December 24, 2014

Retirement Plan and HSA Limit Increases for 2015

The numbers were released back in October, but the first week of January is the time where many folks increase their automatic deferrals into 401k plans and other tax favorable accounts. With that said,we thought it would be timely to remind everyone of the increase in limits for 2015. Below is a brief summary of the most common accounts we see. You can visit the IRS for more details (links at the bottom of this post).

Annual deferral limit increases from $17,500 to $18,000. The catch-up increases from $5,500 to $6,000

The limits went unchanged at $5,500 and $1,000 for catch-up contributions

The maximum contributions increased from $12,000 t0 $12,500 and the catch-up contribution increased from $2,500 to $3,000

The maximum contribution increased from $52,000 to $53,000

HSA (Health Savings Account)
For self only coverage, the contribution limit is $3,350 and for families it  is $6,650. This is up from $3,300 and $6,550 respectively. For those over age 55, there  is an additional allowance of $1,000

Click here for a link directly to the IRS publication regarding qualified plan contributions.

Click here for a link directly to the IRS publication regarding HSA contributions.

December 19, 2014

Year End Tax Planning

Looking for some opportunities to do some year end tax planning?  Below is a link to 2 great lists from Samet & Co., a CPA firm in the Boston area.  This is one of the best lists we've seen this year outlining strategies for actions you can take before year end.  One for individuals and one for businesses.

Some of the highlights include:

Considering a Roth Conversion in lower income years.
Making gifts to charity - specifically gifts of low basis stock.
Realizing gains or losses on investments

November 25, 2014

Medicare: What you need to know about Nursing Care coverage

One of the listed benefits of Medicare Part A is nursing care.  However, there have been many examples of people being surprised by a bill for nursing care that Medicare said it would not cover.  These situations can cur when someone is initially hospitalized, then moves to a nursing home for follow up care.  It all has to do with how you are being coded, or covered, during your time at the hospital.

This really comes down to whether the hospital considers you an inpatient or outpatient case. 

Inpatient means you are admitted into the hospital per doctor's order.  Staying in a hospital overnight does not necessarily signify this.  If you aren't formally admitted, and are considered to be under observation, you could be considered "outpatient" even if you stay in the hospital overnight.

When you are inpatient, Part A covers your hospital services for 60 days after you pay a deductible.

When you were outpatient, Part A does not cover any services.  These would be covered under Part B (and a supplemental plan) and you would be responsible for any copayment after a small deductible is met.

Medicare will not cover follow up care in a nursing home for outpatients.  You must spend 3 consecutive nights as an inpatient in order to be eligible for nursing home coverage.

So, what does this mean for you?  It means that even when you are dealing with a major medical issue that requires hospitalization & nursing home care, you need to be aware of what type of patient the hospital considers you (or have someone with you that can be making sure they know).  The question to ask the hospital is whether you are considered inpatient or outpatient.  Either way you will need 3 consecutive nights as inpatient to have nursing home covered.

November 21, 2014

Medicare: Part B & D Premiums & Other Costs

We continue our Medicare Planning series of blogs with additional information on the costs of Part B & D plans. 

Below is the breakdown of costs for Part B coverage in 2014 (and the additional cost for Part D) based upon your Modified Adjusted Gross Income each year.  We recommend looking at your tax return (and current year income assumptions) to see how close you may be to the higher or lower end of one of these bands to determine if there is any year end tax planning that could be done to help you remain in a lower premium bracket.  We are not suggesting you let the tax tail wag the dog, however, if you are right on the cusp it could be worth some minor tax planning to save hundreds of dollars a year in premiums. 

*Currently, there is a proposal on the table that will lower the income brackets (beginning in 2016) that the premium increases kick in at, and also increase the additional premiums to be paid.  This could have a dramatic impact on future Medicare costs for those in the higher tax brackets.

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Because your premium is based upon income, often times we see people who are retiring right at age 65 have their Medicare premium for year one be based on a higher bracket than their actual income will be going forward.  This is because they were working in the previous year, and their income was much higher.  If this is the case, you should let the social security office know and they can base your premium on your "projected" income for that first year, saving you the increased costs.

An issue we see quite a bit is a one-year jump in income for clients affecting their Medicare premiums.  This could occur due to any number of circumstances such as:  the sale of assets generating capital gains (possibly the sale of a house), or additional income earned through consulting during retirement.

As Medicare gets this information directly from the IRS (via your tax returns) there is often a 1-2 year delay in the implementation of the increased premium.  During that time, your income may have normalized, putting you back into one of the lower brackets.  If this is the case it is important to be proactive and reach out to the social security office to let them know that this increased premium should only apply for one year.  If you get ahead of it, you won't need to wait the 1-2 years for them to catch up to you and avoid paying the higher premiums immediately.

Medicare Part D, the prescription drug coverage, comes with a "donut hole," which is a gap in coverage. After clients satisfy their deductibles, they then pay a percentage of their prescription drug costs up to $2,850 a year. After that point, they must cover all these costs until they hit $4,550, after which point the insurance kicks in again. While in the "donut hole," clients receive full credit for the cost of the medication but the actual cost is reduced by 28% for generics and 52.5% for name brands. Under the Affordable Care Act, however, that donut hole is shrinking. By 2020, it is expected to be closed.

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For MA residents there is some great information on Part D plans at

Also, has a fantastic resource where you can enter in all of your prescription drugs and it will analyze your expected all in costs for the various Part D plans available in your area.  We strongly recommend taking advantage of this each year during open enrollment (especially if your prescriptions have changed during the past year).

November 19, 2014

Medicare: When & How to Enroll:

Medicare:  When & How to Enroll:

In our ongoing series of posts on planning for Medicare, we move onto when and how to enroll. 
Please click this link to view our previous post on Planning For Medicare, which provides an overview of the Medicare system.

It is important to enroll in at least Part A of Medicare during the window that starts 3 months prior to your 65th birthday, and ends 3 months after.  If not, penalties may apply.

It is even more important to apply for Part B  during the prescribed enrollment period.  For each 12 months when you were eligible and not covered by a group plan, your Medicare Part B premium is going up 10%, and will remain up 10% for the rest of your life.  We have seen this period missed most often by those who have been laid off prior to 65 and are on COBRA.  They assume they are covered and don't need to sign up until COBRA ends.  Having coverage through an active employer allows you to defer this, however, COBRA coverage does not.

If you are collecting social security you should automatically be enrolled in Medicare Part A at age 65.  Coverage will begin on the 1st month of your 65th birthday, unless you were born on the first of the month then the coverage begins the previous month.  You will need to be proactive about signing up for Part B, D, & Medigap plans at this time by contacting your social security office.

Most of our clients are employing strategies to defer social security (to at least full retirement age of 66, or even as far as age 70).  If you fall into the boat that is not collecting social security at age 65 you will need to contact the social security office to sign up for Medicare.  You should do this about 3 months prior to your 65th birthday to avoid any delays. 

If you are covered under an employee medical plan at age 65 (still working) you should still contact social security 3 months prior to your 65th birthday and sign up for Medicare Part A.  You can delay signing up for Part B, D & Supplemental plans for as long as you have your group insurance coverage from an employer for whom you or your spouse are actively working.    When you stop working you will be entitled to a special enrollment period to sign up for B, D & Supplemental Plan.

Even if you have a retiree health insurance plan that includes prescription drugs, you will need to sign up for Medicare Part A.  Often times, your plan will also require you to sign up for Part B, which will act as the primary insurance with your retiree plan acting as supplemental coverage.

Additional Resources:

Beyond working with your financial planner to design the right coverage for you, there are a number of resources available:

Centers for Medicare & Medicare Services (CMS):  800-MEDICARE (800-633-4227) or

Social Security Office:  National # 800-772-1213.  Or call your local office to set up an appointment.

Local Senior Center:  Senior centers often have resources or people to talk to who are well versed in Medicare related issues. 

State Specific Resources:  Many states have additional resources and programs you can take advantage of. 
In Massachusetts we have:
  • SHINE:  Serving the Health Information Needs of Everyone.  800-AGE-INFO (800-243-4636).
  • Mass Med Line:  Pharmacy Outreach, help with affording prescriptions, information about medications and side effects.  Free to MA residents.  866-633-1617.
  • Prescription Advantage Program:  State plan that supplements Part D.  800-243-4636

November 13, 2014

Planning for Medicare

October 15th - December 7th is open enrollment time for Medicare.  For many, Medicare planning is a confusing & daunting task.  We wanted to share some information for those approaching 65 years old who are trying to understand their options for healthcare (there is also relevant information for those already 65 whether on Medicare or not).

As there is so much to cover, we plan on writing a series of blog posts on the topic. We'll start with an overview of the Medicare system.

Alphabet Soup:

Let's begin with a breakdown of the terminology you'll hear when discussing, or reading about, Medicare:

Original Medicare:
Part A:  Think of this as your hospital coverage.  This provides coverage for in patient care, medically-necessary skilled nursing facility stays (see future blog post with more detail on this), and hospices.  There is no premium for most people.
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Part B:  Think of this as your primary coverage for doctors visits and other health care providers.  It covers outpatient care, home health care, durable medical equipment, and certain preventative services.  Premiums for this are income dependent and range from $104.90 - $335.70 per month (for 2014).

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Part D:  Prescription Drug Plans.  The premiums for these plans vary with some providing better coverage for brand name drugs vs. generic.  It is very important to research the plans available to find the right plan for you.  Not investigating the plans available can cost you hundreds or thousands of dollars a year in out of pocket costs.

There are a number of great resources for helping find the right plan for you, including  You can provide them with a list of your prescription drugs and which pharmacy you typically use to determine which plan is most appropriate for you.  This is something you should certainly review each year during open enrollment, especially if you are taking any new drugs.

The average costs for these plans range from $40-$110 per month (with additional premium charges for those in higher tax brackets).
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Medigap Policies:  These are also known as Medicare Supplemental plans (if you are fortunate enough to have a retiree medical plan through your employer it can essentially act as your Medigap policy).  They supplement your Original Medicare and will pay:

  • Medicare's deductible
  • Coinsurance costs
The average cost for these plans range from $60-$200 per month.

Part C:  Medicare Advantage Plans
Medicare Advantage plans are offered by private insurers and are localized plans (Medicare A & B are standardized plans at the Federal level).  Advantage plans often require you to utilize certain networks of doctor visits & hospitals (Original Medicare allows you to see any medical provider that accepts Medicare).   These plans can vary greatly in quality not only between states, but, within states.

Choosing the Right Plan For You

Essentially, you can get Medicare health care coverage in one of two ways.  Through Original Medicare by enrolling in Part A, B, D & a Medigap policy, or, by choosing a Medicare Advantage Plan that combines your coverage into one plan. 

Click here to enlarge image

Making a choice between Original Medicare and Medicare Advantage Plans depends on each individuals health needs and budgets.  Because of the potential of out-of-network providers resulting in higher out-of-pocket costs, we tend to recommend Original Medicare for our clients.  The risk of needing to use out-of-network providers is especially high for those who spend winters down south, or enjoy traveling and therefore may need to access healthcare providers outside of their network.

Additional Resources:

Beyond working with your financial planner to design the right coverage for you, there are a number of resources available:

Centers for Medicare & Medicare Services (CMS):  800-MEDICARE (800-633-4227) or

Social Security Office:  National # 800-772-1213.  Or call your local office to set up an appointment.

Local Senior Center:  Senior centers often have resources or people to talk to who are well versed in Medicare related issues. 

State Specific Resources:  Many states have additional resources and programs you can take advantage of. 

In Massachusetts we have:

  • SHINE:  Serving the Health Information Needs of Everyone.  800-AGE-INFO (800-243-4636).
  • Mass Med Line:  Pharmacy Outreach, help with affording prescriptions, information about medications and side effects.  Free to MA residents.  866-633-1617.
  • Prescription Advantage Program:  State plan that supplements Part D.  800-243-4636

Upcoming Medicare Post Topics:

Medicare: When & How to Enroll
Medicare: Part B & D Premiums & Other Costs
Medicare:  What you need to know about Nursing Care coverage

October 27, 2014

IRS Retirement Plan Limits announced for 2015

On October 23, 2014, the IRS announced its annual cost of living adjustments. Below is a chart from that does a nice job summarizing the changes in limits since 2012.

Chart of Select Limits
401k Plan Limits for Year
401k Elective Deferrals 
Annual Defined Contribution Limit
Annual Compensation Limit
Catch-Up Contribution Limit
Highly Compensated Employees
Non-401k Related Limits
403(b)/457 Elective Deferrals
SIMPLE Employee Deferrals
SIMPLE Catch-Up Deferral
SEP Minimum Compensation
SEP Annual Compensation Limit
Social Security Wage Base

October 14, 2014

SPP Investment Update

Below is an email to our clients discussing our recent rebalancing of our Target Allocations.  We thought it would be helpful to share during this recent market volatility.
A phrase I always try to keep in mind during times of higher market volatility is “the markets tend to take the stairs up and the elevator down”.  For me, this helps keep the long term goals of our clients in perspective when the stock market gets choppy.
Our investment philosophy centers on the belief that the most effective way to achieve your goals is to determine the appropriate level of risk and to consistently rebalance your portfolios to that allocation.  Rebalancing involves buying or selling assets in your portfolio to maintain your original desired level of asset allocation.  Instead of simply rebalancing the portfolio on a given day each year, we try to choose times throughout the year when certain asset classes have drifted from the target allocation in a meaningful way (5-10%).  This helps us ensure that we are sticking to the age old method of “buy low and sell high”.    

The majority of our clients tend to describe themselves as more conservative, essentially, willing to give up some of the upside to protect more on the downside.  Because of this, we will from time to time position our portfolios in a slightly more conservative manner (as we did during the summer).  Our thought process at the time was that the market had been on a relatively straight upward path with very little volatility.  We felt there was an opportunity for some pullback in the markets that would allow us to rebalance the accounts to the appropriate long term allocation, this allowed us to sell a portion of the better performing assets in the accounts while they were up in value and be slightly more defensively positioned in your accounts for the past few months. 

Even with the recent slide in the stock market, Large Cap US Stocks are still up around 3% Year To Date, and 12% over the last 12 month.  Other asset classes have not performed as well, with the International Index down 6% YTD and Small Company Stocks down 7.5% YTD.  This recent market sell-off, combined with our already defensively positioned portfolios, has moved our actual allocation to a relatively significant underweight to risk assets.  For example, if your target allocation is 60% Risk (aka Equities or Stocks)/40% Stable (aka Fixed Income or Bonds) your current position is closer to 50/50.  We look at this as an appropriate time to buy back up to 60% Risk in those portfolios.
Another aspect we monitor is the performance of different sectors of the economy.  In our portfolios this year we have owned Technology (+7.5% YTD), Healthcare (+11.5% YTD) and Real Estate (+14.5% YTD) as over-weights to our Large Cap US Index position (+3% YTD).  This has certainly benefited our Large Cap US component of the portfolio.  We will use this opportunity to rebalance those positions, along with slightly reducing our exposure to Technology and International in our Targets.  We will add a small allocation to a new position in a sector that has been down 6% YTD, US Industrials (to give you a sense some of the top holdings in this index are GE, Union Pacific, UPS, Raytheon).

We will continue to implement most of these changes by using low-cost indexes of Exchange Traded Funds.  If you have self-directed accounts (401k plans, etc.) that may have drifted away from your target allocation you may want to take this opportunity to review them and rebalance as well.
We want to be clear, these moves are not a bullish stance on the markets.  They are in our minds simply sticking to our long term philosophy of rebalancing portfolios to their appropriate allocations.  We could certainly continue to see short term volatility in the stock market.  In general, we think trying to predict the short term movements of the markets is a losing game long term.  Knowing the appropriate level of risk based on your goals & time horizons, and remaining disciplined to our approach is the best way for us to help you achieve your long term objectives.

October 3, 2014

Chase Security Breach - What to do?

If you are a customer of Chase Bank you are probably wondering what steps you can be taking to protect yourself.

First, we would suggest not to panic and change banks based on this breach.  All banks and financial institutions are targets for these attacks.  Unfortunately, it is safe to say this won't be the last breach of a bank.

Online Access to Accounts:  We have read that usernames and passwords have not been breached and not to rush to change them.  We disagree with this thought process and think it cannot hurt to change the passwords you use to login to your accounts.

Communication from "The Bank":  Be very cautious with the information you share with those calling or writing you on behalf of the bank.  If someone reaches out to you, we feel it is better to call the bank back directly with the number on the back of the card to verify that the information being shared / requested is truly coming from them.

Pay Attention:  Spend a little more time than normal monitoring your account transactions.  In a few months. it will be a good idea to review your credit report to ensure no one has opened any accounts with your social security number that you are unaware of.  In a previous post on Identity Theft Protection, we review in detail the steps you should take to review your credit.  Click the link below to see that post.

September 25, 2014

IRS Guidance on after tax 401k contributions and Roth conversions

The last quarter (or so), we tend to be very focused on tax planning. (Not to be confused with tax accounting in the first quarter or so). With that, it is very timely that last week the IRS issued guidance (Notice 2014-54) on rolling out after tax contributions from a 401k plan.


In its guidance, the IRS stated that a retirement plan participant has the ability to convert their "after tax" account into a Roth IRA tax free. 

Here is a link to the referenced notice: 

Background: 401k-Employee Contribution Types

To understand the significance of this, we must first understand the types of employee contributions that may go into a plan. 

For more information on contribution types, see the IRS link below.


As a plan participant, you have the option of contributing to your plan on a pretax basis. This will allow you to take a deduction on your personal taxes.

You may also have the ability to contribute without taking a deduction (many plans do not allow). This is an after tax deferral, meaning you do not get a tax deduction. Eventually when you take a distribution of these funds, you will only be taxed on the earnings (remember you already paid taxes on the deferred contribution).

Finally, your plan may allow for you (not all plans do, but this is becoming more popular) to contribute to a designated Roth account. This contribution is after tax, and when it is eventually distributed (both the deferral and the earnings) to the participant, it is income tax free.

NOTE: Although the record-keeper of the retirement plan is hired to make sure that the funds in the account are categorized appropriately, the ownership is on the account holder.  If ever questioned by the IRS, it is the responsibility of the account holder to show proof of their position. The account funds are broken down by year, who is making the contribution, the tax status, etc. 

September 15, 2014

Donor Advised Funds - WSJ Article

Recently the WSJ published this article focusing on Donor Advised Funds that we wanted to share.

The article highlights the ways Donor Advised Funds (DAF) can help simplify & organize your family's charitable giving.  It also outlines how utilizing DAFs can help maximize the tax impact of the gifts you make.

We have seen this impact firsthand in helping clients establish and manage DAFs.  Companies like Vanguard, Fidelity and Schwab have made it easy to establish these funds and manage them online, while providing a great tool for tracking your giving over time.

By utilizing a DAF, it is very easy to give assets other than cash. Specifically, giving low-basis stock can increase the tax impact of your gift.

You don't need to be Bill Gates to take advantage of these tools, your DAF can be established with as little as $5,000, and you can spread the grants you make to charities over a number of years.

For more information on gifting strategies, see our post on Charitable Planning from May 2013.

September 4, 2014

2014 Retirement Plan Year End Deadlines

This post is for you if you are the owner of a business,  self-employed, or a decision maker on your company's retirement plan. Now that summer is behind us (according to the work/school calendar), end of the year deadlines are fast approaching. 


October 1 
-This is the deadline to establish a new  Safe Harbor 401k plan for 2014. The plan must be in effect for 3 months in the first plan year. 
-If you currently have a SIMPLE IRA and want to start a 401k , you must give your employees notice of 60 days(see below). Therefore, you need to handle operational items prior to November 1.

November 1
-If you have SIMPLE IRA plan and you are ending this to start a 401k plan in 2015, you must notify your employees at least 60 days in advance of change.

December 1
-If you already have a 401k plan but want to add a Safe Harbor provision to the plan, proper notices must be delivered to plan participants at least 30 days prior to change

-If you are starting a retirement plan for the first time, you may be eligible for a $500 tax credit (available for the first 3 plan years to cover administrative fees)
- 401k plans offer a number of design options to maximize the deferrals for business owners, key employees, or anyone else in the company. 
-In 2014 a participant can put away up to $52,000/year into the plan (plus $5,500 in "catch-up" contributions for those over age 50)

August 28, 2014

Family (Friend) Loans

Years after the great financial crisis we find ourselves in very interesting times. Many folks are holding more cash than they imagined they ever would. But when is a good time to put that money to work in the markets? Interest rates are at historic lows, and have been longer than most of us would have guessed. The market has rallied multiple times to all-time highs. And over the long term, we anticipate it will continue to go higher. But when is the pullback that we have all been waiting for going to arrive? The economy is getting stronger, but is still fragile at the same time. Bonds will lose value when rates rise, but when will that happen? How fast and how high will rates go? What other effective and (possibly equally as important) impactful places can you put your money to work? Enter, Family (Friend) Loans.

For some, this may be about getting more interest than in a bank account. For others, it may create an effective gifting mechanism for the kids to buy a home or consolidate debt. Wouldn’t it be nice to see your kid’s inheritance have an impact while you are still alive? (I will leave it up to you to insert your own reminders of mortality here).

Whether the topic of discussion is for loans to purchase a home, renovations, paying off student loans, wedding debt, etc., a Family (Friend) Loan may be a solution.  Family and friends often can provide a loan on their own terms. This could mean lower interest rates and underwriting requirements than banks.  And for those that want to commit substantial gifts to children, but want to hold the children accountable over time, this could be a solution. This year families can gift up to $14,000 without paying a gift tax (known as annual gift exclusion) in order to forgive some (or all) of the loans obligation over time. 

Benefits to Borrowers
-Borrowers can avoid additional fees charged by traditional lenders and keep the profit in the family. 
-The family member (friend) lending can offer better rates than banks
-Family members may offer more flexibility in paying back the loan.
-If properly documented, a mortgage on a home can still be tax deductible.
-The borrower can have the ability to negotiate the purchase price in terms of a cash offer vs. with mortgage contingency (a big plus in competitive housing markets like Boston).

Benefits to Lenders
-The loan can become a more conservative (or riskier, depending on the borrower) part of the investment portfolio for the family member.
-The borrower could offer a higher interest to lender than they are getting on some of the current investments (savings, CD’s, etc). 
-The loan repayment could generate a steady income stream for the lender.
-The lender could provide funds to the borrower with strings attached. In other words, they can decide to gift (forgive) a portion of the loan in some years, but not others.

Considerations and Risks
With the ability to have “loose” or minimal lending requirements and standards between family or friends, this can be both a positive and a risk. As we typically advise clients, although you may get into a business venture with the best intentions in mind, it is prudent to think through the risks and protect yourself (within reason) when you can. My point is, what if you lend money and the payments stop coming? Or they are late? Are you okay with this? If not, what is the recourse? As the lender, you are in a position to structure the expectations up front and make concessions down the road (if you choose to). Maybe you require collateral. Maybe you charge late payment penalties. Maybe you hire an independent third party (at the borrowers expense) to administer and collect on the loan so you can keep the peace at Thanksgiving.

 As the usual disclaimer goes, this strategy requires the collaboration of legal and tax counsel.

Resources These are not recommendations, but resources that we thought could be helpful.
To set the minimum interest rate for the loanthe AFR is published monthly by the IRS for federal income tax purposes at

Once the loan is agreed upon, it is good idea to draft and sign a loan agreement. Here is a Sample Loan agreement: (

Here is a company that handles all of the detail of the loan so that it is IRS compliant at a lower cost than a traditional mortgage loan.  They can set up automatic drafts of debt payment.

Here is a company that connects borrows to lenders without the middleman if you don’t want to turn to friends or family.

August 19, 2014

Roth Conversion Strategy

A Roth IRA conversion is the movement of money from a SEP, Simple, or Traditional IRA into a Roth IRA.  The funds converted are considered taxable income.

We wanted to briefly touch on one timing strategy that we have been utilizing quite a bit with our clients. 

The typical profile of this client is mid 60s, retired or having downsized employment recently. When cash flow is not an issue we are often utilizing social security claiming strategies that delay the bulk of the benefit until age 70.  This coincides with the time when you need to begin taking Required Minimum Distributions (RMDs) from your IRA accounts (age 70.5). 

So, you are 65, have been in a high tax bracket for the past 20+ years, therefore you have been deferring as much income as possible into 401k plans, deferred compensation plans, etc. to avoid paying taxes in those years.  Because of this, you have accumulated most of your wealth in IRAs, after-tax investments, and real estate - with very little in tax-free growth vehicles such as Roth IRAs. The high IRA account values mean you will have a large required taxable distribution from your IRAs beginning at 70.5.

Having retired, there is a period of time between your mid- 60s and age 70 when you may be in a lower Federal and State income tax bracket. 

It is during these years where it may make sense to convert some of your Traditional IRA assets into Roth IRA assets, and pay taxes at this lower tax rate.  This could also help keep your income lower post 70.5 as your RMDs from the IRA accounts will be lower.  It can provide greater tax diversification of your assets in the future which can be helpful during distribution planning.  Also, Roth IRA assets are more preferable than IRA assets for future generations to inherit, as the income tax burden will not be passed along to them.

Of course, each situation is unique and there are multiple facts to understand and explore to ensure that a Roth conversion is appropriate in your situation.  There are also many other times in ones financial life when a Roth conversion could make sense.  We simply wanted to point out one common situation with our clients where we have been able to effective implement this planning strategy.

July 29, 2014

Student Loan Follow Up

As a follow up to our post earlier this week, today CNNMoney published an article on the differences between public & private loans in the case of death of the borrower.  This illustrates another big difference between the two types of loans.

Click the link below for the article.

July 24, 2014

Student Loan Repayment Options

In our previous post we briefly mentioned the various options available to recent graduates for repayment of their student loans.  Here is an overview of those options along with some important resources to consider when deciding the best strategy for yourself.

July 8, 2014

Essential Financial Steps for Young Workers

Now that graduations season is over, hopefully your recent college grad is starting their first job in the real world.  There's a great article in the WSJ for those in their first 5 years on the job, with 6 things to make sure you are doing. Click here to read the entire article.

Here's the CliffsNotes (with our own thoughts sprinkled in) if you don't want to click on the article to read the entire thing:

1) Set a budget: (There is a lot of great free software out there to help track your expenses & budget.  Check out to start).

2) Save for emergencies:  Establish 3-6 month reserved of living expenses (in my opinion 6-12 isn't a bad idea).

3) Take stock of debt: This is especially important to pay attention to if you have student debt.  There are a number of relatively new debt repayment options for graduating students that have been put in place under the Obama administration.  The issue is you need to spend the time to understand the options and analyze which is best for you.

4) Think about Retirement:  Consider a Roth IRA if no plan is available through work.  Plan to increase savings % as you get raises.

5) Manage Risk: Evaluate insurance coverage (of particular note: renters, auto, health, disability).

6) Manage Taxes: Adjust your withholdings to avoid a big tax due, and to avoid a big refund. Track tax deductible expenses (charitable donations, student loan interest).

April 25, 2014

Single Point of View | Identity Theft Protection

The recent Heartbleed security breach has heightened concern of identity theft. Below we highlight a few resources everyone should take into consideration so you can be proactive in protecting your identity. 
Also know that The Federal Trade Commission has a dedicated website with a lot of great information. 

April 2, 2014

NerdWallet: Maximizing Contributions

I am 32 and max out my retirement savings every year through 401k and IRA. I also save an equivalent amount that I put into savings/investment accounts. How should I think about trading off between maximizing my contributions to retirement accounts versus putting less in my retirement accounts so I have more liquid assets to put towards a downpayment?

The bottom line is my net worth is now divided equally between liquid and illiquid (retirement) accounts. I would like to buy property, and I need more cash for a downpayment on my dream home.

February 23, 2014

NerdWallet: Roth IRA Contribution

I made a non-deductible "Backdoor" Roth IRA Contribution (to get around income limits), and my taxes went up in TaxAct when filing taxes.

I am using a 1099-R that I received with a Gross distribution (box 1) and Taxable amount (box 2) in agreement, plus 2b checked (taxable amount not determined). Distribution code is showing "02 - "Early distribution, exception applies (under age 59.5)". Is the key here that this distribution code was messed up by the provider of the 1099-R (Vanguard), in which case it should be a "G - Direct rollover of a distribution ... to a qualified plan" ?

February 12, 2014

NerdWallet: Life Insurance Policy

I'm 40 years old, in good health, and considering a life insurance policy for the benefit of my wife and one-year old. Would you rather get a whole life insurance policy, or a term life insurance policy and "invest the difference" in the market?

I'm also contributing to a 401K, a 529 account, and have about $1M in loan liabilities.

January 13, 2014

NerdWallet: Spending Habits

I am 26 years old and have had some bad spending habits and am currently in debt. What is the best way to pay it down?

I have been making $100,000 per year for the past couple of years. I have $30,000 in credit card debt. What is the best way of paying this down? What is a realistic goal for the amount of time it would take to pay this down?