Financial Ducks In A Row • Independent financial advice: IRA, Social Security, income tax, and all things financial

Posted in: amended return, income tax, irs.
Tagged: amended tax return · income tax · irs

IRS Warns of Phishing Scam

Feb 8th, 2017

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fishing This tax season the IRS has been tracking a scam that targets certain employers. It’s a particularly nasty one, hitting where the email targets clerical employees, impersonating someone higher in the organization, asking for W-2 information. With this information the scammer can steal identities.

The scam started out targeting corporations, but now it has evolved to start hitting schools, restaurants, and other organizations. It’s possible that some of these organizations’ less formal management structure may introduce gaps in the process which might provide exploitation opportunities for the scammers.

The complete text of the IRS’s most recent notice about this scam follows below:

Dangerous W-2 Phishing Scam Evolving;
Targeting Schools, Restaurants, Hospitals, Tribal Groups and Others

IR-2017-20, Feb. 2, 2017

WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry issued an urgent alert today to all employers that the Form W-2 email phishing scam has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits.

In a related development, the W-2 scammers are coupling their efforts to steal employee W-2 information with an older scheme on wire transfers that is victimizing some organizations twice.

“This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme,’’ said IRS Commissioner John Koskinen.

When employers report W-2 thefts immediately to the IRS, the agency can take steps to help protect employees from tax-related identity theft. The IRS, state tax agencies and the tax industry, working together as the Security Summit, have enacted numerous safeguards in 2016 and 2017 to identify fraudulent returns filed through scams like this. As the Summit partners make progress, cybercriminals need more data to mimic real tax returns.

Here’s how the scam works: Cybercriminals use various spoofing techniques to disguise an email to make it appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2. This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES).

The Security Summit partners urge all employers to be vigilant. The W-2 scam, which first appeared last year, is circulating earlier in the tax season and to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare and shipping and freight. Those businesses that received the scam email last year also are reportedly receiving it again this year.

Security Summit partners warned of this scam’s reappearance last week but have seen an upswing in reports in recent days.

New Twist to W-2 Scam: Companies Also Being Asked to Wire Money

In the latest twist, the cybercriminal follows up with an “executive” email to the payroll or comptroller and asks that a wire transfer also be made to a certain account. Although not tax related, the wire transfer scam is being coupled with the W-2 scam email, and some companies have lost both employees’ W-2s and thousands of dollars due to wire transfers.

The IRS, states and tax industry urge all employers to share information with their payroll, finance and human resources employees about this W-2 and wire transfer scam. Employers should consider creating an internal policy, if one is lacking, on the distribution of employee W-2 information and conducting wire transfers.

Steps Employers Can Take If They See the W-2 Scam

Organizations receiving a W-2 scam email should forward it to phishing@irs.gov and place “W2 Scam” in the subject line. Organizations that receive the scams or fall victim to them should file a complaint with the Internet Crime Complaint Center (IC3,) operated by the Federal Bureau of Investigation.

Employees whose Forms W-2 have been stolen should review the recommended actions by the Federal Trade Commission at www.identitytheft.gov or the IRS at www.irs.gov/identitytheft.

Employees should file a Form 14039, Identity Theft Affidavit, if the employee’s own tax return gets rejected because of a duplicate Social Security number or if instructed to do so by the IRS.

The W-2 scam is just one of several new variations that have appeared in the past year that focus on the large-scale thefts of sensitive tax information from tax preparers, businesses and payroll companies. Individual taxpayers also can be targets of phishing scams, but cybercriminals seem to have evolved their tactics to focus on mass data thefts.

Be Safe Online

In addition to avoiding email scams during the tax season, taxpayers and tax preparers should be leery of using search engines to find technical help with taxes or tax software. Selecting the wrong “tech support” link could lead to a loss of data or an infected computer. Also, software “tech support” will not call users randomly. This is a scam.

Taxpayers searching for a paid tax professional for tax help can use the IRS Choosing a Tax Professional lookup tool or if taxpayers need free help they can review the Free Tax Return Preparation Programs. Taxpayers searching for tax software can use Free File, which offers 12 brand-name products for free, at www.irs.gov/freefile. Taxpayer or tax preparers looking for tech support for their software products should go directly to the provider’s web page.

Tax professionals also should beware of ongoing scams related to IRS e-Services. Thieves are trying to use IRS efforts to make e-Services more secure to send emails asking e-Services users to update their accounts. Their objective is to steal e-Services users’ credentials to access these important services.

Posted on Feb 8th, 2017

by author: jblankenship.

Posted in: income tax, irs, scams.
Tagged: income tax · irs · scam

Tax Refund Myths Debunked

Feb 6th, 2017

1 comment

Recently the IRS published a Special Edition Tax Tip which debunks some very common myths about your income tax refund. You may find some of these surprising. These myths are pervasive and can lead you astray if you believe them. In my experience the information in the Tip below is great advice for finding information about your tax refund.

The complete text of the Tip (IRS Special Edition Tax Tip 2017-02) follows below:

IRS Debunks Myths Surrounding Your Tax Refund

As millions of people begin filing their tax returns, the Internal Revenue Service reminds taxpayers about some basic tips to keep in mind about refunds.

During the early parts of the tax season, taxpayers are anxious to get details about their refunds. In some social media, this can lead to misunderstandings and speculation about refunds. The IRS offers these tips to keep in mind.

Myth 1: All Refunds Are Delayed

While the IRS issues more than 90 percent of federal tax refunds in less than 21 days, some refunds take longer. Recent legislation requires the IRS to hold refunds for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. Other returns may require additional review for a variety of reasons and take longer. For example, the IRS, along with its partners in the states and the nation’s tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud. The IRS encourages taxpayers to file as they normally would.

Myth 2: Calling the IRS or My Tax Professional Will Provide a Better Refund Date

Many people mistakenly think that talking to the IRS or calling their tax professional is the best way to find out when they will get their refund. In reality, the best way to check the status of a refund is online through the “Where’s My Refund?” tool at IRS.gov or via the IRS2Go mobile app.

Taxpayers eager to know when their refund will be arriving should use the “Where’s My Refund?” tool rather than calling and waiting on hold or ordering a tax transcript. The IRS updates the status of refunds once a day, usually overnight, so checking more than once a day will not produce new information. “Where’s My Refund?” has the same information available to IRS telephone assistors so there is no need to call unless requested to do so by the refund tool.

Myth 3: Ordering a Tax Transcript a “Secret Way” to Get a Refund Date

Ordering a tax transcript will not help taxpayers find out when they will get their refund. The IRS notes that the information on a transcript does not necessarily reflect the amount or timing of a refund. While taxpayers can use a transcript to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation, they should use “Where’s My Refund?” to check the status of their refund.

Myth 4: “Where’s My Refund?” Must be Wrong Because There’s No Deposit Date Yet

The IRS will update “Where’s My Refund?” ‎on both IRS.gov and the IRS2Go mobile app with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15. Taxpayers claiming EITC or ACTC will not see a refund date on “Where’s My Refund?” ‎or through their software package until then. The IRS, tax preparers and tax software will not have additional information on refund dates.

The IRS cautions taxpayers that these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27 – if there are no processing issues with the tax return and the taxpayer chose direct deposit. This additional period is due to several factors, including banking and financial systems needing time to process deposits. Taxpayers who have filed early in the filing season, but are claiming EITC or ACTC, should not expect their refund until the week of Feb. 27. The IRS reminds taxpayers that President’s Day weekend may impact when they get their refund since many financial institutions do not process payments on weekends or holidays.

Myth 5: Delayed Refunds, those Claiming EITC and/or ACTC, will be Delivered on Feb. 15

By law, the IRS cannot issue refunds before Feb. 15 for any tax return claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC). The IRS must hold the entire refund, not just the part related to the EITC or ACTC. The IRS will begin to release these refunds starting Feb. 15.

These refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27. This is true as long as there is no additional review of the tax return required and the taxpayer chose direct deposit. Banking and financial systems need time to process deposits, which can take several days.

See the What to Expect for Refunds in 2017 page and the Refunds FAQs page for more information.

Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

IRS YouTube Videos:

Direct Deposit for Your Tax Refund – English | Spanish | ASL
Claiming EITC or ACTC? Your Refund May be Delayed – English | Spanish | ASL
When Will I Get My Refund? – English | Spanish | ASL

Posted on Feb 6th, 2017

by author: jblankenship.

Posted in: income tax, income tax refund, irs.
Tagged: income tax · irs

Substantial Earnings Years of Credit

Jan 30th, 2017

2 comments

How does the substantial earnings years of credit work for Windfall Elimination Provision?

In this article I wanted to expand on a question that came in via the comments recently, because it addresses a theme I’ve seen often:

I have several years where I was just under the substantial earnings cutoff and 25 that are way over. Do you get partial credit for the years that did not reach the substantial floor?

Overview of Substantial Earnings

When your Social Security benefits are subject to the Windfall Elimination Provision (WEP), there is a way to reduce and possibly eliminate the effect of the WEP. This reduction is accomplished by way of the substantial earnings credit. Substantial earnings years of credit are earned when you have worked in a Social Security-covered job and you have earned at least the substantial earnings limit for that particular year.

The substantial earnings limit is set for each year (click the link to see the substantial earnings limits). This figure is specific to the year.

In order to begin reducing the WEP impact, you must have earned substantial earnings in 21 or more years. For each year earned, from 21-30 years, 10% of the WEP impact is eliminated. With 30 or more years of substantial earnings, WEP impact is completely eliminated.

It’s Black or White

However, if in any particular year you earned even one dollar less than the figure for the year in question, you do not earn the credit for that year. On the other hand, if you have earned more than the substantial earnings limit in any particular year, the excess earnings above the limit are not credited to another year – you can only earn one year of credit in any tax year. And you can’t combine years where you were under the limit to produce additional years of credit.

So in answer to the reader’s question, “just under the substantial earnings cutoff” doesn’t provide a partial credit. So, those several years where the reader was just under the limit produce no years of credit for him. Plus, even though he earned “way over” the limit in 25 other years, he has only earned 25 years of credits for those years.

My response to the question, with the above facts in mind, is as follows:

Unfortunately, no. It’s black or white, you either earned above the threshold or you didn’t. And there is no combining years, either.

Posted on Jan 30th, 2017

by author: jblankenship.

Posted in: Social Security, wep, windfall elimination provision.
Tagged: Social Security · WEP · Windfall Elimination Provision

Planning Without Assets

Jan 27th, 2017

by sraskie.

4 comments

Many individuals, especially after graduating college have an enormous amount of human capital but very little when it comes to financial capital and investable assets. A common question or concern may be that they are of little interest to financial planners because they don’t have any investable assets or wealth. Let me say that this is both correct and incorrect thinking – depending on the financial planner – and just as important; how the financial planner is paid.

Let’s start with the correct version first. Financial planners are paid in a number of different ways from commission, fee-only and fee and commission. Focusing on fee-only planners for a moment, these planners may be compensated by the hour, retainer, or as a percentage of assets the planner manages for the client. If a fee-only planner is only compensated by assets under management, then the planner may not be interested in helping individuals that have no assets to invest. Thus, the client would be correct in thinking that they are of little interest to that particular planner. This is assuming, of course, the client understands the differences in how planners are compensated.

If we look at the incorrect version, the client is incorrect because they may be able to find a planner that can assist them, but whose planning and help for the client can be charged by the hour, or retainer (e.g. monthly). In this example, the client can receive excellent planning and advice, and not have to worry about satisfying a specific asset or net worth minimum.

I think it’s fair to state that planners that have minimums aren’t wrong in doing so. It simply means they have a business model that works for them based on specific goals for their firm and economies of scale. Additionally, AUM clientele and high net worth individuals are a specific market that may be best served by firms with AUM minimums.

However, for individuals starting out, and potentially reading this post, with little no financial capital and net worth but are interested in a plan to get to that goal, firms with hourly charges or retainers may be a great fit – while still getting expert, fiduciary advice.

Posted on Jan 27th, 2017

by author: sraskie.

4 comments already - add to the conversation!

Posted in: AUM, fee-only, fiduciary, financial planning.
Tagged: fiduciary · financial planning

Rollover Risk

Jan 23rd, 2017

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Photo credit: jb

The idea of an IRA rollover, or a rollover IRA, isn’t necessarily a cosmic mystery – this happens all the time. You leave your job, and you rollover your 401(k) to an IRA. No problem, right? Unfortunately, there often are problems with the process of moving funds from one account to another – because there are a couple of very restrictive rules regarding how this process can and cannot be done. It’s not terribly complex, but you’d be surprised how easily these rules can trip you up.

Rollover Risk

Let’s start with a few definitions:

A Rollover is when you take a distribution from one qualified plan or IRA custodian, in the form of a check made out to you, and then you re-deposit that check into another qualified plan or IRA account (at a different custodian).

A Trustee-to-Trustee Transfer (TTT), even though it is often referred to as a “direct rollover”, is treated differently from the Rollover (described above). These transfers, being from one custodian to another (the money never gets into the taxpayer’s hands) is an instantaneous transfer, so the 60-day rule has no bearing on it. Also, the TTT is not restricted to the OPY rule.

The restrictions on a true Rollover (from one IRA to another IRA) are:

the deposit into the new account must be made no more than 60 days after the distribution from the old custodian; and
a rollover can only be done once every 365 days (and yes, 366 days if February 29th is included!).

One exception to the “once-per-year” (OPY) rule is that this only applies to IRA-to-IRA rollovers. Rollovers to or from an employer plan (either to or from an IRA or another employer plan) are not subject to the OPY rule. Also, Roth conversion is not subject to the OPY rule as well. This rule allows only one Rollover for ALL IRAs per year. See the article The One-Rollover-Per-Year Rule: Revised for more information.

There are a few situations where an automatic waiver of the OPY rule can be applied:

You qualify for an automatic waiver if all of the following apply:

The financial institution receives the funds on your behalf before the end of the 60-day rollover period.
You followed all of the procedures set by the financial institution for depositing the funds into an IRA or other eligible retirement plan within the 60-day rollover period (including giving instructions to deposit the funds into a plan or IRA).
The funds are not deposited into a plan or IRA within the 60-day rollover period solely because of an error on the part of the financial institution.
The funds are deposited into a plan or IRA within 1 year from the beginning of the 60-day rollover period.
It would have been a valid rollover if the financial institution had deposited the funds as instructed.

If you do not qualify for an automatic waiver, you can apply to the IRS for a waiver of the 60-day rollover requirement or use the self-certification procedure to make a late rollover contribution.

Why is this so important? When would you make more than one rollover in a year? One case might be where you were waiting for maturity of certain instruments in one IRA (like a CD, for example) and through the course of less than a year, you had two CDs come due and you took rollover distribution from each in separate checks. The second (and any subsequent) check in the 12 month period would be disallowed and considered a taxable (and most likely penalized) distribution.

Two more rules on rollovers

In addition, the TTT helps to avoid any issues with another rule on rollovers: you are required to rollover the same property that was distributed. This means that the IRA account owner cannot receive cash as a distribution and then rollover stock shares that he’s purchased with the cash. Likewise, you couldn’t receive shares of stock in one company, sell the shares and purchase stock in another company and rollover the new shares. One exception to this rule is that if you receive property from a company plan (like a 401(k)), you can sell the property and rollover the cash into an IRA.

If one of those transactions occurs, your rollover funds are considered excess contributions (above and beyond the annual limit) and you would be subject to 6% excess accumulation tax per year that the funds were in the account, on top of being taxed on the original distribution, and quite likely penalized as well.

The last rule I have to offer is the fact that a non-spouse beneficiary can never do a 60-day rollover; they must always do a TTT – as any check written to a non-spouse beneficiary is considered a taxable distribution, and there is no relief available if this mistake is made.

So a good rule of thumb is this: unless there is a very compelling reason, you should always go with a Trustee-to-Trustee transfer when rolling funds to an IRA – this way you’ll avoid some very unpleasant results. If you have to do the other kind of rollover – make sure you haven’t done another within a year and you’ll be golden.

Posted on Jan 23rd, 2017

by author: jblankenship.

Posted in: IRA, qrp, qualified retirement plan, retirement savings, rollover.
Tagged: IRA · rollover

Tax Time To-Do List

Jan 20th, 2017

by sraskie.

1 comment

Now that tax time is around the corner I thought I’d put together a handy guide in case you find yourself in need of delegating your tax prep and return to our firm. As a reminder, both Jim and I are enrolled agents with the IRS and in addition to federal taxes we are capable of preparing and filing your state (nationwide) tax return as well. Here are some items to gather and consider.

Organize your W2s. Gather all of your tax information from your respective employer(s). This also includes any 1099-MISC income if you operated as an independent contractor.

Organize your other tax forms. This include other 1099 forms such as 1099-DIV, INT, as well as 1098 forms for student loan and home mortgage interest. Don’t worry, most of these forms are in the process of being mailed or emailed to you if hold such accounts.

Organize your receipts. If you’re self-employed or incurred non-reimbursed expenses as an employee, these may be deductible. If you’ve used a credit or debit card for these expenses, they can be tracked and some companies will let you categorize them. Additionally if you use an online site such as Mint, you can create your own expense reports for easier access and organization. Examples of such expenses include meals and entertainment (at 50%), self-employed health insurance premiums, supplies, and others.

If you travel a lot for work you may be entitled to a deduction. Throughout the year you (obviously) kept track of your trips in a journal or with an app. Organize this and make sure it’s accurate.

Have you maxed out your IRA? Remember you have until you file or the tax deadline (whichever is sooner) to make your full IRA contributions for 2016.

Although this list is not exhaustive, it can help give you an idea of what deductions you may be allowed, and how to get organized. Of course, part of what we do is to look for additional deductions and credits you qualify for. If you’d like our help, please let us know.

Posted on Jan 20th, 2017

by author: sraskie.

Posted in: tax, tax preparers, tax return.
Tagged: income tax · tax · tax preparers

Filing for Social Security Survivor Benefit alone, preserving Retirement for later

Jan 17th, 2017

7 comments

After all of the changes that have been put in place for Social Security benefits in the past year, there is still one situation that allows for some planning. Knowing about this situation can help if you happen to be in the right circumstances.

If your spouse has passed away and you are due a Survivor Benefit, there may be a strategy for you to maximize benefits. This is because, of all types of Social Security benefits, the Survivor Benefit may still be filed for separately from the Retirement benefit based on your own record.

Why would you want to do this? Well, if your own Retirement benefit either is or will be larger than the Survivor Benefit, it might make sense for you to delay receiving your Retirement Benefit until later. In the meantime, if you’re at least age 60 and not earning more than the income limits, you may want to take advantage of the Survivor Benefit while you delay your Retirement Benefit.

Restricting the Survivor Benefit

For example, Marie’s husband Jake recently passed away. Jake was 66 years old, and had been receiving his own Social Security retirement benefit for a couple of years. His current benefit was $1,500 per month.

Marie is 64, and her own benefit will be $1,500 when she reaches Full Retirement Age (FRA) of 66. Marie is ready to retire from work, and she has two options available at this point:

1) She could file for all available benefits, which would result in a monthly benefit of approximately $1,352. If Jane does nothing more, that would be her benefit (basis) for the rest of her life, except for COLAs.

2) On the other hand, Marie could file for Survivor Benefits only, which would provide her with the same benefit as above, $1,352. But by restricting her application to the Survivor Benefit only, Marie has the option to later file for her own retirement benefit. If she only waits until her Full Retirement Age, Marie could step up her benefit amount to $1,500 per month upon reaching age 66.

Further, Marie could delay filing for her own benefit as long as possible, to age 70, and thereby maximize her retirement benefit to $1,980.

How it works

In the example above, Marie’s own retirement benefit at her age 64 is reduced to $1,300. The Survivor Benefit based on Jake’s record is reduced as well, but only to $1,352. When Marie files for benefits, if she makes no action to restrict her application, she is filing for (effectively) the largest possible benefit, considering all benefits that are available to her.

If Marie doesn’t restrict her application specifically to the Survivor Benefit alone, she has effectively filed for her own Retirement Benefit at the same time. This is because an application for any Social Security benefit is considered to be an application for all available benefits unless the application’s scope is restricted.

However, if Marie does restrict her application to the Survivor Benefit only, she preserves the option to later file for her own retirement benefit. Having restricted her application only to the Survivor Benefit, her own retirement benefit can continue to grow in value since she has not filed for it. Then later she can file for her own benefit – at any time when her own benefit is larger than the Survivor Benefit.

Note: It doesn’t matter if Marie and Jack were divorced, as long as the marriage lasted at least 10 years. As a surviving divorced spouse, Marie would have the same options available to her as a widowed spouse.

How do you do this?

There are a couple of different ways to accomplish the restricted application for Survivor Benefits.

In the online application for benefits, there is a screen called Additional Benefits (ADDB), which has a question:

If claimant is filing as a surviving spouse, is the claimant filing for benefits on own record?

Answering “No” to this question will restrict your application to only the Survivor Benefit.

Another way to restrict the application is to include an unequivocal statement on your application such as:

I do not wish this application to be considered an application for retirement benefits on my own earning’s record.

or

I filed on <date> for all benefits for which I may be eligible except for retirement benefits on my own earnings record.

or

I wish to exclude retirement benefits on my own earnings record from the scope of this application.

If including a statement (instead of the online answer of “No”) it is important to NOT include qualifying phrases in your statement. Examples of such statements are “at this time” or any statement regarding planning to file for other benefits in the future. These qualifying statements will cause the statement to be rejected.

Posted on Jan 17th, 2017

by author: jblankenship.

7 comments already - add to the conversation!

Posted in: restricted application, Social Security, social security retirement, social security survivor benefits.
Tagged: restricted application · Social Security · survivor benefit

After-Tax Investment Considerations

Jan 13th, 2017

by sraskie.

2 comments

Some individuals have the ability to contribute after-tax amounts to their employer-sponsored plans such as a tax-deferred 401k or a defined benefit pension. Generally, since these amounts are after-tax, the contributions start adding up to a sizable amount known as basis. Basis is simply the amount of after-tax money put into these accounts that is not taxed when it’s withdrawn. However, any earnings on the basis are taxable.

Individuals considering contributing after-tax amounts to the above plans may also consider if it makes sense to contribute to a non-qualified brokerage account. Like the aforementioned employer-sponsored plans, contributions to a non-qualified brokerage account are made with after-tax dollars, thus they can build a sizable basis – which is not taxed when withdrawn. Also, like the above employer-sponsored accounts, any earnings are subject to taxation. The major difference is in the way the earnings from the non-qualified account are taxed.

Earnings on after-tax contributions to employer-sponsored plans are taxed at the individual’s ordinary income tax rate. However, earnings on after-tax contributions to a non-qualified brokerage account are taxed more favorably as long-term capital gains (assuming they are held for longer than one year). Although the non-qualified account may seem like the way to go, there are a number of items to consider before choosing which account to place your after-tax money.

One area to explore is how retirement income is taxed in your state. Some states such as Illinois currently do not tax retirement income. Thus, the earnings from the after-tax 401k or pension contributions would not be taxed at the state level, only federally. Earnings from the non-qualified account would be taxed both at the state and federal level.

Additionally, consider the amount of risk the contributions are being exposed to in their plans. Most non-qualified brokerage account and employer-sponsored 401k risk is the responsibility of the individual or employee. However, some defined benefit pension plans bear all the investment risk while providing a nice crediting interest rate. Thus, if an employer-sponsored defined benefit pension allows after-tax contributions, credits interest at 7.5% (accurate as of this writing for some pensions) and bears all of the investment risk, an individual may find that they are willing to pay a higher percentage in tax for the corresponding interest rate credit and transfer of investment risk.

Other considerations include the individual’s goals for the money at retirement and at death. For example, a 401k will have required minimum distributions (RMDs) at age 70 ½. Non-qualified brokerage accounts do not. Furthermore, most beneficiaries that inherit a 401k account must take RMDs based on the life expectancy of the beneficiary. Taxation is still at the ordinary income tax rate on earnings, but the after-tax amount still constitute basis. Beneficiaries of non-qualified brokerage accounts experience a change in their tax basis. In other words, the account value on the date of the account owner’s death becomes the beneficiary’s new tax basis. Thus, any earnings above that amount are taxed as long-term capital gains rates.

For defined benefit pensions, the beneficiary would be the spouse. At the death of the account owner, the spousal beneficiary would receive whatever annuity payout was agreed upon when the pension was initiated. However, if the employee was single or the spousal beneficiary dies; these payments cease. There’s no account balance to inherit or additional beneficiary to receive the pension.

Posted on Jan 13th, 2017

by author: sraskie.

Posted in: 401k, after-tax, after-tax contributions, income tax, investing, long term capital gain, long term capital gains, long term capital gains rate, qualified retirement plan, tax.
Tagged: 401k · income tax · investment · pension · tax

4 Things to Consider About Healthcare in Retirement

Jan 8th, 2017

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Photo credit: jb

As we all are painfully aware, the costs and complexity of healthcare are skyrocketing, and nothing seems to be slowing things down. Granted, the incoming administration is making overtures to give attention to the problem, but… as we all know, paths to places we don’t want to go are often paved with good intentions. At this point I would not hold my breath for the next great proposal on healthcare costs, the problem is enormous and not easily resolved.

Recent information from Fidelity suggests that a 65-year-old couple who retired in 2016 can expect lifetime healthcare costs to top $260,000 over their remaining lifetimes. And that doesn’t include long-term care (nursing home or assisted-living) costs.

Four Things to Consider About Healthcare in Retirement

It’s not solely Medicare. If you haven’t checked into it yet and you believe that Medicare could be your only insurance in retirement, you’re in for a surprise. With the co-payments, “holes” in coverage, and coinsurance payments, it’s almost a requirement that you have a supplemental healthcare policy to help out. Industry averages for a couple, aged 65 and in good health, start around $7,000 per year and go up from there.
Retiring early increases the costs. If you’re planning to retire early (and therefore lose employer-provided health coverage) you’ve got to replace it somehow. These policies are even more expensive than the Medicare supplement policies discussed above – and much more variable due to the complexities of coverage. This portion of your early retirement deserves (requires!) quite a bit of planning ahead, as healthcare costs could be a significant portion of your monthly expenses in retirement.
It doesn’t help to wait. Are you just starting to consider your options and are close to retirement? If so, you’re quite a bit behind the curve – there are several things that could be done in the five to ten years prior to retirement that might help you with the costs. For example, if you’re a little overweight, or a smoker, rectifying these things five or ten years before retirement can have a significant impact on your costs. Participating in a health savings account (HSA) coupled with a high-deductible health plan (HDHP) can position you well for a transition into retirement as well.
Knowledge is helpful. Health insurers use a special report, called a Medical Information Bureau (MIB) report to help determine your eligibility for coverage. Think of it like a credit report on your health. You can order your own MIB report, in order to look things over to see if there are any red flags (much the same as reviewing your credit report). If you have a denial of coverage on your report or any issues that could adversely impact your ability to get coverage, it’s best to know that up front and work with an agent or broker who specializes in your issues.

Although these things may seem like a lot of work, they’re excellent considerations to take into account as you plan for your healthcare in retirement. And – most financial planners these days, myself included, can help you work through the decision-making process. It’s not simple, and mistakes can be quite costly.

Posted on Jan 8th, 2017

by author: jblankenship.

Posted in: financial planning, health insurance.
Tagged: financial planning

Health Savings Account for 2017

Jan 3rd, 2017

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When you have a health savings account you’re allowed to make contributions to the health savings account that are deductible from your income. There are limits to the amount that is deductible each year, and these limits are set by the IRS.

In order to have a HSA, you must also have a High-Deductible Health Plan (HDHP), which is a health insurance policy that, as the name implies, has a high deductible. Qualified plans have a minimum deductible of $2,600 for families (for 2017) or $1,300 for singles. In addition, HDHPs have a maximum annual limit on the sum of the deductible and out-of-pocket expenses that you must pay. Out-of-pocket expenses include co-payments and other amounts, but do not include premiums paid. The maximum sum of deductibles and out-of-pocket payments for a qualified HDHP in 2017 is $13,100 for family coverage, or $6,550 for single filers. These figures have not changed from the 2016 limits.

For 2017 you are allowed to deduct up to $6,750 in contributions to your Health Savings Account (HSA) if you are covering your family with the HSA. If you are only covering yourself, the limit is $3,400 for 2017. There is an additional “catch-up” amount of $1,000 allowed if you are over age 55 during the calendar year 2017. The self-only contribution limit increased for 2017 (by $50); all other figures remained the same as 2016.

If you make the contributions out of your income, you are allowed to deduct up to the allowable limits from your income. If your employer makes the contributions to the account, you are allowed to exclude the amount of the contributions, up to the limits, from your income.

You then can use the funds in your HSA to pay qualified expenses. If you don’t use the full amount of your deductible contributions in any given year, you can leave the funds in the HSA to grow tax free. In this sense, the HSA works much like an IRA – and in fact, if you’ve got the option to rollover your IRA (or a portion of it) into your HSA. On the other hand, you don’t have the option to rollover your HSA into an IRA.

Within the HSA you can make investments, much like an IRA. Depending on how you use the HSA though, you probably don’t want to put your money at risk. Often HSA funds are used up during the tax year for qualified medical expenses, so if the money is in a fluctuating investment you could wind up with less in your account than you expected when it comes time to pay the expenses. Any amounts left over at the end of a tax year might be invested for long-term if you’re continuing to contribute in the next year, but otherwise you’ll probably want to leave your annual contributions in a liquid form, such as a money market investment to ensure that the money is available when you need it.

You have the opportunity to continue using the funds built up in your HSA over your lifetime for qualified medical expenses, or you can withdraw the funds for other purposes. If used for qualified medical expenses, there is no tax on the distribution (although it must be reported on Form 8889). If the distribution is not for qualified medical expenses, you must pay ordinary income tax on the distribution, plus a 20% penalty (also reported on Form 8889).

Upon your death, if your spouse is the designated beneficiary, he or she may continue to utilize the HSA as if he or she had made the original contributions. If someone other than your spouse is the designated beneficiary of the HSA, upon your death the account ceases to be an HSA and becomes fully taxable to the beneficiary as of the year of your death (but no penalty).

Posted on Jan 3rd, 2017

by author: jblankenship.

Posted in: #noTOP, hdhp, health savings account, high deductible health plan, HSA.
Tagged: hdhp · HSA

How to Make Your Saving Automatic

Dec 30th, 2016

by sraskie.

1 comment

Sometimes it can be difficult to save for emergencies or for retirement. While physically not demanding, the mental strain can be a hump that is hard to get over. In other words, we experience a little bit of “pain” or mental anguish if we have to physically hand over money or write a check.

So how can we overcome this anguish? Automate.

First, determine how much you need for an emergency. This can either be to start the fund or to replenish amounts that have been used. Generally, it’s a good idea to have 3 to 6 months of non-discretionary expenses (expenses that don’t go away if you lose your job or become disabled) set aside in an FDIC insured bank account. Some individuals may find it more comforting to have 6 to 9 months or 9 to 12 months. It’s up to you.

For retirement, I recommend saving 15 to 25 percent of your gross income. If this amount seems too high, consider reading our numerous articles on paying yourself first. It’s not too high. Perhaps your spending is? Ok – back to the main topic.

Once you have these amounts established arrange to have your paycheck deducted for each fund. There are a couple of ways that this can be done. First, you can have your employer (if they allow it) take some of your check and deposit it into your checking account. Then, arrange to have your emergency fund contribution sent to a specific savings account. If your employer doesn’t allow this, simply arrange to have a certain amount transferred from your checking to emergency savings on a monthly basis – until it’s at your desired amount.

If you think you’ll be tempted to spend this money, consider having your emergency fund at another bank or credit union. This relates to the mental and physical strain of accessing the money and you can use this tutorial to login to key bank online right at checkintocash.com. That is, if you really need it (for an emergency) then you can get it. Otherwise, you’re more likely to leave it alone.

For your retirement account you can arrange to have your retirement contributions automatically deducted into your employer sponsored plan (401k). If you’ve maxed out contributions or your employer doesn’t offer a plan arrange to have an automatic deduction taken from your checking account to your IRA. Many people contribute to the 401k and IRA directly from their paycheck. If your employer offers this, take advantage of it.

I would recommend having these deductions come out the day after you’re paid. That way, it’s not only automatic, but it reduces the temptation to spend first, and then save. Instead, you’re paying yourself first and living off of the rest – and you’ve made it automatic.

Posted on Dec 30th, 2016

by author: sraskie.

Posted in: 401k, emergency fund, financial planning, investing, IRA, saving.
Tagged: 401k · financial planning · IRA · retirement savings · saving

6 Year End Tips for a Financially Productive 2017

Dec 23rd, 2016

by sraskie.

3 comments

Maroon Bells – Photo courtesy of Jason Raskie

As 2016 comes to a close in a few weeks and we start into 2017, here are some good tips to consider to start 2017 off with some good strategies that will hopefully become habits.

If you’re not doing so already, set up your payroll deductions to save the maximum to your 401k. There’s plenty of time to your payroll allocated so your deductions start coming out on the first paycheck in January. The 2017 maximum contributions are $18,000 for those under age 50 and $24,000 for those age 50 or older. To deduct the max, simply take the number of pay periods you have annually and divide it into your maximum contribution amount. This will allow you to save the maximum amount over 2017. Consider doing the same to maximize your IRA contribution. Those limits are $5,500 (under 50) and $6,500 (over 50) respectively.

Check your allowances on your W4. If you’ve been paying in quite a bit of tax at tax time or receiving a huge refund it may be that you’re having too little or too much withheld from your paycheck. Consider adjusting these amounts in order to improve withholding efficiency. There are also paycheck calculators online to help identify what your check will look like after withholding and retirement contributions.

Refresh or build your emergency fund. Generally, this is 3 to 6 months of living expenses if you lose your job, become disabled, etc. Some individuals prefer 9 or even 12 months set aside. Whichever amount you choose, make sure it’s funded. A simple savings account with FDIC insurance is a great place to keep this money.

Have an old 401k or IRA sitting idle? Now is an excellent time to consolidate those funds into one IRA with one custodian. This makes life simpler regarding keeping an eye on the funds as well and sticking to your investment and asset allocation strategies.

Review your annual spending/budget. Take a look at your spending over the previous 12 months. Are there any changes you’d like to make? Any room for improvement? Chances are you may identify some favorable and not-so-favorable spending patterns that occurred throughout the year. Could you reallocate some money to retirement saving or emergency fund money? If tracking seems daunting, consider an app or website that helps with this type of planning such as Quicken or Mint.com. These tools allow an individual to see how they’re spending money daily and allow the creation of customized budgets and spending goals. They’re also very efficient and time-saving.

Be sure to remember your 2016 required minimum distribution (RMD) and start thinking about your 2017 RMD. The tax penalty is pretty harsh at 50% of the amount not withdrawn. Don’t need the RMD money? Consider reinvesting it into a non-qualified account or using it to build your emergency fund.

Posted on Dec 23rd, 2016

by author: sraskie.

3 comments already - add to the conversation!

Posted in: #noTOP, 2016 tax year, 401k, asset allocation, budgeting, emergency fund, financial planning, investing, personal finance.
Tagged: financial planning · IRA · required minimum distribution · rmd · rollover

IRS’ 2017 Mileage Rates for Taxes

Dec 19th, 2016

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The Internal Revenue Servic mileage e today issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. These rates are for use on your 2017 income tax return, filed by April 2018.

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

53.5 cents per mile for business miles driven, down from 54 cents for 2016
17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
14 cents per mile driven in service of charitable organizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Posted on Dec 19th, 2016

by author: jblankenship.

Posted in: #noTOP, income tax, irs.
Tagged: income tax · irs

Many Happy Returns*

Dec 12th, 2016

1 comment

Photo credit: jb

I was recently talking with an acquaintance who told me about a friend of his that had not filed a tax return for several years… Now, we all know that burying our head in the sand is no way to deal with *any* problem – but especially this one.

Right off the top of your head, I’m sure you can name a few folks who have been “taken down” by the IRS for tax evasion. Let’s see… for starters, Wesley Snipes, Sophia Loren, Richard Hatch, Leona Helmsley, Richard Pryor, Pavaratti, Martha Stewart, Elton John, Nicholas Cage, Heidi Fleiss… the list goes on.

And then there is probably the most powerful, certainly the most influential, of all of these: Al Capone. The granddaddy of ’em all. Legend has it that the notorious gangster once remarked that tax laws were a joke because “the government can’t collect legal taxes on illegal money.” The IRS charged the infamous Chicago mob boss with failure to pay four years’ worth of taxes. Capone was sentenced to 11 years in jail and an $80,000 fine in 1931.

My point in listing all these names is to show just how pervasive and powerful the IRS can be. Even the likes of Al Capone (as well as, believe it or not, former Vice President Spiro Agnew, and even a former IRS commissioner, Joseph Nunan) couldn’t escape the long arm of the Treasury Department.

Now, if you happen to be in a position where you have not filed tax returns for some time, or if you are simply having difficulty paying the taxes that you owe, Uncle Sam has many options to help you work things out. On the IRS’ website (www.IRS.gov) you’ll find information on how to work out a plan with the Treasury Department in order to get you back on track.

And if you need help in working with the IRS for any reason, don’t hesitate to contact me.

* My original tax preparation service (card above) was named MHR Income Tax Service – MHR stood for “Many Happy Returns”

Posted on Dec 12th, 2016

by author: jblankenship.

Posted in: tax.
Tagged: tax

Student Loans Are Not Carte Blanche

Dec 9th, 2016

by sraskie.

1 comment

For many college bound and current college students, the arrival of the financial aid reward can seem like winning the lottery. For some students, this sum of money is more than they’ve seen (in one sitting) in their entire lifetime. The temptation to think of it as a “paycheck” rather than what it is – a liability – can often lead students to make less-than-optimal decisions when it comes to allocating those borrowed dollars.

When it comes to student debt it’s helpful to think of it as just that – debt. This is money that is supposed to go towards the costs of higher education. If and when you are in the position of getting your reward money, consider the consequences of using the money to finance unnecessary purchases. Remember, this is debt. It will have to be paid back someday and with interest.

When you get your financial aid reward check do a careful assessment of what your actual expenses for college are. These would be tuition, room and board and necessary food (meal plan) and expenses (books, lab fees). Your financial aid reward should not finance a car, dining out with friends, the bar, or your spring break trips. It should only be used to fund the necessary expenses you must pay in order to attend college.

If there’s a surplus of money left over, avoid the temptation to spend this money on unnecessary items. In fact, a very wise move would be to take any extra money and use it to pay off some of the student loan debt you’ve already incurred. This will accomplish quite a few things. It will help boost your credit, it will reduce the total amount you owe when you graduate, and it will reduce the interest expense on the loans since the interest will be applied to a smaller principal balance. Should you want extra income for the extras like dining out or spring break, consider getting a part-time job and use the money earned from the job to pay for those expenses. Or better yet, use that extra money to pay down your student loans.

College isn’t cheap, but it doesn’t have to leave you in enormous debt. Be smart with your financial aid reward and only use what is necessary to stay in school. Use the extra to reduce the amount you’ve borrowed.

Posted on Dec 9th, 2016

by author: sraskie.

Posted in: debt, financial aid, financial planning, student loans.
Tagged: FAFSA · financial aid · financial planning · student loans

New IRS Site for Taxpayer Information

Dec 5th, 2016

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tools Quick, how do you find out what your balance is at the IRS? Call somebody? Wait for a paper notice? Who knows??

The bureaucracy that is the Internal Revenue Service just got a bit easier, and it’s bound to continue improving. The IRS recently launched a new online tool to assist taxpayers with basic account information, starting with balance inquiries. As part of the IRS vision to improve the taxpayer experience, more feature are expected to be added soon.

Below is the text of the actual announcement from the IRS, IR-2016-155:

IRS Launches New Online Tool to Assist Taxpayers with Basic Account Information

The Internal Revenue Service announced today the launch of an online application that will assist taxpayers with straightforward balance inquiries in a safe, easy and convenient way.

This new and secure tool, available on IRS.gov allows taxpayers to view their IRS account balance, which will include the amount they owe for tax, penalties and interest. Taxpayers may also continue to take advantage of the various online payment options available by accessing any of the payment features including: direct pay, pay by card and Online Payment Agreement. As part of the IRS vision for the future taxpayer experience, the IRS anticipates that other capabilities will continue to be added to this platform as they are developed and tested.

“This new tool is part of the IRS’s commitment to improve and expand taxpayer services by providing additional online taxpayer options,” said IRS Commissioner John Koskinen. “The new ‘balance due’ feature, paired with the existing online payment options, will increase the availability of self-service interactions with the IRS. This will give taxpayers another way to take care of their tax obligations in a fast and secure manner.”

Before accessing the tool, taxpayers must authenticate their identities through the rigorous Secure Access process. This is a two-step authentication process, which means returning users must have their credentials (username and password) plus a security code sent as a text to their mobile phones.

Taxpayers who have registered using Secure Access for Get Transcript Online or Get an IP PIN may use their same username and password. To register for the first time, taxpayers must have an email address, a text-enabled mobile phone in the user’s name and specific financial information, such as a credit card number or specific loan numbers. Taxpayers may review the Secure Access process prior to starting registration.

As part of the security process to authenticate taxpayers, the IRS will send verification, activation or security codes via email and text. The IRS warns taxpayers that it will not initiate contact via text or email asking for log-in information or personal data. The IRS texts and emails will only contain one-time codes.

In addition to this new functionality, the IRS continues to provide several self-service tools and helpful resources available on IRS.gov for individuals, businesses and tax professionals.

Posted on Dec 5th, 2016

by author: jblankenship.

Posted in: #noTOP, income tax, internal revenue service, irs.
Tagged: income tax · irs

How to Save On Holiday Spending

Dec 2nd, 2016

by sraskie.

1 comment

It’s that time of year when Thanksgiving comes and goes and before we know it Christmas will be upon us. For many people, this time of year means the giving and exchanging of gifts to family, friends and loved ones. It also means that many people will be worried about their spending over the Holiday season; with concerns of how to budget, going over budget, or amassing unwanted amounts of credit card debit.

Here are some ideas to help keep your Holiday spending in check in order to stick to your budget and avoid the trap of credit card debt – the gift that keeps on giving.

Create a spending plan and stick to it. Many individuals have a budget when it comes to what they will spend on gifts for the Holidays. However, it becomes tempting to spend in excess of this budget when we see additional gifts we’d like to give or we feel guilty that what we’ve purchased isn’t enough for the person the gift is intended for. Sticking to your budget reduces the temptation to spend money you don’t have.

Consider shopping earlier in the year. Rather than wait until the last minute, consider doing your shopping throughout the year. Items can be purchased throughout the year when they’re on sale, and perhaps when emotions are less likely to influence last-minute spending.

Consider saving for your Holiday gifts throughout the year. Many banks and credit unions offer a Christmas account where folks can save their money specifically for the Holidays. Then, when it’s time to purchase gifts, the money is already there, budgeted for and ready to be used for its intended purpose. Avoid department store credit card offers to finance your spending.

Communicate expectations. If things are tight or your budget is small, consider explaining this to your family. In most cases, family and friends will be completely understanding of the situation and will often suggest not giving them anything at all. Conversely, they may feel relieved when you tell them the same thing – a gift isn’t necessary.

Consider listening. If a friend or family member mentions that they would rather not get a gift, consider taking that comment seriously. Granted, this is difficult to do as the act of giving gifts is an expression of love and appreciation. However, consider respecting their request. Perhaps in lieu of a gift, you write a nice card or note of appreciation to them. Another idea is to make a donation in their name to a charity or organization they’re involved in or have interest.

Consider combination gifting. Many times family members will pool their gift money to give a bigger gift to their loved ones. This allows family members to participate in giving, without feeling bad that they can’t give as much. Additionally, the folks pooling their money should agree on the amount each person will contribute. Those with higher incomes or who’ve done better planning should not be expected to contribute the most. It should remain equal. It also means that those with more money to give should stick to the agreed upon amount to avoid contention and ill-feelings from those who can’t give more.

Giving is not quid pro quo. If you receive a gift, be thankful. If you didn’t plan on getting the person who gave a gift, consider not doing so, but perhaps send a quick note of thanks in a card or letter. This not only saves money, but also the stress of getting a gift you had no intention of giving.

Posted on Dec 2nd, 2016

by author: sraskie.

Posted in: #noTOP, budgeting, financial planning, saving.
Tagged: holiday budgeting · holiday spending

Penalties for Changing SOSEPP

Nov 28th, 2016

2 comments

broken duck So – you’ve begun your Series of Substantially Equal Periodic Payments (SOSEPP) from your IRA to satisfy your §72(t) requirement. Allofasudden, something happens that causes you to make a change to your payment – either purposely or through unforeseen circumstances. What happens? You were supposed to keep the same payment for the longer of 5 years or until age 59½. What do you do now?

.Well – first of all, we must understand the timeline associated with an SOSEPP: once begun (notwithstanding the “one-time change” exception which you can read about here), you have to continue those periodic payments without change for the longer of five years or until you reach age 59½.

If you make a change to your periodic payments (other than the one-time change), §72(t)(4) indicates that ALL of your payments, beginning with your first payment under the SOSEPP, will be subject to 1) ordinary income tax (should have already been assessed); 2) the 10% non-qualified withdrawal penalty; and 3) interest on any unpaid tax or penalty, calculated from the date(s) of the disbursal(s) forward to the date you “broke” the SOSEPP.

This Code section should strike fear in the hearts of folks who are considering a SOSEPP. If you think about it, the possibilities for error are numerous. Your brokerage can fail to execute a disbursement the way you directed; you forget to take your withdrawal; you mistakenly take more (or less) than your SOSEPP prescribes… And if it’s been in place for several years, you’ll owe penalties back to the beginning of the plan, plus interest.

It doesn’t take much imagination to envision a scenario where you could be in pretty deep with such an error on your plan. The IRS has no sense of humor when dealing with these cases – not many are overturned.

Posted on Nov 28th, 2016

by author: jblankenship.

Posted in: 72t, Early Distribution, IRA, tax.
Tagged: IRA · tax

What to Expect After the Election

Nov 25th, 2016

by sraskie.

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Now that the election has come and gone I wanted to send a note on what we should expect for the next four years and beyond. Really, these are no big predictions, but at times we may tend to forget our long-term goals in the hype and excitement of short term events.

Expect volatility. Volatility is the norm, not the exception. Therefore, it should come as no surprise that markets will fluctuate, gyrate and generally have many ups and downs over the next four years and beyond. Think of it this way, would we expect any higher returns on our investments if markets were always calm and stable? No. Volatility is the price (risk) we pay for expected higher returns. We can diversify and maintain focus, but volatility will never go away.

Expect change. As the saying goes, the only thing that is permanent is change. Do I know what that change is going to be? I don’t. And really, if anyone tells you that they can predict what change is going to happen, be very leery. Laws will change, processes will change and people will change. We have very little control over it.

Expect to save, and save more. In a recent article I read the author cited a study in which retirees were asked their number one regret. No, it wasn’t that they didn’t travel enough or visit with family or friends. And no, it wasn’t spending more time recreationally. The number one regret was not saving for retirement early enough. We’ve spoken quite a bit about paying yourself first and living off of the rest. Try your best to maximize your contributions to your 401k and IRAs. For 2016 (and 2017) those maximums are $18,000 annually ($24,000 if over age 50) for the 401k and $5,500 annually ($6,500 if over age 50) for IRAs.

Expect a bright outlook on your life. One of the few things we can control is our happiness and our attitude. Focus on the things that matter and worry less about the things that don’t. Life’s too short.

Posted on Nov 25th, 2016

by author: sraskie.