Welcome to our new series, THREE THOUGHTS.
We'll be sending this out once a month as an overview of the most important or interesting conversations we are having with clients. We hope the conversations happening in and around the office will help you as you enjoy and explore your financial life!
1. The Early Retirement Tax Planning Window
For a lot of retirees, April means a number shows up (a refund, a bill, or something in between), and then tax season gets filed away for another year. We think about it differently. A tax return is a snapshot. It tells us what bracket you landed in, how your income sources interacted, and whether your withholding or estimated payments were calibrated well.
For clients who are within a few years of retirement, it also tells us something more useful: how much runway you may have left in the current tax environment before the picture changes.
Here's what tends to change it. When you retire, income often drops. RMDs haven't started yet. Social Security can be deferred in some cases. For some clients, that creates a window in which their effective tax bracket is meaningfully lower than it was during their working years and lower than it will likely be once those other income sources turn on.
We often use that window to discuss Roth conversions: moving money from a pre-tax account into a tax-free one at a lower cost than would have been possible during peak earning years, and before RMDs remove that flexibility entirely. Your most recent tax return is usually a good place to start that conversation.
The general goal is to push the most amount of money through the lowest tax rates you are likely to see. It’s a window that only comes for a time, then it is gone. We’re here to help you gauge your tax planning opportunity.
2. “There Are No Bad Financial Decisions. Only Uninformed Ones.”
If you’ve been a client of ours for a while, you might have heard this phrase. (Especially if you work with Joe.)
Clients in the early years of retirement often arrive with a long list of things they have been waiting to do: the trip, the renovation, the boat, the vacation home. Our job is not to narrow that list. Our job is to model it out, show what each item means for the plan over time, and ensure the decision is informed before it becomes final.
Sometimes the numbers confirm it is straightforward. Sometimes we find a more efficient way to fund it — one that avoids selling assets at the wrong time or triggering unnecessary capital gains. Either way, the goal is the same: no surprises after the fact.
If there is something on your list you have been hesitant to bring up, bring it up. That is exactly what the planning relationship is for. Retirement is meant to be enjoyed, and we’re here to help your money make those things you love possible.
3. The Graduation Season Gift Nobody Thinks to Give
This time of year, caps and gowns tend to fill everyone's feed. For grandparents watching a new generation come up behind the graduating one, it is a natural moment to ask: What can we actually do to help?
A grandparent-owned 529 plan has become one of the more useful tools for that question. A rule change that took effect in 2024 removed a significant previous drawback: distributions from a grandparent-owned account no longer count as student income on the FAFSA, which had historically reduced aid eligibility. That concern is now off the table.
Beyond college tuition, these accounts can now be used for trade school, private K through 12 tuition, student loan repayment, and, if the funds go unused, rolled into a Roth IRA for the child (up to $35,000 currently). The flexibility has expanded considerably.
Even a modest early contribution, left to potentially compound over 15 or 18 years, tends to make a meaningful difference. If a grandchild just arrived in your family, or is about to, it is worth a conversation sooner than it might feel necessary.
Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA & SIPC.
The LPL Financial representatives associated with this website may discuss and/or transact securities business only with residents of the following states: AK, AZ, CA, CO, CT, DE, DC, FL, GA, HI, IL, IN, KY, ME, MD, MA, MI, MT, NV, NJ, NM, NY, NC, OH, PA, RI, SC, TN, TX, VT, VA, & WA
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
