R-O-T-H spells opportunity

You’ve got to admit that 99.9% of the American population would consider an hour’s discussion of the intricacies of tax planning in retirement accounts about as exciting as watching cement dry. But if you’re like our adviser attendees — and there were more than a thousand of them — you find the subject fascinating.

“Optimizing Roth IRAs” was the subject of an InvestmentNews webcast that I moderated with reporter Lisa Shidler yesterday afternoon (the webcast, in its entirety, will be available Thursday morning at www.investmentnews.com/webcasts).
You’ve got to admit that 99.9% of the American population would consider an hour’s discussion of the intricacies of tax planning in retirement accounts about as exciting as watching cement dry.
But if you’re like our adviser attendees — and there were more than a thousand of them — you find the subject fascinating. And well you should. In this nauseating economic and investment environment, being a knowledgeable guide through the thicket of U.S. retirement plans and regulations is a surefire way to prove your worth to clients and win over prospects.
Of course, looking at America’s retirement savings system objectively, you have to concede it’s nuts. Traditional defined benefit plans, which are based on actuarial principles and managed by professionals, are vanishing.
Taking their place are 401(k), 403(b) and 457 plans, all of which were created as supplementary savings options and never intended as core retirement vehicles.
Yes, these plans provide a mobile work force with greater flexibility, but they also save employers a ton of money because plan costs are borne by employees, who typically receive meager matching contributions.
Worse, all the plans rely on individuals — most of whom admit they know nothing about investing — to make decisions today that will determine how much income they will have over years or decades of retirement.
Since a better retirement system is unlikely to emerge, the financial adviser is in the catbird’s seat.
Financial advisers are in the unique position of being able to understand, explain, translate and implement everything that needs to be done to protect the biggest financial asset of most Americans — their rollover retirement plan or IRA.
During yesterday’s webcast, our tax experts, Susan Hartman, who serves as a tax and estate planning consultant at the home office of Raymond James & Associates in St. Petersburg, Fla., and Robert S. Keebler, a certified public accountant and partner at Virchow Krause & Co. in Appleton, Wis., explained the nuts and bolts of converting conventional IRAs to Roth IRAs, how to convert them back, when an adviser might suggest either approach and how Roth IRAs can be used in estate planning.
We had a lively discussion that prompted scores of questions. To continue the discussion, we invited our attendees — and now invite you — to join us at our discussion board, www.investmentnews.com/community.
Come and share your ideas about Roth IRAs, IRA conversions and the tax implications of withdrawals and rollovers.
Meanwhile, here’s one insight from the webcast you can implement right now: check your clients’ IRA beneficiaries. Mistakes in IRA beneficiary designations can endanger your clients’ financial future and your career.