Financial planning tools and techniques have evolved over time to meet families' changing needs and align with legislative shifts. Two important tools offer ways to alleviate the financial burden of future commitments, such as purchasing a retirement account or funding a child's college education.

Roth IRAs

A Roth IRA provides qualified distributions, which include:

• Distributions taken at age 59 1/2 or older
• Withdrawals made after the Roth IRA has been open for at least five years and the account holder is at least 59 1/2 years old
• Withdrawals due to total and permanent disability
• Posthumous withdrawals to the beneficiary
• Distributions of up to $10,000 for the purchase of a first home

These distributions are tax- and penalty-free if the original funds are not withdrawn before the age of 59 1/2. Exceptions for the 10% additional tax are outlined in IRS Topic #557, while qualified higher education expenses are detailed here.

Education funding through a Roth IRA offers benefits that are often limited in 529 plans, such as fewer investment options, restrictions on rebalancing and higher investment management fees. For individuals eligible for a Roth IRA, it is a sensible option to consider. Structured settlement

accounting professionals and their clients can utilize structured settlements to achieve financial planning goals. Unlike Roth IRAs, which have contribution limits and income-eligibility criteria, structured settlements do not impose such restrictions. Structured settlements can be funded without limitations and tailored to meet specific needs while growing tax-free or tax-deferred, depending on the circumstances of the case. For individuals whose income exceeds the threshold for Roth IRA eligibility, a structured settlement remains open for investment. How do you decide which option to use? I prefer structured settlements for the following reasons:

• Guaranteed return
• No fees

Unlimited Contributions

Did I mention there are no fees and a guaranteed rate of return?

When a specific need with a known timeframe arises, the optionality of investment is removed. Market volatility often occurs when resources are most needed. Adding financial stress to the emotional departure of a child to college has never seemed appropriate to me.

Once college funding is secured, the financial plan turns to retirement. I often say that there are very few problems a good income stream cannot solve. Accounting professionals and clients who are able to afford structured settlements understand the significance of financial security. Securing the foundation of your financial plan before delving into financial risks is crucial.

IRAs, 401ks and other investments do not guarantee returns. The past 16 years of uninterrupted growth have created a nonchalant attitude towards risk. Educating your clients on these risks will be the most challenging task for financial planning professionals. As a CPA, you can explain guaranteed cash flow and the impact of unlimited income deferral on a taxable basis.

Unlike other retirement assets, structured settlements allow you, as the tax planner, to customize income recognition while establishing a guaranteed retirement income for your client. Knowing which vehicle to use ensures a more comprehensive financial plan. Being well-informed about utilizing tools such as structured settlements can make a significant difference when it matters most.