Latest / The Perfect RIA / Intentional Tax Planning and Avoiding Costly Mistakes with Guest Steven Jarvis, CPA [Episode 266]

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Intentional Tax Planning and Avoiding Costly Mistakes with Guest Steven Jarvis, CPA [Episode 266] · The Perfect RIA

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1:10
Matthew Jarvis: Hello everyone, and welcome to another episode
1:11
of The Perfect RIA podcast. I'm your co host, Matthew Jarvis,
1:15
with me today special guest Steven Jarvis, who is, in fact,
1:20
my brother, but also a CPA. That's the reason I think,
1:23
Stephen, you're my only brother who's been on the podcast. So I
1:27
want to make sure it's clear that you're not here because
1:28
you're my brother. But more on the CPA side.
1:30
Steven Jarvis: Yeah, there's three other brothers that have
1:32
never been on the podcast. So I do that is what like helps me
1:35
sleep at night. I am just somehow in this unique space
1:38
more qualified than my other brothers, who have no interest
1:41
in financial things at all.
1:42
Matthew Jarvis: There we go. There we go. Well, family
1:44
dynamics on the podcast a lot of times, course, with your great
1:48
work at retirement tax services and the retirement Tax Services
1:51
summit, the desktop guide and the 8606 masterclass, all those
1:54
great things. But today we want to talk about common mistakes,
1:58
detrimental mistakes, potentially catastrophic
2:01
mistakes that are made with IRA accounts. So not necessarily
2:04
theoretical ones. We'll touch on those, but ones that you and I
2:07
have run into that it's very easy for advisors, when advisor
2:11
clients to fall into the trap of these mistakes. So Steven with
2:14
that, let's, let's jump right in.
2:15
Steven Jarvis: Yeah, I think this is an area where advisors
2:17
might think, Oh, geez. Well, I've never screwed that up. I
2:19
never would screw that up. How could somebody screw it up that
2:21
bad? But I mean, this is a whole spectrum of things. I mean,
2:24
within the last year, advisor come to me because a client that
2:28
I was not helping them with had just come to them because their
2:32
last advisor had basically done the paperwork wrong on a
2:35
rollover, and inadvertently, the check got cash before it made it
2:39
to the next account, and this huge taxable event got created.
2:43
And so, I mean, we have the one side of things where you need to
2:46
make sure you're doing the basic stuff correctly, and you don't
2:49
take for granted that it's going to happen automatically. And
2:51
then there's the other end of things where about once a year
2:55
or so, I'll have a client that comes to me and says, Hey, I
2:58
just heard about this really cool thing where I can buy
3:00
foreign rental properties in my IRA and then still use the
3:05
rental property myself and not pay taxes like this sounds like
3:09
the best thing ever. So we have this whole spectrum of
3:11
possibilities, and we got to make sure we're paying
3:13
attention.
3:14
Matthew Jarvis: Yeah, there's a there's a lot there. So let's,
3:15
let's start through with some of those examples specifically. So
3:17
your rollovers are a real common area of mistakes. Now, if you're
3:22
doing just a straight trustee to trustee transfer, so let's use
3:24
like the example, ever the client has a fidelity 401K
3:28
account, and you're helping to move it into a fidelity IRA
3:31
account, and it all happens electronically with a quick
3:33
phone call or form two fidelity, well, it's pretty
3:36
straightforward, pretty that's going to get screwed up. The
3:38
1099, could still be issued incorrectly, but it's in the
3:41
reliabilities. But that's a pretty straightforward one, a
3:44
different one, though, on the opposite extreme, would be like
3:46
a client has an old 401K, that's a small dollar amount. They
3:49
ignore it. The custodian pushes out a check so they get a check
3:53
in the mail made payable to them. Well, now we have a
3:56
scenario. This one's really easy to mess up, right? Lots of
3:58
reasons it's easy to mess up one. Of course, they might just
4:01
cash the check and throw in the bank. Well, that's unfortunate,
4:04
because now it's a taxable event, and potentially, if
4:06
they're under 15 and a half the tax, the 20% it was withheld is
4:09
now subject to the penalty, as is the money that they put in
4:12
the bank. So those can get messy pretty quick. I'm sure see what
4:14
Steven Jarvis: Yeah, what makes it even messier at times is if
4:14
you've run into those as well.
4:17
the custodian assumed it was a rollover, was told it was a
4:20
rollover, but sends that check. They might not have withheld
4:22
Matthew Jarvis: That's a great point, right? The IRS is not
4:23
taxes at all. The client cashes it, and then has this tax bill
4:27
due, has penalties. It can get really murky really quickly. And
4:30
the 1099 R is a form I rail on all the time, because it's not
4:34
super helpful at what it actually reports. And we've done
4:37
other podcasts talking about things like qcds, where there
4:40
just isn't great reporting. But even what I just came across
4:44
that I'm still actively working through with a client, they got
4:47
an examination letter from the IRS for 2021 because the IRS
4:51
picked it up to take a look at and is alleging that they owe
4:54
taxes, penalties, amongst other things. It affected their child
4:56
going to accept unlikely as a defense, right? They're going to
4:58
tax credit, all this stuff. Because even I've gone back and
5:00
say, Show us documentation, or we're going to assume the worst,
5:01
looked at the tax return, it's one I filed. Went back and
5:03
right? They're always going to assume the most expensive
5:04
looked at the tax return, the 8606 was reported correctly for
5:08
a backdoor Roth contribution, yeah, some of the IRS still
5:11
flagged it and said, Hey, this should have been taxable, and so
5:15
help the client fight it. I'm very, very confident we'll get
5:18
it sorted out. But this is why we want our documentation to be
5:22
rock solid, even even in that simple example with the
5:25
fidelity, fidelity transfer, we still want documentation of what
5:28
happened in the unlikely event the IRS comes to ask questions,
5:32
because unlikely is different than impossible.
5:47
option. Same with with basis, whether we're talking about Ira
5:50
basis or stock basis. Hey, listen, if you can't prove it,
5:53
we're going to assume the worst case. So on the check and the
5:56
rollovers again, if a client is ever getting a check made
6:00
payable to them. You've got to be really careful. And if you're
6:02
doing any kind of that activity, or when K rollovers, irate
6:05
rollers, any kind of scenario where they could possibly get a
6:08
check, I just want to seed that in there. I want to say, Hey, Mr
6:11
Mrs Klein, two things we need to remember. One, sometimes these
6:14
companies forget that this is your money, not their money, and
6:17
so they might make it difficult. The second is, sometimes they're
6:20
not good at following instructions, and so they might
6:22
mail you a check instead of sending it directly, like we've
6:25
asked. If you get a check from this company or from any company
6:28
you don't recognize, please give us a call right away, because
6:30
there's some important things that we need to do on that so
6:33
that that's a common area of issues.
6:36
Steven Jarvis: There's so many tax areas, Matt, where that
6:38
point you just made is so important that we seed those
6:40
expectations of what could happen. And sometimes, you know,
6:43
as I'm talking to clients, we'll even do with a little bit of a
6:45
laugh, and for 98% of the clients, that will never be
6:48
relevant, but it changes the outcome entirely. Of letting
6:52
clients know, hey, it's possible you can get a letter from the
6:54
IRS, and if you do, we're going to be there to help you with it.
6:57
It's possible that they're going to send you a check and not
6:59
follow the instructions that we give them, but just letting
7:02
people know. I mean, that's like the human condition, right?
7:05
Yeah, the things that negatively impact us the most, from an
7:07
emotional standpoint, are the things we didn't think were
7:10
Matthew Jarvis: Yeah. And this is one of the few places where
7:10
possible.
7:13
I'll risk predicting the future, right? So I'll never predict,
7:15
hey, where do I think interest rates are going to go, or
7:17
elections, or tax laws or anything else, but if I see
7:20
that, you know, hey, these guys might forget that it's your
7:22
money their clients always. Oh, you know what? Matthew told me
7:25
that these guys were gonna forget, right? Or Matthew told
7:28
me they might ask for an extra form, right? So I'm always gonna
7:31
be receiving your point. Hey, Steven told me that the IRS
7:33
might have a question about that, but he was gonna help me
7:35
with this, right? So our mind will go back to that, versus a
7:38
state of frustration or or even sheer panic. Steve, I guess,
7:42
related that, since we're on the topic of those Ira rollovers,
7:44
how about mistakes with the 60 day rule? I think this is a
7:47
common issue that I see where people kind of say, like, Hey,
7:50
I'm going to use this 60 day rule as a 60 day loan. Lot of
7:53
kind of misunderstandings there.
7:54
Steven Jarvis: Yeah, there definitely are some
7:55
misunderstandings there. And as much as I love podcasts,
7:59
obviously I host one as well. It can be hard for us sometimes,
8:03
because we were talking quickly, we only got so much time trying
8:05
to get through things. And I mean, all of these conversations
8:08
really should come with a reminder of like you need to do
8:10
your research and apply these to specific situations. Because I
8:13
remember not too long ago, talking with our good friend
8:15
Micah shilanski about using the 60 day rollover near the end of
8:20
the year when we're not exactly sure where income might fall out
8:22
for things like premium tax credits and doing Roth
8:25
conversions, and this can be a great way to create ourselves an
8:29
extra window of time, but we've got to make sure that we have
8:33
all of our ducks in our row if we're going to go beyond the
8:35
basics of tax planning or any kind of planning, gotta be
8:38
really clear on when does that 60 day window expire. Are we
8:42
remembering that there's the 60 days and then we can only do
8:46
this once within 12 month period. And whose Ira was it?
8:50
Because IRAs are individual accounts, and so if we've got a
8:52
married couple, there's there's some conditions in there, we got
8:55
to really make sure we're paying attention to we can create
8:59
irreversible situations for our clients.
9:00
Matthew Jarvis: Steve, this reminds me of a specific client
9:02
that I had. This was a few years ago, and they've actually since,
9:06
since passed away. And so what we'll call them Gary and Patty
9:10
here. And so Gary retired from his employer, had worked there
9:13
for many years, had a 401k and had about $400,000 in it. And so
9:16
this particular employer was one that issues checks. So some
9:20
employers won't do a electronic transfer. They issued a check,
9:23
but the check was made payable to the custodian, and so we
9:27
deposit it with the new custodian within the 60 days. So
9:30
that doesn't matter the 60 days of its payable the custodian.
9:33
You don't know a big deal. The following years, I always do. I
9:37
ask for the client's tax return, and I get the client's tax
9:40
return, and it shows $400,000 of ordinary income of Ira
9:43
distributions, taxable Ira distributions, I said, I called
9:46
Gary. I said, Gary, I saw that they had to show this $400,000
9:50
distribution on your taxes that you filed three months ago and
9:53
that you owed like $150,000 on that. He says, oh, yeah,
9:56
Matthew, that was terrible. We actually had to go get a home
10:00
equity loan to pay that tax bill. And I said, Carrie, how
10:03
come you didn't call me? He says, Why would I call you?
10:06
That's just what happens when you retire. I asked my tax
10:09
repair. They said, that's what happens you retired. So I paid
10:12
the money well, Steven, what had happened is the custodian had
10:16
incorrectly marked it as a taxable distribution, so they
10:19
put it in the wrong box, and the tax repair didn't think of it,
10:23
and so the client didn't know any they just paid the bill. And
10:26
so I looked at that. We saw it. We were able to get an amended,
10:30
amend the tax return. We got the $150,000 back. We also saved
10:33
ourselves an issue down the road, because that money, if it
10:36
was deemed as a taxable distribution, it could go back
10:39
into an IRA there was, like, all these cascaded issues, but it
10:43
was a reminder. And I always remember the example of Gary and
10:46
Patty that anytime we're doing money movement, it's not done
10:50
until we verify that it's correct on the tax return. This,
10:53
I think, speaks Steven to your point on backdoor Roth
10:56
contributions or rollovers or contributions until it's report
10:59
on the tax return, it's not done.
11:01
Steven Jarvis: Stories are great for reinforcing these things.
11:03
Remember what happened? Because another example that's the
11:06
opposite extreme comes to mind a client recently this came up
11:10
called Scott, and Scott has a pension as a former clergy
11:15
member, and there's some tax rules that are a little bit
11:18
different with clergy, but their pensions are still taxable. We
11:22
accepted very rare cases, yeah, but the 1099 that he received
11:27
showed all of his pension as non taxable. The custodian for the
11:33
administrator had not reported any of it as taxable, and so we
11:37
intentionally filed a tax return that conflicted with the 1099
11:41
Sure, which? I bring this up for a couple of reasons? Well, one,
11:44
to show that the opposite can be true as well. We like the errors
11:47
don't just happen in one direction. And also, just to
11:50
remind people that the tax reporting forms, unfortunately,
11:54
and I love an attorney to contradict me so we can hold
11:56
some people accountable. But this is not some kind of
11:58
contractual agreement between the IRS. It's more of like a
12:02
best effort, because I've never heard of a situation where the
12:05
custodian was held responsible for incorrect reporting on a
12:08
1099, it's it's always the taxpayer who gets stuck with
12:11
sorting this. Your example is a private example. The IRS is
12:14
never going to sort that out, because they were told, hey,
12:16
it's taxable. The custodian, they marked it as such and moved
12:20
on like nobody's going back to that. If you had caught it,
12:23
something that slightly different probably would have
12:24
happened with Scott in this case, because at some point the
12:26
IRS probably would have flagged that the year before he had
12:29
taxable income, and then, if we were would have reported it in
12:32
line with the 1099, and reported no taxable income, the IRS, at
12:36
some point might have flagged that, but it's not going back to
12:38
the custodians, going back to the taxpayer. So as an advisor,
12:42
as someone who cares about tax planning, you have to be getting
12:44
these tax returns every year to make sure that the tax reporting
12:48
happens correctly.
12:49
Matthew Jarvis: Yeah, I guess. Let's keep pulling on that
12:51
thread. I'm reminded of another stress that we just story day
12:53
for us we need like a campfire here. A client will call him
12:55
Adam. He got a new tax repair at some point, and I was review, I
13:00
was asked for last couple of years tax returns. In fact,
13:02
actually see another thing was this actually came from we were
13:05
doing a form 8021 so we were pulling the IRS transcripts, and
13:08
we were looking at tax returns for the last several years. And
13:11
I noticed that four years prior, they had been reporting basis on
13:14
their IRA, and then no basis the next year. But no conversion,
13:19
no, no, 8606 and what had happened is they had changed tax
13:23
repairs, and the basis had gotten lost. So the basis has
13:27
gotten lost, so we were able to find that basis tracking back
13:29
down. But that's a great example specific to IRAs, if they're
13:32
carrying forward basis on form, 8606 and again, you've done an
13:36
entire masterclass on this. You've got to make sure year
13:38
after year that gets tracked. Because I would say nine times
13:40
out of 10 that's anecdotal. Often the basis gets lost.
13:44
Somebody just either gives up tracking it or forgets why it's
13:46
there, and it just doesn't keep getting tracked on that nobody
13:48
said double taxed.
13:49
Steven Jarvis: Yeah, as much as we love software and AI and all
13:52
these different tools that help us, technology isn't to the
13:54
point to replace an advisor yet, as you well know, but there are
13:57
certain life events that we should all have checklists
14:00
around that we double check a few things. Retirements,
14:03
certainly one of those rollovers, moving money between
14:06
accounts. But you mentioned there, if someone is switching
14:09
tax preparers, you should have a list as an advisor of, Hey, did
14:12
the basis get carried over? Were there losses that need to get
14:15
carried over? Was depreciation information carried over? They
14:18
have rental properties or businesses. There's these life
14:21
events that as things are getting switched between
14:23
professionals, between software platforms, things can get
14:25
missed, and the software is never going to tell you, hey,
14:28
that basic did you go back and look the last three years that
14:31
there is basis. So there's a huge opportunity for advisors
14:34
who are being proactive and intentional about this to really
14:37
change outcomes for clients.
14:39
Matthew Jarvis: Yeah, there really is, Steven. Let's shift
14:41
gears a little bit. You alluded this at the beginning of the
14:43
episode, which is situations where clients come in and
14:46
they've heard about $5 billion Roth IRA accounts, or they've
14:51
heard about buying property outside of the country and
14:54
leasing it back to themselves, or whatever the case may be.
14:56
Let's chat a little bit about as advisors, when people come in
14:59
with kind of hairball tax ideas. How do we how do we give space
15:03
for that, such as, the client doesn't feel like we're
15:05
insulting them, or that we're ill informed, but at the same
15:07
time, like, help the client see, like, Hey, this is this not a
15:10
good plan?
15:11
Steven Jarvis: Yeah, that's always an interesting question
15:14
to have to navigate. So my perspective be a little bit
15:16
different, because I'm not an advisor and a more site advisor,
15:19
and so sometimes this makes it a little bit easier for me. And I
15:21
have very constructive and collaborative relationships with
15:24
advisors. So I'm never, I'm never throwing them under the
15:26
bus, but I can use the advisor as a little bit of a buffer to
15:30
say, hey, you know what? That's a really great question. And
15:33
then I remind clients all the time that taxes are never the
15:35
primary, or almost never the primary, reason we do something
15:38
their passenger on the busses. You like to say, Yeah, and so
15:41
that I can feed the conversation back through the advisor. So
15:43
we're making sure we're taking a holistic look at it. But Matt,
15:47
for me, where it often starts is, I always want to come back
15:50
to the basics to say, You know what? There's a whole range of
15:53
tax planning that we can do, and some of that, some of that
15:56
flashy stuff is, is a lot of fun to talk about. Sounds exciting,
16:00
but we've got to make sure we've covered the basic stuff first.
16:04
And for a lot of clients, that's as far as you had taken there.
16:06
Oh, that's right, we need. Let's come back to these other things
16:08
that we can just we can skip over really issuing an opinion
16:12
on whether that's a good idea or not. So that's where I typically
16:15
start. Yeah, I think that is a great spot.
16:17
Matthew Jarvis: I've definitely run into this a lot of times
16:18
with clients. And there's a couple of tools I go back to
16:20
again and again one and you kind of stole my thunder on that,
16:23
which is great. It's a good expression, right? I was like,
16:26
Hey, listen, Mr Mrs client taxes are a passenger on the bus.
16:29
They're not the driver of the bus. And so corollary to that is
16:32
we're never going to do anything for taxes that we wouldn't
16:36
otherwise do. Yep, right. So giving money to charity is a
16:39
great example of that. Like and I tell clients all the time,
16:41
hey, you should only give money to charity because you feel like
16:44
it's an organization that's going to make the world a better
16:46
place, that we potentially get a tax benefit that is icing on the
16:50
cake at best. This, by the way, we're gonna sidebar here for a
16:53
second. This is where, like, Charbel, remainder, trust and
16:56
whatnot. These are great tools, but often they're sold. It's
16:59
like there's this amazing tax break. No, no. First things
17:02
first, if this is a smart move financially, let's go down that
17:05
second would be if there's a tax benefit attached to it. So So
17:08
helping clients get awareness of that. I also step into your
17:11
point of collaborating with advisors. If the client is
17:15
really set on something that sounds like a bizarre tax idea,
17:17
this is where I go to my Center's influence. I say, you
17:19
know, Mr business client, I'm not super familiar with this
17:21
strategy, kind of for that is a it's because it looks a little
17:23
shady to me. But tell you what, let me reach out to the CPA that
17:27
I relationship with. Let me get some more details. Why don't you
17:29
get some more details as well? And let's circle back around
17:31
next Thursday.
17:32
Steven Jarvis: Another approach that I'll take, and I think I've
17:34
heard you, you say similar things, just when people want to
17:37
buy a rental property in Hawaii, kind of a thing, yeah, one of
17:40
the things that can help, especially when I can tell that
17:42
this is a new idea for the client they just came across
17:44
that it's not something they want to do for 20 years. Their
17:46
their brother's uncle just told them about this thing they could
17:49
do, and they're so excited about it, what I'll do is somewhat
17:52
intentionally repeat what I'm hearing back to them, but in a
17:55
way that highlights the parts that don't pass the sniff test.
17:58
An advisor actually just recently reached out to me about
18:02
this potential investment opportunity where you put in
18:05
$50,000 and you immediately get a $250,000 charitable defection.
18:10
The look on your face is appropriate. And so if a client
18:13
comes to me with this that you know, they're going to initially
18:16
Give me what the sales pitch was, then I'm going to repeat
18:18
back to them and say, hey, just so I understand this, right?
18:20
Like I want to make sure I understand the logic here. Of it
18:23
sounds like you're telling me that you get to invest $50,000
18:26
and get a $250,000 terrible deduction. I'm gonna have to
18:29
look into that, because that doesn't sound like the kind of
18:31
thing the IRS would be would do for us, because that sounds a
18:34
little bit too nice. And so I'm intentionally highlighting kind
18:37
of some of what sounds ridiculous to me, and then I'll
18:40
take it a step further and start asking the client to go back to
18:44
whoever's pitching the idea. I say, you know, why don't you go
18:47
tell that you work with a CPA who would love to see the
18:50
documentation behind this, just so I can look at the numbers,
18:53
because that's sometimes where it starts to come undone when
18:56
these things are really in those gray areas, or in just areas
19:01
that we shouldn't be in at all. When they hear the CPA wants to
19:03
look at it, that they suddenly disappear or don't want to talk
19:06
about it anymore, which is another it's a win for the
19:08
client too. Of Well, great. Now I don't even have to go down
19:11
and, like, give this hard no and a sales pitch, like, they just
19:14
ghosted me because they didn't want to give the information to
19:15
my CPA.
19:16
Matthew Jarvis: Steve, I'm glad you had mentioned that's a
19:18
brilliant approach that I like using in all sorts of angles. So
19:20
we're talking specifically about taxes, but it works if they're
19:23
getting pitched some kind of bizarre investment or some kind
19:26
of deal that's guaranteed to make money and they can never
19:29
lose and I would just say, Listen, sometimes we hear things
19:31
differently than they were said. Just ask them to send it to you
19:34
the bullet points in an email, that would be great. Why do I
19:37
want it an email like you're you got the same, you know, stupid
19:40
grade that I've got on. Why do I want an email? Well, now I have
19:43
it in writing, which means that maybe there is something that I
19:45
missed, like maybe they are, yeah, they do have something
19:47
I've not seen before that would be great. Or now I have a
19:49
written thing that I can forward on to whatever regulatory body I
19:52
need to go to. So they said, Hey, this thing is guaranteed to
19:54
give you Forex to return to the IRS. Cool, that email is getting
19:57
forwarded to the IRS. Now they have a complaint line for that,
20:00
right? Or the state insurance commissioner, whoever the case
20:02
may be, also saves me from telling the client like, hey,
20:04
this guy's a crook. Yeah, I'm saying, Hey, listen, so that we
20:06
all are clear. Could you just get those bullet points? That
20:08
would be perfect, and it solves so many problems.
20:11
Steven Jarvis: There's always new things to learn. The tax
20:12
code is always changing. People are getting creative with the
20:14
tax code. Backdoor Roth contributions were created on
20:17
accidents, and I'm a huge proponent of them, yeah, and so
20:19
I genuinely do want to learn. And so when a client comes to
20:23
me, I don't want to be like Man, that guy sounds like an idiot.
20:25
You need to run away because I want to learn, either for one of
20:29
two reasons, either to be able to see, hey, this is shady. We
20:32
shouldn't be involved, but now I can see how it's being pitched,
20:35
or this is something new, and I want to know that when, when
20:38
this makes sense, to make my clients aware of it.
20:41
Matthew Jarvis: Yeah, for sure, pulling us back to the IRA
20:44
specifically, a big area of mistakes and a big, just kind of
20:47
warning flag for us as an advisor, is anything that
20:50
involves what's known as self dealing on an IRA account,
20:53
right? So like, hey, I want to sell my company to my Roth IRA,
20:57
so that it grows tax free. Or I want to sell a rental property
21:01
to my IRA, or I want to buy a rental property in my IRA and
21:05
then contribute manual labor to manage it. Or I want to then use
21:08
it as a rental myself for my own use. Anything that involves you
21:13
as one of the people in the transaction is likely going to
21:16
be prohibited, not necessarily 100% like there may be some
21:18
exceptions, but as a rule of thumb, if you are one of the
21:21
parties in the transaction, it ain't gonna work so, uh,
21:25
important one there, yeah, IRAs are meant to be completely
21:28
separate from you as an individual. The other one that
21:31
can get tricky in there, when we go outside of more traditional
21:34
investments, is physical possession of the investments.
21:37
This comes up with gold interest. Want to buy gold
21:40
inside of their IRA, and then I'd have to go back and find the
21:44
specific it's great story.
21:45
Steven Jarvis: I'll have to go back to clients getting sold on
21:48
this idea of I've got to own gold inside of my IRA, which
21:51
someone else can have the investment conversation as to
21:53
what you want to do with gold anyways. But just from a tax
21:55
standpoint, the you as the individual can't have physical
21:59
possession of the investments of the IRA. So if you buy this gold
22:03
or silver or whatever precious metal it is, and then it gets
22:05
shipped to you, this is a huge problem. And you might think
22:09
that sounds ridiculous, that happens.
22:12
Matthew Jarvis: Oh yeah, it for sure happened. So again, not
22:15
something to go on willy nilly. Again, something you'd want to
22:17
have like, Hey, can we get an email detailing that I always
22:20
like to Stephen, especially on the gold one, I always I'd like
22:23
to say, because I'm a little snarkier than most. Hey, could
22:25
you ask that for just a copy of their IRA statement that shows
22:29
them owning this gold or this real estate or whatever? Why do
22:32
I want to because they don't own any right, nobody. They're not
22:34
eating their own cooking. But it's just, again, it gives the
22:36
client this great ammunition that you're not going to argue
22:38
with. Right? If they go back and they say, Hey, my advisor says
22:41
this is a bad idea. The guy is going to say, well, your advisor
22:43
is an idiot, and here's why, and they're part of the conspiracy.
22:46
But if they come back and say, hey, my advisor asked you, kind
22:48
of just put those bullet points in an email, and if you could
22:50
send me a copy of an investment statement, I could show up. That
22:52
would be great. Suddenly all their ammunition goes away and
22:55
they tend to disappear, thus saving the client the fraud or
22:58
whatever the case makes. It's a great non computational way to
23:01
to sort that out. Steven any other big ones that come up
23:04
with, with IRAs that you can think of, of course, we could go
23:07
into required minimum distributions, which is a whole
23:10
can of worms. It gets messed up quite often, especially for
23:13
inherited or spousal rulers, things like that. Beneficiaries
23:16
are obviously there are can of worms as well, not as much a tax
23:19
issue, but a lot of Ira problems come from beneficiaries issues.
23:22
Steven Jarvis: We can do whole episodes that we have on the
23:24
retirement Tax Services podcast on inherited IRAs. The thing
23:27
I'll say, though, because I think it fits into this
23:30
conversation, and maybe we haven't specifically hit on in
23:33
these words yet, is whatever area of tax planning we're
23:35
talking about, we have to have an intentional plan. That's how
23:39
we get ahead on tax planning is intentional and proactive.
23:41
Because you mentioned inherited IRAs, which the IRS recently
23:44
punted again on enforcing RMBs on inherited IRAs. And I see a
23:48
lot of people react to that, thinking, hooray. I don't have
23:51
to worry about this for another year, and maybe that's a good
23:54
thing, but if we let taxes happen by default, most likely
23:57
we're gonna get killed on taxes, because by default, if we don't
24:00
do anything else. We're going to take the entire inherited IRA in
24:03
year 10, and we're going to get killed all at once. And so
24:06
people look at this, do I take an RMD or not as the litmus test
24:09
of what I should be doing? But that's really just one piece of
24:12
the puzzle that we obviously want to meet the RMD if we have
24:15
that requirement, if the IRS ever gets around to enforcing it
24:18
for inherited IRAs, geez, literally back at the napkin.
24:21
Write down the next 10 years and make sure you understand for
24:24
your client. Are there any big life events? Are we going to
24:27
retire? Do we have severance coming to us? We have RMDs on
24:30
our own accounts, kicking in Social Security? What are these
24:33
different things so that we know, hey, here's a couple years
24:36
where I want to take more of this inherited IRA. Or there
24:39
could be situations where somebody's going to retire nine
24:42
years from now. Maybe we do wait 10 years to take it all, but we
24:45
want to make it situationally specific. We want to have an
24:48
intentional plan.
24:49
Matthew Jarvis: I love it. I love it. Well, Steve, in this
24:51
podcast like yours, the retirement Tax Services podcast,
24:53
is all about taking action. So let's take a minute to cover a
24:56
couple of action items. I know the first one well, I'll give a
24:59
shameless plug here. The first one that comes to my mind is, of
25:02
course, the retirement Tax Services Summit, which is
25:04
September 25 and 27th that's correct, in beautiful Phoenix,
25:07
yeah, and Phoenix. So that'd be a great gathering. I'll be
25:10
there. You'll be there. You know, dozens, hundreds,
25:12
whatever, of advisors sharing how they practice taxes in real
25:15
life. So there's a lot of places you can go and listen to someone
25:18
read you the tax code. And I suppose that's interesting. What
25:20
I always want to know is, how are you doing this with clients?
25:23
How are you articulating this when you're running into a
25:26
client who says, hey, I want to buy gold in my IRA and keep it
25:28
at the vault in my basement, how are you having that discussion?
25:31
So, yeah, that's action item number one. Go to
25:33
retirementtaxservices.com and get signed up for the Fall Tax Summit.
25:36
Steven Jarvis: Yeah, and that, I'll just comment on that real
25:38
quickly, because last year was so well that we were able to
25:41
expand it this year. We're going to have a few more sessions.
25:44
We've got some great breakout sessions that are going to
25:46
happen this year. Obviously, the tax plan is going to be a big
25:49
focus of it, but we've got people coming to talk about how
25:51
to do systems and processes to make this a reality in your
25:54
practice. We're going to talk about delegation. We're going to
25:56
talk about the behavioral side of all of this. So this is
25:59
really going to be an incredible event for giving you things you
26:01
can immediately go home and implement. I love it. Actually.
26:04
Matthew Jarvis: Item number two, whether you use our scripts or
26:06
someone else's, you need to have really clear, concise ways of
26:09
articulating complex strategies, right? So, for example, Hey,
26:12
your rollover is not complete until it's been reported to the
26:15
IRS correctly. Or, hey, sometimes these companies forget
26:18
whose money this is, or, Hey, that sounds like a great idea.
26:21
Why don't you come and send me an email with the bullet points,
26:24
just so I can take a look make sure I'm understanding what it
26:27
is they're talking about, right? So for whatever you're running
26:30
into in your practice, it needs to be that concise. It cannot be
26:33
some convoluted well, on a Thursday, maybe it's this. So
26:36
whatever that is, find it and get as rehearsed with that as
26:39
you are with your own name, right? That same level of
26:41
confidence. And once I say, What's your name, I don't say,
26:44
Well, you know, kind of depends who Jarvis. You know, Friends
26:47
call me Jarvis. Here it is. So that's a key action item.
26:50
Steven Jarvis: I'll do a shameless plug that I think goes
26:52
along with those. If we have actually two different master
26:55
classes on the retirement taxer.com website, one
26:57
specifically around form 8606 and back to Roth contributions,
27:01
and one on reviewing tax returns for broadly. And why this fits
27:04
in is because Matt you, you rattled out those scripts very
27:07
casually and fluidly, because you've set them so many times
27:10
you have to practice this stuff. And both of those master classes
27:13
include scripts. It includes discussion around how you say
27:16
this to a client. And I'll be totally honest, even though I'm
27:19
a huge fan of those masterclasses, that's not enough
27:21
either. That's gonna give me a great resource. So you have to
27:25
practice. And so you have to, whether it's getting on camera
27:28
or standing in front of a mirror, whatever it is, you
27:30
gotta practice and rehearse these things. So when it's time
27:33
to perform, practice is over, it is perfect.
27:35
Matthew Jarvis: Well, Stephen, hey, thank you so much for
27:38
joining us and for all our listeners until next time, happy
27:42
planning.
27:42
Hey, before you leave a quick word from our sponsors. Hey
27:49
everybody, I want you to take a quick look around your office,
27:56
and on your desk there should be the Retirement Tax Services
28:03
Desktop Tax Guide. And if it's not there, or if it's not
28:10
current, meaning you didn't download it in the last month,
28:17
go to retirementaxtservices.com and download the desktop tax
28:24
guide. This is a must have resource for every financial
28:30
advisor committed to tax planning.