Good to Know
We will take a very short break from our Social Security blog series with late-breaking news – potentially good news for advisors who charge only investment advisory fees.
First, we’ll frame the issue then present the potentially good news.
But before we frame the issue, let’s unpack the word “nonqualified” as it is used herein.
- An annuity purchased with after-tax personal funds is called a nonqualified annuity.
- An annuity purchased with funds from an employer-sponsored qualified retirement plan (e.g., 401(k)) OR an IRA may be referred to, cleverly enough, as a “qualified annuity.”
If you’re questioning why the investment advisory fees couldn’t be paid with a taxpayer’s personal funds and then deducted as an itemized deduction on the taxpayer’s tax return – that’s a great question! That was a common practice before the Tax Cuts and Jobs Act suspended the entire category of itemized expenses that included deduction of investment advisory fees. But the story doesn’t end there. Recent IRS rulings may indicate good news.
Stay tuned! In our last Social Security blog, we illustrated how delayed claiming of Social Security Retirement benefits until age 70 could increase the monthly benefit over 70% vs. claiming at age 62. In our next blog, you will see ideas to make the peanut butter and jelly come out even (pay the bills) until age 70.