Whatever November Brings, Start Preparing Clients Now

There will be some significant potential consequences on the horizon if Congress allows certain existing tax laws to expire on January 1, 2013. With only a few months left to plan, it’s time for CPAs to be aggressive in educating clients about the decisions they may face.

Several tax changes are now set to occur at the beginning of 2013 if Congress does not act. Among them:

• Individual income tax rates will go up.
• Long-term capital gains rates will rise.
• The gift and estate tax exemption will drop from $5.12 million to $1 million. Estate assets more than the $1 million exemption will be taxed at a maximum 55% rate.
• Taxpayers whose income exceeds a set “threshold amount” will be subject to a 3.8% Medicare surtax on net investment income, effectively raising their marginal income tax rate. An affected taxpayer in the 39.6% bracket—the highest bracket in 2013—will have a 43.4% marginal rate. This will apply to individuals and trusts and estates.

In the News: Leave that Savings Alone

A Bankrate.com article titled “Four Ways to Avoid Dipping Into Your Savings Account” quoted Kelley Long, a Chicago CPA, personal finance coach, and member of the AICPA’s National CPA Financial Literacy Commission. In the article, Long provides prudent advice on how to keep the money currently in your savings account right where it is. She suggests savers don't get an ATM card or sign-up for Internet account access - because it provides the user with hassle free access to their savings. For more savings tips, please visit 360 Degrees of Financial Literacy, a free program of the nation’s CPAs to help American’s understand their personal finances through every life stage.

Majority Don’t Expect to Retire at 65

A recent poll conducted by CPA Letter Daily asked the question, “Do you think you will continue to work past 65?”  Coincidentally, the number 65 came up again. 

• Yes – 64.8%
• No – 29.31%
• I don’t know – 5.89%

Approximately 65 percent of the respondents said they would be working beyond age 65.  Do that many people love what they do for a living or is there something else happening?

AICPA Tells Congress to Keep Oversight of Investment Advisers with SEC

As the AICPA gears up for our 125th Anniversary next week, here’s a wrap up of a few interesting accounting topics recently making the news. You can follow @AICPANews on Twitter to stay on top of all the latest official AICPA news as well as articles impacting the profession.

CFO.com wrote that the AICPA raised concerns over the Investment Adviser Oversight Act of 2012 and urged Congress to keep oversight of investment advisers with the SEC. Introduced in the House of Representatives on April 25, the bill would transfer oversight of investment advisers from the SEC to a self-regulatory organization."Many of our members work for a firm that is registered as, or affiliated with, a registered investment adviser," Barry Melancon, CPA, CGMA, AICPA president and CEO, said in a statement. The AICPA's stance is that the system proposed under the bill would cost advisers much more in fees than current SEC oversight would.

On January 19, 2011, the SEC issued a staff report that found the current SEC-registered investment-adviser examination program faces hefty capacity and funding challenges. Three options were proposed to offset these challenges.  One would be to impose "user fees" on SEC-registered investment advisers to fund oversight. A second would authorize one or more SROs to examine investment advisers, with oversight from the SEC. A third choice would be to authorize the Financial Industry Regulatory Authority, a leading broker-dealer SRO, to examine dual registrants for compliance with the Investment Advisers Act of 1940. All three options require congressional action. "We believe that the SEC's core mission to protect investors requires adequate regulation of the investment advisory profession. The SEC remains the proper regulatory body to protect the public's best interest." Melancon said, "Providing the SEC with resources to properly enforce their rules is the best solution for investors and the public."

From Tax Preparer to Financial Planner

Congratulations on making it through another tax season! As you helped your clients prepare their tax returns, did you ask yourself any of these questions?

• Who, if anyone, is looking at their overall financial picture?
• What can I do to help remove financial obstacles so they can accomplish their goals?
• Can I offer financial knowledge, analysis and a framework to make this person’s dreams a reality?

From those long hours, including rigorous reviews and meetings with clients, you’ve gained unique insight into their lives – insight into their incomes, spending habits, investments and life events. While reviewing those 1040s, you are able to envision potential tax impacts of financial decisions and begin considering tax planning opportunities for your clients. This is a great first step in helping them meet their overall financial planning needs, including making estate, retirement, tax, investment and insurance planning decisions to move them toward meeting their long term goals.

4 Tips to Stay in the Loop on your Finances

I recently read a blog post that talked about ‘the loop,’ which is essentially the browsing cycle we go through on the internet. This caused me to reflect upon my own habits on the web when I’m home relaxing in front of the computer. I found out that I have a regular routine of scanning the news, checking for any new sports information, seeing what my friends had for breakfast on social media and ensuring any emails are responded to promptly. I do this two or three times on an average night and as many as a dozen times on the weekends (please don’t judge me).

However, I’ve recently made it a point to expand the loop at least once daily to include checking my bank account and recent credit card spending, as well as my 401(k) and investment portfolio. Because as Jordan Amin, CPA, chair of the National CPA Financial Literacy Commission puts it, “the first rule of personal finance is be informed.”

In the News: Accounting named one of the Happiest Jobs in America

We’ve got a lot of big things on the horizon at the AICPA: April Financial Literacy Month (we’ll be releasing survey results on the financial state of Americans) and in mid-May, we’ll be celebrating the 125^th Anniversary of the AICPA at our Spring Council meeting in Washington D.C.

Which is not to say that we’ve haven’t been busy lately! Just in the last week we released the results of our CGMA Global Economic Forecast and Barry Melancon, CPA, CGMA, president and CEO of the AICPA, testified before the House Capital Markets Subcommittee Accounting and Auditing Oversight Hearing. Melancon told members of the subcommittee that AICPA supports a strong, balanced and independent regulatory structure that protects investors but does not restrict the flow of capital.

During busy season and year-round, you can keep abreast of all the most important AICPA news by subscribing to the Media Relations RSS feed or following @AICPANews on Twitter. On to news of note from the last few days.

Proactive Planning with Your Individual Clients During Tax Season

In this audio stream, Lyle, Ted and Scott discuss why 2012 is a critical year to proactively plan with your clients.  Hear about planning techniques that need to be considered now given the many unknowns in 2013. Learn about planning opportunities that can be uncovered while you’re preparing your clients 2011 tax returns. Find out tips to communicate the value of financial planning with clients, and how you can get paid for the work you are providing and increase your bottom line by adding or expanding Personal Financial Planning services.

Proactive Planning with Your Individual Clients during Tax Season

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Lyle Benson, CPA/PFS, President, L.K. Benson & Co. Based in Baltimore, Lyle runs his practice as a multi-family office, offering traditional tax services as well as a full scope of financial planning, including estate, retirement, investment, insurance and tax planning. He oversees clients’ investment portfolios and his compensation model is retainer/hourly fee.

Ted Sarenski, CPA/PFS, President, Blue Ocean Strategic Capital, LLC. Based in Syracuse, New York, Ted has gotten a taste for providing PFP services in a larger CPA firm and on his own. He provides financial planning services and manages assets. His compensation model is a mix of hourly, retainer and assets under management fees.

Scott Sprinkle, CPA/PFS, Partner, Sprinkle Financial Consultants, LLC. Based in Littleton, Colorado, Scott runs a traditional CPA practice alongside a registered investment adviser entity. He offers a full scope of tax and PFP services, and charges a mix of hourly, retainer and assets under management fees.

AICPA Podcast on Estate Planning Impact of the President’s Budget Proposals

A 20 minute podcast on the estate planning and financial planning impact of the estate tax provisions in the recently released President’s fiscal year 2013 budget proposal covers various provisions, including those affecting intentionally defective grantor trusts, valuation discounts and grantor retained annuity trusts.  Even though these provisions may not be enacted this year, it will help you have intelligent conversations with your clients, know what the President’s legislative agenda for this year is, and be prepared for some of the estate tax provisions that may eventually be enacted.

Estate Planning Impact of the President’s Budget Proposals

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.  

In the News: Clients Increasingly Turn to CPAs for Financial Planning

While economic uncertainty persists and conflicting economic indicators make predicting the progress of the recovery tough, stocks have been on the rise since late 2011. With the Dow crossing the 13,000 threshold earlier this week, many investors may be considering a return to the market. Before making any important financial decision, it’s essential to develop a plan that addresses the specific situation and ensures alignment with one’s goals for the future. As a number of recent news articles below demonstrate, individuals are increasingly turning to their CPA for help making investment decisions and planning their financial future, and the AICPA is ensuring that CPAs have the tools they need to best advise their clients.

Investment News reports that, as a result of increased demand from their clients, more CPAs than ever before are offering financial planning services. CPAs, who are trusted advisors to their clients, may have an advantage on other investment professionals. “We're in a natural position of trust with clients to expand into financial planning,” said Lyle Benson, CPA/PFS, of the executive committee of the AICPA's Personal Financial Planning section. The economic conditions in the U.S. have only added to the perception that CPAs are one of the best options for financial planning, and the AICPA is ensuring that members who wish to expand their financial planning services have the resources they need. “With the uncertain times, our members are seeing a lot more demand from clients for financial planning services,” said Andrea Millar, CPA/PFS, senior technical manager of the AICPA’s Personal Financial Planning section. “In recent years, we've expanded our efforts to help them add that to their practices.”

Tax Time is the Right Time for Financial Planning

If you’re like any of the CPAs I know, you’re probably fishing receipts from shoeboxes right about now, brewing coffee like it’s a second job and greeting the sun most days from your office chair.

It is, after all, that most taxing of seasons: tax season.

But in those long hours and rigorous reviews you’re also getting fresh insight into the lives of your clients – insight into their incomes, spending habits, investments and life events. That’s why tax season is a great gateway to financial planning. And why CPAs are uniquely positioned to excel as financial planners.

In the News: Accounting Graduates Earn 20% More than Average

The National Association of Colleges and Employers recently released the findings of their latest Job Outlook survey, which contained good news for current accounting students as well as recent accounting graduates. According to the survey, accounting majors who graduated in 2011 earned an average starting salary of $50,500, up 3.7 percent from the previous year and roughly 20 percent more than the average starting salary of all graduates. This increase isn’t an anomaly, according to Andrea Koncz of NACE, who told FINS.com that "entry-level accounting and finance jobs tend to see steady growth from year to year."

Financial Planning Conference Attracted Diverse Crowd (Part 3)

The third and final part of this series covering the 2012 AICPA Advanced PFP Conference. Our on the ground bloggers:

Jean-Luc Bourdon, CPA/PFS, Principal, BrightPath Wealth Planning LLC. Jean-Luc is a regular contributor to CPA Insider and currently serves on the AICPA’s PFS Credential Committee.

Theodore Sarenski, CPA/PFS, President/CEO, Blue Ocean Strategic Capital, LLC. Ted is an appointed member of the AICPA Virtual Grassroots Panel, Social Security Task Force and Planner Magazine Editorial Advisory Board. Ted serves as Chair of the AICPA Elder Planning Task Force and is a liaison to the AICPA PFP Executive Committee.

From the beginning, several other attendees posted notable take-aways on Twitter. Take a look at what experts, including Michael Kitces, Mitch Freeman, Bill Winterberg and Carolyn McClanahan, had to say at the bottom of this post.

Financial Planning Conference Provides Wealth of Knowledge (Part 2)

Part 2 covering day two of the 2012 AICPA Advanced PFP Conference. Our on the ground bloggers:

Jean-Luc Bourdon, CPA/PFS, Principal, BrightPath Wealth Planning LLC. Jean-Luc is a regular contributor to CPA Insider and currently serves on the AICPA’s PFS Credential Committee.

Theodore Sarenski, CPA/PFS, President/CEO, Blue Ocean Strategic Capital, LLC. Ted is an appointed member of the AICPA Virtual Grassroots Panel, Social Security Task Force and Planner Magazine Editorial Advisory Board. Ted serves as Chair of the AICPA Elder Planning Task Force and is a liaison to the AICPA PFP Executive Committee.

From the beginning, several other attendees posted notable take-aways on Twitter. Take a look at what experts, including Michael Kitces, Mitch Freeman, Bill Winterberg and Carolyn McClanahan, had to say at the bottom of this post.

Financial Planning Conference Offers Path to New Career (Part 1)

The 2012 AICPA Advanced Personal Financial Planning Conference concluded Wednesday at the Aria Resort in Las Vegas. The conference, held annually, brings together experts from four diverse financial planning areas: Investment Management, Wealth Management, Practice Management and Retirement/Elder Planning. This year we asked two attendees to share their thoughts and experiences from the financial planning conference. See what they had to say.

Our on the ground bloggers:

Jean-Luc Bourdon, CPA/PFS, Principal, BrightPath Wealth Planning LLC. Jean-Luc is a regular contributor to CPA Insider and currently serves on the AICPA’s PFS Credential Committee.

Theodore Sarenski, CPA/PFS, President/CEO, Blue Ocean Strategic Capital, LLC. Ted is an appointed member of the AICPA Virtual Grassroots Panel, Social Security Task Force and Planner Magazine Editorial Advisory Board. Ted serves as Chair of the AICPA Elder Planning Task Force and is a liaison to the AICPA PFP Executive Committee.

In the News: Easy Steps to Save $1,000

Do you happen to be one of the many people who has resolved to make saving money a priority this year? Do you also find yourself in the category of those who feel they cannot even save $25 a week?  If so, Mackey McNeill, CPA/PFS, a former member of the AICPA’s National Financial Literacy Commission, has offered some actionable tips to help you painlessly save $1,000 this year in an article appearing on depositaccounts.com.

McNeill suggests finding your largest discretionary expense and challenging yourself to spend 5% less. For example, if you spend $400 a month at the grocery store, make it your goal to reduce that figure to $380. The 5% challenge works because it doesn’t feel like a huge sacrifice, but $20 over the course of a month translates to a cool $240 a year (full disclosure: I was a math minor).

Cost Basis Reporting Rules

In this audio stream, Michael Kitces covers the new cost basis reporting rules enacted under the Emergency Economic Stabilization Act of 2008.

Note that the new tracking rules will require any financial intermediaries (i.e., generally all brokers and custodians, as well as certain other types of financial institutions) that currently issue Form 1099-B to report using an updated version, which tracks not only the gross proceeds from sales of securities, but the cost basis, acquisition date, amount of gain/loss, and character of the gain/loss (i.e., short-term or long-term). Actual reporting on cost basis will be phased in over time, with equities in 2011, mutual funds and dividend reinvestment plans in 2012, and bonds and other securities in 2013.

Michael Kitces on Cost Basis Reporting Rules

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Michael Kitces, Director of Research, Pinnacle Advisory Group. Michael is the publisher of the e-newsletter The Kitces Report and the blog Nerd’s Eye View through his website kitces.com, dedicated to advancing knowledge in financial planning.

 

Bob Keebler on Refining the Roth Strategy

In this audio stream, Bob Keebler covers the new thinking as it relates to Roth planning given market volatility. Key considerations include:

• Opportunistic conversions (i.e., optimizing Roth segregation strategies, which focus on the volatility of the stock market)
• Hedging against increased tax rates
• Tactical planning (i.e., net operating losses)
• The annual Roth conversion strategy

Important to note is that conversions to Roth 401(k)s cannot be recharacterized.

Bob Keebler on Refining the Roth Strategy - 12/9/2011

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.  

New Estate Planning Guidance for Decedents Who Passed in 2010

Notice 2011-66 provides guidance for executors of estates of decedents who died in 2010 regarding the time and manner of choosing to opt out of the estate tax have the carryover basis rules apply. Revenue Procedure 2011-41 provides safe harbor guidance regarding property acquired from estates of decedents who died in 2010. This audio stream provides an overview of the guidance and strategies to assist advisers and clients in making decisions.

New Estate Planning Guidance for Decedents Who Passed in 2010

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration. 

Impact of the Debt Ceiling Fallout

Have your clients been asking you tough questions about the current U.S. fiscal situation in this time of uncertainty? "Should I change my asset allocation? Should I put money in gold? Should I get out of the stock market as a whole?"  This audio stream provides an overview of where the U.S. is right now from a market, economic and fiscal standpoint and also suggests various tax-motivated strategies that you might want to pursue with your clients. Note: This was recorded prior to Standard & Poor’s lowering of the U.S. credit rating.

Debt Ceiling Fallout

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Michael Goodman, CPA/PFS, President, Wealthstream Advisors Inc. Michael is highly active in the financial community and serves on the Personal Financial Planning Executive Committee and as the 2009 PFP Conference Chair. He earned a B.S. in Business Administration and a B.A. in Communication from State University of New York, as well as a Certificate in Finance & Management Information Systems. Michael co-founded and serves on the board of directors of Commerce Plaza Inc., a non-profit program which teaches financial skills to children at the elementary school level.

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration. 

 

An Overview of Estate Tax Portability Provisions

The IRS on Sept. 29 issued Notice 2011-82 to alert executors of 2011 estates of the need to file a Form 706 to make the election to transfer a decedent’s unused $5 million estate and gift tax exclusion to the surviving spouse. In particular, for the executor of a 2011 estate to make a portability (i.e., deceased spouse unused exclusion amount) election, the executor is required to file a timely Form 706 for the decedent's estate, even if the estate is not otherwise obligated to file a Form 706. If a timely return is not filed, any excess exclusion amount is lost forever and is unavailable at the death of the surviving spouse. To avoid falling into this trap, practitioners should discuss with their clients the benefit of filing the federal estate tax return for the first spouse, even if no tax is due. Over the next few weeks and months, it is very important to file extensions (Form 4768) or Form 706 for early 2011 deaths within the nine-month deadline (starting Oct. 3, 2011).

2011 Deaths and Form 706 and Portability

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration. 

Critical Issues to Consider: Estate Planning Filings

The final Form 706 and instructions were issued early September by the Internal Revenue Service for decedents who died in 2010. For most people who died in 2010, the form and estate tax payment were due Sept. 19. The AICPA requested a 90-day postponement of the due date, and on Sept. 12 the IRS announced filing and penalty relief for 2010 estates. In light of recent estate tax developments, listen to Bob Keebler’s thoughts on critical issues to think through for 2010 and 2011 estate planning and filings. 

Recent Estate Tax Developments

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.