SYMPOSIUM SPEAKER – November 3, Robert Keebler, CPA, MST, AEP


Best Income Tax Strategies for Financial Professionals

With the introduction of the 3.8% net investment income tax (NIIT), 20% capital gains rate, 39.6% income tax rate, and personal exemption and itemized deduction limitations, America has shifted from a two dimensional tax system to a five dimensional system. Virtually every financial decision now needs to be analyzed through this prism. The complexity of going from a two dimensional system to a five dimensional system is exponential, not linear, which requires a quantum leap in tax analysis methodology, tax strategy and tax planning software tools.

There are now seven different ordinary income tax brackets – 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%, and three different capital gains tax brackets – 0%, 15%, and 20%. Furthermore, if you combine these tax brackets with the new 3.8% NIIT, there are even more possible tax brackets; i.e., high income taxpayers will be subject to a 43.4% tax rate on ordinary investment income and a 23.8% tax rate on long-term capital gains. Lastly, when taking into account the phase-out of personal exemptions (PEP) and limitations on itemized deductions (Pease) as income rises above the applicable threshold amounts, the tax rates increase even further.

The increased value created in an investment portfolio by using the tax saving strategies described below is referred to as “Tax AlphaTM.” Put another way, it is your after-tax excess return (after-Tax AlphaTM) minus your pre-tax excess return (pre-Tax AlphaTM) based on the appropriate benchmarks. Generally, an index is used as the appropriate benchmark (e.g., the Russell 1000 for U.S large cap stocks). Research indicates that many portfolios don’t consistently beat their benchmarks on a pre- tax basis, often producing negative alpha on an after-tax basis. That is why creating Tax AlphaTM is important. If pre-tax alpha is positive, tax planning can increase the excess.

Main Room:  75 Best Income Tax Strategies to Generate Tax Alpha
Presentation Scheduled for Tuesday, 7:55 – 9:15 am
Anticipated CE:  1.5  CFP, 1.5 CIMA, 1.5 NASBA/CPE, 1.5 MN insurance, 1.0 WI insurance, 1.0 CLE

Taxes are the most important drag on investment return – greater than inflation, transaction costs or management fees. Studies performed ten to fifteen years ago showed that taxes reduced returns by an average of one to three percentage points. Recent tax increases should increase these percentages significantly, making it more important than ever to manage tax drag and create positive alpha by virtue of reducing the effective tax rate on investment returns for clients. In this session, Bob will review some of the best income tax strategies in 2015 covering IRA and Roth IRA, Capital Gain/Loss, Bond Income, Dividend Income, Open Transaction, Pension Distribution, Stock Option, and Charitable Planning Strategies.

Breakout Session:  Digging Deeper into Strategic and Tactical Tax Strategies
Presentation Scheduled for Tuesday, 12:40 – 1:30 pm
Anticipated CE:  1 CFP, 1 CIMA, 1 NASBA/CPE, 1 MN & WI insurance, 1 CLE
With the focus of investment strategies changing rapidly, in order for financial advisors to add value for their clients, they will need to add alpha by virtue of reducing the effective tax rate on investment returns. The heart of this  is understanding and utilizing the statutory tax shelters provided within the Internal Revenue Code.  In the breakout session, Bob Keebler will go into more detail on a couple of the strategies: Strategic Tax Strategies and Tactical Tax Strategies.