Excerpt from a Thought Leader Forum hosted by Puget Sound Business Journal – Kelly Keydel | Financial Advisor, Principal
Originally Published April 20, 2018
Recent changes to tax laws have resulted in questions and uncertainty for both individuals and corporations. The Puget Sound Business Journal recently held a Thought Leader Forum on the topic with Kelly Keydel, Advisor and Principal with Private Ocean; Gary Kirk, Shareholder with Lane Powell and Charles Purcell, Partner, at K&L Gates. Emory Thomas, PSBJ’s Publisher, led the discussion. Below is an excerpt from the interview. Visit Puget Sound Business Journal for the full discussion.
What industries are you finding are the most, or you expect to be most, affected by the legislation?
Keydel: Potentially real estate. Particularly as you look at cities like Seattle and San Francisco, and given the reduction in mortgage interest deductions, that may have an impact on the housing industry. It may also have an impact on lending.
Let’s identify opportunities that individuals and couples have with the new tax situation in place. What should they be especially attuned to exploring?
Keydel: I would certainly start the conversation with what do we have in the way of a comprehensive plan, and not let any one specific aspect of the tax reform act or even the tax reform act in its entirety drive a decision. At the same time, I think individuals and couples can reap some benefit due to the lowering of the tax brackets potentially resulting in additional cashflow. In addition, giving through a donor-advised fund can allow individuals to gift a larger amount in a given year, utilizing the deduction more effectively, and then spread that gift out over a desired time period to their chosen charities. As noted earlier, this is a good time to reevaluate whether carrying a mortgage or a HELOC makes sense or not. One other opportunity to explore is the possibility of doing more family gifting as it relates to estate planning. Given the new higher lifetime exemption amount, there may be unique opportunities for closely held business owners, who may be looking to transfer that business to the next generation. This may be an ideal time to gift some of that ownership.
How about small business owners? How can they take advantage of the new tax law to maximize retirement savings?
Keydel: Small business owners may benefit from the tax reform act through both lower personal taxes, and by qualifying for a 20% deduction of income. The result of these benefits may be greater cash flow for the business owner, allowing them to add more to tax advantaged retirement plans. This is a good opportunity to evaluate the type of plan that the business owner is currently using. And ask the question “is there something that I could be using that would enhance my tax-deferred savings?” For instance, if the business doesn’t already have a profit share plan or a cash balance plan, both of which have greater contribution levels, I see this as a good time for small business owners to explore these options.
What are other important considerations?
Keydel: There’s a clear call to action. This is an ideal time to revisit your plan, with a professional, to be sure you are still on the right track.
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