What You Need to Know
- Slott explains why the retirement planning provisions aren't in Biden's plan.
- Advisors are still woefully unprepared to help clients with tax planning.
- Clients are relying on advisors to have knowledge of how new tax bills will affect their retirement plans.
IRA whiz Ed Slott of Ed Slott & Co. doesn’t mince words when criticizing policies coming out of Washington.
Slott spoke this week with ThinkAdvisor about how he got started teaching the IRA retirement tax rules, what he thinks of President Joe Biden’s Build Back Better spending plan — with IRA changes like the elimination of backdoor Roth strategies notably absent — and advice to advisors heading into the new year.
The American Retirement Association reported Thursday that a number of key retirement-related provisions that had been under consideration were stripped out of Biden’s plan late Wednesday, including House Ways and Means Committee Chairman Richard Neal’s auto-IRA plan.
ThinkAdvisor is set to recognize Slott on Nov. 9 as a winner of its new recognition program, the LUMINARIES, for the work he and his firm do in industry thought leadership.
THINKADVISOR: What do you think of Biden’s Build Back Better framework that was released Thursday?
ED SLOTT: It’s not controversial; this is more like a PR piece. … The funny part of it is that a lot of the retirement provisions do provide revenue. But I don’t think they want to promote that; if they talk too much about it they might get pushback on that.
They’re at the point now they just want to push this thing through, so they don’t want to bring in new items that might get pushback. Maybe that’s why the retirement stuff isn’t in there.
Do you think the retirement provisions will get thrown into Build Back Better?
I just don’t think [lawmakers] want to put a spotlight on it now because that could bring new questions, and they’re not looking for, with a train analogy, stops along the way, more passengers on there to complain about things.
But the retirement provisions were originally revenue enhancement provisions; they were all meant to provide additional revenue, so why wouldn’t they throw that in?
That’s what happens with all legislation. Once they think it’s going to the White House, … they throw everything they have at it. But with this one, it looks like all the wheels are coming off.
How did you get started working with IRAs?
I morphed into it almost accidently. As you know I was an accountant, CPA, with a tax practice. I realized early on then that … doing people’s taxes, it was a commoditized service. I also saw the problems with it early on; this was when I was in my late 20s, early 30s.
People would come in the next year and say, ‘We should have done this, we should have done that’ … I realized: This is not the way to help people. And I still say it in a lot of my seminars, a lot of my CPA colleagues that prepare tax returns are really just history teachers.
They tell you what already happened. I was telling them on a form what already happened in most cases can’t change it anymore … Reactive, like looking in the rearview mirror. What value is there in that?