Envestnet | MoneyGuide has created a new tax planning feature that will enable advisers to have deeper conversations with clients about various tax strategies. It includes graphics and illustrations to show the impact of different strategies across personalized retirement plans.
Since the SECURE [Setting Every Community Up for Retirement Enhancement] Act became law, advisers say their clients have been asking questions about the changes to the required minimum distributions (RMDs). They also report that pre-retirees assume they will pay less in taxes when they retire, even though that is often not the case, Envestnet | MoneyGuide says.
“Our goal was to deliver a solution that helps advisers feel confident in having these conversations and educating their clients so they can make informed decisions,” says Tony Leal, president of Envestnet | MoneyGuide. “Using the personalized breakdown as a backdrop, advisers can discuss the trade-offs of taking qualified distributions early in retirement, when tax brackets may be lower, to avoid being pushed into higher tax brackets later and the overall potential tax savings if implemented in the plan.”
Some of the options available to retirees, Envestment | MoneyGuide says, are Roth conversions, qualified charitable distributions and qualified distributions.
“At this point and time in the industry, financial advisers are being asked more and more by their clients to assist them not just with retirement in a general sense, but to also share guidance on ways to help minimize how much they pay in taxes throughout retirement,” says Kevin Hughes, chief growth officer at Envestnet | MoneyGuide. “They also want to know how much they can potentially provide to their heirs in the most tax-efficient fashion, and they want these strategies all in coordination with, obviously, still being successful in retirement. Our developers had this in mind when they built this new tool.”
Envestnet | MoneyGuide is hosting a webinar on its new tool on April 7 at 2 p.m. EST. To attend, sign up here.