No. 3 – Net Unrealized Appreciation (NUA)
The net-unrealized appreciation rule only applies to people with company stock in their company retirement plan, and taking it a step further only applies to the stock that is inside their company retirement plan. Still, it may be hugely beneficial to those holding highly appreciated company stock within their plan.

“It has to be a lump-sum distribution, and everything has to come out in one calendar year, so there’s not much time to start this process,” said Slott. “The company stock gets withdrawn in-kind into a brokerage account, and the client only pays taxes on the cost basis. Appreciation is not taxed until it is sold, and when it is sold, it will be taxed at the long-term capital gains rate.”

Non-company stock securities within the plan can then be rolled over tax-free into a traditional IRA or converted to a Roth account.

After a decade-long bull market, many clients may have highly appreciated employer stock in their retirement accounts.

To take a NUA distribution, a client must have reached age 59-and-a-half, or have separated from employment, or have suffered death or disability.

No. 4 – Qualified Charitable Distributions (QCDs)
QCDs are another useful way to reduce the balance of traditional retirement accounts and lower the future tax burden for clients, but the account owner or beneficiary must be age 70-and-a-half or older.

“It’s a direct transfer from the IRA to a qualifying charity,” said Slott. “When funds go to the charity, they’re then excluded from income. This is valuable because most of your clients get no tax benefit out off the gifts they’re currently making.”

IRA owners can make up to $100,000 in QCDs per year, but QCDs are not available from company plans and cannot go to a donor-advised fund, a private foundation or a supporting organization.

Because the 2017 Tax Cuts and Jobs Act increased the standard deduction, fewer charitably inclined clients qualify for itemized deductions, said Slott. QCDs are one way advisors can help clients realize a tax advantage from the kind of giving they’re already engaging in.

No. 5 – Life Insurance
“As a tax advisor, I have to tell you that the tax exemption for life insurance is the single biggest benefit in the tax code and most people don’t use it enough,” said Slott.

In 2019, the SECURE Act eliminated the “stretch IRA” strategy, Slott said, which allowed certain beneficiaries of a traditional IRA to “stretch” their required distributions over their own life expectancy, resulting in lower annual distributions and a lower income tax burden.

Now, most IRA beneficiaries are required to distribute all of the account’s assets and pay income taxes on those distributions within 10 years of their inheritance.

The tax advantages of IRA trust strategies, like the conduit trust, were also neutralized by the SECURE Act, said Slott, making life insurance planning even more valuable for clients.

“The big benefits of life insurance is that you get money to the beneficiaries at zero tax cost,” he said.