A married couple needed to create cash from their taxable account as they were dramatically over exposed to equities based on near term cash needs to recent life changes. A tax analysis needed to be done to determine the capital gains impact.
Had been a client of the firm for several years.
Husband was retired,the spouse was working.
Husband was 66 and planning on collecting Social Security.
We had been converting 25k/year to a Roth IRA for the last 5 years.
Clients are charitably inclined.
KEY DISCUSSION POINTS:
Client was worried that he would not be able to do his annual Roth conversion.
Client was resistant in sending us copies of his tax documents, but did so any way.
Spouse was curious what the plan would look like if she retired early, even though her current job satisfaction was high.
Spouse was worried that health care costs before age 65 would be detrimental to their plan.
The result after a tax analysis by our Advance Planning Team was that we should decrease the Roth conversion amount by 5k to a total of 20k for this year, and that we could harvest 40k in LTCG’s and still be under the 15% tax bracket and therefore not have to pay any capital gains tax:
The tax analysis provided clarity and certainty around what needed to be done to achieve the client’s goals in the optimal manner.
Through the tax analysis our Advance Planning Team discovered an error by the client’s accountant which resulted in the client getting a larger refund on their prior tax year.
Our Advanced Planning Team was also able to come up with a method that would allow the spouse to retire before 65, and get most if not all of her Health Insurance covered by MNsure.
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