Litman Gregory Senior Advisor and Principal Gretchen Hollstein, CFP® was recently quoted in Barron’s Here are 5 Tax Moves to Consider for an Unusual Year, which offered ideas to consider for year-end tax planning.
She describes some common planning strategies we utilize with clients, such as considering Roth IRA conversions. “We’ve been helping people who are in a relatively low tax bracket with [Roth] conversions,” Gretchen says. “The key is how much to convert—we suggest partial conversions, just enough to keep people in their income-tax bracket.”
Gretchen also responded to questions about managing IRA distributions in a unique tax year. The downside to leaving assets in the IRA is that next year’s distribution—and therefore, tax bill—may be significantly bigger. She explains that to address this “we’re helping clients use IRAs for charitable giving this year.” A so-called qualified charitable distribution rule allows gifts to be made directly from IRAs to a charity without tax consequence. “It doesn’t end up as an itemized deduction, but it reduces their IRA balance.”
The article further covers some additional strategies we often use to help clients incorporate charitable giving in their tax optimization plan, and family gift planning within their estate plans. Amidst the many unknowns of the year, she notes that “some planning is about hedging your bets.”
Our advisory team at Litman Gregory has been working through a variety of tax-sensitivity and optimization strategies with clients in recent year-end planning discussions, and many of these were also covered in our recent Year-End Planning Webinar. Please contact your advisor to discuss opportunities for your situation.
Read the full article by Barron’s.
Advisor Q&A: Tax Planning and the American Families Plan with Senior Advisor Chris Wheaton
The American Families Plan was recently released by President Joe Biden and includes many of the provisions outlined during his campaign. We asked Litman Gregory Senior Advisor, Chris Wheaton, to answer some questions about key proposed tax law changes, and related tax planning ideas for our clients to consider in 2021 and beyond.
Research Update: Our Views on Inflation
As mentioned in our recent commentary, investors have been concerned about inflation as economic activity picks up. But what we see is an economy reflating as it recovers from a recession, not one on the edge of a hyperinflationary spiral. In preparation, our portfolios are already positioned to offer some inflation protection.
Key Features of the American Rescue Plan Act of 2021
The American Rescue Plan Act of 2021 was signed into law in March to help aid in the United States’ recovery from the impacts of the COVID-19 pandemic. In this post we review how this Act extends some aspects of the CARES Act and other 2020 legislation, and several key provisions that provide planning opportunities in 2021 and beyond.