Highlights From Ed Slott’s Spring 2017 Elite IRA Advisor Conference

Mike Branch is a member of Ed Slott's Master Elite IRA Advisor GroupI have been a member of the Ed Slott Elite IRA Group for nearly a decade. One of the benefits of membership is that twice a year I get to geek out on the latest rules and regulations regarding IRAs and retirement plans with over 400 financial advisors from around the country.

This is also one of the best opportunities in the industry to meet with other like-minded advisors to learn how to help our clients make the most of their retirement assets, and take a deep dive into the estate and financial planning strategies that benefit them most.

This spring’s conference in Kansas City, Missouri, did not disappoint. In the future I may do a more detailed blog post on one or more of the topics below. In the meantime, follow along as I share some of the highlights of the spring conference.

Financial Abuse of Seniors. As we get older the likelihood of cognitive decline increases. Unfortunately, this also leads to a greater likelihood of financial abuse of seniors. Sometimes the abuser is a new friend who enters your life and begins to take control of your finances. More often, however, it’s a relative or a trusted family friend who steps in to help and begins to advantage of the situation.

As financial advisors we are often the first line of defense.  When clients forget major transactions, miss appointments to review their accounts, or can’t remember important financial details it can be a red flag that something may be wrong.

Many financial advisors have systems in place to deal with these situations, but there are steps clients can take to protect themselves as well. At the top of the list is to designate a person to act on your behalf if you are unable to do so. Share your Power of Attorney documents as well as the contact information for your “attorney-in-fact” (the person who has the legal power to act on your behalf) with your financial advisor.

Better yet, introduce that person to your financial advisor and include them in your financial meetings and correspondence with your advisor. That way everyone is in the know regarding your financial situation, your designated attorney-in-fact is in a better position to take over the reins if it ever becomes necessary to do so, and it’s easier to detect when something appears out of the ordinary.

Planning for health care expenses in retirement. Studies have shown that the average married couple spends over $250,000 on health care expenses during retirement. And even that number may be low. How much you actually pay for Medicare and other health care related expenses depends on your taxable income, the rate of inflation for health care (currently at over 5%), and other factors.

Consider this: According to Peter Stahl who specializes in training financial advisors on Medicare and retirement health care issues, if a married couple can keep their modified adjusted gross income to less than $170,000 per year, they save up to $80,000 in Medicare premiums over their lifetime. But if their income is even $1 over that amount, they lose money.

While $170,000 may be a high income for many people in retirement, a lot of retirees can cross this financial line when their IRA and 401k Required Minimum Distributions kick in at age 70 ½.

Two of Peter’s top tips to manage taxable income in retirement:

If possible…

  • Start and max out contributions to a health savings account or HSA. HSA’s offer pre-tax contributions and tax-free withdrawals during retirement for health care expenses.
  • Fund a Roth IRA or Roth 401k. With Roth accounts, money goes in after taxes and so is tax-free during retirement. Plus, there are no RMD requirements on Roth IRA distributions.

Both of these strategies allow you to create tax-free income in retirement. I will write more about these strategies in an upcoming blog post.

Got a minute? One of the things I really like about these conferences is that the content goes beyond just IRAs and IRA tax rules, and includes additional information that helps us be more productive so we can do a better job serving our clients.

1,440. That’s the number of minutes in a day. None of us knows how much time we have on Earth, but we all know it’s limited. How you use that time is what matters.

Kevin Kruse, author of 15 Secrets Successful People Know About time Management, has interviewed billionaires, Olympic athletes, straight-A students and over 200 top entrepreneurs. He shared ideas about how to make better use of our time so we can serve more clients, do better work for them, and still have a life.

Among his secrets:

Focus on one thing. Multitasking is a myth. (Finally someone agrees with me!). Decide what your most important task is, then do it. Don’t get sidetracked by urgent, but unimportant tasks. Don’t get distracted by a steady stream of email alerts or notifications on your cell phone. And definitely don’t move on to other tasks until you’ve finished your most important task for the day or week.

Eliminate the “To Do List”. If it’s important, schedule it. Put it right on the calendar. Start with blocking off time for your most important task in the beginning of your workday.

Make sure all your top priorities get scheduled: exercise, date night, even taking out the trash. If it must get done, it must get on the schedule. What gets scheduled gets done.

Those are just two of the productivity habits Kruse outlines in his book. To read them all, download his book or order it from Amazon.

Cover your assets. A big portion of the content at every conference focuses on estate planning: preserving your assets, protecting your IRA and estate from the IRS, and making sure your assets go where you want them to go when you die.

Shannon Evans, attorney and founding principal of Evans & Associates, has been a featured presenter at the Ed Slott Elite IRA Advisor workshops for the last three years. At this conference the focus was on creditor and bankruptcy protection of assets held in IRAs, 401(k)s, and other retirement accounts.

If you get sued do you know which assets are protected from creditors? What if you own a business and are forced to file bankruptcy? Is your 401(k) safe? What about your IRA?

Certain protections are provided by the Federal government, but there are limits and exceptions to the rules. IRAs are covered under state law, which of course, varies by state. To learn more about the risks that apply to your retirement accounts consult an attorney that specializes in asset protection. Your financial advisor may also be able to provide some guidance and refer you to qualified professionals.

IRA mistakes. A significant portion of each conference is devoted to case law or as I like to think of it, “learning from other people’s mistakes”.

Helping clients avoid IRA mistakes is the number one reason why I have been a member of the Ed Slott Elite IRA Advisor group since 2007. Some mistakes can be fixed. Others can’t. And the consequences can be severe.

At a minimum a mistake on an IRA creates a taxable event. At worst, it can trigger Federal and State income taxes, IRS penalties and jack up your marginal tax bracket, which in turn, affects your Medicare premiums, college financial aid, and other government benefits.

Some of the most common mistakes IRA owners make include:

  • 60-day rollovers
  • improperly titled inherited IRAs
  • making prohibited transactions
  • owning prohibited assets
  • having the wrong beneficiary or no beneficiary at all

Unfortunately many of the cases we study involve IRA owners who worked with financial advisors. And in the majority of cases they also worked with large financial institutions that employ people who are supposed to know how to avoid these mistakes.

Honest mistakes can happen, but most of them can be avoided if the IRA owner and/or financial advisor know what they were doing.

Matching consumers with educated IRA advisors. That’s the mission of the Ed Slott Elite IRA Advisor Group. To find an educated advisor in your area, click here.