If you’re in healthcare or academia and you already have a CPA, it’s easy to assume your tax and financial picture is fully covered. It isn’t, and this episode explains exactly where the line falls. Amy Walls breaks down the real difference between tax preparation and tax planning, why accounts spread across multiple hospital systems or universities, 403(b)s, 457(b)s, and pensions, need someone coordinating them across institutions, and where CPAs and financial planners have to work together instead of separately.
You’ll learn
(00:00:00) - Intro
(00:00:22) - Do I need a financial advisor if I have a CPA?
(00:00:59) - Backward looking vs forward planning
(00:02:37) - Tax preparation vs tax planning
(00:06:05) - Multiple retirement accounts in healthcare
(00:08:10) - Where coordination breaks down
(00:08:19) - Roth conversion coordination example
(00:10:21) - Pension lump sum vs monthly income decisions
(00:12:40) - Making advisor and CPA work together
(00:14:06) - The key question to ask your CPA
(00:15:18) - Wrap up and contact info
Jon Gay (00:09):
Welcome back to ThimbleberryU. I am Jon Jag Gay, hello Amy Walls from Thimbleberry Financial.
Amy Walls (00:14):
Hi, Jag.
Jon Gay (00:15):
I tried to change up the intro, and I overcomplicated it for myself.
Amy Walls (00:18):
(Laughs) It's so funny how we all get into our little habits and routines.
Jon Gay (00:22):
Absolutely. Alright, today, we're going to answer a question that I hear from friends in healthcare all the time: Do I need a financial advisor if I already have a CPA?
You've got somebody that does your taxes every year, they know your income, they know your deductions, feels like that should cover it for a lot of folks. But if you're also carrying a 403(b) from one hospital system, 457 from another, maybe a pension, maybe a K1 if you're in a group practice (the list goes on) — none of that gets decided in April.
So, if you've ever wondered whether your CPA already has this covered or whether you're paying two people to do the same job, let's settle this right now, Amy. If I have a CPA, do I actually need a financial advisor?
Amy Walls (00:59):
Yes. For most people in healthcare and academia, and here's the plain reason why. A CPA files the year that already happened, they're backwards looking.A financial planner shapes the years (and that's plural) still ahead of you.
Jon Gay (01:18):
Hence the word planner.
Amy Walls (01:19):
Yep. But those are two different jobs, even though they both touch your money and are related. And so, to be really clear, I think we all understand the past, but your CPA takes what occurred between January and December and reports it accurately to the IRS. That's their first job.
Your planner, on the other hand, should be helping you decide this year and the years down the road what should happen next, and why.That means what account do you pull from when you go to take distributions, which do you contribute to, when to convert, when you just hold the line and do what you're doing, or you need to make changes to that strategy?
So, if only the taxes are getting filed and nobody's doing that second job, your CPA ends up narrating decisions that nobody made on purpose.Again, to answer your question, it's not CPA or advisor for our listeners; for most, it's both and coordinated.
Jon Gay (02:25):
I like that distinction you made: the year that happened versus the years (plural) ahead. I think a lot of people assume that their CPA is already doing that forward-looking piece. Why is that not a safe assumption?
Amy Walls (02:37):
That assumption mixes up two things that sound similar, tax preparation, and tax planning. So, tax preparation is what we've already talked about. That's what most CPAs do.They take last year's numbers, fill in the forms — not saying that's easy because there's lots of nuance in law they need to know, tax law they need to know about.
Jon Gay (02:58):
And always changing.
Amy Walls (02:59):
Yep, and file an accurate return. So, I'm making it sound really simple, that's not always simple. Tax planning, on the other hand, is the forward-looking piece. Sometimes that's a decision before the calendar year closes, sometimes it's setting up something that plays out over several years.
And it might even be that you're pre-retired and that planning is about what's going to happen in your first five years of retirement. With the idea that yes, tax laws could change, but let's plan for what we know now.
So, also, it's important to note that some CPAs do offer tax planning as a formal service. But most CPAs, many are built around volume, filing hundreds of tax returns between January and April, and don't do that service.
Jon Gay (03:50):
That planning, yeah.
Amy Walls (03:51):
Yep. There's also one other thing I want to be clear about; I am not a CPA.CPAs are great, I love it when my clients have CPAs. And I don't officially do tax planning either because I'm not a CPA.But what we do is financial planning and wealth management. And part of financial planning is building tax projections. I can't do my job without building tax projections.
And by doing that, we're not talking about doing a year-end scramble. We're modeling this year, next year, future years. And we're looking at how if we make one decision, let's just take since it's 2026, the IRS imposed decision that anybody over 50 that is making catch-up contributions, and their income was over $150,000 — so healthcare workers, I'm talking to you if you're our listener, that those catch-up contributions have to go to Roth.
Well, what that means for most of our clients, we modeled this and said this is going to increase or is projected to increase your tax bill by X amount because you're no longer getting pre-tax savings with all of those dollars.
So, that was a tax change that we looked at in our planning to say that's going to impact this year this much, but this is what the overall change is going to do to you long-term, and you have to make a change.You either have to stop doing catch-up contributions, or you have to switch them this way. So, now, you know the cost of both and what it means longer term.
And what I'll also share is most of the CPAs we work with through our clients welcome those projections.It saves them from rebuilding the same numbers from scratch. I know we've had CPAs that we'll send reports to and they're like, "Great, I can just look at these reports and now give my advice."
Jon Gay (05:48):
I love it when a financial advisor and a CPA work well together. In fact, when we changed financial advisors a few years ago, it was actually a recommendation from our CPA. That's how we found our financial advisor because the two of them had worked hand-in-glove with a lot of clients. And the relationship has been terrific.
Amy Walls (06:04):
That's perfect.
Jon Gay (06:05):
That’s why I love this idea. Alright, so let's get specific to our healthcare listeners because a lot of you are not dealing with one retirement account. I mentioned that off the top.Lots of pieces at lots of different institutions, right, Amy?
Amy Walls (06:16):
Absolutely. And Jag, I hear you've learned a lot about healthcare over the years.
Jon Gay (06:20):
I have, thanks to you — in the, what, seven years we've been working together, Amy, or something like that?
Amy Walls (06:24):
Yeah.So, you're right and what you just described is one of the most common pictures I see in healthcare and academia households. A 403(b) from one hospital or university, a 457 plan from another, maybe one of each from one employer and potentially a pension or two on top of that.So, if you've held a faculty appointment and a clinical role, yeah, you may have both. Your CPA is going to see the 1099s and W-2s each of these accounts generates.
What your CPA typically isn't doing is deciding the order that you're going to take money out of those accounts at retirement. So, in the years leading up to retirement, that's probably a question you'll end up with. It might not be your question yet. Or it might be that you were in academia and it's a question you face annually.
They also might not be coordinating the fact that your 457 has early access advantages that your 403(b) doesn't. So, that sequencing decision work is a vital part of financial planning and tax planning. And so, without someone doing that, you've got all these pieces.
I kind of imagine little kids with a parachute that's filled with balls and they're throwing it in the air, and all the balls go up. And that's what I visualize, that those balls going up, but the kids are under the parachute, as are the leaders, and no one's looking at how they fall down together.
Jon Gay (08:03):
And you're running around with a basket and catching them one by one.
Amy Walls (08:06):
Absolutely, because I can't stand messes.
[Laughter]
Jon Gay (08:10):
So, where does it actually break down? When people have one or the other when it comes to financial advisor and CPA, and they don't have someone coordinating it, and making sure everybody's talking?
Amy Walls (08:19):
Jag, let's go through a real example. So, the cleanest example I can think of right now is Roth conversions. Say that I want to convert some pre-tax money to Roth for you in a lower income year.Before I do that for you, before I recommend that, I need to know about other things in your life that might've moved. Like whether you rolled an old 401(k) into an IRA earlier that year because that will change the tax picture drastically.
Here's another piece of that same situation. It's not just, did you do it, but how did you do it? How a rollover gets done carries its own tax … we're talking about taxes (and I can't even say the word), carries its own tax risk.
A direct trustee to trustee transfer is clean and we don't have to worry about taxes, but if you didn't do that, we now have to worry about the taxes and the income from that because that's an indirect rollover, and that means the money came to you first, there's a 60-day window to redeposit it into the account.There was mandatory withholding, and there's also a limit on how often you can do that in any one year.
So, if I want to make this recommendation to you and I don't know if a rollover happened or I don't know how it was done, I could end up recommending a conversion that compounds your tax problem, which the whole point of a conversion is to save you on taxes later on, instead of solving one.
So, being thorough on my end means more than I'm just running numbers. If I'm converting something for you, recommending something, I'm already going to be looking at what you should expect as a result of that change on your tax bill, and telling you explicitly, "Hey, this is something you're going to want to flag for your CPA" before we even do it.
Jon Gay (10:21):
A lot of our healthcare and academic listeners, Amy, are going to face a pension decision at some point, whether it's lump sum or monthly income. Where does that fall in this CPA advisor question?
Amy Walls (10:32):
So, Jag, I can model what a lump sum is likely to cost in taxes for the year you would take that lumpsum. That's going to be a close estimate. It's not CPA-level precision, but it's usually enough to decide with. That number is part of how we decide whether a lump sum or the monthly annuity is right for you and your household over the next 30 some years.
No, you're not there yet, but I'm talking to you as if you're making this retirement decision today, and not something we need to wait on a CPA for. That decision also depends on things a tax projection alone doesn't show, like how long you expect to need income, what other assets you're sitting on that we might pull from, and how they're invested, because that makes a difference; and how you feel about market risk versus a guaranteed check.
The other thing to note is this decision is usually irreversible. So, once you pick, you don't get to switch it.Your CPA's role in this decision making shows up later. And their role ends up being taking the numbers that got sent to you in income and getting those onto your tax return correctly along the way.
So, the other thing that I think is important in this question, it is the CPA and advisor and how they work together piece, but there's an identity question in this retirement decision.Leaving your place of employment, the institution, it's not about leaving a paycheck. It's leaving a structure that you've had, that you've been comfortable with for decades. And that part isn't a tax question at all, which is why it belongs with the planner.It's a planning conversation and it's a life goals behavioral adjustment that all fits into planning.
Jon Gay (12:40):
Makes sense. Final question, Amy. Our listeners decide they do want to have both a CPA and a financial advisor working together, what does that look like?
Amy Walls (12:49):
Before we talk about that, I'm going to say let's talk about the flip side of everything we've already talked about. A good financial planner already expects that you're going to work with a CPA. It's not an upsell; it's just how a financial planner is going to operate.
Why I bring that up is the conversation's been should I have both? If you're thinking about a financial planner or you have a financial planner, if you were to ask them, I'm going to guess 99% of the time they're going to say we'd really expect our clients to have a CPA.
CPAs, on the other hand, don't always expect the reverse. Plenty of them are used to working with clients who don't have a financial planner. And that's not a knock on them; it's just how a tax practice runs and how it's built. Because everybody has to file their taxes, not everybody has the time or the attention to do so confidently and comfortably.
So, some people really need the CPA, some people, it's more a matter of convenience and comfort. But they got to get their taxes filed one way or the other.
Jon Gay (14:04):
Right. No option on that.
Amy Walls (14:06):
Yeah. The financial planner is optional. Does the situation warrant having this kind of advice?So, the question isn't does my CPA also do planning? The question that our listeners need to ask is, will my CPA work with my planner?
Jon Gay (14:24):
I like that.
Amy Walls (14:26):
And I'd really encourage our listeners to ask them directly: are you willing to talk with my financial planner, share information, coordinate on things like conversions or withdrawals, whatever we're working with, and accept information from them when they send it to you as part of our taxes well before tax time so that you're aware, hey, we're doing a backdoor Roth strategy. Hey, we're doing a conversion this year. And that you'll already have that so that if I forget to mention it, you'll already be prepared.
The point is because we're talking to people in healthcare, you're busy. You've got a lot on your plate. You have more than likely a lot of accounts and what you want is a team, not two professionals working absolutely independent from each other and passing messages through you.
Jon Gay (15:18):
I think that's probably a good place to leave it. A CPA and a financial advisor aren't competing for the same job like we talked about off the jump.One's looking back at the year that happened, and one's planning ahead. And for most people in healthcare and academia with pieces scattered across institutions, you need both talking to each other not to just you.
Amy, if our listeners want more info on you and your team at Thimbleberry Financial, how do they best find you?
Amy Walls (15:38):
They can give us a call at 503-610-6510, or you can find us online at thimbleberryfinancial.com.
Jon Gay (15:48):
Good stuff, Amy. We'll talk again soon.
Amy Walls (15:50):
Sounds great, Jag.
[Music Playing]
Voiceover (15:51):
Securities offered through registered representatives of Cambridge Investment Research, Inc., a broker-dealer, member of FINRA, SIPC. Advisory services through Cambridge Investment Research Advisors, Inc., a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.
Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions.
Securities offered through registered representatives of Cambridge Investment Research, Inc., a broker-dealer, member of FINRA, SIPC. Advisory services through Cambridge Investment Research Advisors, Inc., a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.