Home Life Insurance RMDs, Venmo Reporting and Different Tax Points to Watch Now: Jeff Levine

RMDs, Venmo Reporting and Different Tax Points to Watch Now: Jeff Levine

RMDs, Venmo Reporting and Different Tax Points to Watch Now: Jeff Levine


The top of every 12 months brings many tax planning alternatives for monetary advisors and their shoppers, and in keeping with Jeff Levine, Kitces.com’s lead monetary planning nerd and Buckingham Wealth Companions’ chief planning officer, late 2023 isn’t any exception.

Talking throughout a tax-focused webinar just a few days forward of Thanksgiving, Levine stated there was so much for monetary advisors and their shoppers to be glad about this 12 months, even with some huge lingering challenges within the markets and questions on what 2024 might carry. Inflation, whereas excessive, has slowed, and retired buyers can now reliably supply higher-yielding revenue portfolios with much less threat.

As Levine famous, some tax planning concerns apply every year, from taking the proper required minimal distributions to making sure correct withholdings on earned revenue and funding returns. Nevertheless, there are additionally distinctive objects to think about in any given calendar 12 months that rely on current market actions, anticipated authorities actions and particular person shoppers wants.

In keeping with Levine, the top of 2023 represents a very lively time in the case of tax mitigation concerns, due in no small half to the friendlier markets and to anticipated modifications in tax legal guidelines that may take impact with the sunsetting of key provisions of the Tax Cuts and Jobs Act on the finish of 2025.

Except Congress takes motion within the interim, this implies shoppers have about two years to think about, examine and enact varied property planning strategies that will both be diminished or totally eradicated come 2026. Add these concerns to the traditional yearly burden of tax administration and the approaching 12 to 24 months will undoubtedly be a “tax crunch time,” Levine warned.

12 months-Finish Roth Conversions

As Levine emphasised, by this time within the 12 months, an advisor ought to be capable to fairly estimate most shoppers’ adjusted gross revenue and taxable revenue for 2023.

This implies advisors and their shoppers can now start to make a dependable name as as to whether 2023 represents a low marginal charge 12 months for a given particular person or couple, which in flip permits the advisor to evaluate the attractiveness of Roth conversions. Talking typically, Roth conversions will likely be enticing in years when a shopper has decrease earned revenue and might subsequently pay the bottom potential charge on property being transformed.

Ideally, Levine stated, a shopper can have money readily available to pay the tax on the conversion with out having to liquidate any investments, however there are additionally occasions when it could nonetheless make sense to transform and pay the taxes with the proceeds.

As Levine identified, a Roth conversion technique can have many advantages for the unique account proprietor throughout life, however many purchasers additionally overlook the potential upside for account beneficiaries after the unique account proprietor’s demise.

As in prior years, the ultimate quarter of 2023 represents a good time for advisors to interact their shoppers in these deeper planning conversations, Levine instructed.

Tax Loss Harvesting

In keeping with Levine, over the previous a number of years, the supply of tax-loss harvesting providers to advisory shoppers has turn out to be “desk stakes.”

As such, he warned advisors on the road that, if they don’t seem to be already engaged in some degree of pretty refined tax-loss harvesting, they’re falling behind the business normal.

Whereas loss-harvesting actions may be strongest throughout years with greater market losses, advisors with the suitable strategy can nonetheless assist to considerably scale back their shoppers’ tax burdens in combined market years reminiscent of 2023. Doing so, Levine stated, typically entails proactively harvesting interim losses all year long, together with in November and December.

“Regulate year-end capital beneficial properties distributions,” Levine really useful. “Additionally, be careful for wash gross sales, and contemplate locking in any crypto losses.”

Levine additionally really useful that advisors and shoppers fastidiously consider the potential to make tax-efficient bond swaps, however they should be conscious of the tax guidelines when shopping for bonds with a market low cost.

Medicare Open Enrollment

As Levine famous, on a nationwide foundation, the typical month-to-month premium for Medicare Half D prescription drug protection is about to lower barely in 2024, and the small reprieve is because of a wide range of components together with key coverage modifications made as a part of the Inflation Discount Act.

This will likely be welcomed information for a lot of retirees who’re dwelling on a set revenue, particularly given the comparatively modest 3.2% Social Safety cost-of-living adjustment set for 2024, however analysis reveals the typical decline in Half D premiums truly masks a dramatic improve anticipated in a number of states with sizable retiree populations, particularly California, Florida, New York, Pennsylvania and Texas.



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