By Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA Executive Summary The Health Care and Education Reconciliation Act of 2010 created a 3.8 percent surtax on certain net investment income effective for tax years beginning on and after January 1, 2013. The tax applies to estates and certain trusts as well as to individuals. Given the low income threshold at which the tax begins to apply, the tax will have broad application to trusts and estates. This article summarizes application of the 3.8% surtax to trusts and estates and offers some initial planning ideas What Trusts are Subject to the…
The Art of Roth Recharacterizations
By Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA For affluent taxpayers Roth Conversions provide a significant opportunity to move funds from a tax deferred environment (as is the case with traditional IRAs) into a tax-free environment (as is the case with Roth IRAs) at a relatively reasonable current income tax cost. In general, there are eight reasons why a person may want to consider converting to a Roth IRA: Special favorable tax attributes (e.g., charitable deduction carryforwards, net operating losses (NOLs), investment tax credits, excess itemized deductions, high basis nondeductible traditional IRAs, etc.) can be taken advantage of. The…
2014 Year-End Tax Planning
By Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA As we near the end of 2014, year-end tax planning again takes center stage. In this article we summarize a number of strategies that may produce substantial tax savings with just some year-end tax planning. Making Trust Distributions The tax brackets for trusts are much more compressed compared to the brackets for individuals. This suggests, if the governing instrument allows it, that trustees should consider making discretionary distributions of income to beneficiaries at the end of 2014 to reduce tax rates. Harvesting Ordinary Income Harvesting ordinary income is another part of…
Tax Alpha®: What Sophisticated Counselors & Advisors Need to Know—Part 2 of 2
By Robert S. Keebler, CPA, MST, AEP (Distinguished), CGMA In the world of finance, “Alpha” is often referred to as the value a money manager generates by exceeding a particular benchmark. In the world of financial planning, Tax Alpha® is best defined as the value financial advisors add by reducing the tax burden on portfolio income – “After all, it is what you keep not what you earn that counts.” A thorough knowledge of the intersection between tax and finance will allow an advisor to substantially reduce a client’s overall tax burden. The heart of Tax Alpha® for most clients…
Keebler & Ward on Taproot v. Commissioner: Roth IRA Not Eligible Shareholder of S Corporation
Reproduced with Permission by and Courtesy of Leimberg Information Services, Inc. (LISI). For information about how to subscribe to LISI, click here. Traditional IRAs are not eligible S corporation shareholders under Rev. Rul 92-73 on the theory that the beneficiary of a traditional IRA is not taxed currently on the IRA’s share of the S corporation’s income. But what about Roth IRAs? In Employee Benefits and Retirement Planning Newsletter #506 Bob Keebler provided LISI members with his analysis of the initial Tax Court decision in Taproot, that at the time supplied the answer to the fascinating question set out above….
Michelle Ward & PLR 201203033: Trust Qualified as Designated Beneficiary After Beneficiary Released Certain Powers
Reproduced with Permission by and Courtesy of Leimberg Information Services, Inc. (LISI). For information about how to subscribe to LISI, click here. EXECUTIVE SUMMARY In PLR 201203033, a trust qualified as a designated beneficiary after a trust beneficiary released certain portions of a power of appointment. The trustee of the trust was also allowed to transfer the inherited qualified plan to an inherited IRA for the benefit of the trust. FACTS “Alex” died at age 62 after establishing a trust that became irrevocable at his death. Alex was survived by his wife, “Lydia”, and his two children, “Nicholas” and “Melissa.”…
Robert Keebler Charts Promotion – Get All 7 for Just $99!
Until tomorrow, September 18th, you can get all seven of Robert Keebler’s Client-Friendly Laminated Charts for just $99, normally $19.99 each. These charts are 11″x17″ and come printed in full color and laminated. These are great for explaining complex tax and retirement benefit planning concepts to clients. You can purchase multiple copies and even purchase a customized design to brand the chart with your firm’s logo. >>MORE INFO The seven charts include: The Personal Exemption Phaseout & PEASE Impact This chart evaluates the Personal Exemption Phaseout and the PEASE impact, along with projected tax rates for 2013. The Healthcare Surtax…
The Nevada Asset Protection Trust: Why Nevada is the Leading Jurisdiction…Period!
Download Printable Article By Steven J. Oshins, Esq., AEP (Distinguished) There are now 17 states with statutes allowing Domestic Asset Protection Trusts (“DAPTs”). Nevada is the best of those states. Period. That’s not just the conclusion of this author. Rather, it appears to be the conclusion reached by the high majority of the estate planning industry, including unbiased planners. This article will not only explain why Nevada is such an asset protection trust powerhouse, but it will also explain how the Nevada Asset Protection Trust works so those planners who are not currently making use of this opportunity can now…
The Private Decanting: A Do-Over Trust with your Privacy Intact
Download Printable Article By Steven J. Oshins Esq., AEP (Distinguished) What is Trust Decanting? For many years, practitioners have struggled to find ways to change the terms of an irrevocable trust. However, through common law and through the decanting statutes that have been enacted in many jurisdictions, it is now possible to modify an irrevocable trust. The rationale for allowing such a modification is that a trustee who has the power to distribute the trust property to or for the benefit of one or more beneficiaries should be able to make the distribution to them in trust and dictate the…
Can a Wrong IRA Beneficiary Designation be Corrected After Death?
Download Printable Article By Michelle L. Ward, JD, LLM, CSEP In recent PLRs 201628004 through 201628006, the IRS considered the effect of a state court action that modified the named beneficiary after the death of the IRA owner. In the rulings, the decedent had originally named three trusts as beneficiaries of his IRAs. The trusts qualified as designated beneficiaries under the IRC Section 401(a)(9) Regulations. When his IRAs were moved to a new custodian, however, the beneficiary was changed to his estate. It was represented that, although the decedent signed the new beneficiary designation form, he merely intended to move…