Tax strategy scan

Retirees between the ages 59½ and 70½ should consider the Roth IRA conversion strategy, an expert says.

Failing to monitor reinvested dividends could boost their tax bills.

Certain clients will have to take a taxable distribution from the account every year.

Clients must still account for gains not incurred through a sale or cash distribution.

Although the rules have become more lenient, high-income clients must not be complacent.

Salary-reduction arrangements can exclude up to $520 each month from a client’s taxable income to cover these expenses.

One option for the higher earning spouse is to use an IRA as payment.

Even investors who aren’t ultrawealthy may be able to avoid income taxes on their investments with “off the rack” strategies similar to the specially designed life insurance contracts sold by some financial firms to ultrahigh-net-worth clients.

Clients should not only check the fees, but also compare their after-tax returns.

Reporting to the IRS can be complicated and boost preparation fees by as much as 300%.