The onset of a new year presents an excellent opportunity to potentially optimize your wealth planning strategy. The San Diego Union-Tribune sought insights from Dick Pfister, CAIA, CEO and founder of AlphaCore Wealth Advisory, to help investors build wealth in today’s economy.
The first strategy to utilize this year is to take advantage of changes occurring in various types of savings accounts. For example, Pfister says changes to rules surrounding Roth IRA accounts and 529 college savings plans will make saving for retirement or college easier in 2024.
Furthermore, changes from the Secure 2.0 Act also make it easier to save for retirement this year, including that Simple and Simplified Employee Pension IRAs can now be treated as Roth contributions. “This will help business owners and their employees put away more money for retirement after-tax. In addition, the new law enables employer matching to qualified plans to be Roth contributions,” explains Pfister.
Another way Pfister says investors can build wealth in 2024 is to consider a tax-free exchange into a REIT if their real estate has appreciated. According to Pfister, many of his clients with appreciating real estate portfolios are worried about capital gains taxes as Proposition 19 alters property tax exclusions for transfers between generations.
While the traditional way to mitigate these capital gains taxes is through a 1031 exchange, Pfister says more and more AlphaCore clients want to “wash their hands clean altogether of their real estate burden to better enjoy their golden years.” For these clients, AlphaCore is utilizing a more modern approach: a 1031/721 exchange.
“The 1031/721 exchange is a two-step process that allows the client to make a tax-free exchange of their existing real estate for ownership in a large institutionally managed Real Estate Investment Trust (REIT),” says Pfister. “Once the client has been enrolled in the REIT, they have the freedom to sell their shares over a period of time to fund their own retirement.”
However, AlphaCore ensures the strategy fits the client’s unique needs and goals before embarking on any solution. “Ultimately, each client has a specific situation and circumstance to which we adapt, but the 1031/721 exchange has served as a great solution for many AlphaCore clients,” he tells the publication.
Click here to read the entire article in The San Diego Union-Tribune. If you are interested in learning more about how to potentially build wealth in 2024 and beyond, please do not hesitate to contact us.