Category Archives: investing

To roll or not to roll, that is the question.

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Generally, I am not a fan of leaving assets with a former employer. There are a few circumstances when leaving some cash in a former employer’s 401k may be the right thing to do. Here is one instance:

If you are between ages 55- 59 and may need some cash, you would not want to rollover your full 401k.

Here is why: at age 55 or older, many 401k plans allow for cash withdrawals without the 10% early withdrawal penalty. If you are in transition – you may need to keep this option available to you.

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Is a Living Trust for you?

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Many people think they need a Living Trust so their assets will pass to their heirs easily and without tax. Here are a few facts to ponder when deciding if you need a Living Trust.

There will be no delay or expense of probate with a Living Trust.
True enough but if your titling of assets is done properly, everything may pass without going through probate. Any account with a beneficiary attached avoids probate, as do accounts that are joint or have the addition of “in trust for”, or “Payable on Death” after the joint designation.

You will save on all of the administration costs associated with probate.
A Living Trust does avoid the filing and court fees; however, the Trust may still be subject to an Executor’s fee and Lawyer’s fees. Many Executors are family members and will waive the Executor fee if there is not too much work to be done in settling the Estate. If an Attorney’s advice is needed, you will not be able to avoid those fees.

Your heirs can receive their distributions faster with a Living Trust.
Perhaps, assuming that your assets are not very complicated or your Trust does not establish a Postdeath Trust that dictates the distribution.

You will save taxes with a Living Trust.
If you have a Revocable Living Trust, you will not save anything in taxes. You still technically own and have the rights to the assets in the trust. These assets will still be subject to any federal and/or state death tax that may apply. Tax saving provision may be written into your trust to offset the tax.

A Living Trust can be a wonderful tool. Make sure it is written as you wish it to be and that you and your heirs understand the trust.

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Don’t leave $3000 on the table.

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Your 2014 tax planning starts now. While you are receiving all of your W-2’s and 1099’s, you have the opportunity to rebalance your portfolio and do some tax planning at the same time. Take a close look at the cost basis on the holdings in your non-retirement accounts. As you rebalance, you can sell off some losses and harvest some gains. You can match your gains and losses against each other but what if you have more loss than gain? Each year you can write off up to $3000 in losses against ordinary income. So please, don’t leave that $3000 on the table.

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What growing sunflowers can teach us about reallocation.

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I have no problem selling gains from investments in order to keep them and reallocate them into other opportunities. Recently, I met with a client for a review appointment who claims “she can’t understand this stuff that is why she has me.” I know that she likes to garden, I walked down that path with her. This is what I had her visualize:
I said, Imagine planting a sunflower. It grows tall and strong throughout the season. Harvest time comes and you love looking at this tall, strong plant. Dilemma, right? This is how you enjoy the flower and many more like it in the future, you cut it down.

By cutting down the sunflower you can enjoy it two ways. First, you can put the flower in a vase and enjoy its beauty. Second, you can take the gain of many, many new seeds from the flower and plant them. Next season you will have many different flowers from the growth of the original one.

My client easily understood why we take some gains off the table and diversify. Go out there and look at your own sunflowers.

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Listen to 96.5 FM the Saturday from 9-10am, call me with a question.

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This Saturday hear
Nancy Hecht CFP® and
Jim Hachadorian CFP®
co-host our program
“On The Money”!

They’ll be discussing . . .
• What is this 4% withdrawal rate
I keep hearing about?
Is it the best way to withdraw?

• It’s Tax Time – Changes to Your 2013 Return
You Need To Know About.

• Listener Question: I am 80 yrs. old and have never filed for Social Security.
How do I find out what I can get and how do I file?

Call or eMail
Your Questions:
407-290-0058 OR
1-800-328-5858

Nancy@FinancialGroup.com
Jim@FinancialGroup.com

These changes may impact your 2013 tax return

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It’s that time of year – tax time. There have been some important changes to the 2013 tax return that you must be aware of. Here are a few of them:

New 3.8% Medicare surtax. If you are single with an AGI over $200k, married filing joint AGI over $250k, you will have to pay an additional 3.8% surtax on capital gain for Medicare purposes. This brings the long term capital gains rate to 23.8% vs. 15% for those to whom this will apply.

New Medicare surtax for those of us who are self-employed. If your salary and/or Self Employment income is over $200k single, $250k married filing joint, you will now pay and additional .9% on top of the 2.9% we are currently paying.

Itemized deductions have a new threshold. If, for example, your medical expenses exceeded 7.5% of your AGI, you were good to deduct. Now, that threshold is 10%. That is a 25% increase in what you have to spend in order to deduct those expenses.

These are just a few of the big changes to the 2013 tax return. If you do your own taxes, please make sure you are up to date on all of the changes.

disclosures:http://www.hechteffect.net/?page_id=31

Your 2014 financial checklist – part 3

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Now that you have your budget in order, made sure your credit report is correct, done everything you can to reduce your taxes, and updated your will, it is time to get serious about your retirement.

Hopefully, you are saving for your retirement through a 401k, 403b, or IRA account. If not, please start. If you have been saving through one of these plans, it is time for some review and updating. Here are some points to consider:

When was the last time you increased your contribution?
When did you last rebalance your portfolio?
Do you have a primary & contingent beneficiary listed?

Many people get regular raises, if you get a 3% raise, consider increasing your contributions by 1%.

It is ok to take some of those gains off the table. Re-balancing your portfolio allocation forces you to analyze your investments and re-allocation the cash.

Have you gotten married, divorced, has there been a death? These are all primary reasons to check your beneficiary designations. Often this gets overlooked when there are life changes. Many people have not named a contingent beneficiary to their retirement plans. This is just as important as naming your primary beneficiary. You never know what might happen.

If you need help with these checklist items, or have other questions or concerns, please feel free to contact me at nancy@financialgroup.com

Happy 2014!

disclosures:http://www.hechteffect.net/?page_id=31

Your 2014 Financial Checklist – Part 2

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This time I have two simple issues for you to review.

First, update your will. Estate Tax Law is changing all of the time. If you have not updated your Will, Living Will, Florida Medical Surrogate, or beneficiary designations, now is the time to do so.

Second, check your credit report. There are a number of free annual services that will provide one –time to look at your credit picture at no charge. Please look at everything carefully to make sure the information reported is accurate.

One more installment of your Financial Checklist is in the wings.

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Your financial checklist for 2014

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Over the next few blogs I will be giving you points that should be on your Financial Checklist for 2014. Let’s get started!

Look at your taxes:
In January make sure all of your receipts are in order. Over the month you will be receiving your W-2, 1099, statements from non-profit organizations of donations, and mortgage interest paid. If you have everything in order early you can get your refund early. Why lend the money to the Government when you can be using it.

Budget:
If it has been a while since you have created a budget, now is the time to update it. Many of our regular expenses, such as cable, change their rates in January. You don’t want to be caught off guard. Now is also a great time to review your budget from last year. Were you too conservative? Not conservative enough? Did you have enough of an emergency fund? Are there home improvements that need to be added? These are issues to address now.

I have given you two points to think of, more financial checklist points are coming!

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