Brokers around the country had a very positive reaction to the new version of the SEC’s Best Interest Rule which was approved last week. One of the reasons why, other than the generally light-touch direction of the regulation, is that the new rule seems to suggest that a broker can always be confident in putting money into an IRA when considering a rollover. However, the SEC has just warned brokers against this quick conclusion, saying they cannot short-circuit their analysis.

FINSUM: The way the new rule was structured seemed almost too good to be true for advisors as it appeared to heavily favor rollovers into IRAs. More analysis of the rule will be forthcoming over the next week.

Published in Wealth Management
Thursday, 14 April 2016 08:16

Why You Should Start IRA Withdrawals Early

(New York)

Be proactive in your tax planning, says this piece. One of the key bits of advice to doing so revolves around planning to take earlier withdrawals from your IRA so as to keep in a lower tax bracket. This runs against conventional wisdom, which says to not touch the funds until you are required to do at 70.5 years of age. However, if you take careful withdrawals starting at 59.5 years old, you can try to stay under the 15% federal tax bracket throughout your retirement years. If you wait longer, distributions will be larger, which will cause you to lose more to tax. Additionally, if you take the money out sooner it can save heirs tax payments, as younger, working people, are generally in a higher tax bracket.

FINSUM: Good piece on tax and inheritance planning. Most advisers will already be fully versed in this, but good read for individual investors.

Source: Wall Street Journal

Published in Markets
Thursday, 28 January 2016 05:36

Tax Tips for a Bad Market

(New York)

Times are tough in the markets. The reversal has caught many out, and a lot of clients are presumably fretting. With that in mind, we wanted to run this piece from the Wall Street Journal which tells of the top tax tips to employ in down markets. The first thing to think about is selling losers in order to receive capital losses that you can use against future gains, $3,000 of which may be used to protect ordinary income. The next tip is to contribute to a retirement plan when markets are down, as that allows one to partake in tax-free growth when the market picks up. Thirdly, consider moving to a Roth IRA, considered the gold standard of tax-light retirement plans. Taxes are incurred when one converts an account to a Roth, but many people do it in market down years to reduce the impact. You can also convert an account back from a Roth if market values are now lower in order to pay less tax. Down markets are also a good time to exercise stock options, as it will mean less taxes to pay and the ability to pay the lower long-term capital gains tax when you eventually do sell the shares.

FINSUM: This is a great article full of tax wisdom for the current environment. A must read for any investor, though most advisers should already know all this!

Source: Wall Street Journal

Published in Markets

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