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- [00:01]
Eric
Welcome to the AICPA Town Hall Series.
- [00:04]
Mark Peterson
Your resource for the latest news and.
- [00:06]
Eric
Updates on pressing issues facing the accounting profession.
- [00:11]
Lisa
Good afternoon and welcome to the AICPA Town Hall Series. You can see that I'm in our New York studio and with me is Mark Peterson up from Washington, D.C. you all know Mark very well. He leads the advocacy area. Mark, it's great to have you here.
- [00:25]
Dan Snyder
Great to be here, Eric.
- [00:27]
Lisa
We've got a great program for you today, a lot of timely topics. We're going to kick off a discussion with Mark on what's going on in D.C. then Lisa is going to provide some technical updates. And then we're going to have a timely discussion related to tax and financial planning strategies. We're going to give you some technical information related to some tax planning items that you want to be taking into account for this upcoming tax season. And then we're also going to have an in depth discussion on the intersection between tax and financial planning. And that will that will include Adam Holt and Dan Snyder. We'll be introducing them shortly and then we'll have our open forum session. So please bring the questions, bring the feedback. Mark. Well, there's a lot of feedback always occurring in Washington, D.C. and you know, it looks like somehow they get, they got another continuing resolution passed.
- [01:30]
Dan Snyder
So they did. Eric. I think I say it's been a crazy week every week, but it truly has been. We've got, you know, brand new Speaker Johnson from Louisiana. He's basically doing on the job, learning. He's only been in Congress for six years. Like you have to go back to 1883 last time. There's somebody with that little of experience congressionally. And so his first significant challenge was the government fund that they had to pass this week to keep the government from shutting down tomorrow. And basically what he did is he brought an approach that divided up the funding of the government into what they call a laddered resolution. So there are two funding mechanisms, one with four appropriations bills and then the other one with eight. Just to remind everybody, continuing resolution basically just pushes funding levels into the future. You'll hear the words often a clean funding resolution, meaning that legislation was not attached to it. It can be attached and sometimes they will adjust the funding within the resolution, but it's not a corporations bill. This is important because the controversy around that is going to impact operations of the irs. So anyway, where we are is the bill passed? He did. He lost 126 of the Republican members of his side of the aisle who voted against it. So it passed with support of Democrats in order to keep the government funded was sent to the Senate. Senate passed it. It's going to the president's desk. So we have government funded until January 19th. The funding that's included for the IRS and the SEC, which is very important to us, will run out on February 2nd. So if you look at that January 19th date, if you add up the legislative days that are currently scheduled, there's only about 20. So unless they add some days to the calendar, there's only about 20 days that are currently scheduled for Congress to be in business. They've got a lot of work to get done. So the goal is that they will get all of the Appropriations done, the 12 appropriations bills done prior to the funding running out. If the funding runs out on February 2nd and they have not figured out how to move forward with those bills, we're going to have a government shutdown.
- [03:53]
Lisa
Well, Mark, I'm, you know, just, it's been a busy year. It was June that we thought there was going to be a shutdown. And then somehow McCarthy got the resolution passed and extended to November. And that didn't work out too well for Speaker McCarthy. And now there was a real feeling that this wasn't going to happen. We were going to, we were going to have a shutdown. Now they've extended it to January 19th and February 2nd. And this in some ways, I mean, I remember we've talked about the shutdowns that have occurred over the past 30 years. I think the Trump shutdown ended like in mid January.
- [04:36]
Dan Snyder
Correct.
- [04:37]
Lisa
So this will be something that has not really occurred, a shutdown during tax filing. And then I think a lot of people on the town hall know that, you know, you, there are a lot of filers that look to have their refund in early February, their earned income tax credit, that a lot of those filers usually get that paycheck, that, that paycheck, that, that refund which is their largest paycheck of the year, sometime in mid February.
- [05:06]
Dan Snyder
Absolutely. And that's, that's real politics. Yeah. And members of Congress are going to be hearing about it if there's an extended shutdown. There is the. I'll still take the under on whether there's going to be a shutdown or not, Eric, because that means you're saying.
- [05:18]
Lisa
There will be a shot.
- [05:19]
Dan Snyder
I think so. I thought there was going to be last one. Ultimately there wasn't. But the speaker lost his job. The new speaker basically had his, had his honeymoon. And he, the quote from one of the members of his own Conference was that. That was strike one and two. And when we get back after Thanksgiving, there's gonna be a fight. And so there's a lot going on that leads us to believe that we're headed towards what could be an extended shutdown in February, which would be extremely painful. Now, we've been thinking about this, right?
- [05:50]
Lisa
And so, Mark, there's lots of questions coming in here on, you know, what's the AICPA doing?
- [05:56]
Dan Snyder
Exactly. So even prior going into the end of the government's fiscal year, at the end of September, we started to talk to the IRS and try about contingency planning. What would they do if there was a shutdown? You know, shutdowns can vary. It could be 48 hours, it could be two weeks, it could be longer. It all depends. So we started to talk to them about contingency planning. We also started to work through, and the tech Executive committee started to think about what are things that the IRS has regulatory authority to do. So that would not mean Congress would have to pass something that could help mitigate this. And so we have been working through those ideas. We are going to continue to expand them and think of other things that would help to mitigate some of the pain that's going to hit taxpayers and tax preparers. But it's things like, as you know, and it's discussed a lot in the IRA bill that passed, there was significant funding for the irs. We're going to come back to that when we talk about Commissioner Warfel, the ability for them to utilize that with current employees at 100%. So that means you keep everybody working. You deem them essential. So essential means you're required to show up to work. Doesn't necessarily mean you get paid until after the government is funded, but you're required to show up automatic extensions for notices and collections, making sure that the online systems are working and operating, retain more chief counsels to have the ability to answer questions. And we're going to also look at, continue to look at things that we could add to this list that we could call on the IRS to do, and we could call on Congress to ask the IRS to do, because we think this is coming and we want to do everything we can to try and mitigate some of these problems.
- [07:40]
Lisa
Well, stay tuned. We've got, we've got a couple more town halls before we end 2023, and then we'll be, we'll be, we'll be kicking things off of the town hall the first week in January. So we'll, we'll Keep everybody apprised of how this evolves. And we always are all seeing it in the daily press. So, Mark, there was a lot of press about this. We kicked off this week with the AICPA National Tax Conference. I was actually there on Monday morning leading a session on generative AI in the world of tax and really active dialogue on the implications for the tax area related to this incredible capability, technology, capability that generated AI is offering. But there also was. I can. I'll comment a little bit more about that, but, you know, the commissioner was there on day two, and he had a lot of, you know, timely updates.
- [08:41]
Dan Snyder
No, and, you know, we do work very closely with the irs. You know, there are times that we disagree and we will continue to stick up for the membership when we need to, but it's also very collaborative relationship, and we need the IRS to function, and they need the profession to function in order to serve taxpayers. You know, he. He is really in a different situation than previous commissioners because he did get a bunch of funding. And so they're. What they're doing right now is working through transformation. He talked about that. He talked about, you know, some big initiatives around, you know, IRS accessibility and fairness and enforcement, and those were kind of the macro issues. He did get questions about shutdowns. He's not going to comment because that's political as far as he's concerned. He got questions about beneficial ownership, but his response to that is that's a different part of Treasury. That's FinCEN, the financial crimes unit. We also had the taxpayer advocate, Aaron Collins, there. Again, real important opportunity for us and for the conference scores, to hear where she's focused on. And one thing specifically she was focused on is that some things are not working as well as they should be. One is the tax preparer hotline that is available. It is not being appropriately resourced and prioritized. And so that's something that we focused on and actually had called and advocated for it being restructured, being focused on. We believe that that would actually create more opportunity to take resources and focus them on higher sophisticated phone calls that could be answered for practitioners, for a bunch of clients. That takes them out of the line for the general taxpayer, which makes total sense.
- [10:33]
Lisa
Well, Mark, just expanding a little bit on the discussion around technology there and the tax practice, the. The irs, you know, and we, we had somebody from the Senate Finance Committee participate on this panel. The IRS is leveraging artificial intelligence today. They're, they're concerned about unintended consequences at times where they're, you know, Selecting, you know, certain demographic groups at a higher rate for audit. So there's things that they're working on, but they're, they're also talking about, you know, leveraging generative AI. And we did a poll to the audience there. Close to 50% are beginning to do some type of experiment, experimentation related to generative AI. And when you think about the tax era, you think about what we're talking about, tax bills, tax research. It really is well suited to help, you know, accelerate, you know, the digesting of information in providing of client advice. So more, more to come on that we did. We do have a toolkit that we've talked about in previous town halls. We'll make sure a link to that is an AI toolkit is provided in the, in the town hall newsletter. That's a 28 page document. It is something that you can really leverage to start just getting your arms around what's, what's happening with this major, major movement in technology which is going to impact all areas of the practice.
- [12:05]
Dan Snyder
You know, Eric, on that real quickly, there was an executive order that just came out of the White House because they're really trying to figure out how to get their arms around source Capitol Hill about the regulation of AI. But part of the executive order is to go into the agencies to figure out how they're all going to be utilizing AI. And that is a great example of how they're going to do that. And I can't let you leave a tax conversation without keeping hope alive for the potential for a year end tax bill. Yes, it's below 50 50, but it is still alive that they could cobble together a bipartisan tax bill. There are issues like, you know, increasing the threshold for 1099 K child tax credit, some of the expiring business credits that you could see coming together in a year end deal. Now if there's any deal, we're going to push to see if we could also get section 174 included and then, and then of course, any opportunity to get anything, anything done on beneficial ownership. We would also see if we could get it attached. There's a couple opportunities. Potentially a defense bill that is considered must pass. We'll see how that looks. But we're not going to miss a boat or a train if it's leaving the station.
- [13:18]
Lisa
Well, I mean that could be an interesting setup for the continuing resolution activity to start the year. Absolutely. We'll keep everybody updated on that as it evolves. So thanks Mark. And we'll be bringing you back for the open Forum section. So Lisa, welcome. It's great to see you and I'll let you take us through this next section.
- [13:43]
Eric
Thank you, Eric. It was a busy week in dc. I was in Phoenix, Arizona at the AICPA Women's Global Leadership Summit. So I want to give a shout out to all of our town hall attendees that I got to meet there in person and some of our Twitter contacts as well. So it was fun conversation. We talked about generative AI and got a great presentation with some real life use cases from Ashley and Byron on how to leverage AI for tax challenges and also some fun examples of how to use it to simplify your personal life as well. So great conversations and again, thank you to all of you, the over 700 attendees at the Women's Summit. We had both men and women. It's a great event, lots of energy and I'd love to see you there next year. But I also know that a lot of you were at the tax conference, so good stuff from a technical update standpoint, we're going to keep this one fairly quick because we're going to have a longer conversation around tax and financial planning conversations that will give you some technical updates too. But of course I can't do a technical update without some ERC conversations and I get to bring back my favorite acronym of glam. A general legal advice memorandum was issued by the IRS within the last couple of weeks about whether or not businesses who had filed for ERC using OSHA communications as their support for suspended operations. And as a reminder, the GLAM resource is not considered authoritative. It's kind of informal internal legal advice, but it gives us a window into what IRS perspective might be around a particular issue. So I've given you a link to the to the glam, and I'm just going to say it as much as I can on this one slide. But they went through two scenarios that I think you'll find really interesting. And I'm not going to go through them in detail because I think it's better if you go in and read them. But the first one was around OSHA communications about the benefit of handwashing and masking and whether or not an employer who was instituting hand washing and masking at work could say that that qualified them for a partial or suspended operations. The advice that the IRS gave in this memorandum was that that does not qualify. And then the second one was around an example of an employer who had been doing telework prior to the pandemic for two or three days a week and Then when the pandemic hit, based on OSHA communications, they went to a five day a week telecommute. Does that qualify them as partial or total suspended operations? And again, the glam says that doesn't qualify. So I know that a lot of employers have been using these OSHA communications as guidance. So if you've got a client in that situation and you're looking at whether or not they really did qualify for erc, you're going to want to research that one. So moving from glam into remote work and hybrid work, I'm going to give you a little bit of my practice management conversation because this is something that's really important and we've got new resources for you to access if you're an AICPA member for a little bit of time. And then these are technically PC PASS resources, but we want to make sure that you get to use them for now. As we all know, the pandemic brought around a huge surge in hybrid and remote work. A lot of companies are still, they rushed in, they didn't maybe have the right processes. Their managers weren't fully trained in how to manage or lead hybrid and remote teams. So we have put together some resources that can help you with leadership development. How to establish lines of communication around what a high performing team looks like. Communication and feedback. In this hybrid or remote environment, having open communications and providing clear feedback is very important to driving engagement, coaching and developing others doesn't stop just because you're not in the office. And I hear a lot about that as I'm talking with firms or just anyone that's out there in the workforce these days. There continue to be some uncertainties around how to develop people in a remote environment. So we'll give you some resources around that and then also simply leading by example. For me, that means making sure that I'm being really clear about if I'm not going to be at my home office for a while, my team knows where I am and how to reach me. Just some good examples like that on how to create that transparency and create that open line of communication for your team. I hope you'll find those useful. As a reminder, this is all part of a bigger project that PCPS is working on around helping firms transform their business models to adapt to this changing environment. We have a changing talent landscape, we have a changing technology landscape. Your clients are looking for different types of services and so we're packaging a lot of really good resources that we've developed along with consultants in the profession to help you navigate these changes. As a reminder, a few town halls ago, we talked about a very specific toolkit that we had developed on. Right. Sizing your client base. It's November 16th, and I think a lot of those conversations are going on right now. So as a reminder, go back to the town hall replay that you'll find at the end of the presentation today. You'll get a link to that session that I did with Carrie Steffen. We'll walk you through that toolkit and make sure that you've got access to it. So again, that's a really quick technical update, but let's go on into a deeper conversation around another component of technical, which is tax year and tax planning and personal financial planning conversations that we could be having with our clients right now as we approach year end. And I'm going to bring up a couple of folks to join us for this conversation. Adam Holt and Dan Snyder, thank you for joining us. And Eric, welcome back.
- [20:29]
Lisa
Yeah, well, thanks, Lisa. And it's great to have this group here. So let me introduce them. We've got Dan Snyder, who's a director at the AICPA, leading the PfP and financial planning area. Dan, it's great to have you with us.
- [20:46]
Mark Peterson
Good to be here.
- [20:49]
Lisa
And we have Adam Holt, who's the founder and CEO of Asset Map. And we're going to be talking about what we're doing here in this discussion is we're going to start things off at a high level, talking about tax planning and some trends that are occurring related to tax planning. And then we're going to get into some tax planning topics. But then we're going to close the session talking about some capabilities that we think you can offer to your, to your tax clients. And this, this is this session is really geared to the tax professionals. I mean, Dan, and you, you may want to, you know, comment a little bit about that, where at times you think about the group of PfP, the personal financial planners that are, that are CPAs and AICPA members, and, and you focus on supporting them. But that's a very, very small segment. And really what you're also working on is broader financial planning capabilities for the tax practitioner.
- [21:56]
Mark Peterson
We definitely see, we see many of the tax practitioners focusing on different activities of financial planning. So certainly there's a core segment that are acknowledging the financial planning activities that they do, and then there's a larger segment that are doing some of those activities that aren't approaching it in this maybe a structured way. But that's the beauty of tax is it touches all of these areas anyways. And so it's just, it's a natural discussion for CPAs. So it's a real advantage.
- [22:28]
Lisa
So why don't you and Adam. And Adam, welcome. Hello.
- [22:31]
Adam Holt
Good to see you.
- [22:33]
Lisa
So why don't we just get into this a little bit. You've got some markets studies here where, you know, tax professionals are discussing a lot of these, these critical tax financial planning items.
- [22:49]
Adam Holt
Yeah, yeah, certainly everybody, great to see you. You know, the kind of my own background as a certified financial Planner spending last 25 years in this. This has been interesting to see the amalgamation of the kind of modern practices and everybody's getting in everybody's business these days. Clients are really looking for trusted advice, as we all know. And so the interesting thing about some of the surveys that were done Recently, Herbert's & Co. And Angie Herbert's team really kind of sharing that a lot of what CPAs have been doing for many years are really, you know, areas that we've been working on in financial planning. This, this crossover is but I think been intimidating to a lot of tax professionals. But recognizing that the clients are looking for these types of experiences. So things I think and topics at least it talked about that I think our community here at CPAs are really comfortable with are things that we should be talking about with all of our clients.
- [23:45]
Mark Peterson
Yeah, I think that. And even that not only the activities they're talking about, but one of the surveys that was there was very interesting in that there's a number of do it yourselfers out there that are kind of going it alone with respect to planning. And some of the reasons that they cited why they didn't want to work with an advisor were things like you see on the screen there of independence or they're afraid of conflicts of interest, objectivity, the advice quality, that trust factor. And it's just kind of interesting that CPAs have those qualities as a profession. And so it's a very natural thing, very easy for CPAs to kind of apply that and really kind of deepen their client relationships beyond the tax side of things.
- [24:28]
Lisa
Well, let's just moving on here. And this is something that when I was at the tax conference on Monday, there was discussions around other competitors coming into the marketplace. And I actually was at a large firm meeting this week as well, and they were talking about non CPA firms competing with them. And if you look at this slide here, what this shows is that financial advisors are leaning in to tax planning. So they know this is something that's important to clients. And I know of financial Advisor firms that are not just doing tax planning, but are also doing tax compliance. So why don't both of you kind of talk a little bit more about this trend. And I think this is once again why markets are converging. So as a tax practitioner doing compliance and some planning, you might need to lean into financial planning as well, because the client wants that holistic solution.
- [25:37]
Mark Peterson
Yeah, a recent survey that was just done, you see it on the screen there, shows that in the advisor world, the tax planning software, now that's not tax compliant. So it's not the tax compliance software we were talking about, but the tax planning software is one of the fastest growing and used categories. And we see that it's growing at a very fast rate. So certainly being able to lead with some of that technology is going to be something that's going to enable them to kind of initiate conversations. And what we really want to be able to see is those conversations really ought to be centered around the CPA relationship and being able to have the CPA kind of govern and guide that and bring the investment folks and the insurance folks and all that in as a result of that. But it's just something to be aware of that the tax has this huge impact on financial planning. We all know that. And it's not lost on financial advisors. And from the previous slide, they're just reacting to the market. I mean, tax planning was one of the top services that high net worth folks were looking for. So it's not surprising they would seek out that type of software.
- [26:47]
Adam Holt
Yeah, I would just add on to that. We all know that taxes tends to be the highest expense that pretty much anyone pays relative to investments. And of course, long term planning. It's interesting to see that this tax software is not coming out being very robust, but rather either AI generative or fast scanning to get an impression of what the tax position is for these households. And it's really endemic of the fact that many households are feeling like they're not getting the proactive future based planning that they would hope to from their tax professionals. And it's creating a great opportunity to either create synergy between the traditional financial planners and the tax practitioner as well as potentially going to these new markets.
- [27:27]
Eric
You know, I think sometimes the word financial planning can be intimidating to someone who doesn't realize that they're already doing it by just creating this holistic conversation with their client about life goals, client needs, what are their plans for funding, education, what are their plans for charitable giving. I think what you're telling us is we Just need to lean in, to use Eric's words, and assume the role that we're already doing. Maybe not as directly as we could be.
- [28:04]
Lisa
Well, I mean, now, Lisa, Adam and I are going to take a step back and let you and Dan kind of take the town hall through a number of things that they all probably are thinking about related to the upcoming tax season. And then we'll have Adam, we'll join back in the discussion. And one thing just, I mean, a little bit more about Asset Map. I mean, they're supporting 6,000 financial advisors today. They have over a million consumers utilizing the platform through these advisors. There's a number of CPA firms that we've introduced to this platform over the past six months. And this is something that CPA.com and the PSP Group have been working on because we do want to help the tax practitioner on this journey to lean in and play a more strategic, holistic role around financial planning. But, Lisa, let you work through these next group of technical slides and then we'll step it back up with some financial planning discussions.
- [29:05]
Eric
And I cannot work through these technical tactics slides without Dan. So, Dan, thanks for staying on with me. Otherwise, this would be a very short segment. But again, I think it's important to. Let's just reframe. Let's step back a little bit. So we talked a little bit about the need to have these holistic conversations. We're going to talk a little bit about some tactics, some details. Dan's given us some great information on these slides that, that we prepared specifically so you'd have them to refer back to. We're not going to go through these in detail. Dan's going to pick a couple that he thinks are worth digging out a little bit. But we've also got some great resources, so don't panic if you're not able to take notes fast enough. We've got resources that we're going to lead you to as we get through some of these tactical conversations. Then again, we'll bring Eric and Adam back up for the more of the resources that we can talk about. All right, let's talk about the first tactic, the first thing we could be talking about with our clients as we approach year end, and that's tax practice, tax bracket management. So, Dan, what have you got for me?
- [30:15]
Mark Peterson
Well, this is a, this is a common topic that we address every year, and the opportunities are there. I think the thing to walk away from this year is that with the sunsetting of TCGA coming up in, in at the end of 20, 25, then the idea of taking, you know, things, decisions you make this year, it's good to kind of take a couple year look at it, to be able to think about the fact that we know tax rates. We're pretty sure tax rates are going to significantly change for most of our clients. So that way we want to, we want to try to maximize the benefit of the lower tax rates while they have it. So whether it's gains, accelerating gains, it doesn't affect capital gains as much, but there's a window of opportunity there or maybe pushing losses out so you can take advantage of a higher tax rate in the future. But one it's an important one to think about is Roth conversions. Because Roth conversions are the opportunity to get money from a pre tax account into a tax free Roth account and tax deferred. And the benefit there is that once people get into retirement, it makes a very convenient thing for them to have both already taxed money that's tax free as well as taxable money, which enables them to kind of even out their tax burden over years into retirement. So if they can do a structured series of Roth conversions when they have lower tax rates, it just really sets them up for the future. So the Roth conversion there is something to take a look at. Now, tax brackets aren't the only factor that you want to consider. If you, if you have other cash or discretionary monies that you can pay the tax burden on it, that's great. If you don't, then it kind of becomes a little bit of a wash. But some of those, there's other factors to take into account there. But I think this year is more than anything, you know, tax bracket management is going to be a really important one.
- [32:10]
Eric
And I do want to just call out TCGA does those provisions. Sunset December 31, 2025. So to Dan's point, just starting to get that two year lookout is a great approach to start taking with your clients. I think the next one we were going to talk about was retirement plan and IRA contributions. I know this one's always a hot topic. And you've got some information for us.
- [32:38]
Mark Peterson
Yeah, and there's a lot of information on here. The biggest thing with retirement plans and IRA contributions that I would recommend that you think about is talk to your clients, ask your clients questions. What plans do they have? Qualified plans? Are they employer based plans, employer contribution plans, employee contributions? What are the limits that they have? How much discretionary income do they have to make excess contributions? What are their income levels that may cause them to Phase out of certain options, which means you need to focus on something different. So asking your clients those types of questions is going to be really important to kind of maximize their opportunities. The one that I wanted to really, you know, just going to remind everybody about was in the qualified plan area and 401k plans is the opportunity for what I would call super funding it with the mega backdoor Roth contribution where people would contribute over and above their deferral as a non deductible. And if the plan allows it, this is a plan document thing. But if the plan allows it, doing an in plan conversion to a Roth and then you'd have more money available in a Roth environment. The reason that becomes important is because normal Roth contributions of course have a income phase out, whereas the Roth, the in plan conversions do not have a Roth phase out. So that's a huge benefit when it comes to trying to maximize your contributions from that perspective.
- [34:07]
Eric
And Dan, this is one just a personal aside. Dan brought this up recently and I wasn't aware that you could do this Roth, this backdoor Roth through your plan. So I just assumed that all Roths were limited by these income phase outs. So this one's been really interesting to learn about. So thanks for sharing your insights with me.
- [34:29]
Mark Peterson
Yeah, yeah. It's an important message to get out.
- [34:33]
Eric
Yeah. And another big topic is education savings. As parents are saving for their kids education needs or grandparents are. What kind of conversations should we be having with our clients about that?
- [34:50]
Mark Peterson
I think that again you're going to hear a common theme is start with asking the questions, what are their goals when it comes to education funding? They were trying to maximize their dollars. They want creditor protection. You know the questions you see on the screen there, because that's going to have an impact on which plans are available. And 529 plans is a common one that you hear about. And the thing I'd like to leave you with on 529 plans is there was a recent change this year in the fafsa, which is the Financial Aid Application for Federal Student Aid. There's a recent change that third party 529 plans that are owned by a third party will no longer affect a student's financial aid eligibility. So this becomes really important. It's called a grandfather grandparent loophole because ultimately they're able to save and put money into something that's going to help them in college and university funding or other, whatever qualifies. But it's not going to affect any financial aid decisions. The one caveat I throw out there, though, is if you have current 529 plans, you say, great, I'll just transfer it all. My, my parents, so they can help my kids. Just be aware that the, who the owner is and who the beneficiary is, it's going to have an impact on gift tax returns. Might not have a big tax impact, no income tax impact. But the point is, beware of some of the impacts of changing owners or changing beneficiaries, because it's going to make a big difference there. One thing I will say is in 2024, that part of the Secure 2.0 is if you have existing funds left in your 529 plan, and the 529 plan has been around for 15 years, then you now have the opportunity to transfer a limited amount, 35,000 from the 529 plan into your Roth IRA. So that's new for this year, for 2024. Looking forward to next year.
- [36:46]
Eric
Okay, so some good planning opportunities to talk about in 24 with your clients. Okay, good stuff. And then let's see what our next topic was. Gifting and charitable planning.
- [36:59]
Mark Peterson
Yeah, we know gifting and charitable planning. So gifting, of course, there's the annual limit. So again, questions, what are their goals? Had they anticipated gifting and just been putting it off? Not doing it. Take advantage of it, because once you go past the end of the year, you can't go back and, and redo it. So you want to make sure you take advantage of it. 17,000 in this year, it jumps to 18,000 next year. Also, just be aware that if they're gifting directly to someone's tuition provider or medical provider, then it doesn't count toward the 17,000. So that enables them to be, to be more focused on what they're doing, but not have those type of limitations. On the charitable side, if you're talking, if you know that your clients are charitably minded and you'll know this from their tax relationships, if they're making charitable contributions and they're not looking at and analyzing the qualified charitable deduction from their IRA. So if they're age 70 and a half or more, they can do 100,000 of that in the form of their IRA, keeping it out of tax entirely, and not have to worry about percentages for charitable deductions and whatnot. So again, that's a topic that, as we get closer to the end of the year, is always one that comes up.
- [38:20]
Eric
I'm always interested in what the annual gift tax exclusion is because I plan on winning the lottery and I have a few people lined up that I'm going to be making annual gifts to. So I'm always keeping my eye on what that number is. Let's talk about. We mentioned that TCJA is going to be sunsetting in 2025. And you've brought up some things that we need to go ahead and start getting on the radar, getting into the conversations to be thinking about what happens when some of those sunset provisions go away.
- [38:53]
Mark Peterson
Sure, 26 months and counting. Right. So the countdown is on. So one thing that we've talked about, there's been discussions, there was a session at National Tax Conference on this is the managing that lifetime exemption gift as you approach the sunset. We know that it's a higher amount now and it will likely be lower. We don't know what it's going to be. But don't just assume that if they do want to use that exemption in gifting, don't just assume that the best thing to do is to split it between the husband and the wife. Because if you're split between the spouses, you may be disadvantaged depending on what the ultimate limits go down. So the point is plan for the family as opposed to planning for the individual. I think bracket management is another one. Another technique that somebody had shared was the idea of with the inherited IRAs, the 10 year rule for inherited IRAs, you don't have to necessarily take the distribution, but if you know that you're going to have a lower tax bracket now, you might want to take some of those distributions larger up front, pay a lower tax rate and then not and then and pay less taxes on it later on. So just kind of managing that if you have clients that are in an inherited IRA standpoint. So really anything you can do to manage it just goes on hyperdrive when it comes to. When it comes to accelerating expenses or pulling in the income.
- [40:25]
Eric
Okay. And then the last time you were with us, you talked a little bit about Secure 2.0 and you've identified some areas where we're looking to Congress to make some corrections.
- [40:39]
Mark Peterson
Yeah. This is not new news. There's been several things that have come up with respect to the secure 2.0 corrections. The AICPA's PfP and tax committees did a comment letter to the irs. They agreed. Some of the lawmakers in fact identified these as well. And we agreed with those. There's some other ones that we've added to that. But as Mark said earlier, it just depends on what happens with the bills and whether it comes through this year, whether it be a rider on something else. So it's still up in the air. We're not sure what's happening, but, you know, there's a desire at some point, you know, has to be corrected.
- [41:16]
Eric
Yeah. So just letting you all know that these corrections are on our radar and we continue to advocate for them. Dan, thanks so much. That was a lot, a lot of great information. And it really just continues to prove that these are conversations that as practitioners, we've already been having with our clients. We're already thinking about them. And so this is just a natural conversation that leads us into something a little more formal and then helps us identify the resources that we need to provide those services. So, Eric and Adam, welcome back.
- [41:52]
Lisa
And Lisa, as you've been busy kind of reviewing those slides, I've been looking at all the questions coming in. So to kind of kick this off, just I think a little bit more framing. And then we're going to get into some of the details of this financial planning tool that we really think can help some of the tax practitioners. So, Dan, there's questions related to, you know, when you've got tax planning, financial planning, and then ria, you know, like the kind of journey there. There's questions here of, you know, do I need to get an RIA, be an RIA? And then there's also questions on the path, the PfP. So I think the goal here, again is for us to talk to the tax practitioners about leaning in and providing more of these financial planning, having more of these financial planning discussions, but talk a little bit about the spectrum there of moving all the way into asset management.
- [42:55]
Mark Peterson
Sure, there's a wide variety of business models that are available out there. And certainly, you know, there's, there's a lot of financial planning that happens that has nothing to do with investments. And I think that's a really important point, that financial planning is really broader than investments. And there's Nothing that stops CPAs from being able to have those financial planning conversations with your clients as they start to touch on things like investment education, investment allocate investment allocation is definitely a no no with respect to needing to be registered. But there's, there's a, there's a middle ground there where you start to bring up some of those types of things. The good news is there is an accountant's exclusion. So if it's de minimis, again, it's not a problem. But when it starts to be something that's a major focus on the investment side, then you do have to get into the registration. We have some guides in the PFP section that can help with that, that, that question.
- [43:52]
Lisa
And, and then the question being ring adamant, it was almost a setup to this slide here, you know, from the traditional perceptions versus this holistic guidance, financial planning, life planning approach that we're going to be discussing in the upcoming slides.
- [44:11]
Adam Holt
Yeah, I mean, it's really interesting. I mean most of the tax professionals that we're talking to have had this kind of historical or traditional perception of what financial planning is. And while I don't do that right, and yet we all know that they are actually doing a good amount of work, as Lisa said. But I think it's really important that we all pay attention to this theme because it's affecting both professions, especially those that have been siloed in the either investment management, the insurance, that annuity, property and casualty as well as the tax, maybe even legal. Is this kind of old perception, as you can see here on your screen, moving towards this comprehensive or holistic guidance. And I think one of the real takeaways about this is that to recognize that given the preeminence that tax professionals have created associated with the trust factor, especially around financial decisions, is that we now are, I think our customers are expecting greater professional collaboration. So whatever our professionals are doing to help bring all of the expertise to the table is going to be a really important aspect of where all of us go to serving the clients holistically.
- [45:16]
Mark Peterson
Yeah, Adam, I was going to say I think there's some major themes that are coming through as far as concepts and trends that you're seeing in the marketplace that kind of address this whole idea of how do you connect the technical knowledge with the, you know, what the client needs and you know, what are they looking for in some of the big themes that you're seeing there?
- [45:38]
Adam Holt
Yeah, well, I mean you can see here that, that, that I think this idea of comprehensive is almost scared people because they said, well, I don't even know what that means or I'm providing guidance. There's a, there's a, a kind of awareness, what we're tending to call advice engagement. And of course we all know that the conversations around AI has been gosh, prolific all over the place. But one of the things that I think we all have in the human capital and collective experience we all have created over time is this idea of the original AI, which is advisor intelligence. And of course applying that to our clients lives in real time. And we really frame it around this concept of advice engagement and the journey that a client has throughout their lifetime relationship with the professional. And you can see these four terms have been big themes that we've seen literally globally as a lot of professionals and we'll call subject matter experts are now merging into this idea of I got to create an experience for my customers, I got to build trust, I got to get them involved, I got to empower them to make better decisions when they're not with me. Probably have heard of behavioral finance becoming a big thing. This is really the drive to changing behaviors. And of course, since we're all competing with a level of experience, certainly on demand, how does a professional create a way to deliver advice and guidance to their clients that feels like it matches Starbucks or Disney or some of these other kind of consumer experiences? So the pressure is on us in many ways to all deliver what we would call the evolution of financial planning is really this engagement.
- [47:09]
Eric
Adam, can you show us some of the resources that you have and how your technology kind of creates this journey that you've got described there?
- [47:19]
Adam Holt
Yeah, certainly. Well, I think one of the most, I think things we're probably most well known for is for our name brand, which is AssetMap, which is one of the things that we realized years ago. So over a decade ago was with our highest net worth clients that typically had the complexity that meant business entities, families in their household, family members, generation one, generation three, maybe business partners, trusts offshore, etc. All the complexities that we're all used to deal with, we had no way to really view that. So asset map really was born out of the need for all of us who are in the advice world to literally put everything you got on one page. And there's a very kind of technical aspect to that that we can all appreciate as technical professionals, but also make it consumable for the client because at the end of the day, they also want to know what their, where their stuff is. So I think the real key to this is not so much the it starts with this visualization, then of course running algorithms and all kinds of mathematical feedback. But then probably the most impactful part, Lisa, here is this is how are we helping our clients understand what's going on in their life and then how are we applying our insight and asking good questions around what they're doing to see if we can actually add value. And that's really the interesting thing. Most clients tend to think, well, I'm only going to tell you about my tax stuff when the reality is they're dealing with other issues that have real big, I think financial Implications.
- [48:40]
Eric
Yeah. And I think that's a great lead into to how CPAs can actually get started with these conversations. And you were kind enough to give us. Are we asking the right questions? A great resource that we've added into the resource section of the platform today. So make sure that you grab that because I think it's going to really help you understand how these holistic conversations can begin. Dan, you've brought some additional resources that you wanted to make sure we got to talk about. So let's take a look at those as well.
- [49:14]
Mark Peterson
Yeah, just really quickly, we've got the two items. The one item that Adam mentioned, the PFP section has a resource available to ASCPA members. That's the analysis of a tax return. It's a great resource to be able to use for last year's tax return and use it as a basis for year end conversations for this year. So I encourage you to take a look at that in the resource for the town hall if you want a deeper dive on the year end stuff. If you're a PfP section member. Bob Keebler in our video library has a video out there. And certainly we have a year end tax planning kit that's about to roll out for tax and PfP for section members, for both tax and PFP section. So again, the resources of both the tax and the PFP are there to do it. And then we do have, for Adam and myself, we'll be on a webcast on Monday and Tuesday. We'll talk a little bit more about that. As far as how does this, what does this look like both for tax people but also for financial planners? If you're doing financial planning, how can what Adam just briefly talked about there be put to work in your practice?
- [50:18]
Eric
So, Dan, if you, if you aren't active in these conversations with your clients right now, do you start with that first one, the tech driven tax practice? Okay.
- [50:27]
Mark Peterson
Yes. Yep.
- [50:30]
Eric
Okay, that's great.
- [50:33]
Lisa
We'll have a slide on that at the end. Kind of more information on how to access those deeper dives on. What Adam and Dan have been describing here is this journey into financial planning.
- [50:46]
Eric
For the tax practitioner and a lot of great resources.
- [50:51]
Lisa
All right, so this is a comp. Dan, comprehensive resource slide. Anything you want to add on?
- [50:59]
Mark Peterson
Yeah, just an observation that you've heard this common theme of the advantages of combining and integrating tax and PfP. Both the tax section and the PFP section are committed to helping to provide the tools to do that. And there's links here on this page. I encourage you to take a look at them. And, you know, we want to be able to provide the resources to do it. We've got a lot of great volunteers on both the tax and the PfP side that are helping to contribute and get this message out there. So it's a great opportunity.
- [51:29]
Lisa
Well, now we've got a lot of questions here, so let's, let's pivot into open forum and some of the questions will be directed to both you, Dan and Adam. And we've got Mark here back with me in the studio. One thing that. Yeah, sorry, Lisa.
- [51:46]
Eric
That's okay. I was just going to say real quickly that I wanted to let you know that the tax section, engagement letters, which are always a huge benefit and everyone anticipates getting those, are going to be available very soon. If not tomorrow, they'll be on the site on Monday.
- [52:03]
Lisa
Well, bringing up tax is one thing I did we did want to mention about another element of the tax conference this week was an award given to someone who participated been in many town halls, Ed Carl. So, Mark.
- [52:19]
Dan Snyder
Yeah, Ed Carl, 40 years with the AICPA National Expert on tax ethics, absolute devoted to the profession, was a recipient of the Arthur J. Dixon Award. Many, many of our volunteers have gotten over the years that have really showed that kind of dedication. But we really wanted to call out Ed as a longtime participant in these town halls.
- [52:43]
Lisa
Okay. And if Ed was here with us, he'd probably be helping, you know, dig into some of these questions related to what's going on with the IRS with this potential shutdown if it does occur in January and February. So a number of a few people pointed out or asked, could there be an exemption for the IRS like defense? And that probably would be. I think there's some Republicans that don't would be okay with the IRS shutting down. So this probably would be a little bit different than defense.
- [53:13]
Dan Snyder
It is. You know, I mean, I think, I think more likely that you would be, you know, an essential personnel, which means that you're required to show up. Doesn't necessarily mean you're going to be paid. That's more likely. There's also, listen, there's a possibility they could pass the individual bill that funds the IRS and Treasury and that goes to the president and gets signed. So there are some paths. I think that there's a reason why we're focused on things that the IRS can implement under its own authority because we think that that's where we should focus with the likelihood of where we're headed.
- [53:47]
Lisa
Okay, thanks, Mark. And back to Dan and Adam here. Just this is just. Thank you. A lot of questions came in. Dan, you're going to have over 100 questions for you to kind of digest and we'll leverage these in the follow up newsletter.
- [54:07]
Mark Peterson
Absolutely.
- [54:08]
Lisa
But I think there's people that agree that they considered some of the advice that they're providing as being part of pfps. So just I think this is something that is acknowledged. I mean, so why just, you know, in some ways have we not been able to get some of the tax practitioners to move more into this financial planning? Is it just. Adam, what do you see as the challenges or the obstacles related to making this change?
- [54:38]
Adam Holt
Yeah, I think honestly the customers of tax professionals don't think to ask. I think that they have a perception around technical expertise and they keep that silo unique and they don't tend to bring up these other topics, especially around, let's say perhaps estate planning, unless they become urgent or they become episodic.
- [54:58]
Lisa
Right.
- [54:58]
Adam Holt
They're going through it right now and they've got to scramble. So the planning side or really just projecting forward as opposed to being reactive is really, I think, a shift. But we all know as professionals, tax professionals specifically need to have a permission opportunity to talk about these other things outside of their traditional scope. So that's where I think we can all make a difference.
- [55:18]
Mark Peterson
Well, and I would add to that that the other thing is that many times a tax professional thinks about financial planning as investments, investment management. And so that's a natural barrier to kind of further that silo effect. And when they do have the conversations, they're couched under a tax manner as opposed to that broader financial planning banner. So there's a number of factors that we definitely need to kind of break down some of those barriers.
- [55:45]
Eric
I think you're right, Dan.
- [55:47]
Lisa
Well, thanks, Lisa. I don't know if there's anything that you've picked up in the questions. I think we're pretty much close out of time. I will one, there was some BoI questions that came in. We are going to be having AON join us in the late December town hall where they will be getting into BOI and the questions around you pull. So we will be, you know, discussing that in more details or anything else that you want to share related to that, Lisa?
- [56:18]
Eric
No, apparently I've gotten a few more friends who volunteered to hang out with me when I hit the lottery though.
- [56:26]
Lisa
People want to hang out with you, Lisa, even if you don't win the lottery. So. Hey Bark, thank you. Thanks, Adam. Thanks, Dan. Let's, let's go through these remaining slides. Lisa. So here's the in summary lot covered today and leverage that. And we already discussed that there are going to be these two other webinars. One of the webinars is more geared to attack professional. That's the one occurring on November 20th. If you are a PFP expert, there's another1 on November 21 that will kind of go into this tool and capabilities in a little bit more advanced style. Lisa?
- [57:10]
Eric
Yeah. I wanted to let you know about a new series that's going to be starting in January. So many of our audience are not just in tax. They might be in industry, they might be interested in financial accounting and reporting or they might be in audit, might be in all of those areas. So we're launching a new series that is free for AICPA members with cpe. And you'll see a QR code that you can click on and sign up for that. You'll get auto registered just like you do for this one. And we hope that that will certainly expand the the conversations around AA issues.
- [57:47]
Lisa
Thanks, Lisa. So our next town hall will be coming to you live from Digital cpa. We do that every year. It's going to be on Tuesday, Tuesday, December 5th at 1pm and I think in the upcoming newsletter we're going to just make sure you're well aware of that. And then also we're going to give more information on, you know, getting that auto calendar registration set up so you know, you're there's no issues. And you you joining our town hall when, when they're scheduled. So once again, that'll be Tuesday, December 5th at 1. And we'll have Barry Malonson and the chair of Digital cpa, Lindsay Lindsey Stevenson and our current AICPA chair, Okorie Ramsey. So that'll be a great session. Here's some Twitter feeds or I should say X feeds. So Lisa, anything you want to share? I think there was one here of spreading the word.
- [58:43]
Eric
Yeah, I wanted to call out the one Accountants are Fun. That's a new hashtag I'd ask you to start looking for on LinkedIn or on X if we're going to go with that terminology. So just designed to generate some interest and excitement about all the cool stuff that we get to do in accounting.
- [59:02]
Lisa
So that brings us to the end of today's program. The next one is December 5th and then our final one of the year will be December 21st. We wish you all a safe and happy Thanksgiving and we look forward to being with you after that, hopefully. Well, you know, a well deserved break for all of us.
- [59:23]
Eric
Thank you for your participation.
- [59:26]
Mark Peterson
You can now subscribe to the AICPA.
- [59:28]
Eric
Town Hall Series on your favorite podcast platform as well as watch archives on.
- [59:34]
Dan Snyder
YouTube and AICPA TV.
- [59:36]
Eric
Tune in for live broadcasts Thursdays at 3pm Eastern Time.
- [59:41]
Dan Snyder
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