The Retirement Savings Time Bomb... And How to Defuse It
by Ed Slott
Reviewed by Jon Ford, CFPA®
I bought this book hoping it would add clarity to parts of the U.S. Tax Code. Since beginning my practice seven years ago, I've spent 20-plus hours each year in tax-planning seminars. They are invariably "topical," in the sense that nobody offers an integrated view. Instructors and coaches provide updates on key changes from the last legislative session and speak to particular topics such as "tax treatment of ISOs" or "S-corp liquidations." Most are quick to point out that they are teaching what we've asked for.
I think of these topical reviews as skeletal tax planning studies. The IRS, via its forms and investigative manner, provides muscle to bone. Imagine, though, a body of muscle and bone with no connective tissue, no blood, and no life, if you will. That's how I viewed my understanding of tax planning.
Ed Slott is always added to my list of must-see presenters when he and I are at the same conference. My hope is that he will add the sinew to bone and muscle after all, he's one of the top authorities in the country. I read his book for the same reason; clients have retirement plans and I don't want my ignorance to be an obstacle to their reaching financial goals. Besides, every expert in the country, including Slott, is quick to point out the dire legal consequences that await me if I don't follow his or her advice.
Following Slott's presentations, I'm invariably left with a distinctive feeling of helplessness. He cites case after case of tax attorneys and accountants who cost clients millions of dollars because of negligent and incompetent practices. Private letter and tax court rulings and changing regulations represent only a small part of the tax practice jungle. No machete has yet been sharpened that can cut though the undergrowth.
My hope that The Retirement Savings Time Bomb would be that tool was much too optimistic. The fault lies, however, not with Slott's clear and detailed presentation, but slow learner that I am, with the incomprehensible nature of the United States Tax Code. Let me then say here and now, my apologies to Ed and any other teacher whom I believed would add coherence and unity to my study of tax law.
The author describes five steps to protecting retirement savings: (1) smart timing of rollovers, beneficiary designations, and withdrawals, (2) insuring savings with life insurance, (3) stretching your IRA with proper beneficiary designations, and (4) avoiding the death tax trap. In his usual way, Slott attends to details, gives numerous examples, and by default, leaves it to the reading audience to generalize details from his examples to their real world.
Please don't misunderstand me. I have already recommended this book to over 250 students and others since finishing the reading. I will continue to attend Ed Slott's presentations wherever I find them, and I will be first in line to buy his books. I simply will not expect him (or anyone else) to build for me a coherent theory of tax practice based on guiding principles because there is none. This book helped remove my Pollyanna view.
The Retirement Savings Time Bomb... And How to Defuse It - by Ed Slott
Penguin Books, 2003, $14.95 (Paperback: 354 pages)
Jon Ford, CFP, is president of Commission Free Financial Planning Solutions Inc. in Cedar Falls, Iowa.
Reprinted with permission by the Financial Planning Association, Journal of Financial Planning. For more information on the Financial Planning Association, please visit www.fpanet.org or call 1-800-322-4237.