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Financial Collaboration Leads to Great Things for YOU

Photo of author, Michael O'Brien.
Michael O'Brien
Client Coordinator

Did you know that McKinley Carter Wealth Services has experienced Certified Public Accountants (or CPAs) on staff and even a seven-member internal Specialized Practice Group (SPG) completely dedicated to Tax and Legacy issues? Our Tax and Legacy SPG’s mission is as follows: To educate and equip advisors with the most current knowledge, tools, and best practices to proactively spot opportunities to save taxes and improve estate plan design for our clients within the framework of their broader goals and objectives. Furthermore, as a firm, we utilize many cutting-edge analytic tools to help our clients have a better understanding of their tax situation as well as industry benchmarks.

However, it’s important to note that as a registered investment advisory firm or RIA, McKinley Carter does not provide accounting services. As fiduciaries, we continually monitor both state and federal tax laws and revisions, but we confer and collaborate with professional tax experts who take the deep-dive into the nuances of each tax law and any potential impact on individual clients. By regularly working with and collaborating with accountants, we ensure our clients know their options and get the best tax advice and guidance.

Collaboration ensures you, the client, is best served and all relevant perspectives to your unique financial situation are considered. It gives you confidence in your strategy moving forward. Just as your family doctor would confer and collaborate with your cardiologist if you have a family history of heart disease, so too must a financial or investment advisor confer with a client’s professional tax expert.

Case in point, reflecting on the March 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that was passed and signed into law. Among other things, this law granted special distribution and rollover rules for retirement plan owners.

One of the tax relief measures included in the bill can be found in Section 2202 of the CARES Act. This provision allowed qualified retirement plan owners to take an early distribution of $100,000 without an early distribution tax. To qualify, the individual had to experience ‘adverse financial consequences’ due to COVID-19. Also worth noting is the option to repay the retirement account within three years of the original qualifying distribution. This type of transaction had to be reported to the IRS through filing an 8915-E. If a situation like this affected you, your accountant and advisor should have worked together to confirm all the proper steps were taken to utilize this economic relief measure.

Here are some other examples where advisors and accountants should collaborate:

  • An advisor working with clients on ROTH IRA conversions should collaborate with the client’s accountant to ensure the client is not recognizing too much income.
  • Business owners who are looking to sell their business need a CPA’s expertise while advisors can help with diversifying the proceeds from the sale. Furthermore, McKinley Carter utilizes tools to evaluate a business’s valuation, which can assist in this type of situation.
  • Gifting strategies often require collaboration between the advisor and accountant. For example, Once a client turns 72, Qualified Charitable Distribution (QCD) count towards their required minimum distribution for an IRA and is not included in reportable income. However, this does not show up on the 1099-R and needs to be disclosed by the tax preparer. If the accountant is not aware of the QCD, the client may not receive the income deduction.

Moreover, there have been many recent changes to federal tax laws, and we anticipate even more to come. So remember, seek full and comprehensive financial support for your situation no matter the complexity. Your investment advisor should have a healthy, working relationship with your accountant because both are critical to your long-term financial success.

Just as Mother Teresa once said, “I can do things you cannot, you can do things I cannot; together we can do great things.”

For more information, about McKinley Carter’s Specialized Practice Groups and how they benefit our clients, click HERE.

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