Wife and I have some money in tax-deferred accounts, and some other money in ordinary investments. In both cases, it’s just mutual funds that feature some mix of bonds and stocks. I also have some inherited IRAs that need to be emptied out in the next eight years.
Not intending to sneak-brag here, but the amount of money in the tax-deferred accounts and inherited IRAs has me concerned about how to minimize our tax liability. I’m still working my full-time day job (for another five years or so), but my side gig is winding down, and my wife will probably retire in a year or two. We have a coarse plan for emptying out the inherited IRAs within the next eight years, and a similar plan for drawing down our own tax-deferred accounts by enough so that we don’t end up with required minimum distributions in our 70s that that bump up into higher tax brackets.
I’d like to hire a pro to look over our plan and determine whether we’re on the right track or need significant course corrections. Looking around, it seems like we might need a certified financial planner for help with this. Assuming that’s correct (is it?), how do we determine whether any given advisor is any good or not? How much should we expect to pay for the kind of advice we’re after? Anything else we should know?
There are many people out there who can help. I would ask any friends or coworkers who may be in similar situations to suggest people you can reach out to. Try to find someone local so you can meet them in person for an interview to make sure you can work with them, and they can work with you.
You can ask potential advisors for references if you need them, but otherwise you should be able to find someone with the knowledge and experience needed to handle your financial situation and questions.
Take you time finding someone, and don’t go with the first name you are given. Picking the wrong person can be a very expensive mistake to make (think Bernie Madoff).
One thing to look for is someone who starts with asking what your goals are and what level of risk you are comfortable with. If they start by telling you what you should be doing with your money without asking these questions, run.
I assume you have a CPA. That’s the best person to ask about reducing taxes, the financial planner could tell you some options, but is not necessarily the person for that.
Don’t have a CPA; I’ve been doing our taxes myself (using H&R Block software) ever since we got married. And I’m comfortable with our investment allocations; I’m not looking for comprehensive investment advice, really just tax optimization advice.
I think there is only so much advice on taxes they can give you. I just spoke to mine about taking my required distribution, and the boilerplate message for the withholding for my IRA withdrawal said “it is complicated, see a tax professional if you need more information.”
And I just discovered that moving money from an IRA into a Roth doesn’t could for your required distribution. My financial advisor said he didn’t think it did, but had to look it up.
If you get into the murkier waters you may need a professional. Not that you don’t need a financial advisor also.
Assuming you meant “doesn’t count for your required distribution”?
And I also did not know this bit of info. Good to know!
Should not post while packing for a trip.