Wealth Advisor's Guide to 2019

Comprehensive wealth planning strategies for high-net-worth clients

Legislative Update
Tax reform one year later

Legislative Update

Tax reform one year later

United States 116th Congress

House of Representatives
Pre-Midterm
Post-Midterm
193 Democrats
235 Republicans
235 Democrats
199 Republicans
Senate
Pre-Midterm
Post-Midterm
47 Democrats
51 Republicans
2 Independents
45 Democrats
53 Republicans
2 Independents

Tax Reform One Year Later

Bonus depreciation and Section 179 deductions

IMPLICATION

Limits and eligibility are expanded, allowing for greater tax benefits

ADVISOR ACTION PLAN

Discuss nonpurpose margin loans with small-business owners

Qualified loan offsets inside employer retirement plans

IMPLICATION

Upon termination from service, employees can pay back outstanding loans up until the tax-filing deadline

ADVISOR ACTION PLAN

Inform rollover clients with an outstanding loan of the new deadline

Applicable exclusion amount

IMPLICATION

The amount doubled beginning in 2018 but reverts back to the 2017 threshold (inflation adjusted) in 2026

ADVISOR ACTION PLAN

Consider a spousal lifetime appointment trust (SLAT) for clients concerned about the potential reversion to lower limits

Qualified business income

IMPLICATION

Certain pass-through business owners are eligible for up to a 20% deduction

ADVISOR ACTION PLAN

Partner with a competent CPA; the rules are complicated!

Roth IRA conversions

IMPLICATION

Recharacterizations are no longer permitted

ADVISOR ACTION PLAN

Ensure clients understand the decision to convert is irrevocable

ABLE accounts

IMPLICATION

Additional contributions permitted for beneficiaries gainfully employed

ADVISOR ACTION PLAN

Suggest clients with a disabled relative explore a 529 ABLE, even if the plan is out of state

Miscellaneous itemized deductions

IMPLICATION

No longer permitted

ADVISOR ACTION PLAN

IRA assets should be used to pay IRA custodial and advisory fees

Alimony

IMPLICATION

No longer deductible for the payer or taxable to the payee for marriages that dissolve beginning in 2019

ADVISOR ACTION PLAN

Adjust after-tax cash flow projections accordingly for the years 2019 through 2025

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