Investing in IRAs come in many shapes and sizes. There are 401(k)s, Roth IRAs, self-directed IRAs and stretch IRAs, to name a few, but many people make the mistake of believing that these different types of IRAs are actually different products. IRA’s are not actual products, but part of the tax code. Very few financial advisors that are giving investment advice and doing retirement planning are also Certified Tax Coaches. The reason this is so important is because Ed Slott, a CPA and one of the nation’s leading IRA expert’s called the IRA “a tax and tested time bomb”.

So, one of the most popular financial vehicles, used by almost every financial advisor is a” tax infested time bomb” and it is being handled by financial advisors without the knowledge to deal with all the tax implications of putting money in as well as taking money out. Our tax code is so complicated and so ubiquitous that both financial advisers and consumers are confused as to where products stop and tax code begins.

Integrated tax and retirement planning is very important when dealing with IRAs. Most people think that the letters, IRA, stand for Individual Retirement Account. This can be true, but as it relates to the tax code, 401(k)s, 403(b)s, Roth IRAs, self-directed IRAs, defined-benefit plans, 457’s, pension plans… are all IRAs. The I R A stands for Individual Retirement Arrangement. These individual retirement arrangements are all part of the IRS tax code publication 590.

Not only are you armed with information a very small fraction of the population understands, but you have trivia for the next party go to. If you want to test the knowledge of your financial advisor ask him or her what I R A actually stands for. I think you be surprised that they don’t know that it actually stands for individual retirement arrangement not individual retirement account. Then you will need to ask the question, do I need a financial advisor that is also a Certified Tax Coach or in other words, “gets” taxes.