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Steven (00:51):

Hello everyone and welcome to the next episode of the Retirement Tax Services podcast Financial Professionals edition. I’m your host, Steven Jarvis, CPA, and this week I have a very special guest with me, an enrolled agent and tax professional. Chad Huebsch is joining me from Blueprint Tax Partners. Chad, welcome to the show.

Chad (01:08):

Thanks, Steven. Happy to be here.

Steven (01:10):

Yeah, I love having conversations with other tax professionals as much as my audience is financial advisors and I have quite a few financial advisors who come on, I love being able to share both sides of it and so you spend a lot of time working with small business owners, with financial advisors doing real estate tax related issues, but really what prompted me to reach out to you and get connected on LinkedIn was post. I had seen basically you were talking about some financial advisors, at least my interpretation was having you come in-house and just do all their tax stuff for ’em and he said, you know what? I’m probably okay going to pass on this one, but I’d love to know more. What was the pitch from the financial advisor? Why wasn’t that appealing to you? Why didn’t you still work with financial advisors? Anyways, give us some background here.

Chad (01:50):

Yeah, no, it was earlier on in my firm history where you really take calls and set up things from anyone who’s interested in chatting and so I know the value of having conversations with professionals and inevitably if your clients sync up the referrals that can come from it. What was interesting is that there was a few financial advisors that had reached out and they’re like, Hey, we know taxes have an impact on all of our clients’ lives and we’d love to see if you could come in and maybe we’ll outsource to you. Maybe we’ll create some sort of joint venture. Ultimately, most of the conversations came down to, Hey, can you just come in under my umbrella under the financial advisor firm and either be an employee or have some sort of joint ownership in an entity that’s providing tax services.

Steven (02:43):

And then ultimately for you, you said No, I’d rather do my own thing. I mean clearly you didn’t just swear off financial advisors altogether. Was there anything specific about the arrangement that maybe you said that’s just not going to be ideal for me? I’ve got some thoughts on this because I see a lot of financial advisors try and do it, but I was just curious your perspective.

Chad (02:59):

Having partners is always a tricky thing in any business. Frankly. What I had found with some of these offers or opportunities was in some cases was I was going to have majority ownership in the new venture.

(03:12):

Some it was going to be 50 50 and I knew really that it was going to be me that was taking on all the risk. My name was signing the tax returns, there was going to be some joint efforts on client generation and stuff like that of business development. But ultimately in one instance it was basically they just wanted to hire me as an employee and I had come from that realm. I had done big four, I had worked for someone else and I was like, yeah, I’m pretty comfortable being my own boss. But what was interesting that came out of it was that a lot of financial advisors would reach out, they’d have a client that we’d work with together and they’d be like, oh, well let’s meet. And all financial advisors, not all, but a majority would love to chat with their client’s tax advisor, but most tax advisors aren’t available. And I say advisor, but it’s mostly can we prepare your tax return is what most default to. And so as we’d meet and coordinate on client situations, they inevitably would reach out and be like, Hey, actually can we do the discovery process for me because I’m interested in becoming client because of the way we approach tax planning first and then prep second.

Steven (04:22):

That’s really interesting. I have a couple of questions on specifically some of the tax planning you do for financial advisors, but before we get there, diving in a little bit more to this arrangement that financial advisors propose because you’re not the first person I’ve heard of receiving this proposition. I run advisors all the time who love the idea of having tax prep in-house and my experience has been that sounds a lot better on paper than it usually played out in reality. Before I started retirement tax services, I actually worked at a national accounting firm that had wealth management and so large teams on both sides of this, but I think what a lot of people miss is that they have this kind of magical idea that being under the same umbrella means that they’ll just be these perfect synergies and whatever other business buzzword you want to use, it’s still two different service models.

(05:09):

It’s two different business line to your point, they want to bring you in as a partner, but it’s still your name on the tax return, you’re still taking on a lot more of the risk. And if you get brought in, I talk about financial advice all the time as, hey, this is a great position for being in the driver’s seat, for being the quarterback, whatever analogy you want to use, financial advisor is going to take a much more holistic approach. The tax partner is going to be focused on taxes, so you’re always going to be in a second position to the overall firm and that can work okay, if you can find someone who doesn’t want to take the risk of being a business owner who isn’t interested in running their own shop. I do know advisors who are able to hire a CPA or an EA onto their team and it works out, but the advisors doing that well went in knowing, Hey, I’m taking on risk here. I’m responsible for this person’s training development. I’m responsible if this person quits. Like if I’ve told all my clients that we’re going to do taxes and what if that person quits on me? So there’s a lot more to it than simply finding somebody like Chad and saying, Hey, come partner with us.

Chad (06:11):

Yeah, exactly. I think you hit it on the head was where’s the relationship derived from? And financial advisors I think do a great job looking at everything holistically, big picture and multi-year, whereas a lot of tax professionals only focus on what happened last year and not only is it a one year by one year focus, it’s usually in the rear view. You’re not looking ahead for the most part. And so if you can find a strong number two, a person that’s okay to be in the weeds but not necessarily generate or lead with relationship, which I don’t think is any surprise to anyone’s. Accountants typically are the introverted head down type of situation. Those people do exist out there. You just have to find are they comfortable with a little bit of risk or like you said, none coming in as an employee. And I think more importantly is does their history, does their background, if they’re higher in coming in, do they line up with the clients that you serve? I think that’s more important. I focus mostly on small business owners, entrepreneurs in the real estate space. I wouldn’t say one of my strong suits is working with retirees, which is a lot of financial advisors, client base.

Steven (07:22):

That’s a really great insight there that I think a lot of people miss. Even if you’re just looking for CPAs or EAs to partner with from a center of influence kind of standpoint of a resource, you’re not even looking for a formal partnership. You still need to keep this in mind that just because someone is a tax professional doesn’t mean they do all things. And in fact, if they tell you they do all things, it’s probably an indication that they’re not a person you really want to work with because if they do everything, they probably don’t do any of it particularly well. So whether you’re looking to bring somebody in house or you’re just looking for a referral partner, someone who can service your clients, that’s a really important recommendation there. Chad, to as the advisor, you’ve got to know your own clients well enough to know what types of tax help they need so that when you go and look for someone to be a referral partner, if they’re going to provide quality service to your client.

Chad (08:07):

For sure, someone with a lot of pension planning, liquidations distributions, charitable giving and a lot of estate planning and anything to do with social security and Medicare, those are the types of questions I would ask if I was a financial advisor looking to bring taxes in house.

Steven (08:22):

Chad, let’s talk a little bit more about what it is that you do for your clients because you have this focus on working with small business owners, you work with some financial advisors, so maybe talk high level about who you typically serve and then just because it’s a theme for us this month, I would love to also hear how you’re helping people, small business owners navigate qualified accounts as far as making retirement plan contributions.

Chad (08:45):

So we have really kind of three client avatars, three client profiles that we look at who we’d like to onboard, who like to enjoy working with first is what I call solopreneurs. That’s the a hundred to 500,000 in revenue, usually no employees or they might have one in some subcontractors that work for them. Client number two, avatar is what I call my small business owners, one to 5 million in revenue, usually not a hundred percent involved in generating revenue has employees.

(09:13):

And then client number three, which is more of a minority of our client base but is real estate professionals. So people that are heavily involved in real estate that could be as a realtor, as landlord, as generating and managing investments on the real estate side. So for me, that’s where the interesting part of the tax code lies. And so that’s who we work with and how we do it a little bit differently is we focus on planning. So immediately when we’re meeting with prospects and going through the discovery process is your only interaction with your accountant sometime between February, march, April, and then they put you on extension and then you never hear from them until it’s, Hey, here’s this form to sign. We’ve got to e-file your tax returns, we want to meet with you at least twice during the year, once in the summer, once in the fall.

(10:01):

It’s really predicated on the clients having good information, so a solid bookkeeping solution in place, running payroll regularly if they’re an S corporation, and really just making sure that we can be part of the team. So I like to think we’re kind of veering into the financial advising relationship perspective where we’re involved throughout the year. I want my clients to reach out and we build that into our service offering where we’re not going to charge them for a 10 or 15 minute phone conversation because we want that information. We want to lead them away from any tax landmines that they’re inevitably going to come across.

Commercial (10:34):

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(11:37):

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Steven (12:13):

I love seeing other people do that. That’s certainly the approach we take as far as having that year-round relationship and it is still more of the exception on the tax side than the norm, but it’s always great to see that other people are leaning into that as well. Chad, talk a little bit about how you help financial advisors specifically for their own businesses, but let’s talk about two things to sort of get lots of questions and see issues in this area, how you help them navigate entity selection and then how you help them navigate what type of retirement plan they should set up for their business. Because you mentioned it earlier, a lot of financial advisors work with pre-retirees and retirees. They’re great at helping someone navigate their 401k IRA rollovers pension, social security, these very stereotypical things that people do need help with. But for the typical financial advisor, that’s not the position they’re personally in. And so the cobbler’s kids have no shoes. The financial advisor themselves ends up not with the best planning all the time

Chad (13:07):

And an accountant same way. Actually, this is my first year I’m outsourcing my own tax prep, which makes me nervous but also really excited that I don’t have to do that. But we work a lot with these financial advisors and the ones that become clients are ones that usually start out getting some sort of 1099 income from their broker and those would fit into the solopreneur. Maybe they’re part of a bigger company, but everything comes to them personally revenue wise to when they start hiring employees and hiring other advisors. And so we have a slew that fit into that solopreneur a couple hundred thousand in revenue to, I have one where the father started the firm years ago and now he makes about 3 million a year and his sons and kids are now making several hundred thousand to a million dollars a year. So they’ve done really well for themselves.

(13:57):

When we talk about entity selection, there’s a tax court case, which I know a lot of people don’t want to veer too far into that, but there’s what’s called the Fisher case where basically it’s how do you report income that’s given to you? So there’s income that usually comes to you as under your social security, and that’s usually where a Schedule C is involved on their tax return. Whereas if you can get an entity in place, an S corp is usually very favorable in a professional service environment most of the time because you’re going to be phased out quickly of the QBI,

(14:29):

The qualified business income deduction and a component of that at higher income levels. How you calculate that, which usually is a 20% deduction on your net business income is a component of wages, how much wages you pay, and as Mass Corp you have to pay some wages. And so we talked through that. A lot of clients in the financial space have multiple advisors as part of the group. The main entity is a partnership. It collects all the fees, it pays all the common wages for all the employees, but then each advisor has their own s corp ation that is the member in that partnership. And so they receive their income. They have the self-employment tax filter that the S corp provides. And that kind of leads into your question about qualified accounts. And so I used to work for an older firm that the go-to was a simple IRA and it was simple and that’s about it. Just the contribution limits were lower, the ability to do matching well is there, but it’s like you have this one option, really there’s two, but everyone chooses the one that’s elective. It’s not the mandatory 2% matching solo 401k is great if it’s a solo provider, but once you have employees it blows that up. So you got to convert it to a traditional 401k. I love the flexibility of the 401k and really from secure and secure 2.0,

(15:51):

There’s so many credits that offset the cost of implementing a 401k. My favorite one that’s new is basically you get a dollar for dollar matchup to a certain threshold, but of what you are contributing as matching contributions as the employer, great credit to offset. And so going back to the options there, 401k is great. You can do up to now it’s 23,500. I was talking to my staff about the unique provision that is for clients that I think are 60 through 63 or 62 this year. Not only do you get the what is normally 7,500, but there’s an extra, I’m blanking on the number, but it’s a couple thousand that they can contribute. So I was like, Hey, as we’re planning this year, know that if there’s anyone 60, 63, they get this extra. But what really gets to turbocharge that is the profit share component, the 25% of your W2, that is the ultimate flexibility that you can put away what you want. And then you could also add that whereas in contrast with the SEP IRA, which is another plan, it is just a straight 25% in W2, which I’m kind of bumping my hands to my fists together for those that are listing. But that goes in contrast to what as many small business owners are organized as an S-corp, you want to keep wages low as reasonable as possible. And then the SEP IRA usually goes in direct contrast with that. So you’re limited on how much you can contribute that way.

Steven (17:17):

There’s a lot of great insight in there, Chad, I really appreciate you walking through that because it is a little bit more nuanced than some people make it out to be, especially online, maybe even on podcasts at times, people will oversimplify these things and say, well, everyone should be an S-corp or everyone should have a step. Or there’s these blanket statements that anytime people talk in superlative, I just start tuning it out because it has to be more nuanced now, even as you talk about having firms with multiple partners have a partnership and then getting paid to an escort, because for people out there who are a little bit savvy, you might think, well, they’re both passed through entities. Why does it matter? But Terry, you’ve done a great job of explaining what some of those steps are, and there’s also some non-tax things. There’s some just legal and operational things that get way more convoluted if you want multiple partners in an S-corp versus a partnership. And so this is a bigger conversation than what did TikTok tell me I should have as an entity selection

Chad (18:13):

For sure. And you have to look at IRAs as well, just the traditional IRA Roth IRA. I had a client that was super excited about a 401k and you wanted do the mega backdoor Roth this year. And so we helped him through that calculation and how it all works and what ultimately gets reported. That leads to a few other plans. One in particular is either called a cash balance or a defined benefit plan, which is super powerful but not broadly applicable frankly for a lot of folks. But if your situation calls for it could be a pretty sweet setup up good tax deductions this year.

Steven (18:49):

We haven’t talked about the cash balance plans recently on the show, so let’s talk a little bit more about that because I’m with you. Cash balance plans can be incredibly powerful, but there are, I’m saying contrast to just set up a 401k or a SEP, it’s a little bit more of a long-term plan. You got to really commit to this. It’s not the kind of thing that we’re going to do on a whim and then sort of fund every now and then. If we’re going to do it, we got to do it and if we follow through, it can be incredibly powerful. So talk a little bit more about that.

Chad (19:16):

So the situation where it is usually super favorables where you have a 401k in place and you are already maxing out through the profit share, so you’re getting that roughly $70,000 between the profit share and the employee contribution and there’s more money to put into those accounts. The nice thing about profit share is that you can turn it on and turn it off depending on how your profitability goes every year. But to your point about the cash balance plan is that the benefit is that you can do way more than that 70,000 a year for even people. And it’s usually based off of age and close to retirement you are. But as far as how much you can put in, I’ve seen on the lower end, a hundred thousand plus to half a million is how much your contribution to that plan could be, which is super favorable because in years that you have a lot, you can put that much more.

(20:10):

And as you get closer to retirement, it’s age weighted so you can put more in. But one of the drawbacks is unlike profit share where you can turn it on or turn it off, you can’t really do, you are committing, as one of the names implies the pension plan is a commitment by the employer, the business to fund a certain amount of benefit for the employees. And so in one-off huge income generating years, great if you’ve had a plan in place for multiple years before that, but it’s usually not great if you didn’t have that plan in place. You want to set it up to get this great benefit, it usually doesn’t work out that way. And the last thing that is really, and what prevents I think most business owners from pulling the trigger on implementing this plan is that the kind of equality component of it, if you have other employees unlike profit share and the employee portion that which comes out of their paycheck themselves is you have to do a minimum amount of funding for all employees.

(21:08):

And so to the extent, and there’s multiple ways that your administrator can do the testing to see if you can pass the testing, but to the extent that you can get 75 to 80% of whatever that cash balance contribution for the year to the owners, that’s great. So which usually means there’s 25, 20 to 25% that has to go to the employees. There’s some vesting components that you can put in there to prevent if there’s some turnover in your business that money’s not going to get locked up forever. But I think yeah, the biggest component of not doing it is the, well, two, the time commitment, it’s a multi-year commitment, and two is that you have to fund a certain amount to employees.

Steven (21:49):

Chad, thanks for walking through that. I think that’s really helpful context for people to have and you hit on it in there. At the end of the day, just like with our clients, long-term planning is what gets us the furthest ahead, understanding what changes are coming in our personal life and our business life, having things set up ahead of time that we’re doing things proactively as opposed to reactively. And that applies to so many different areas of our business. But I definitely see advisors run into this where they’ve done a great job of tax planning for their W2 clients who are on their path to retirement, but for themselves as 1099 contractors or as business owners, they don’t always feel as prepared to know what they should even be looking into.

Chad (22:29):

And so I think the best advice I ever received, and what I try to tell others is start somewhere with retirement planning, with budgeting, start with something that you can manage, even if it’s $10 a week of moving that money over. And at some point in most cases this isn’t applicable across the board, but in most cases, and this is some of the retail opportunities to prepare your own taxes, it’s not going to cut it once you get to a point if you have an scorp and no offense against TurboTax, but that’s probably not the solution that’s going to be best. I say that and there might be some TurboTax people that love it and they’re like, oh, actually I prepare my scorp every year using Turbo Tax. And that’s fine. But for peer people and especially financial advisors who acknowledge and build their businesses around relationships and the power of leveraging someone else’s knowledge, paying for tax help is not necessarily an expense. It does come off the bottom line, but from what you can get from it, if your situation calls for it is much more than what you’re paying out.

Steven (23:32):

So Chad, let’s talk a little bit more about that. When it comes to collaborating with financial advisor, it’s not necessarily them as your clients, but that they have questions, they’re looking to partner you with one of their clients who is a good fit for what you do? What makes advisors stand out for you as somebody you really want to work or you’re excited to collaborate with as opposed to you dread seeing their name at your inbox?

Chad (23:51):

Yeah, I have kind of two tranches of different financial advisors. We work one that are clients that we also collaborate on, their clients and common clients and others that we just collaborate on clients. I am very straightforward with the financial advisors that I work with, that kind of what I hit on a few minutes ago, which is I work with business owners. And so if you have a client that’s a business owner, there’s a lot of value that we can derive from that. If they’re not, then there’s others out there that I can refer you to. But I think for financial advisors that our clients as well as ones that we just collaborate, they’re always curious as to like, Hey, here’s the situation. How would you approach it? And it’s more like you said, collaborative. How would you come across this? For the ones that are clients more, I would say not all of them, but at least half the phone calls are like, Hey, I have this quick situation and I know it’s not necessarily covered under our relationship working together. It’s not a situation for me, but how would you come across it? And it’s usually a 10 minute phone call, but I’m happy to take those because inevitably there’s going to be multiple client situations where that’s going to be applicable to, and we’ll be able to collaborate on that together and going forward.

Steven (25:00):

Yeah, that’s why we move to doing office hours for our premier members twice a month, I have these office hours for our premier members that they can come and join and ask whether it’s questions clients I work with or just other clients they have. Because to your point, I find that we actually do ’em in groups as well, so they can learn from each other. But

(25:16):

The advisors asking me the question, they probably have the question on a dozen clients, not just one. And it sounds like you’ve probably come to the same conclusion that especially if it’s a five or 10 minute phone call, especially if it’s something that you can handle relatively quickly, it just builds the overall relationship. It creates better client outcomes. It helps the advisor understand what you’re an expert at and what you’re not. I love that you just lead with, Hey, I don’t do this stuff that applies to a lot of your clients. It creates such a better outcome and just better relationships. We’re just real clear about that stuff.

Chad (25:48):

And I think there’s a tendency of the fear of not knowing an answer but being like, oh, I’ll figure it out. And it’s like, well, you probably could, and if you’re in the tax world doing research as a component of your job, but it’s also an indication of like, Hey, make sure you stay in your lane. There’s things that you enjoy presumably about taxes, that’s why we do it. But there’s things about taxes that you enjoy and others that you want to stay far away from. And so if you can stay within your niche and acknowledge that if, Hey, this isn’t my strongest suit, how much better than trying to fake it till you make it type situation.

Steven (26:24):

A lot of good reminders in there, Chad, especially in a year like 2025, where we’re just kind of expecting that there’s going to be big changes to tax rules. It really highlights the fact that a lot of people look at taxes as if it’s black and white, data-driven. There’s a clear answer to everything. That’s just the reality, especially in a year where laws are changing. The AI tools don’t cut it. You still need a professional person to help you evaluate. They might make you go faster, just like Google makes you go faster, but you still need someone who’s familiar, who knows what’s going on with that client with that particular situation. Who’s seen it go wrong before? That can be really helpful perspective to have of, okay, when does the IRS get mad about this? And at least to this point, I might be proven wrong over the next couple of years, but at least to this point, you still need a real person behind.

Chad (27:13):

You do, and it’s nuanced, right? Anyone could Google, what should I invest in? And there would be a plethora of answers and they could all be applicable depending on your situation. And I think that’s where the human component comes in, is what is your situation? And that’s something that maybe AI and I eventually will think that AI will be able to like, Hey, here’s the situation that happened three years ago that has an effect on today. And you can kind of build out this supercomputer robot that can predict all sorts of things, but the human component of knowing and remembering things. I have a client who needs to file a partnership return this year. They bought a building with their business partner and we were talking about different things and in my notes and how I remembered from a previous call was like, oh yeah, it’s a triple net lease. And so it’s that stuff that AI’s not going to necessarily know, but like you said, for 2025 between BOI reporting, wherever that’s at, depending on the day depreciation, bonus depreciation going down, new tax laws that inevitably are going to be discussed and probably passed, there’s going to be a lot that goes on this year and would need to anyways, even if there wasn’t a tax law change, there will be this tax cliff that’s going to happen in 2026 if nothing happens, which we’re not anticipating, but you never know.

Steven (28:33):

Yeah, it will not be a boring year. Chad, I appreciate all the great discussion you taking the time to come on and chat with me about all of this. How can advisors learn more about what you’re doing in contact with you if they want to follow up?

Chad (28:45):

So you can find me on X, which I say that, and I almost caught myself and said Twitter, but it is X, I believe you can find me on Twitter slash x. LinkedIn are my most common social media platforms. My website is www.bluetaxplan.com, and I tried to make that as simple as possible. So blue tax plan.com, we are a firm of, I’ve got five employees plus me, we’re six a hundred percent remote. We work all over the country. We have all the time zones besides Alaska and Hawaii covered. And yeah, we love working with small business owners.

Steven (29:19):

Well, Chad, like I said, I appreciate you coming on and everyone listening, thanks for being here. If you’re enjoying the show, take a minute to give us five stars and leave a comment so that we can keep helping more advisors, learn more about tax plan and help even more taxpayers. And until next time, good luck out there. And remember to tip your server, not the IRS.