8 VIP Tips on Retirement, Tax & Financial Planning Today

1. Managing risks amid market volatility

“Just because markets change doesn't mean your financial goals do,” said Matthew Rosenberg of RoseCap Financial Advisors. “That's why, as advisors, our job is not to correctly time the market for our clients but to focus on the things we can control for them. This includes fees, taxes, diversification and asset allocation.”

2. COVID-19 state income tax and residency issues

“To truly change domicile, it does not matter when you leave one state, it matters when you establish yourself in your new state,” said Mark Klein of Hodgson Russ Attorneys. “The intention of the move is also important, especially in these COVID-19 times. Did you just leave to weather the storm? Or did you leave with the intention of establishing yourself somewhere new?”

3. Stretch IRA planning after the Secure Act

“The SECURE Act is here,” said IRA expert Ed Slott of Ed Slott & Co. “Identify clients with the largest IRAs whose estate plan will be most affected by the elimination of the stretch IRA and take these actions ASAP: Contact these clients and let them know about the change in the law and that it is effective now, in 2020. Check their IRA and plan beneficiary forms to see what their current IRA estate plan is. Look specifically for those who have named a trust as their IRA beneficiary and let them know their current IRA estate plan may no longer work as originally planned.”

4. Social Security planning strategies

“Financial planners’ advice as to when to begin Social Security benefits is often to wait until age 70 to get the maximum benefit possible and certainly not before full retirement age,” said Theodore Sarenski of BLue Ocean Strategic Capital. “However, with many in a cash crunch due to unemployment or business shutdown, they may want to consider starting Social Security benefits at the earliest age of 62. If employed or able to reopen a business within a year, they can pay all the benefits received back with no interest and restart at full retirement age or later.”

5. RMD ‘undo’ opportunity expiring soon

“As part of the CARES Act, RMDs are not required in 2020,” said Julie Welch of Meara Welch Browne P.C. “IRS Notice 2020-51 allows those who already took distributions from IRAs or 401(k) plans in 2020 to ‘undo’ the distribution by Aug. 31, 2020. If there is even a remote chance that [the client] may want to ‘undo’ a distribution made earlier in 2020, be sure to ‘undo’ it before the deadline. This will give you more time to do multi-year financial planning to help decide if a distribution in 2020 is a beneficial strategy.”

6. Charitable planning

“For just 2020, the CARES Act has suspended the AGI limits for cash contributions to charities,” said Jeffrey Levine of Buckingham Wealth Partners and Kitces.com. “If your client wants to give away money this year, they can now effectively eliminate their tax liability entirely by giving to charity. From a planning perspective, if you get rid of your entire tax liability, you are also getting rid of income that is taxed at lower rates. If your client is normally in a high tax bracket, consider splitting contributions between now and early January so that more of those dollars offset the income at the higher rates.”

7. Business legacy planning

“The pandemic has created some temporary financial planning opportunities,” said Steven Siegel of The Siegel Group. “If you have a client who plans to pass their business along to a child one day — while business values are low — this is a useful time to get a new business appraisal. If you wait, values may recover, and federal tax laws may be less generous to business owners seeking to transfer their interests to family members.”

8. Future of personal financial planning practice

“The COVID-19 pandemic has permanently altered the way work gets done by CPA financial planners,” said Christopher Benson of L.K. Benson & Company. “Most of us won’t move to 100% remote work, but very few of us will go back to 100% office work. We will finally realize that we can have a remote staff and hire from a diverse pool of candidates across the country. Clients will finally stop searching for advisors by their location, since most meetings are virtual anyway.”