7 Key Takeaways on Tax and Estate Planning from the AICPA Engage Conference

Our team recently attended the AICPA Engage Conference in Las Vegas, where we picked up timely and important tips and resources to improve our service to clients. Many of the sessions focused on income tax planning and estate planning.

Laws and regulations constantly evolve, and we strive to ensure we are current with changes. This conference also reinforced ways we can help clients with their estate planning to maximize impact and minimize taxes.

Here are 7 key takeaways from the conference that impact our clients’ current and future tax planning.

1. The SECURE Act. The Setting Every Community Up for Retirement Enhancement Act of 2019 promises to overhaul the current retirement system in the U.S. We’ve briefly covered the passage of this in the House and will continue to monitor its movement in the Senate. This legislation impacts anyone with a retirement plan such as a 401(k) or Roth IRA. Another benefit of the act? It would allow people with 529 plans to use up to $10,000 from a plan to pay for student loans. A recent graduate could start a plan in Indiana, fund it with the maximum $5,000 one year and $5,000 the next year, and receive a 20% tax credit from the state of Indiana.

2. Roth Conversions. The SECURE Act raises the required minimum distribution age to 72 for traditional IRAs. For Roth IRAs, however, there is no RMD, so some clients may want to convert over to Roth IRAs over a period of time, which will allow for lower taxes and higher sheltering of assets to pass on.

3. Tax Bracket Management. The more money you make, the higher tax bracket you are in. The goal is to have clients in at the 24% tax rate or lower, and this conference reinforced discussing with clients their income streams and how to maximize deductions.

4. Modifying Existing Trusts to Account for Higher Estate Tax Exemption. Since the Tax Cuts and Jobs Act of 2017 passed, the estate tax exemption jumped to $11.4 million per individual or $22.8 million for a married couple. Years ago, people created trusts to shelter assets because it provided better tax savings. However, with this increase in the exemption amount for at least the next five years, people should re-evaluate their estate plans and see if they should be moving assets into the estate to take advantage of the higher exemption amount.

5. Moving to Zero-Tax State. Moving to a state with no taxes isn’t as simple as buying another home, changing your driver’s license and voter registration, and living there half the year. We learned that in an audit, that’s not going to be enough to prove you live in the zero-tax state.

6. Structuring Family Meetings. The Fi3 Family Office works with families across generations to establish and implement planning and investment strategies. When it’s time for a family meeting, sometimes people spend too much time focusing on the numbers and not on the interests of the family. Generally, about 30 percent of the meeting should be spent on actual numbers and investments, or else people will begin to be disengaged.

7. Cryptocurrencies. Some of our clients have invested in cryptocurrencies, such as Bitcoin. These are treated as property, not securities like stocks or mutual funds are. This means some tax laws applicable to securities don’t apply to cryptocurrency, such as the wash-sale rule, and investors can take some losses in the currency.

If you have questions about any of these topics or about your tax and estate planning strategies overall, please reach out to any of our advisors for more information.