As many of you know, I am an Ed Slott Master Elite Advisor. I have been part of his group for over 10 years. Ed Slott is a consumer advocate and retirement and tax expert and educator. If you'd like a little bit of background on Ed Slott and his group read to the end.
Recently, I attended Ed Slott’s semi-annual conference in Kansas City, MO. As usual, it was packed with information. Here is picture of me with Ed.
Due to the multitude of information at the conference, unfortunately there is no way I could write about it all! Here are some of the main highlights:
Strategic Senior Planning As we age, many challenges present themselves. One of the most daunting challenges is the loss or decrease of cognitive ability. A retirement plan is not complete without a solution to this challenge should it come to fruition. Contrary to popular belief, the risk goes beyond degradation in health and the need for long-term care – a decline in cognitive function can be slow and subtle as well.
Unfortunately, this issue could give rise to financial abuse on this group. This abuse commonly occurs within one’s inner circle. Oftentimes, a friend, neighbor, or relative is aware of the decrease in capacity and financial vulnerability.
As a financial planner equipped with knowledge about my client’s finances, family, and needs, I am often one of the first individuals to detect that something may be amiss. It could be as mundane as neglecting an appointment, forgetting a conversation, or taking longer to recall certain aspects of their finances. Therefore, I encourage all retirees to develop a strong relationship with a planner and set up documents and to aide in their decline. It is extremely important to designate a person to act on your behalf if you are unable to do so. A Durable Power of Attorney will facilitate this process, where your “attorney-in-fact” has the legal authority to act on your behalf. The next step is to introduce your agent to your planner, and begin to involve them in your financial matters. Although this may sound simple, these steps could go a long way in transitioning the decision making process. For additional strategies, please reach out to schedule a conference.
Healthcare expenses in retirement Guest speaker Peter Stahl, who specializes in training financial advisors on healthcare issues and retirement planning, cited a number of studies (Employee Benefit Research Institute, Fidelity, etc.) that have shown that an average couple will spend over $250,000 on healthcare expenses in retirement. Keep in mind that this figure does not include long-term care expenses. This number is likely on the rise due to inflation and greater anticipated life expectancies. Additionally, the actual cost for Medicare Part B and Part D is based on taxable income. According to Mr. Stahl, if a married couple can keep their taxable income under $170,000 per year, they could save up to $80,000 in Medicare premiums over their lifetime. However, earning just one more dollar would jeopardize that savings.
Here are two of Peter’s top tips to manage taxable income:
- Start and max out contributions to a health savings account (HSA).HSAs offer pre-tax contributions and tax-free withdrawals during retirement for healthcare expenses.
- Fund a Roth IRA or Roth 401(k).Contributions to Roth accounts are funded with after-tax dollars, so you get tax-free growth.Plus, there aren’t any RMD requirements for Roth IRAs.
Both of these strategies provide tax-free income in retirement and would not impact your tax return. To discuss further strategies, please schedule a conference.
IRA and Trusts. An important part of the conference discussed IRAs and naming trusts as beneficiaries. A portion of this discussion was led by Shannon Evans, JD, LLM of Evans & Associates. Shannon’s presentation was focused on the risk of bankruptcy and creditor claims against our beneficiaries. She has a very specific recommendation on how we can safeguard our IRAs from these risks. Certain states have greater protection than others, so it is important to know how you are protected. She also discussed the process and planning of utilizing trusts, as well as the pros and cons of each strategy.
The remainder on this section was focused on trust as beneficiary options and comparing each option for the specific client. Ed Slott and Company provided several resources such as a checklist and charts to assist in determining the best option for the participant.
IRA Mistakes. At every conference, a considerable amount of time is devoted to case law and the issues surrounding the cases. This section never fails to provide gems of wisdom, as it is always important to learn from the mistakes of others. Personally, I believe that an ounce of prevention is worth a pound of cure. Some mistakes can be fixed, while others cannot. However, they all come with a cost.
The most common IRA Owner mistakes are:
- 60-day Rollovers
- Prohibited Transactions
- Owning Prohibited Assets
- Outdated Beneficiary Designation Form (or no beneficiary or a wrong one)
- Improperly Titled Inherited IRAs
Many of the cases we reviewed involved situations in which IRA owners worked with the wrong financial advisor or got poor recommendations from individuals that were not well versed in IRAs or retirement accounts. As the saying goes – to err is human. Unfortunately, many mistakes that we reviewed occurred due to lack of expertise, not the lack of honesty.
The conference proved to be extremely educational and valuable, as it does every time. It is always interesting to hear and learn from many experience professionals, and it is important to sift through this information in order to incorporate it into our strategies. Should you have any questions regarding the key points or Ed Slott’s conference in general, please do not hesitate to contact us!
Ed Slott is a consumer advocate and retirement and tax expert and educator.
Ed Slott and Company, known as “America’s IRA Experts,” provides timely and accurate IRA education to hundreds of thousands of financial advisors and consumers throughout the year. We are on a mission to match consumers with competent, educated financial advisors.
Ed Slott was named “The Best Source for IRA Advice” by the Wall Street Journal and called "America's IRA Expert" by Mutual Funds Magazine. He is a nationally recognized IRA-distribution expert, a professional speaker, and the creator of several public television specials, including the most recent, Ed Slott’s Retirement Rescue!
Members of Ed Slott's Elite IRA Advisor GroupSM train with Ed Slott and Company on a continuous basis, have completed requisite training, passed a background check, attend required workshops and complete mandatory exams. They are immediately notified of changes to the tax code and updates on retirement planning, so you can be sure your retirement dollars are safe from unnecessary taxes and fees.
Retirement planning is complicated and you need an IRA specialist in this area. It is a personal and situational endeavor with possible pitfalls in the way of success. Work with a financial professional who invests in his / her education to eliminate risk and keep more of your retirement dollars for you and your family.
Ed Slott's Elite IRA Advisor Group is a group of financial professionals who pay a fee to attend a seminar that explores regulations, tax updates, and other issues regarding individual retirement accounts. It does not qualify a financial professional to provide investment recommendations, or advice.
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