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"Financial Planner's Corner" is a periodic series sharing advanced financial planning techniques, foundational planning principles, practice management tips, and more. In Focus (Highlights from particularly compelling content.) First, ICYMI, Jeffrey Levine and Ben Henry-Moreland break down: • The IRS's New Final Regulations on RMDs • New rules for Trusts & Annuity treatment • New Proposed Regulations Key point: "The IRS's Final Regulations effectively mirror the Proposed Regulations, subjecting different requirements for 2 groups of Non-Eligible Designated Beneficiaries based on when the original account owner died. Thus, when planning for Non-Eligible Designated Beneficiaries, advisors must ascertain whether the owner died before or on/after their Required Beginning Date. Non-Eligible Designated Beneficiaries who inherit(ed) a retirement account from someone who died before their Required Beginning Date only have to empty the inherited retirement account by the end of the 10th year after the owner's death. By contrast, Non-Eligible Designated Beneficiaries who inherit(ed) a retirement account from someone who died on or after their Required Beginning Date are subject to both the 10-Year Rule and to the 'old' (but still applicable) Stretch rules. In other words, at a minimum, Stretch-style RMDs must be taken in years 1–9 after the year of death, with any and all remaining amounts in the account distributed by the end of the 10th year after death." Next, Stephanie Bogan on: • The challenges of stalled organic growth • 2 ways to stand out in today's digital marketing landscape • How to effectively & sustainably implement growth tactics Key tip: "We all know it from experience—consumers have a magnetic relationship with ease and convenience. It’s not a mystery why Apple remains the most popular smartphone brand in the U.S. From watches and phones to laptops and headphones, everything is seamless. Why not apply that model to your client experience? Are you leveraging technology to provide smooth interactions? Are your touchpoints with clients personalized and impactful? The average client experience is so unremarkable that it can be a genuine game-changer to focus on client experience that truly differentiates." Finally, Brad Johnson opens up about: • Why he believes all entrepreneurs need therapy • His experience with couples therapy & the benefits • Why therapy needs a re-brand Key takeaway: "Fast forward, the gift that Michael gave me that day was he made therapy okay. He said the therapist told him it’s the healthy people that come see me, that don’t bottle things up, that don’t have toxic relationships, that actually work through their stuff." … "The truth was the stress of being an entrepreneur and the strain and the weight of that when you have a team of five trying to compete with teams of hundreds in our space that’s very competitive can be often very cutthroat. The stress and the strain I was putting in at the office, I would come home and I wasn’t showing up as the husband that I needed to be. I wasn’t showing up as the dad I needed to be." Grab Bag (An assortment of content from around the industry.) Ed Slott: Why A Lump Sum Beats An IRA Rollover For Some Clients [Melanie Waddell, ThinkAdvisor] "'So, the plan has to happen in one calendar year after what we call a triggering or qualifying event, that’s age 59.5 or separation from service.' The other qualifiers are death and disability. 'If you take the stock down, that would empty the account because the other funds from the 401(k) were rolled over,' Slott continued. 'You take it. You don’t sell the stock. That’s one of the mistakes — people blow it. You take the stock out in-kind as stock and transfer it to a taxable account, that million dollars, you only pay tax on the cost, $100,000, that original cost. That other $900,000 comes over to your taxable account absolutely tax-free. And whenever you do take that money out, you sell the stock, you automatically get long-term capital gain rates.' Added Slott: 'So, this applies to a lot more people because more people have company stock, longevity at the job, and the market['s] runup.'” Optimal Withdrawal Frequency For Sustainable Retirement Withdrawals ($) [Stephen Horan, Financial Planning Review] "Retirement portfolio success rates are invariant to the pattern with which withdrawals are made from the account provided the withdrawal patterns allow money to be invested for roughly equivalent periods of time. We find that although withdrawal sustainability is negatively related to volatility and positively related to return autocorrelation, the frequency of withdrawals is irrelevant. This result is robust to using simulated as well as historical returns. It is also consistent with a continuous time approximation to withdrawal sustainability. This seemingly inconsequential negative result has surprisingly important implications. First, financial planners may mistakenly believe that increasing or decreasing the frequency of withdrawal may improve a retirement portfolio's probability of success. This is false. They should instead focus their attention on withdrawal rates, volatility, and taxes. Second, financial planners and retirees should focus on matching retirement withdrawal frequency to cash flow patterns to increase retiree utility and decrease transaction or financing costs." Using IRC Section 1042 for Retirement and Exit Planning for Business Owners: A Guide for Financial Planners ($) [Alberto Toribio del Pilar, Journal Of Financial Planning] "As an incentive to promote employee ownership and enhance employee retirement investment security, Section 1042 of the U.S. tax code provides the seller of a business, under specific circumstances, the ability to defer the recognition of long-term capital gains resulting from the sale of their business to an employee stock ownership plan (ESOP). For instance, if eligible under Section 1042, a seller of a business with a taxable long-term capital gain of $30 million can defer recognizing that gain and, as such, defer taxes of approximately $7 million based on current applicable federal taxes. In other words, selling to an ESOP could allow a seller to retain about 23.8 percent more of their sale proceeds compared to selling to a traditional third party. This means the seller can invest a significantly larger amount of capital after the transaction. Moreover, an ESOP transaction can generate significant retirement investment value over time for employees participating in the plan and preserve a business owner’s legacy within their community." Whenever you're ready, there are 3 ways we can help you:
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