Center Stories: Bob Ingram, Financial Planner

Contributed by: Robert Ingram

Money and finances can be very emotional topics and they can certainly seem confusing in today’s busy and complex world.  We all may have different emotions when it comes to money, emotions that shape how we manage our finances.  To me, financial planning is not just numbers on a spreadsheet or a group of investments in an account.  It is your own evolving roadmap to help guide you in making confident decisions in the face of uncertainties, concerns, or even exuberance.  A strong financial planning relationship is about helping you develop your life goals, truly understanding your personal situation and priorities, and taking steps to make the most of your resources to help achieve your goals.

I hope the video helps you get to know a little more about me and how I work with clients here at The Center.  If I can be a resource for you, please don’t hesitate to contact me!

Robert Ingram is a Financial Planner at Center for Financial Planning, Inc.®

Explaining the What is the “Restore” Option for Pensions, Part 3 of a 3 Part Series on Pensions

Contributed by: Nick Defenthaler, CFP®

Selecting your pension benefit option as you near retirement could quite possibly be the largest financial decision you ever make.  If you’ve received a breakdown of the various ways you can elect to have your pension benefits paid and you’re feeling overwhelmed, you are certainly not alone!  In many cases, employers give you the option to select from upwards of 30 different options that have various survivor benefits, lump-sum payouts, Social Security bridge payments and more.  Is your head spinning yet? 

One of the more appealing pension options that our team is seeing more and more of is the “restore” option.  The restore feature of a pension is a way to protect the person receiving the pension if their spouse dies before them.  If that were the case, the restore option allows the retiree to “step-up” to the higher single/straight life payment.  Similar to the survivor benefit, the restore option is another layer of “insurance” to protect the retiree from being locked into a permanently reduced pension benefit if their spouse pre-deceases them. 

Let’s take a look at an example of the restore feature:

Tom (age 61) is retiring from XYZ Company in several months.  Tom would like to evaluate his pension options to see which payment would be best for him and his wife Judy (age 60).  Tom has narrowed it down to 3 options:

Option 1:

• $45,000/yr single/straight life (no survivor benefit)

  • Payment would cease upon Tom’s passing – $0 to Judy

Option 2:

• $41,000/yr 50% survivor option

  • Judy would receive a $20,500/yr benefit during her lifetime if Tom pre-deceases her

 Option 3:

• $40,200/yr 50% survivor option with “restore” feature

  • Judy would receive a $20,500/yr benefit during her lifetime if Tom pre-deceases her

  • Tom would step-up to a $45,000/yr benefit (straight/single life benefit figure) if Judy pre-deceases him

The more Tom and Judy have discussed their overall financial plan; they are not comfortable selecting the single/straight life option and risking Judy not receiving a continuation of benefits if Tom pre-deceases her.  However, because Judy has had some health issues in the past, they feel the 50% restore payment option makes more sense for their situation because it is very possible that Judy will die before Tom.  They are comfortable with an $800/yr reduction in payment to have the “insurance” of Tom stepping up to the higher single/straight life option if he survives Judy. 

While the restore option for Tom and Judy seems to make perfect sense, there truly is no a “one size fits all” pension option that works for everyone.  Every situation is very unique and it’s important that you evaluate your entire financial picture and other sources of retirement income to determine which pension option is right for you and your family.

Click to see part 1 of pension blogs How to Choose a Survivor Benefit for Your Pension and part 2 What You Need to Know About Pension Benefit Guaranty Corporation or PBGC

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Nick Defenthaler, CFP© and not necessarily those of Raymond James. This is a hypothetical example for illustration purpose only and does not represent an actual investment. This is a hypothetical example for illustration purpose only and does not represent an actual investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. 

Charitable Giving Reminder Due to New Tax Law

Contributed by: Timothy Wyman, CFP®, JD

Are you making charitable contributions in 2018? 

There are three parties to every charitable gift; the charity, you, and the tax man. Due to the increased standard deduction, many folks will NOT receive an income tax benefit when making direct contributions to charities.  For those over the age of 70.5, consideration should be given to making charitable contributions via your IRA. For those under the age of 70.5 you should consider “bunching” your contributions into one year; a donor-advised fund can be quite useful. 

If we have not had an opportunity to discuss either of these strategies, and you expect to make charitable contributions, please feel free to contact our team to discuss your options in making tax-efficient charitable contributions.   

Here are two links to articles outlining the QCD strategy. 

Required-minimum-distribution-update

Qualified-charitable-distributions-giving-money-while-saving-it

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc.® and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Timothy Wyman, CFP©, JD and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. This material is being provided for information purposes only. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. You should discuss any tax or legal matters with the appropriate professional.

What You Need to Know About Pension Benefit Guaranty Corporation or PBGC, Part 2 of a 3 Part Series on Pensions

Contributed by: Nick Defenthaler, CFP®

In many cases, the decision you make surrounding your pension could be the largest financial choice you’ll make in your entire life.  As such, the potential risk of your pension plan should be on your radar and factored in when ultimately deciding which payment option to elect.  This is where the Pension Benefit Guaranty Corporation comes into play.

The Pension Benefit Guaranty Corporation or “PBGC” is an independent agency that was established by the Employee Retirement Income Security Act (ERISA) of 1974 to give pension participants in plans covered by the PBGC guaranteed “basic” benefits in the event their employer-sponsored defined benefit plans becomes insolvent.  Today, the PBGC protects the retirement incomes of nearly 40 million American workers in nearly 24,000 private-sector pension plans. 

Municipalities, unions and public sector professions are almost never covered by the PBGC.  Private companies, especially larger ones, are usually covered (click here to see if your company plan is).  Each year, companies pay insurance premiums to the PBGC to protect retirees.  Think of the PBCG essentially as FDIC insurance for pensions.  Similar to FDIC coverage ($250,000) that banks offer, there are limits on how much the PBCG will cover if a pension plan fails.  It's important to note that in most cases, the age you happen to be when your company’s pension fails is the age the PBGC uses to determine your protected monthly benefit. 

For example, if you start receiving a pension at age 60 from XYZ company and 5 years later, XYZ goes under when you’re 65, your protected monthly benefit with the PBGC would be $5,2420.45 – assuming you are receiving a straight life payment (see table below).  As we would expect, the older you are, the higher the protected monthly benefit will be due to life expectancy assumptions.    

*chart is from Pension Benefit Guaranty Corporation website

When advising you on which pension option to choose, one of the first things we'll want to work together to determine is whether or not your pension is covered by the PBGC.  If your pension is covered, this is a wonderful protection for your retirement income if the unexpected occurs and the company you worked for ends up failing.  If you think it will never happen, let’s not forget 2009 when many unexpected things occurred in the world such as General Motors filing for bankruptcy and Ford nearly doing the same.  If your pension is not covered, we'll want to take this risk into consideration when comparing the monthly income stream options to a lump sum rollover option (if offered). 

While PBCG coverage is one very important element when evaluating a pension, we’ll also want to analyze other aspects of your pension as well, such as the pension’s internal rate of return or "hurdle rate" and various survivor options offered. 

As mentioned previously, the decision surrounding your pension could quite possibly be the largest financial decision you ever make.  When making a financial decision of such magnitude, we’d strongly recommend consulting with a professional to ensure you’re making the best decision possible for your own unique situation.  Let us know if we can help!   

Be sure to check out our pension part 1 blog How to Choose a Survivor Benefit for Your Pension posted April 5th and our next blog Explaining What the “Restore” Option is for Pensions posted May 10.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Nick Defenthaler, CFP© and not necessarily those of Raymond James. This is a hypothetical example for illustration purpose only and does not represent an actual investment. This is a hypothetical example for illustration purpose only and does not represent an actual investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

How to Choose a Survivor Benefit for Your Pension, Part 1 of a 3 Part Series on Pensions

Contributed by: Nick Defenthaler, CFP®

If you’re married and eligible to receive a pension upon retirement, chances are you will be making an election for a survivor benefit before you start collecting. What should you choose when it’s time to elect your payment option?

As a quick refresher, when a pension has a survivor benefit attached to it, the income stream the pension provides goes through the lifetime of you and your spouse. Depending on the level of the survivor benefit, you could see a large discrepancy in the payment amount that the pension ultimately provides while both spouses are still alive. 

For example, the monthly payment a 100% survivor benefit provides will be much lower than the monthly payment a 25% survivor benefit would provide. This is because the 100% survivor option offers a guaranteed continuation of full benefits to the surviving spouse as compared to only a 25% continuation of benefits. In reality, a survivor benefit is an “insurance policy” on your pension! The reduction in monthly benefits by having a survivor option is like the “monthly premium” on that insurance policy.

Case Study

Let’s take a look at an example of how selecting a survivor option could vary depending on your family’s unique, personal situation:

Nancy (age 65) and Steve (age 64) are evaluating Nancy’s pension options as she approaches retirement in a few months. Unfortunately, Nancy has had heart issues over the years and does not have longevity in her family. Steve on the other hand, is in great shape and plans on living into his nineties.  Below are the pension options Nancy has to choose from:

• 100% Survivor Option

  • $42,000/year to Nancy: Steve would receive $42,000/year if Nancy dies first

• 50% Survivor Option

  • $46,000/year to Nancy: Steve would receive $23,000/year if Nancy dies first

• 25% Survivor Option

  • $48,000/year to Nancy: Steve would receive $12,000/year if Nancy dies first

• Straight-Life Option (No Survivor Benefit)

  • $50,000/yr to Nancy: No continuation of payments for Steve when Nancy dies

Due to Nancy’s health issues, the straight-life option would likely not be advisable. There is a very high likelihood that Nancy pre-deceases Steve so they would not want to select an option that would provide zero continuation of benefits, especially considering the size of the pension payment. In a similar vein, Nancy and Steve are not comfortable with Steve only receiving 25% of Nancy’s pension if she passes before him, primarily due to Nancy’s health issues.  At this point, they have narrowed their options down to the 100% survivor or 50% survivor benefit election.  

Because Nancy is a number cruncher, we created a spreadsheet to analyze the value of maintaining a larger survivor benefit, assuming she pre-dececeases Steve at various ages:

While it’s all well and good that Steve would receive a higher continuation of benefits if Nancy passes before him under the 100% survivor option, we have to remember that there is a “cost” to this pension option ($4,000/yr lower payout compared to the 50% survivor option). However, as the table above shows, it does not take long at all for Steve to “break even” on the cost of the $4,000/yr “insurance premium”. 

After reviewing the numbers in detail, Steve and Nancy decided to elect the 100% survivor option.  They arrived at this decision primarily because of Nancy’s reduced life expectancy. In addition, if she does die before Steve within the first 15 years of retirement (a very likely possibility), it only takes several years for the larger survivor benefit to make up for the lower pension payment Nancy would have received during her life, especially taking into consideration Steve’s good health.  

As you can see from our example, many factors come into play when selecting a pension benefit and survivor option. While it might be human nature to ask which option is best, unless we have the proverbial crystal ball to look into the future and see what life has in store for us over the next 30+ years, it’s impossible to provide a concrete answer.

When evaluating pension options, my number one goal as a fiduciary advisor is to provide a sound recommendation that aligns with your own personal situation and retirement goals. If our team can be a resource for you in evaluating your pension decision, please feel free to reach out to us.  

See Part 2 of the series, What You Need to Know About Pension Benefit Guaranty Corporation or PBGC. Part 3 Explaining the What is "Restore" Option for Pensions I invite you to listen to a replay of my webinar from April 24th at 1:00 pm on Retirement Income Planning: How Will You Get Paid in Retirement?  

The case study and accompanying chart have been provided for illustrative purposes only. Individual cases will vary

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

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Center Stories: Kali Hassinger, CFP®

Contributed by: Kali Hassinger, CFP®

Regardless of your circumstances or stage in life, there can be a general sense of anxiety surrounding money.  Our society tells us it's uncouth to discuss our personal finances with others, and in many cases fundamental financial concepts aren't taught in schools. This environment can make taking control of your financial life seem extremely difficult and overwhelming.

When I decided to become a financial planner, I knew that I wanted to help others to establish, maintain and ultimately reach their goals.

Money and finances are an integral part of our personal wellbeing, and the most effective way to feel empowered is through education.  I take the time to make sure you understand the financial planning process and that you feel confident in our decisions.  Whether you're starting from scratch or reevaluating your current plan, we can walk through each step together and without judgment. The relationship between you and your financial planner is profoundly personal and built on trust, and here at The Center there is nothing we take more seriously.

If you want to know a little more about my background, please check out my bio video above.

Kali Hassinger, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

International Women’s Day Celebration with The Center

Contributed by: Laurie Renchik, CFP®, MBA

On behalf of The Center team we want to thank everyone who participated in our First Annual International Women’s Day event!  The energy in the room of 200+ women on March 8th was an inspiration sure to carry on throughout the year.  Celebrating women’s success and making a difference in other women’s lives carries a message of community and mutual support; a WIN-WIN with staying power.

Our keynote presentation by Laura Vanderkam was a gift of wisdom and practical application as she helped us understand how to focus on aligning our time with priorities.  Before, during and after the presentation it’s no surprise that networking conversations were abundant from start to finish.  A truly remarkable exclamation point on the morning was the generous spirit in which financial donations were made for Haven’s Spark program. 

DONATION RESULTS

An amazing result for Haven’s Spark program:

$5,295 (so far!)

RESOURCE DIRECTORY

Networking connections are an essential ingredient to success.  If you have not already reached out to new connections we are happy to provide this resource directory of the companies and organizations who were participants in our Women’s International Day event.

KEYNOTE TO-DO LIST LINK

Laura’s advice hit home as evidenced by all of the head nodding going on in the room!  If you missed the link to our “more balanced life” To-Do list click here to open your personal copy!

PHOTO GALLERY

Smiles and memories of our time together at The Center sponsored Women’s International Day event. Click to view.

SAVE THE DATE 

Plan to celebrate International Women’s Day with us again next year on Friday March 8th 2019!  You can mark your calendar and we will take care of all the details!  

IN CLOSING

Women celebrating women is one example of pooling resources around a common goal.  We are grateful to have so many professional connections and women advocates in our circle of friends.  In our world of financial planning, it is not uncommon to work with accomplished women who are seeking guidance to ensure that their present plan for financial security is on track for future success.  One hurdle is that many times they don’t know someone …… consider that we might be that someone!

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc.® In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie is a member of the Leadership Oakland Alumni Association and is a frequent contributor to Money Centered.

Annuity Basics

Contributed by: Kali Hassinger, CFP®

An annuity is a contract between you, the purchaser or owner, and an insurance company, the annuity issuer.  In its purest form, you pay money to an annuity issuer, and the issuer eventually pays the principal and earnings back to you or a named beneficiary.  Life insurance companies first developed annuities to provide income streams to individuals during retirement, but these contracts have since become a highly criticized investment vehicle.  The surrender periods, fees, and endless annuity products on the market make it difficult for retail investors to understand contracts, let alone feel confident that it's the best option available for their situation.  There are of course pros and cons to consider when entering into an annuity contract, and it's especially important to understand the basics of what an annuity offers. 

Annuities are categorized as either qualified or non-qualified. 

Qualified annuities are used similarly to tax-advantaged retirement plans, such a 401(k)s, 403(b)s, and IRAs.  Qualified annuities are subject to the same contribution, withdrawal, and tax rules that apply to these retirement plans.  That may make you question why someone would use a qualified annuity at all!  If you are merely looking for tax-deferral, a qualified annuity probably doesn't make sense in connection with your retirement account.  However, depending on your goals, there are aspects of a qualified annuity that are not available with traditional retirement plans, such as a living income benefit guaranteed by the insurance company and an additional death benefit. 

One of the attractive aspects of a non-qualified annuity (which means the money deposited has already been taxed), on the other hand, is that its earnings are tax-deferred until you begin to receive payments or make withdrawals. During the period before withdrawing funds, the non-qualified annuity is treated similarly to your typical retirement plan.  The same age requirement is enforced, which means that if you access this account before age 59 ½ there is still a 10% tax penalty on a portion of the withdrawals.  The difference between a qualified and non-qualified annuity becomes apparent, however, when the withdrawal or annuitization payments begin.  Only the part of these payments that represents investment or account growth is taxed at ordinary income tax rates.  When annuitizing a contract, there is an "exclusion ratio" that means each payment represents both a portion of your initial investment and a portion of your investment returns.  This means that the entire payment received isn't taxable to you – only the percentage that represents an investment gain. 

Beyond the categories of qualified and non-qualified annuities, you can then classify annuities into fixed and variable contract options.

A fixed annuity functions similarly to a bank CD.  You make a deposit, and the insurer will pay a specific interest rate over a specified period.  A variable annuity, on the other hand, allows a contract holder to invest the funds in annuity subaccounts or mutual funds.  Insurance companies can offer income riders as an additional benefit to their annuities.  These riders typically have a guaranteed income growth rate, and they will increase the overall cost of the contract. 

It is important to understand that annuities, although they can be an effective savings tool, are not right for everyone.  Most deferred annuity contracts are designed to be long-term investment vehicles and can penalize the contract holder for making early withdrawals.  If an annuity seems like it would fit within your overall financial picture, it is essential to consider which annuity products are appropriate and how to utilize them within your investment portfolio. 

Kali Hassinger, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Kali Hassinger, CFP® and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors.

With variable annuities, any withdrawals may be subject to income taxes and, prior to age 59 1/2, a 10% federal penalty tax may apply. Withdrawals from annuities will affect both the account value and the death benefit. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. An annual contingent deferred sales charge (CDSC) may apply.

A fixed annuity is a long-term, tax-deferred insurance contract designed for retirement. It allows you to create a fixed stream of income through a process called annuitization and also provides a fixed rate of return based on the terms of the contract. Fixed annuities have limitations. If you decide to take your money out early, you may face fees called surrender charges. Plus, if you're not yet 59½, you may also have to pay an additional 10% tax penalty on top of ordinary income taxes. You should also know that a fixed annuity contains guarantees and protections that are subject to the issuing insurance company's ability to pay for them. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Tax Reform Series: Changes to Charitable Giving and Deductions

Contributed by: Nick Defenthaler, CFP®

The Tax Cuts and Jobs Act (TCJA) is now officially law. We at The Center have written a series of blogs addressing some of the most notable changes resulting from this new legislation. Our goal is to be a resource to help you understand these changes and interpret how they may affect your own financial and tax planning efforts.

If you’ve heard the charitable deduction is going away under the Tax Cuts and Jobs Act of 2017, you are certainly not alone – this is a common misconception under our new tax code.  To be perfectly clear, gifts to charity are certainly still deductible!  However, depending on your own tax situation; your deduction may not provide any tax savings due to the dramatic increase in the standard deduction moving into 2018: 

Standard Deduction vs. Itemizing Deductions

Think of the standard deduction as the “freebie deduction” that our tax code provides us, regardless of our situation.  If you add up all of your eligible deductions (state and local tax, property tax, charitable donations, medical expenses, etc.) and the total happens to exceed the standard deduction, you itemize.  If they fall short, then you take the standard deduction.  Pretty simple, right?

With the standard deduction nearly doubling in size this year, many of us who have previously itemized deductions will no longer do so.  Let’s take a look at how this change could impact the tax benefit of your charitable donations:

Example

Below is a summary of Mark and Tina’s 2017 itemized deductions*:

• State and Local Taxes = $6,600

• Property Tax = $6,000

• Charitable Donations = $5,000

• Total = $17,600

Because the standard deduction was only $12,700 for married filers in 2017, Mark and Tina itemized their deductions.  However, the only reason why they were able to itemize was due to the $5,000 gift they made to charity.  If they didn’t proceed with their donation, they simply would have taken the standard deduction because their state and local tax along with property tax ended up being only $12,600 – $100 shy of standard deduction for 2017 ($12,700).  Their gift to charity created a tax savings for them because it went above and beyond the amount they would have received from the standard deduction!

For the sake of our example, let’s assume Mark and Tina had the same exact deductions in 2018.  It will now make more sense for them to take the much larger standard deduction of $24,000 because it exceeds the total of their itemized deductions by $6,400 ($24,000 – $17,600).  In this case, because they are taking the standard deduction, there was no direct “economic benefit” to their $5,000 charitable donation. 

*This is a hypothetical example for illustration purposes only. Actual investor results will vary.

Planning Strategies

Because many clients who previously itemized will now take the larger standard deduction, reaping the tax benefits for giving to charity will now require a higher level of planning.  For clients who are now taking the standard deduction who are charitably inclined, it could make sense to make larger gifts in one particular year to ensure your charitable deduction exceeds the now larger standard deduction. Or, if you’re over the age of 70 ½, the Qualified Charitable Distribution (QCD) could be a gifting strategy to explore. Of course, we would want to dig deeper into this strategy with you and your tax professional before providing any concrete recommendations. 

For most of us, the number one reason we give to charity is to support a cause that is near and dear to our heart.  However, as I always like to say, if we can gift in a tax efficient manner, it just means additional funds are available to share with the organizations you care deeply about instead of donating to Uncle Sam. 

Don’t hesitate to reach out to us for guidance surrounding your gifting strategy, we are here to help!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

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Check out our other Tax Reform articles:

Changes to Federal Income Tax Brackets

Changes to Standard Deduction, Personal Exemption, Misc. Deductions, and the Child Credit

Changes to Investments and the Financial Market

Changes to State and Local Tax Deduction

Changes to Mortgage Interest Deduction (including Home Equity Loans and LOC Implications)

Changes to Estate Tax Planning in 2018 and Beyond

Changes to Medical Deductions

Changes to Business & Corporate Tax, and Pass-Through Entities

The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

 

2017 Year-End Financial Planning

Contributed by: Josh Bitel

With the fourth quarter upon us, tedious tasks like assessing your financial situation can often fall by the wayside.  With that in mind, this is a good time for us to share some important items to consider before the end of the calendar year. Here are a few things to consider before you take on 2018.

Establish or tighten up your emergency fund.

As we often recommend, keeping three to six months worth of expenses saved in an easily liquidated and accessible account can protect you against any unforeseen perils that may arise. Getting an emergency fund in place before the year wraps up is a great way to jump-start your budget for 2018.

Check your flexible Spending Account

Make sure you don’t end the year with a balance inside your FSA plan. Most of these plans have a ‘use it or lose it’ feature. So if you’re putting off that pesky doctor’s visit or are overdue for a new pair of prescription glasses, use your pre-tax dollars you’ve elected to cover these expenses!

Review your retirement accounts to make sure you’re on track to maximize your contributions

Whether it is an IRA account, either traditional or Roth, or an employer sponsored plan, the end of the year is a great time to assess your contributions and make sure you’re on track to meet your goals. This is important for your tax situation as well, as you may be able to deduct contributions to certain retirement plans. Although IRA accounts can be funded up until April 15th of the following year (up to $5,500 if you’re under age 50), it’s never too early to make sure you’re on track!

Give a tax-deductible charitable contribution

The end of the year is a time when we’re all thinking about giving. If you are charitably inclined, the end of the year is a great time to donate to any causes you are passionate about so you can receive a write off on your taxes for 2017. Don’t forget, donating appreciated securities from a taxable account is often more advantageous for you and the cause you believe in! Make sure you are making this donation for something you really believe in and not just for the potential tax write-off, the holiday season is a great time to asses this.

As always, in regard to your financial life, we are here to assist in anyway we can. These are just a few of the things you should keep in mind as the year wraps up. If you have any questions regarding your personal situation, contact us here at The Center for Financial Planning.

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.®

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Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional.