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The rules surrounding inherited IRAs have changed a lot over the past couple of years. A variety of regulations (both pending and finalized) have caused a lot of stress and confusion for both advisors and their clients. This flowchart will help give you and your client clarity about how they must handle distributions from their inherited traditional IRA.

We cover important factors a client needs to consider when determining how they must handle distributions from their inherited traditional IRA, such as:

- Determining whether the client is an Eligible Designated Beneficiary or Non-Eligible Designated Beneficiary, and how that will affect their distributions requirements.

- Understanding how their distributions requirements will be affected based on when the owner passed away (i.e., before or on/after their required beginning date).

- Who the 10-Year Rule does and does not apply to.

- Whether required minimum distributions (RMDs) apply, and whose life expectancy they are based on.

Clients often have outsized positions due to appreciation and large pre-tax retirement accounts. They may be looking to reduce portfolio risk and protect gains now, while also aiming to reduce their future income tax burden. Roth conversions and harvesting capital gains are two effective financial strategies that can achieve these goals; however, they accelerate income tax costs. There are current tax consequences associated with each strategy, and the issue becomes whether to accelerate ordinary income, capital gains, or a combination thereof.

Clients may struggle to choose the optimal balance between Roth conversions and harvesting capital gains. We help guide your conversations and the weighing of options. Key considerations:

- Expected need and future goals for the assets

- Current tax brackets and the effect of increasing income (ordinary or capital gains)

- Projected future income and tax rates

-Collateral impact on Social Security, Medicare, wealth transfer goals, etc.

Reviewing a client’s tax return can always be an informative exercise to ensure you understand all sources of their income and their tax liabilities for the prior year. This is true for existing clients with whom you have been working and is especially true for new clients as a way to familiarize yourself with their situation.

We highlight points to consider on your client’s tax return if they are retired, including:

- Review the client’s filing status. If they are married should they automatically file jointly with their spouse or might there be situations where the client might consider filing separately?

- If the client is divorced or widowed, there are filing steps for them to take depending upon timing and circumstances.

- If the client had investment income for the prior year, there are reporting issues that you will want to be sure your client addressed in connection with this income.

- If the client owned tax-advantaged accounts during the prior tax year there may be some reporting issues to consider, especially if they took any distributions from these accounts. For clients who have reached their RBD, did they take the full amount of their RMD from their retirement plans? Did they do a rollover to an IRA? Were any distributions taken from an after-tax IRA account?

- Check to see if the client had a high level of medical expenses or if there are state-specific issues to be considered.

This is a summary checklist of the types of issues that advisors should be discussing with their clients who are retired when reviewing their tax returns from the prior year.

RMDs (Required Minimum Distribution) are often an inconvenience to our clients. The timing, amount, and tax consequences associated with RMDs might run the risk of throwing a wrench in our clients’ financial plans, but it doesn’t have to be that way. That’s where you step in.

With your help, clients will have a better understanding of what options they have at their disposal when managing their RMDs in relation to their financial situation.

We cover important factors a client needs to know when reviewing their RMDs, such as:

- Having a clearer understanding about how they are taking their RMDs (e.g., timing, amount, where it is being sent, etc.).

- Being more deliberate about how they use RMDs that are in excess of what they need for living expenses (e.g., reinvest, bolster emergency fund, etc.).

- Coordinating their RMDs with other investment, charitable, and/or tax planning goals.

Planning for the sale, disposition, or succession of one’s business is a challenging process. This topic is on many business owners’ minds, yet many struggle to take action and start planning.

With your guidance, clients will have a better idea of where to start and what questions to ask when addressing their exit strategy.

We cover key issues to consider when a client must make a decision regarding the sale, disposition, or succession of their business, such as:

- Identifying an optimal successor to take over the business.

- Considering ways to improve the business appraisal and valuation process.

- Developing an optimal buy-sell agreement that is fair to all parties involved.

- Understanding the impact one’s business has on their tax and estate planning goals.