(805) 339-0760

Author Archives: admin

Your Advisor: A Partner in Pursuing Lifelong Financial Goals

Need help managing your financial life? An investment professional is a tremendous resource to tap for financial planning information throughout your lifetime. For instance, your financial advisor can help you with:

Short-term savings: Avoid piling up debt when unexpected expenses come your way by having at least three months of living expenses available at all times. If you don’t have an “emergency” fund, your financial advisor can help you figure out how to build one.

Investing for long-term goals: Your investment professional can help you determine how much you will need to retire and then work with you to build a portfolio to pursue the kind of retirement you have in mind. He or she can also help you come up with creative funding solutions for your children’s education.

Estate planning: Contrary to popular thinking, estate planning is not just for the wealthy. Creating a will and naming a health care proxy (someone who makes medical decisions for you if you are incapacitated) and durable power of attorney (someone designated to decide financial matters if you are unable to do so) can make sure your wishes are honored. Consider using a qualified professional to develop an appropriate plan.

Three Tips for a Smooth Financial Meeting

Prepare for an appointment with a financial advisor by keeping this pre-meeting checklist in mind.

  1. Organize your thoughts and set priorities. Think about your financial goals and time frames. Your advisor will be able to help you review these issues and match them to your tolerance for investment risk. Also discuss your top areas of financial concerns, such as reducing debt.
  2. Gather the appropriate paperwork. You’ll likely need to bring financial documents, such as investment account statements and tax returns, to your first meeting. Call in advance and ask what documents would be helpful.
  3. Prepare questions for your advisor. It’s important that you feel comfortable with your advisor and the services provided. Ask about the type and level of advice you should expect. Talk about how often you should meet for a “checkup” or to rebalance your portfolio.1

 


 

1Rebalancing strategies may involve tax consequences, especially for non-tax-deferred accounts.

Investing involves risk including loss of principal. No strategy assures success or protects against loss. Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2015 Wealth Management Systems Inc. All rights reserved.

Read More
I’m a Single Parent. How Can I Get Ahead Financially?

As a single parent, you need to understand the financial strategies that can stretch your income and help you lay the groundwork for a secure future. Consider the following lessons to help improve your family’s bottom line:

Identify Your Goals

You can’t have a financial plan without first defining your financial goals. Start by recording all of your short-, medium-, and long-term financial goals.

For example, a child’s education could be one of the biggest expenses in your future. Setting aside money for emergencies and planning for retirement are other important goals you’ll need to keep in mind while raising a family. Don’t let day-to-day concerns distract you from such important goals. Plan for today and tomorrow.

Be a Better Budgeter

To pursue your family’s goals, it’s necessary to manage your household’s cash flow. That involves tracking income and spending, eliminating unnecessary costs, and living within the confines of a realistic budget.

For example, if you spend $2 each work day on a take-out coffee, that amounts to about $40 each month. By eliminating that minor expense from your budget, you could easily save almost $500 per year.

Say No to Debt

High-interest credit card debt can make it extremely difficult to get your budget in order. If you have an outstanding balance, consider paying it off as aggressively as possible. The savings in interest alone could allow you to address other important financial goals.

It’s also a good idea to review your credit history, commonly referred to as your credit report, to make sure that the information it contains about your past use of credit is accurate.

Capitalize on Tax-Advantaged Accounts

Once you free up some cash, apply it toward your goals. But first, learn about the savings and investment opportunities available to you. Keep in mind that tax-deferred investment accounts may enable you to grow the value of your assets more significantly than taxable accounts. Examples of such accounts include 401(k) plans and IRAs for retirement planning.

For college goals, Section 529 college savings plans. These plans are state-sponsored investment programs that allow tax-free withdrawals for college expenses. College savers who contribute to their home state’s 529 plan may be eligible for state tax breaks.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2015 Wealth Management Systems Inc. All rights reserved.

Read More
Creative Ways to Motivate Your Employees

The common thread that runs through all small businesses, from professional services to manufacturing, is that a motivated workforce is central to your business’s success.

Here are some quick, inexpensive, and potentially effective ways to motivate your employees and improve your employee retention.

Weekly “Good News” Emails

Too often the business day can be about addressing problems or issues, large and small. We forget to recognize the “wins” and other positive accomplishments. Yet, it is the successes that we achieve that inspire us to reach new heights.

Encourage Mental Breaks

Whether it is making sure employees go out for lunch, take a mid-day walk, or even take a short “power nap,” these breaks away from the grind can re-energize, refresh and even lead to new ideas.

Be Visible

As a leader, your troops appreciate your visibility and a human connection to you. Walk around the floor. Write handwritten notes of appreciation. Roll up your sleeves to help meet a deadline.

Break the Routine

Think about bringing in a community speaker for a “lunch and learn” session. Perhaps, even sponsor a “bring your pet to work day!” Changing up the routine inspires, invigorates and makes it more fun to be at work.

Invite Staff to Client Visits

Not only will an employee appreciate the opportunity to visit with a client and the vote of confidence it implies, but he or she will gain a valuable perspective on what a client needs and the integral role he or she has in delivering your service or product.

 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2015 FMG Suite.

Read More
How to Help Keep Identity Thieves Away

The more business we do and information we share online, the more identity theft becomes a growing threat to our financial security. There are ways you can help protect your good name and credit. Here are some tips to help keep you and your family safe.

Monitor Your Accounts

This goes for everything you have financially — credit cards, banks, brokerages, credit unions — as well as email and social networking accounts. You should also monitor your phone bills (both cell and landline), as thieves can “piggyback” on your plans.

But above all, be sure to check your monthly financial statements carefully. If you notice something strange — even if it is just for a small amount — call the issuing financial institution immediately and report it.

Sometimes identity thieves test, or “phish,” stolen account numbers by running a small charge or debit — often of a dollar or less — to make sure the account number is legitimate. Most accountholders don’t notice the transaction or don’t think it’s worthwhile to alert their financial institution. That is, until a few weeks or months later when thieves wrack up big credit card purchases or drain a bank account. Bottom line: If you see something “fishy,” no matter how small, report it right away.

Vigilance is the word for your email and social media accounts. The more information you share with the world — say, by posting your birth date to your Facebook profile — the easier you are making it for thieves to find that information. Check your privacy controls, and keep checking. Facebook for one is notorious for changing its policies with little or no notice. Also check the information your children are sharing online. They are less likely to be aware of privacy concerns and the consequences of sharing sensitive information.

Finally, you should Google yourself periodically to see what type of information about you or your family is publicly available. You may be in for a surprise.

Shred Sensitive Documents

You don’t have to shred every piece of mail you receive, but anything with account numbers or other personal data should be shredded. You should also be sure to shred certain pieces of junk mail — especially those unsolicited pre-approved credit card offers that seem to show up in your mailbox on a weekly basis.

You can further reduce or even eliminate these nuisance offers by opting out of the lists aggregated by credit bureaus, who then sell your name to lenders. Go to www.optoutprescreen.com or call 888-567-8688 to get your name off these lists.

Check Your Credit Reports

The Fair Credit Reporting Act gives all American consumers the right to access their credit reports from the big three credit bureaus (Equifax, Experian, and TransUnion) for free once a year. Many unscrupulous firms will offer access to these reports for a fee or on a subscription basis. You shouldn’t pay anything for this access. To get the reports, go directly to the source: www.annualcreditreport.com.

You can also place a security freeze that will prevent anyone from viewing your credit report who is not affiliated with a company that you already have a financial relationship with or certain government and exempt agencies. You have to visit each credit bureau individually to do so.

Note: Security freezes are not free. Each agency charges a fee for this service, unless you are already the victim of an identity theft.

Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2015 Wealth Management Systems Inc. All rights reserved.

Read More
Retirement Account Distributions After Age 70½

Key Points

  • Required Minimum Distributions During Your Lifetime
  • Additional Considerations for Employer-Sponsored Plans
  • Employer-Sponsored Retirement Plan Distribution Alternatives
  • Lump-Sum Distributions
  • Periodic Distributions
  • Uniform Lifetime Table for Required Minimum Distributions
  • Other Considerations
  • Conclusion
  • Points to Remember

If you have assets in a qualified retirement plan, such as a company-sponsored 401(k) plan or a traditional individual retirement account (IRA), you’ll want to be aware of several rules that may apply to you when you take a distribution.

Required Minimum Distributions During Your Lifetime

Many people begin withdrawing funds from qualified retirement accounts soon after they retire in order to provide annual retirement income. These withdrawals are discretionary in terms of timing and amount until the account holder reaches age 70½. After that, failure to withdraw the required minimum amount annually may result in substantial tax penalties. Thus, it may be prudent to familiarize yourself with the minimum distribution requirements.

For traditional IRAs, individuals must generally begin taking required minimum distributions no later than April 1 following the year in which they turn 70½. The same generally holds true for 401(k)s and other qualified retirement plans. (Note that some plans may require plan participants to remove retirement assets at an earlier age.) However, required minimum distributions from a 401(k) can be delayed until retirement if the plan participant continues to be employed by the plan sponsor beyond age 70½ and does not own more than 5% of the company.

In accordance with IRS regulations, minimum distributions are determined using one standard table based on the IRA owner’s/plan participant’s age and his or her account balance. Thus, required minimum distributions generally are no longer tied to a named beneficiary. There is one exception, however. IRA owners/plan participants who have a spousal beneficiary who is more than 10 years younger can base required minimum distributions on the joint life expectancy of the IRA owner/plan participant and spousal beneficiary.

These minimum required distribution rules do not apply to Roth IRAs. Thus, during your lifetime, you are not required to receive distributions from your Roth IRA.

Additional Considerations for Employer-Sponsored Plans

The table below is general in nature and not a complete discussion of the options, advantages, and disadvantages of various distribution options. For example, there are different types of annuities, each entailing unique features, risks, and expenses. Be sure to talk to a tax or financial advisor about your particular situation and the options that may be best for you.

Employer-Sponsored Retirement Plan Distribution Alternatives1

Method Advantages Disadvantages
Annuity A regular periodic payment, usually of a set amount, over the lifetime of the designated recipient. (Not available with some plans.) Assurance of lifetime income; option of spreading over joint life expectancy of you and your spouse.2 Not generally indexed for inflation.
Periodic Payments Installment payments over a specific period, often 5 to 15 years. Relatively large payments over a limited time. Taxes may be due at highest rate.
Lump Sum Full payment of the monies in one taxable year. Direct control of assets; may be eligible for 10-year forward averaging. Current taxation at potentially highest rate.
IRA Rollover A transfer of funds to a traditional IRA (or Roth IRA if attributable to Roth 401(k) contributions). Direct control of assets; continued tax deferral on assets. Additional rules and limitations.

In addition to required minimum distributions, removing money from an employer-sponsored retirement plan involves some other issues that need to be explored. Often, this may require the assistance of a tax or financial professional, who can evaluate the options available to you and analyze the tax consequences of various distribution options.

Lump-Sum Distributions

Retirees usually have the option of removing their retirement plan assets in one lump sum. Certain lump sums qualify for preferential tax treatment. To qualify, the payment of funds must meet requirements defined by the IRS:

  • The entire amount of the employee’s balance in employer-sponsored retirement plans must be paid in a single tax year.
  • The amount must be paid after you turn 59½ or separate from service.
  • You must have participated in the plan for five tax years.

A lump-sum distribution may qualify for preferential tax treatment if you were born before January 2, 1936. For instance, if you were born before January 2, 1936, you may qualify for 10-year forward income averaging on your lump-sum distribution, based on 1986 tax rates. With this option, the tax is calculated assuming the account balance is paid out in equal amounts over 10 years and taxed at the single taxpayer’s rate. In addition, you may qualify for special 20% capital gains treatment on the pre-1974 portion of your lump sum.

If you qualify for forward income averaging, you may want to figure your tax liability with and without averaging to see which method will save you more. Keep in mind that the amounts received as distributions are generally taxed as ordinary income.

To the extent 10-year forward income averaging is available, the IRS also will give you a break (minimum distribution allowance) if your lump sum is less than $70,000. In such cases, taxes will only be due on a portion of the lump-sum distribution.

If you roll over all or part of an account into an IRA, you will not be able to elect forward income averaging on the distribution. Also, the rollover will not count as a distribution in meeting required minimum distribution amounts.

Periodic Distributions

If you choose to receive periodic payments that will extend past the year your turn age 70½, the amount must be at least as much as your required minimum distribution, to avoid penalties.

Uniform Lifetime Table for Required Minimum Distributions

Age 70 75 80 85 90 95 100 105
27.4 22.9 18.7 14.8 11.4 8.6 6.3 4.5

This table shows required minimum distribution periods for tax-deferred accounts for unmarried owners, married owners whose spouses are not more than 10 years younger than the account owner, and married owners whose spouses are not the sole beneficiaries of their accounts.

Source: IRS Publication 590.

Other Considerations

If your plan’s beneficiary is not your spouse, keep in mind that the IRS will limit the recognized age gap between you and a younger nonspousal beneficiary to 10 years for the purposes of calculating required minimum distributions during your lifetime.

Conclusion

There are several considerations to make regarding your retirement plan distributions, and the changing laws and numerous exceptions do not make the decision any easier. It is important to consult competent financial advisors to determine which option is best for your personal situation.

Points to Remember

  1. Distributions from a 401(k) can be delayed until retirement if a plan participant is still employed by the plan sponsor beyond age 70½ and if the plan participant does not own more than 5% of the company.
  2. After age 70½, failure to withdraw the required minimum amount annually may result in substantial tax penalties.
  3. A lump-sum distribution may qualify for 10-year forward income averaging.
  4. The IRS will give you a break (minimum distribution allowance) if your lump sum qualifies for 10-year forward averaging and is less than $70,000.
  5. You may be able to accelerate or minimize the disbursement of your retirement assets by how you choose to calculate periodic payment time periods.

 

 

Source/Disclaimer:

1Speak to a tax or financial advisor about your alternatives before making a decision.

2Annuity guarantees are backed by the claims-paying ability of the issuing company.

Annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Withdrawals made prior to age 59 are subject to a 10% IRS penalty tax and surrender charges may apply. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2015 Wealth Management Systems Inc. All rights reserved.

Read More
Making Sense Of A Home Warranty

As a consumer, when you purchase an expensive item, like a car or refrigerator, you expect to receive a warranty that the manufacturer will repair or replace that product if it breaks down.

A warranty makes sense for big-ticket purchases, but what about for a home?

An Overview of Home Warranties

A home warranty typically covers the repairs on specific items in a home, such as heating and air conditioning systems, plumbing and built-in appliances.¹

A home warranty on a newly built home may be offered by the homebuilder and may cover up to 10 years on structural defects, one year on items like walls and paint and two years for HVAC, plumbing and electrical systems. Appliances may only be covered for six months. Typically, the cost of this policy is contained in the price of the home.

A home warranty on an existing home also can be purchased, usually paid for by the seller or real estate agent to facilitate the sale of a house. These policies tend to have coverage not lasting more than one year.

Occasionally, a home buyer may choose to purchase a policy, for instance, in the case when buying a foreclosure.

Be Realistic

You should understand the limits to which a home warranty will protect you. A home warranty promises you that certain items will remain functional; it does not promise you a new appliance or furnace.

Though it may be comforting to know repairs are covered, a warranty may restrict the contractors you can use to do the repair work.

A home warranty may be most beneficial to someone who will be purchasing an older home.

If you elect to buy a home warranty, make sure you work with a reputable company with a long-standing record in your local area. And, as always, be sure to comparison shop.

  1. Several factors will affect the cost of home warranty policy, including the size, location and contents in the home. Any guarantees associated with a home warranty policy are dependent on the ability of the issuing company to continue making claim payments.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2015 FMG Suite.

Read More
1 2