The new tax law has created a certain amount of chaos that'llcontinue to juice not just accountants, but for financial serviceproviders, too. (Photo: Shutterstock)

When it passed, everyone was ecstatic as they saw theirtake-home pay immediately shoot up. But now… now is more than ayear later. And all those refund “bonuses” people had become soaccustomed to? Well, you can't get a refund back for something thatwas never taken away from you in the first place.

If you don't know what this means, you may be missing thebiggest opportunity in years (see “Has New Tax Law Twisted Business Owners BestInterests When It Comes to Retirement Savings Plans?”FiduciaryNews.com, February 26, 2019).

Face it. People are confused. Things have changed. If you lookat the math, it's pretty evident they've changed in a good way. Butpeople don't look at the math. They look at their feelings.

That could be a bad thing. Especially for them. For when you paytoo much attention to your feelings and not enough attention to themath, that's when someone who is quite adept at math will takeadvantage. You want to know the worst of it? Those “feelings” folksare likely too absorbed in finding their inner Alan Alda to evenknow they've been hoodwinked.

Like I said. That's a bad thing.

And it's a very frustrating thing for a fiduciary to have towitness. It's like that stupid Prime Directive on StarTrek. Captain Kirk et al must have been very frustratedknowing Star Fleet demanded the not interfere and let nature takeits course, even if that meant another civilization was about to gothe way of the dodo.

Fortunately, for the most part, people aren't dodo birds. Theyknow enough to ask for help when they get confused. Astuteprofessionals know to keep their eyes and ears open for theslightest sign of confusion. When the market is confused, there'sopportunity to add value, to help guide and direct and provide thekind of service all those marketing text books tell you toprovide.

First, let's review the basic “good news” from the fallout ofthe Tax Cuts and Jobs Act. Because of the dramatic increase in thestandard deduction, you don't need all those usual receipts you'dhave to keep to show your accountant when tax time reared its uglyhead.

You'd think this “easier” tax form might threaten the livelihoodof those accountants. Not the case. It turns out the new tax lawhas created a certain amount of chaos that'll continue to juicethose accountants.

That's where the really good news resides. And not just foraccountants, but for other financial service providers, too.

Here's where the changes impact retirement savers (and,especially, business owners):

Because the tax rates are so much lower (and the standarddeduction is so much higher), there now becomes a serious questionas to whether the primary assumption associated with tax-deferredretirement saving remains true.

Namely, in the past it had been assumed that one's effective taxrate during retirement will be smaller than one's effective taxrate while working. This made deferring taxes a good strategy.

But what if that assumption is wrong? What if some futureadministration and Congress decides taxes need to be raised? If youfeel this scenario is more likely, then it's better to contributeto an after-tax retirement savings vehicle (i.e., a Roth).

Indeed, this has been what younger workers have been doing forsome time now. It's likely this trend will only accelerate.

Then the question becomes: What is the best retirement savingsvehicle given the specific make-up of the business (i.e., number ofemployees, employee demographics, overall profitability)? These arevery different questions than the more familiar questions dealingwith 401(k) plan design.

These questions, being terra incognito for most plansponsors, require the presence of an expert professional.

Who do you think that might be?

READ MORE:

Get them addicted to saving —Carosa

How the new tax law affects 5 types ofadvisors

4 new challenges created for employers bythe new tax law