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Donating Highly Appreciated Stock PDF Print
Tuesday, 26 August 2014
It can give you a tax break. It can give a charity a tax break in the future.


raising-money-for-charity-300x300Why sell shares when you can gift them? If you have appreciated stocks in your portfolio (and you hold them in a non-qualified account that doesn't get special tax treatment), then you might want to consider donating those shares to charity rather than selling them someday.


Why, exactly? Donating appreciated securities to a tax-exempt charity can result in a pair of tax breaks. If you have held the stock for more than a year, you can deduct the fair market value of the stock in the year that you make the donation. If the charity is tax-exempt, it won't face capital gains tax on the stock if it sells it in the future. Again, this is all provided you donate the shares to the charity out of a non-retirement account (and not out of a qualified retirement plan such as an IRA).1


When is donating stock a better choice than gifting cash or just selling the shares? Two reasons may motivate you to donate highly appreciated stock to a tax-exempt charity. One, if you own too much company stock or your portfolio isn't very diverse, it can give you a chance to reduce overweighting in one stock or sector. Two, it might be a smart tax move if you own a number of low-basis stocks.


If you just hand some cash to the tax-exempt charity, the tax benefit is certainly significant.

Should You Change Jobs or Stay the Course? PDF Print
Tuesday, 12 August 2014
Does sticking with the same firm actually hurt your financial potential?

 Should You Change Jobs or Stay the Course   

If you spend two years or less at a series of jobs, is that a problem? Shouldn't your résumé signal loyalty instead of transience?


Well, maybe it isn't a problem. Maybe you are doing yourself a financial favor instead, especially in this decade. Maybe the conventional wisdom about getting ahead is flawed. The era of the organization man/woman is long gone, and how many people do you know who have spent a decade or longer working for one employer?


Remember 5% annual raises? You don't see them much anymore. In fact, when the respected HR firm Buck Consultants released its 2013 employee compensation forecast, it projected that "the median salary increase in 2013 will be 3%" and that "the new normal for salary increases will settle at this 3% level."1


Chances are, your most recent raise was on the order of 2-3%. While you are keeping up with consumer prices at that rate, you may not be making up for any financial steps you took backward as a result of the recession. Even the all-stars at your firm may be getting just a 5-6% yearly raise.


Why does jumping ship so often mean a jump in pay? As a senior hiring manager who has worked with Intuit and other Fortune 500 firms in the San Francisco Bay Area recently commented to Forbes, "I would often see resumes that only had a few years at each company. I found that the people who had switched companies usually commanded a higher salary."2

Rules Changes for Retirement Plan Fiduciaries PDF Print
Tuesday, 05 August 2014
Have you kept up with them? Have they raised new questions for you?Rules Change for Fiduciaries


On July 1, 2012, the Department of Labor implemented some rules changes for ERISA-covered defined benefit and defined contribution pension plans. These changes were made to improve transparency.1


Covered service providers (CSPs) must fully describe services & fees. Financial advisors, financial consultants or third-party administrators who expect to receive $1,000 or more in direct or indirect compensation for their services are considered CSPs and must detail their compensation and/or fee structure to fiduciaries. CSPs also include financial advisors or TPAs who act as fiduciaries or Registered Investment Advisors for plan sponsors. If applicable, the CSP must detail any fees charged for recordkeeping along with recordkeeping methods.1


CSPs must offer this information to a plan sponsor before the plan sponsor contracts their services, and they must provide updates in the event a contract is renewed or extended or when their fees change.


Plan fiduciaries must detail fees (and more) to plan participants. Fiduciaries are now required to disclose (and update) the kind of information that was often buried deep within the typical fund prospectus.  


Key plan information must be clearly communicated. Each plan participant should be provided with a) a list of the plan's investment alternatives (options) and designated investment managers, b) a description of any self-directed brokerage accounts offered, c) how plan participants may direct invested assets and any restrictions or limits on asset transfers, d) the plan provisions regarding voting, tender and similar rights.3

The Right Beneficiary PDF Print
Tuesday, 29 July 2014
Who should inherit your IRA or 401(k)?  See that they do.The Right Beneficiary


Here's a simple financial question: who is the beneficiary of your IRA? How about your 401(k), life insurance policy, or annuity? You may be able to answer such a question quickly and easily. Or you may be saying, "You know ... I'm not totally sure." Whatever your answer, it is smart to periodically review your beneficiary designations.


Your choices may need to change with the times. When did you open your first IRA? When did you buy your life insurance policy? Was it back in the Eighties? Are you still living in the same home and working at the same job as you did back then? Have your priorities changed a bit – perhaps more than a bit?


While your beneficiary choices may seem obvious and rock-solid when you initially make them, time has a way of altering things. In a stretch of five or ten years, some major changes can occur in your life – and they may warrant changes in your beneficiary decisions.


In fact, you might want to review them annually. Here's why: companies frequently change custodians when it comes to retirement plans and insurance policies. When a new custodian comes on board, a beneficiary designation can get lost in the paper shuffle. (It has happened.) If you don't have a designated beneficiary on your 401(k), the assets may go to the "default" beneficiary when you pass away, which might throw a wrench into your estate planning.


After QE3 Ends PDF Print
Monday, 14 July 2014
Can stocks keep their momentum once the Federal Reserve quits easing?

After QE3 Ends"Easing without end" will finally end. According to its June policy meeting minutes, the Federal Reserve plans to wrap up QE3 (Quantitative Easing) this fall. Barring economic turbulence, the central bank's ongoing stimulus effort will conclude on schedule, with a last $15 billion cut to zero being authorized at the October 28-29 Federal Open Market Committee meeting.1,2


So when might the Fed start tightening? As the Fed has pledged to keep short-term interest rates near zero for a "considerable time" after QE3 ends, it might be well into 2015 before that occurs.


In June, 12 of 16 Federal Reserve policymakers thought the benchmark interest rate would be at 1.5% or lower by the end of 2015, and a majority of FOMC members saw it at 2.5% or less at the end of 2016.3


It may not climb that much in the near term. Reuters recently indicated that most economists felt the central bank would raise the key interest rate to 0.50% during the second half of 2015. In late June, 78% of traders surveyed by Bloomberg News saw the first rate hike in several years coming by September of next year.4,5


Are the markets ready to stand on their own?


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