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Consider an IRA Charitable Rollover PDF Print
Tuesday, 15 March 2016

Mar 15 16 IRA imageIf you want a tax break and want to help a non-profit, this may be a good move.

(Photo: Creative Commons IRA by GotCredit is licensed under CC BY 2.0)


Have you ever wanted to make a major charitable gift?  Would you like a significant federal tax break in acknowledgment of that gift? If so, an IRA charitable rollover may be a good financial step to take.


If you are age 70½ or older and have one or more traditional IRAs, you may want to explore the potential of this tax provision, first introduced in 2006 and recently made permanent by Congress. In the language of federal tax law, it is called a Qualified Charitable Distribution (QCD) – a direct transfer of up to $100,000 from the IRA to a qualified charity.1,2


An IRA charitable rollover may help you lower your adjusted gross income. That may be a goal in your tax strategy, especially if your AGI is large enough to position you for increased Medicare premiums, greater taxation of your Social Security benefits, or exposure to the 3.8% investment income tax and the 0.9% Medicare surtax. If your AGI passes a certain threshold, you also lose the ability to itemize deductions.2


Up to $100,000 may be excluded from your gross income in the year in which you make the gift. The gifted amount also counts toward your Required Minimum Distribution (RMD).1,2

Should You File Jointly, Or Not? PDF Print
Thursday, 03 March 2016

Should you file joinly or not SQFor many married couples, filing jointly is a good idea, but there are exceptions.

(Photo: Creative Commons Uncle Sam by efile989 is licensed under CC BY 2.0)


Ninety-five percent of married couples file joint federal tax returns. Filing jointly can be convenient. Frequently, there's a financial advantage, but that does not mean it should be done without consideration.1


Years ago, there was less incentive to file jointly. That was because the "marriage penalty" for doing so was effectively greater. There is no written "marriage penalty" in the Internal Revenue Code, but, in the past, income tax brackets were structured a bit differently and spouses having similar annual incomes sometimes paid more taxes by filing jointly than single taxpayers did.


There are many good reasons to file jointly. Nearly all of them involve saving money.


Joint filing may give you an effective tax break right off the bat. Currently, married taxpayers who file separately face the 28%, 33%, 35%, and 39.6% income tax brackets at lower income thresholds than other unmarried taxpayers.2


Joint filers can claim significant tax credits that marrieds filing separately cannot. If you want to claim the American Opportunity Tax Credit, the Lifetime Learning Credit, the Elderly or Disabled Credit, or the Earned Income Tax Credit (EITC), you have to file jointly. Joint filing also gives you the potential to claim the full Child Tax Credit, rather than a reduced one.3

Will You Avoid These Estate Planning Mistakes? PDF Print
Friday, 15 January 2016

Too many wealthy households commit these common blunders.

(Photo: Creative Commons Warning! by lamoix is licensed under CC BY 2.0)


Warning Sign 2 Estate Planning MistakesMany people plan their estates diligently, with input from legal, tax, and financial professionals. Others plan earnestly, but make mistakes that can potentially affect both the transfer and destiny of family wealth. Here are some common and not-so-common errors to avoid.


Doing it all yourself. While you could write your own will or create a will or trust from a template, it can be risky to do so. Sometimes simplicity has a price. Look at the example of Warren Burger. The former Chief Justice of the United States wrote his own will, and it was just 176 words long. It proved flawed – after he died in 1995, his heirs wound up paying over $450,000 in estate taxes and other fees, costs that likely could have been avoided with a lengthier and less informal will containing appropriate language.1


Failing to update your will or trust after a life event. Relatively few estate plans are reviewed over time. Any life event should prompt you to review your will, trust, or other estate planning documents. So should a life event affecting one of your beneficiaries.


Appointing a co-trustee. Trust administration is not for everyone. Some people lack the interest, the time, or the understanding it requires, and others balk at the responsibility and potential liability involved. A co-trustee also introduces the potential for conflict.


Being too vague with your heirs about your estate plan. While you may not want to explicitly reveal who will get what prior to your passing, your heirs should have an understanding of the purpose and intentions at the heart of your estate planning.

Did You Hear What Just Happened With Social Security? PDF Print
Friday, 18 December 2015

Congress just eliminated two popular strategies used to get greater retirement benefits.

FotoFlexer Photo


If you want to claim Social Security benefits soon, keep a date & a number in mind. The date is April 30, 2016. The number is 62.


Recent changes to the Social Security benefit rules have made that date and that number very important, especially for those about to retire.


In October, Congress passed a new federal budget. In doing so, it shut down the file-and-suspend and restricted application claiming strategies for Social Security, which married couples used to try and maximize their combined retirement benefits.1


Broadly speaking, the point of both strategies was to generate spousal Social Security benefits for a couple while they suspended their own, individual benefits (thereby allowing those individual benefits to grow by roughly 8% per year from age 62-70 until claimed).1


After April 30, 2016, the door will shut on the file-and-suspend strategy. The strategy worked like this: when one spouse reached Social Security's Full Retirement Age (66), that spouse claimed Social Security but then immediately suspended their retirement benefits. The other spouse could then claim a spousal benefit while their deferred, individual Social Security benefit grew 8% annually.2


You may still be able to use the file-and-suspend strategy before the door closes. Are you married? Are you 66 or older right now, or will you be 66 years old by April 30, 2016? If your answer is "yes" to both those questions, then you and your spouse still have a chance to use the strategy. That chance disappears forever on May 1. (It may be risky to wait until April, when the Social Security Administration may have a backlog of applications on its hands.)2

Comprehensive Financial Planning: What It Is, Why It Matters PDF Print
Tuesday, 01 December 2015

Puzzle Pieces Question MarkYour approach to building wealth should be built around your goals & values.

(Photo: Creative Commons Question mark made of puzzle pieces by Horia Varlan is licensed under CC BY 2.0)


Just what is "comprehensive financial planning?"As you invest and save for retirement, you will no doubt hear or read about it – but what does that phrase really mean? Just what does comprehensive financial planning entail, and why do knowledgeable investors request this kind of approach?


While the phrase may seem ambiguous to some, it can be simply defined.


Comprehensive financial planning is about building wealth through a process, not a product. Financial products are everywhere, and simply putting money into an investment is not a gateway to getting rich, nor a solution to your financial issues.


Comprehensive financial planning is holistic. It is about more than "money". A comprehensive financial plan is not only built around your goals, but also around your core values. What matters most to you in life? How does your wealth relate to that? What should your wealth help you accomplish? What could it accomplish for others?


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