Achieving ‘Tax Clarity’ on Retirement Income Is Possible in 2018

“Understanding and discussing the tax impact of your investment and retirement account withdrawal recommendations is not the same thing as giving tax advice,” explains Joe Elsasser, president of Covisum.

Sitting down for an introductory conversation with PLANADVISER, Joe Elsasser, president of financial services software solutions provider Covisum, offered an insider’s take on the efforts providers are making to update advisory support products and solutions in light of the implementation of the Tax Cuts and Jobs Act.

Elsasser noted that his firm has long been concerned with tax issues, going back to its first offering, the Social Security Timing optimizer.

“When you spend a lot of time on Social Security, you very quickly get into taxes, and so it has been a natural evolution for our firm to get into this area,” Elsasser says. “Advisers know, any time you are talking about structuring income sources and the interplay of taxation, it very quickly becomes a complicated set of interactions.”

In recent weeks the firm has been working overtime, like many of its clients and competitors, to update its product set to reflect the major changes brought about by the GOP tax cuts hammered home in the final days of 2017. Elsasser in particular cites the firm’s Tax Clarity product as having received an important update heading into 2018.

As he describes it, Tax Clarity “focuses on the interaction between different types of income, allowing advisers to make the most effective recommendations to mass affluent clients.” The solution “gives a consumer a landscape view of retirement income taxation.”

“The end result is that we can help advisers demonstrate for their clients and their CPA partners exactly where there may be missed opportunities to make changes to withdrawal strategies, small or large, that could impact the total amount of taxes paid, and thus the total wealth of the client,” Elsasser says. “Without a solution that allows the adviser to play around and guide the client through this complex conversation, it’s very hard for people to see where they may not be making the best tax decisions. Even for a CPA partner, it can be hard for them to see some of the stuff that our platform is going to show them.”

Elsasser says the real goal of Tax Clarity is to “start conversations,” rather than to be a definitive source of tax guidance. The tool asks users to input a broad range of factors when generating a client’s tax outlook—it weighs anticipated individual retirement account (IRA) and defined contribution (DC) plan distributions, the passing through of capital gains, Social Security income, pension income, tax free interest, and more.

“All these things can be weighed and compared for their tax impact,” Elsasser says. “The system also factors in your age—if you are over or under 65 right now and what that means for the tax future. As an output, it shows what income levels you will draw and how that will increase or decrease your future taxes, based on all the various spill-overs that are possible and the interaction of different income, be it qualified, non-qualified, government benefit.”

“Our goal with Tax Clarity is to be a great first response program,” he concludes. “In that sense, we’re expecting that, on our adviser side, it’s going to be a significant year for us, given everything that is going on. Clients are reaching out, thirsting for guidance on how their taxes may be impacted. CPAs are getting hammered with questions and they don’t have the time, especially with all the corporate reform that is also going on. It’s all hands on deck for all of us.”

 More information about Tax Clarity is available at