In advance of our seventh client story, I wanted to share what can truly bring a marriage together.
Wendy and I were sitting on the sofa, and she asked me to name hobbies that we could do together over the weekends; activities that would be “ours.”
I immediately suggested bowling and even got a bit creative with disc golf. She then turned to me and professed an intense and long-lived interest in metal detecting.
Metal detecting? I didn’t even know that was a thing. However, she was serious!
She did some research and found a local dealer. I was expecting a storefront, but it turned out that the showroom was a residential driveway.
The dealer was smart, very patient, and very nice. He told us many stories of great finds. I learned how to calibrate the detector for different levels of metal conductivity, how to screen out unwanted finds, and how to adjust the settings for hard versus soft ground.
Wendy eventually asked the key question, which was certainly the elephant in the room. How do we find gold?
It turned out to be a little more complex and less common than either of us thought. However, old coins and historical relics seemed exciting enough.
Wendy wanted to purchase the lightest model and wanted us to engage in this hobby together. The device was (a lot) more expensive than I had anticipated. She suggested that it could be her Valentine’s Day gift and I thought I could position it as a down payment on a birthday gift as well.
Therefore, we are now the proud owners of a metal detector. If you see a couple waving a metal detector in the parking lot of a CVS, in the middle of the woods, or on the beach and the male looks strikingly similar to your financial advisor, just remember this story and know that what truly brings a marriage together is different for all of us.
Our seventh client story is tied into multiple cases. It involves capitalizing on a major tax deduction for which most of those affected do not realize they are eligible.
A Continuing Care Retirement Community is a type of retirement community where the full gamut of aging care needs: independent living, assisted living, and skilled nursing care can all be met in the same community.
In many cases, a resident can treat a significant portion of their one-time entry fee and their recurring monthly costs as a prepaid medical expense. The portion treated as a medical expense may then be a deduction on your income tax return.
Unfortunately, many find out about this very large deduction the year after it is incurred. By this time, it is too late. The tax year is closed out and there is not enough taxable income on their return to fully benefit from the deduction.
During the financial planning process, we can identify this opportunity the year in which the expense is incurred. This can lead to numerous tax strategies for recognizing taxable income that can be made tax free by utilizing the deduction. A common strategy is a large Roth conversion.
The benefits to this are as follows:
- A large amount of pre-tax IRA assets that are growing tax deferred can be converted into after-tax Roth IRA assets that can grow tax free. This conversion can potentially be done with limited to no current tax impact.
- A significant reduction or potential elimination of taxable Required Minimum Distributions from pre-tax IRA accounts.
- If these assets are ultimately inherited, the heirs many not have to pay any taxes on these assets. Heirs are required to pay taxes at their own bracket on pre-tax IRA assets. That is very often not the case with Roth IRA assets.
- Depending on how long the IRA owner lives, the potential tax savings for them and their heirs could be substantial.
Our motto is “we can help you with that.” We will collaborate with you on any financial decision you make, engaging other subject matter experts when necessary. We will not stop until we get things right.
We encourage you to reach out to us for assistance in making important financial decisions and we always appreciate you recommending us to others.
- Gary Alpert Financial Strategies and LPL Financial do not provide tax advice or services.
- Any examples given are for illustrative purposes only and not meant to provide specific advice or recommendations for any individual. We strongly recommend you consult a qualified professional regarding your specific situation.
- Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.