William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

TaxFacts Intelligence: Nov 30, 2022

Posted by William Byrnes on November 30, 2022


The Texas A&M Master and LL.M. programs (e.g. international tax, transfer pricing, wealth management, or risk management) are accepting applications from financial professionals and from lawyers. Over 850 enrolled, the enrollment for a course’s section is kept to between 20 and a maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.
2022

Clients today are wondering whether there are any smart moves that can be made to take advantage of the current market downturn.  Depending on the client’s situation, there are many reasons why a client might want to consider a Roth conversion in today’s market.  Also, we have details on the proposed SECURE Act 2.0’s new rules for part-time employees in 401(k) plans and the most recent IRS extension of the waiver of the so-called “physical presence requirement” for retirement-related actions requiring spousal consent.  Read on for more.

Considering Roth Conversions in a Down Stock Market.  The primary reason to consider moving traditional IRA funds into a Roth IRA in a market downturn involves tax savings when compared to strong market conditions. When a client converts to a Roth, taxes are due on the value of the amount converted (at current ordinary income tax rates) in the year of conversion.  If the value of the client’s IRA has declined (which is what most clients are seeing right now), the client can convert the IRA assets at that lower value—generating a correspondingly lower tax liability.  If and when the market rebounds, the gain on the converted Roth assets will be tax-free to the client.Under current law, conversions may be even more attractive to certain clients because income tax rates were reduced by the 2017 tax reform legislation.  Those lower tax rates are temporary and set to expire after 2025.  In fact, many clients might have been considering a Roth conversion in order to take advantage of the lower rates anyway.  For more information on Roth conversions, visit Tax Facts Online. Read More

SECURE Act 2.0 Accelerates Timeline for Part-Time Employee Eligibility for 401(k)s.  Under prior law, employers were permitted to exclude workers who performed fewer than 1,000 hours of service per year from participation in the employer-sponsored 401(k) (this rule still stands, as modified by the SECURE Act’s additional eligibility requirement).     Under the SECURE Act, employees who perform at least 500 hours of service for at least three consecutive years (and are at least 21 years old) also must be allowed to participate in the employer-sponsored 401(k).  In a surprise move, a proposed version of the SECURE Act 2.0 would accelerate the timeline, so that employers would be required to start allowing part-time employees to participate after only two years with at least 500 hours of service for the employer.  For more information on the eligibility and participation requirements for 401(k) plans, visit Tax Facts Online.  Read More  

IRS Extends Relief from Physical Presence Requirement for Spousal Consents until December 31, 2022.  Notice 2022-27 extends the physical presence waiver for certain retirement elections through December 31, 2022.  This relief waives the requirement that certain retirement plan elections must generally be witnessed in person by either a plan representative or notary public.  The relief was initially granted in response to the COVID-19 lockdown.  Typically, elections that require consent of a participant’s spouse must be witnessed in the “physical presence” of an authorized witness.  The relief allowed this “witnessing” to be accomplished via a live audiovisual medium.  The IRS has also requested comments on whether this option should be made permanent even as the nation begins to return to normal following the COVID-19 pandemic.  For more information on situations where the physical presence requirements apply, visit Tax Facts Online. Read More

Look in your Tax Facts Online app for our continuing analysis of 2022 and 2023 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier of law schools and is ranked in the top 10 for the employment of its graduating law students among U.S. law schools.

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