How necessary is it to have a forward-looking tax plan created by a CPA and financial advisor? Is it essential to have your CPA and financial advisor work together to help ensure you make solid financial decisions now and in the future? Osiwala Financial Group thinks so. Over the years, OFG advisors have had numerous conversations with our clients to help reduce the person’s taxes over their lifetime. That’s the key: a long-term perspective.

A collaborative relationship between a CFP and a CPA is critical. When driving a car, you look out of the windshield to see where you are going, while the rearview mirror gives you insight into the past. When you have a solid partnership between a CPA and a Certified Financial Planner (CFP), you can look in both directions. Likewise, the CPA and CFP can reflect on what they see and discuss the best path. A problem may arise when a CPA only looks in the rearview mirror (at your tax returns) instead of paying attention to the future (tax planning).

One issue that our CFP/CPA teams will discuss is Roth Conversions, especially since the tax cuts and JOBS Act will “sunset” (expire) at the end of 2025. At that point, taxes will go up. So, Roth conversion discussions will be critical to your continued success over the next few years. Often, prospects come to Osiwala Financial Group solely focused on issues like asset allocation, investment style, and the stock market going up or down. But the subject of taxes is nowhere on the radar. When it comes to financial planning for retirement, many aspects can’t be controlled, such as the stock market. Therefore, it’s imperative to also concentrate on the parts you have control over, such as risk and tax planning. You’re missing out on wealth retention if you’re not doing that.

Sometimes it makes sense to do Roth Conversions immediately. Sometimes you need to wait for a foreseen event to happen in your life like retirement. Regardless, your financial experts should ask you every year if a Roth Conversion makes sense. If not, fine. But in 12 months, you should be having that same conversation. Those conversations don’t have to happen early in the year, so it’s not too late for you to start the discussion. Osiwala Financial Group Advisors are starting Roth Conversions in October, November, and even December because we know what the rest of the year has already brought. We rarely discuss Roth Conversions early in the year unless there is high predictability of what the rest of the year will look like. So, we must look at it year-by-year.

If you’re not familiar with Roth Conversions, it’s paying the tax now on the money you move from a Traditional IRA over to a Roth IRA and never paying taxes on a dollar of that money ever again. Additionally, all of the earnings are tax-free, and it’s also tax-free when it passes to the next generation. (Read more about Roth Conversions HERE).

If you are considering a Roth Conversion, it’s critical to look at the big picture and the future forecast.. What tax bracket are you in? What does it look like through the windshield and the rearview mirror? Is the windshield telling you that there is a high probability that tax rates may be higher? It’s scary to discover that you’re in a higher tax bracket later in life, despite being told you would be in a lower bracket.

Additionally, in what ways could the 2026 Sunset laws impact your estate taxes? A married couple can currently pass approximately $24 million on to the next generation without filing an estate tax return, and no estate taxes are due. That also gets cut to about $6 million per person or $12 million for a married couple. However, many people don’t realize that if you’re married this year and one spouse passes away, Form 706 must be filed to claim that unified credit for the deceased spouse. Suppose you did that this year; for example, now that deceased person still has their $12 million that they can pass to the next generation. And even after the sunset, where it gets cut in half for the surviving spouse after 2025, you could still pass $18 million to your heirs without any estate taxes. Please don’t make the mistake of thinking that since you only have $10 million, you don’t need to worry about estate taxes. You do need to worry because it’s going to sunset (expire). And if one spouse passes away before that sunset, you will want to capture the more significant $12 million unified credit. You will not want to miss that opportunity because if you do and the year goes by, you don’t get a do-over to get it correct.

People assume that their tax person has it covered. But not every tax professional takes that windshield approach and looks into the future due to not having a financial plan. That’s where I think people are missing it. And that’s one of the reasons why I got into the retirement planning business over 30 years ago. I came from the CPA world. During that time, I noticed that some people were not leveraging their plan because they were only looking at what Wall Street was currently telling them, and their accountant didn’t have the complete picture without the financial plan. As the saying goes, how does the left hand know what the right hand is doing? And can you get them to collaborate?

Do you have a retirement plan incorporating investments, social security, taxes, risk management, and estate planning? If the answer is no, I have good news. Osiwala Financial Group offers access to the same financial planning software that my advisors use. You can start your retirement plan right from the comfort of your own home. All you have to do is click HERE. Remember that this is a professional piece of software designed to be used by financial advisors. As you’re entering data to start building your plan, if you have questions, click HERE and request a 20-minute “Ask Anything” session with an OFG Advisor to help make sure you’re on the right path to paying as little tax as possible.