Taxes are the biggest challenge for investors approaching retirement, says Ed Slott, Founder and President of Ed Slott and Company, Professor at The American College of Financial Services and nationally recognized IRA distribution expert. In today’s episode of Carson Group and PIMCO’s Retirement Income Series, Ed shares insights and strategies to minimize taxes in retirement.

Ed was a thirtysomething CPA in 1986 when he shifted the course of his career to focus on educating consumers and finance professionals about IRA distributions and retirement planning.

“The tax rules governing IRA and 401(k) distributions came out, and I had an epiphany,” he says. “All of this money is going to accumulate and come out. Minimizing tax with good retirement planning will be key.”

Today his firm is the go-to source for IRA expertise, and Ed has been named “the best source for IRA advice” by the Wall Street Journal.

One key piece of advice he shares with financial advisors: financial planning is tax planning.

“If you advise on Roth conversion, you’re doing tax planning. If you advise beneficiaries on legacy planning, you’re doing tax planning,” Ed says. “And if you’re not doing it, somebody else is and you’re going to lose that client.”

In today’s episode, Ed speaks with Jamie and Devin Ekberg, Senior Consultant and Education Advisor with PIMCO, about all things tax and IRA. He explains why now is the right time to convert IRA accounts, the latest IRA, SECURE Act and SECURE Act 2.0 regulation, how to minimize estate taxes and more.

Key Takeaways

  • Taxes are the single biggest factor that will separate someone from their retirement dreams. The fundamental key to all good tax planning is to always pay taxes at the lowest rates.
  • Advisors don’t need to know everything about tax and estate rules, but you do have to know people who do. Create a team of experts to support your clients.
  • The best thing an advisor can do is help clients consolidate their IRA and 401(k) accounts so they don’t risk missing Required Minimum Distributions (RMDs). The penalty for missing an RMD is 50% of the amount you should have taken but didn’t. Clients need help figuring it all out.

Quote

“Advisors do pretty well helping people build money, but they have to play the full game, and that includes the distribution phase, too. As an advisor, if you can help people keep more of the money they’ve made and make it last through retirement, that’s where the value is.” – Ed Slott

Links

Carson Group is committed to advancing financial literacy. Schedule a consultation to learn how Carson can help you help your clients and grow your business. Visit PIMCO to learn more about the work it is doing in the retirement income planning space.

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