What You Need to Know
- Tax issues cut across all aspects of the saving, spending and investing process, such that consideration of tax matters can significantly boost overall outcomes.
- Given the constant fluctuations in tax laws and regulations, tax planning is best done on a shorter time frame.
- While the tax laws may change frequently, the most common questions about tax mitigation do not.
As shown by the recent kerfuffle over the death of the stretch IRA, the IRS’ controversial interpretation of the rules around its death, and the penalty relief extended late last week to IRA beneficiaries who have not complied with that interpretation, tax planning strategies are ever-changing.
But that doesn’t mean there are no constants when it comes to advisors’ role in tax planning.
“There is no such thing as a permanent tax law,” says Timothy Steffen, director of tax planning at Baird Private Wealth Management, the U.S.-based financial planning arm of the multinational independent investment bank and financial services company Baird.
As a certified public accountant and director of tax planning for Baird, Steffen is responsible for researching, writing and speaking on important tax issues that affect the firm’s diverse set of clients. His work covers topics related to retirement planning, executive compensation, business ownership, legislative changes and overall best practices.
During a recent interview with ThinkAdvisor, Steffen offered a number of tips and suggestions for his colleagues in the financial planning industry, with the hope of inspiring them to consider the tantamount importance of tax issues in the planning process.
As Steffen emphasizes, the financial advisor will never replace a client’s trusted accountants or tax attorneys, but advisors must understand that tax issues cut across all aspects of the saving, spending and investing process, such that close collaboration on tax matters can significantly boost overall outcomes.
Here are four of Steffen’s top tax considerations.