Need RMD proactive tax planning; Will pay hourly fee for CFP with good computer algorithm

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capgain22
Posts: 23
Joined: Sat Jan 14, 2017 2:07 pm

Need RMD proactive tax planning; Will pay hourly fee for CFP with good computer algorithm

Post by capgain22 »

In southeast Florida.
Retired married high net worth couple. Age 72 RMDs will start in two years. Need CFP with modern software program to plan Pro Active taking of current IRA distributions and stock capital gains so as to minimize tax brackets, Medicare, S.S. escalations when RMD's kick in. (We have no ROTHS)
Wish to pay hourly or all inclusive fee annually (no AUM) for this very specific area of tax planning.

Recommendations appreciated.
mhalley
Posts: 10432
Joined: Tue Nov 20, 2007 5:02 am

Re: Need RMD proactive tax planning; Will pay hourly fee for CFP with good computer algorithm

Post by mhalley »

You might give mark zoril at planvision a try. You can search the forums for previous discussions.

https://planvisionmn.com/

Here are a few
viewtopic.php?t=370521
viewtopic.php?t=301444
viewtopic.php?t=282215
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FiveK
Posts: 15742
Joined: Sun Mar 16, 2014 2:43 pm

Re: Need RMD proactive tax planning; Will pay hourly fee for CFP with good computer algorithm

Post by FiveK »

The optimum tax strategy will depend on knowing when each of you will die, and what future tax law will be. As you probably don't know any of that, the best you can do is an educated guess.

E.g., one reasonable strategy might include taking no capital gains, allowing your heirs to receive the basis step-up and pay no tax.

Understanding your current marginal tax rate, and how it will change when RMDs start (including whether you will use qualified charitable distributions or not), should be included in any strategy.

Even if you do eventually pay someone else, are you comfortable enough with tax software, web tools, and/or spreadsheets to do some marginal tax rate calculations for yourselves?
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celia
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Location: SoCal

Re: Need RMD proactive tax planning; Will pay hourly fee for CFP with good computer algorithm

Post by celia »

capgain22 wrote: Tue May 17, 2022 7:45 pm Retired married high net worth couple. Age 72 RMDs will start in two years.
RMDs start in the year you each turn 72.
[I originally read this post as (you are each 72) and (RMDs will start in two years). After re-reading this post, I now think you are 70.]
Need CFP with modern software program to plan Pro Active taking of current IRA distributions and stock capital gains so as to minimize tax brackets, Medicare, S.S. escalations when RMD's kick in. (We have no ROTHS)
Wish to pay hourly or all inclusive fee annually (no AUM) for this very specific area of tax planning.
This is the same planning as doing Roth conversions, before RMDs start at age 72. You don't have much time to be pro-active. But if you look at the threads about doing Roth conversions in early retirement, you can see all the inter-related topics you need to know about. Here is a good example:
viewtopic.php?f=1&t=337660&p=5763312


Remember that RMDs are REQUIRED. And the percentage of your IRAs that you have to remove each year also increases each year. The IRA year-end balances also usually increase each year, as long as the rate of growth in the account is more than the percentage that must be removed. Luckily, we are currently in a down market, so your 2023 RMD might be less than your 2022 RMD, if the markets continue to stay lower than at the beginning of the year.

Many Bogleheads find it to their advantage to keep their income level from the day they retire to the day they die. This tends to also keep their taxes somewhat level. They find it is better to pay level taxes each year instead of having a few low years of taxes in early retirement followed by many years of higher-than-necessary taxes. They keep their income "level" by turning on (and off) their income streams (SS, Capital Gains, pensions, Roth conversions, IRA/pension withdrawals) at pre-determined times. This is a Do-It-Yourself task that anyone can figure out by using a spreadsheet. (See links referenced in my above link.)
Admiral
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Joined: Mon Oct 27, 2014 12:35 pm

Re: Need RMD proactive tax planning; Will pay hourly fee for CFP with good computer algorithm

Post by Admiral »

Sadly at age 70 the amount of "proactive planning" you can do re: RMDs is a ship that has likely sailed quite some time ago.

As a start, before paying someone, try this spreadsheet:

viewtopic.php?t=97352
JoinToday
Posts: 1110
Joined: Sat Mar 10, 2007 8:59 pm

Re: Need RMD proactive tax planning; Will pay hourly fee for CFP with good computer algorithm

Post by JoinToday »

capgain22 wrote: Tue May 17, 2022 7:45 pm In southeast Florida.
Retired married high net worth couple. Age 72 RMDs will start in two years. Need CFP with modern software program to plan Pro Active taking of current IRA distributions and stock capital gains so as to minimize tax brackets, Medicare, S.S. escalations when RMD's kick in. (We have no ROTHS)
Wish to pay hourly or all inclusive fee annually (no AUM) for this very specific area of tax planning.

Recommendations appreciated.
I hope you are planning on doing Roth conversions rather than distributions to your after tax account. IRA distributions to your after tax account will result in tax drag for any money not spent. Roth conversions will not result in tax drag. Also, I hope your asset location is implemented in a tax efficient manner.

As previously mentioned, the ship has almost sailed on tax planning by age 70. Not much you can do at this point. Frankly, if you posted your portfolio, you would probably get what you need here.

One other thing: if you have a high net worth in your traditional IRA, there really isn't much you can do. I have looked at this with others I know. Roth conversions don't change the RMD amount very much. $1M Roth conversion (a really big number) changes the initial RMD only approximately $25K.
I wish I had learned about index funds 25 years ago
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Eagle33
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Re: Need RMD proactive tax planning; Will pay hourly fee for CFP with good computer algorithm

Post by Eagle33 »

If you give to charity, you should read up on Qualified Charitable Distributions (QCD) - tax-free IRA distributions. Even though they can be taken as early as 70.5, they are most beneficial the year you turn 72 and RMD start. QCD amount counts as part of your RMD amount.
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