What if Congress slams the door on back door Roth IRA strategies?

What if capital gains taxes increase?

What if social security benefits are cut?

A lot of us are receiving questions like that right now, especially after hearing about the new tax proposals recently passed by the House Ways and Means Committee.

But what is really behind the noise, and should we worry?

Psychology Today says, “Worry sometimes begins with a negative possibility, a mere “What if?” 1.

Worry takes a toll on your mental and physical health. 

Over time, this can affect your heart, blood vessels, and other systems.

So, instead of being consumed by all of the unanswered questions, let’s discuss strategy.

Before we dive in, remember that right now we only have proposals.

In this new role of part therapist and part fortune-teller, we need to keep telling our clients to keep calm that this bill is not yet a law.

Our world has already taken on such drastic changes in the past few years so easing our clients’ concerns and equipping them with the tools they need is our primary purpose, regardless of what news “worries” the financial markets.

However, it is best to acknowledge that there is a possibility that this bill passes and you will no longer be able to use these planning strategies.

What will you do?

Most clients that are earning less than $400,000 will not see much of a change in their federal income taxes, but the majority of your clients will so here are some options:

  • One suggestion from  Julio Gonzalez, CEO of Engineered Tax Services in West Palm Beach, Florida is, “One step that real estate investors can take is to use component depreciation methods for new properties on their taxes. Component depreciation separates out the specific systems of a building, such as electrical, roofing, and plumbing, then depreciates each element over a shorter life span. That would help minimize the tax advantages lost with the removal of the 1031 like-kind exchange, Gonzalez says. In the meantime, investors might be able to slip in a 1031 exchange this year, before the law is repealed, he adds.” 2.
  • You could also advise your clients to consider gifting more of their assets to their children while they are still alive. By selling their assets now and paying the current, lower capital gains taxes they will lessen the tax burden to their children later.
  • Many advisors are counseling their clients to sell assets now before tax rates increase. The downfall is that after years of advising clients to avoid triggering taxable events, now clients are hesitant to sell. 3.

 

Although there is no guarantee that the new tax proposals will become law, you are already on track to handle any potential changes in your client’s long-term planning. 

If you are not feeling as confident, reach out to us so we can walk you through it.

Watch as Jeremy Shipp shows you how the Circle of Wealth® tools will help you dispel any myths and concerns that your clients might be having.

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The Plan: We have everything you need to deliver financial strategies that your clients will implement 

The Process: We give you a repeatable client process that identifies viable prospects & converts them into clients that buy.

The Coaching: We will guide you through our courses that are focused on helping you attract, engage, and convert prospects into clients. All so you can spend more time doing what you love: helping clients succeed financially.

It really is as easy as 1,2,3!

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1.https://www.psychologytoday.com/us/articles/199711/fighting-lifes-what-ifs

2.https://money.usnews.com/financial-advisors/articles/how-bidens-tax-proposals-may-impact-financial-advisors-clients

3.https://www.bloomberg.com/news/articles/2021-04-30/biden-tax-hike-what-financial-advisers-are-telling-rich-clients