Q2 Investment Commentary - Diversification Delivers Results

Contributed by: Angela Palacios, CFP®, AIF®

Key Highlights This Quarter:

• Diversification Outperforms
  A balanced portfolio returned +6.69%, outpacing the S&P 500’s +6.2%, while also reducing risk amid market swings.

• Market Volatility Persists
  The S&P 500 hit new highs, dropped into correction, and rebounded—all within the quarter—highlighting the value of a balanced approach.

• Tariff Tensions Resurface
  Trade negotiations remain uncertain as the U.S. approaches key deadlines. Tariff revenue is rising, largely funded by U.S. consumers and businesses.

• “Sell America” Fears Overblown
  Despite April’s rare simultaneous drop in stocks, bonds, and the dollar, foreign demand for U.S. assets remains strong. Bond yields fell, and U.S. equities hit new highs by quarter-end.

• Credit Rating Downgrade
  Moody’s downgraded the U.S. from AAA to AA1—still strong, but a signal worth monitoring.

• Consumer Resilience Holds
  TSA screenings, hotel occupancy, and restaurant reservations remain robust, signaling continued consumer strength (Source: Raymond James Up and Adam).

• Geopolitical Risks Rise
  Escalation in the Middle East caused short-term volatility and a modest rise in gold and oil prices. Historically, such events have limited long-term market impact.

• GDP Impacted by Imports
  A surge in imports ahead of tariffs dragged Q1 GDP, but underlying consumer demand and inventory growth remain solid.

The first six months of 2025 have been anything but calm—changing government leadership, trade negotiations, global conflicts, and volatile markets have kept headlines spinning. Even the Federal Reserve, after pausing rate hikes, cited 'uncertainty' caused by tariffs. We have watched the S&P 500 hit new all-time highs, fall into correction territory, and then back to new all-time highs in a very short period. A diversified portfolio has provided some welcome risk reduction this year while also outpacing the returns of the S&P 500.

Tariffs

It is likely that we will continue to see volatility as the trade war escalates again, given the approaching expiration of the 90-day negotiation deadlines with various countries. There were numerous headlines surrounding the on-again, off-again tariff situation throughout the quarter. In the second half of the quarter, the legality of certain tariffs has been called into question, but there has been little traction on this issue, and it is a lengthy process to progress through the court system. The Big, Beautiful Bill is counting on about $2.5 Trillion in tariff revenue to offset costs. It is too soon to say if this will materialize, but for now, the worst-case Tariff scenarios seem to be off the table, and with that, consumer sentiment has improved. The very early data below show that in April and May, the government is earning more in tariff revenue than it did the year before. Where is that coming from? Mostly American consumers and businesses.

Best offers from trading partners were due on June 4th. As information becomes available regarding the parameters of certain deals, it is essential to remember that it will be unrealistic to negotiate a deal with every trading partner by July 8th (the 90-day deadline). However, don't get caught up in noise from small trading partners. We should focus most closely on our top 10 trading partners, as they account for 80% of our trade volume. The EU, Mexico, China, and Canada are our top trading partners, collectively accounting for 60% of our trade.

3 possible outcomes after July 9th (most likely a mixture of all 3 as the month continues): 

1. It could be a nonevent for certain countries with additional deadline extensions ;

2. It might be a time of celebration of long-promised trade deals;

3. Or it could be a day for other countries when the hammer comes down, and tariffs are simply dictated again.

Sell America!?

Among the April drawdown post-liberation day, we saw this "sell America" theme emerge. The worry was that investors had collectively lost faith in all things America, which caused a rare occurrence where stocks, bonds, and the U.S. dollar all fell at the same time. While rare, this does not necessarily need to be a red flag. April was a bit of an anomaly compared to a "normal" market environment because President Trump shook up all global trade.

To add to the headlines, Moody's decided in May to move the U.S.A. down one notch on their credit rating system – from AAA to AA1. Still great, but not perfect. Also, it's a worrisome headline.

We are not going to ignore the headlines; they COULD be the start of larger themes, but maybe more importantly, we will track the data to see where money is ACTUALLY going. Despite the headlines, Bloomberg reported that foreign banks were still holding more U.S. treasuries than ever. Despite the "sell America" headline, it seems that everyone is still "buying America." Another confirmation of this fact is that bond yields are lower than they were when we started the year. If investors were selling U.S. bonds in mass, you would likely see higher yields. And this is without even mentioning U.S. stocks (while underperforming internationally) were hitting all-time highs at the end of June.

Here is how our new rating stacks up against the rest of the world’s largest economies.

GDP

The decline was driven by a significant surge in imports, which is a subtraction in the calculation of GDP. Imports increased at an annualized rate of 41.3% in the first quarter as companies packed in as many orders as they could ahead of anticipated tariffs from the Trump administration. The surge in imports was good for a -5% contribution to the GDP calculation in the first quarter. Final sales of goods to domestic purchasers, another sign of demand in the economy, grew at a 3% annualized rate in the first quarter, above the 2.9% seen in the fourth quarter of 2024. We saw a huge build in inventories. However, when you examine underlying demand and consumer spending growth, it was still relatively solid.

There are several interesting real-time economic indicators that help determine the health of the consumer, who accounts for 70% of our economy. TSA screenings, Hotel occupancy, and restaurant reservations are all still looking very strong throughout the quarter. People are still going out to travel and eat.

Geopolitical Events

The Middle East conflict between Iran and Israel escalated significantly in June when Israel targeted bombing Iran's nuclear capabilities and the U.S., followed by also striking their nuclear facilities later in June. As a result, we saw some initial volatility, and gold prices climbed modestly again. However, history tells us that events like these, although extremely concerning from a humanitarian perspective, often cause initial stock market volatility but have a minimal impact over the long term. Most of the time, the S&P 500 notches positive returns, with an average annual return of about 8.5% when fast-forwarded 12 months.

Oil prices also spike as Iran is responsible for supplying a portion of the world's oil. However, it is interesting to note that the U.S. has become far less dependent on importing oil. In fact, we are net EXPORTERS of oil. See the chart below:

As you enjoy these final beautiful summer months, don't hesitate to reach out to us with any questions you may have. We appreciate the trust you place with us; thank you!

Angela Palacios, CFP®, AIF®, is a partner and Director of Investments at Center for Financial Planning, Inc.® She chairs The Center Investment Committee and pens a quarterly Investment Commentary.

Any opinions are those of the Angela Palacios, CFP®, AIF® and Nick Boguth, CFA®, CFP® and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. The MSCI EAFE (Europe, Australasia, and Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States & Canada. The EAFE consists of the country indices of 22 developed nations. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. Past performance does not guarantee future results. Diversification and asset allocation do not ensure a profit or protect against a loss. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not a guarantee or a predictor of future results. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Grandparents in Retirement: Balancing Caregiving and Financial Stability

Contributed by: Sandra Adams, CFP®

For many retirees, becoming a grandparent brings immense joy and a sense of purpose. But increasingly, grandparents are stepping into caregiving roles—whether helping raise grandchildren, providing financial support to adult children, or caring for aging spouses. While these roles are rewarding, they can also place unexpected pressure on your retirement plan.

According to the U.S. Census Bureau, over 2.5 million grandparents are the primary caregivers for their grandchildren. Many others offer regular babysitting, financial support, or even contribute to housing costs. While it’s natural to want to help, it’s important to remember that your financial well-being is essential not only for your peace of mind but also to remain a steady presence in your family’s life.

Start by clarifying your boundaries—both in terms of time and money. Create a spending plan that includes caregiving-related costs, and be honest with your loved ones about what you can sustainably offer. Consider tools like 529 college savings plans or gift tax exclusions if you’re assisting with education costs. And if caregiving demands are growing, we can explore how that impacts your cash flow, healthcare planning, and estate intentions.

The key to navigating this role successfully is proactive planning. It is possible to maintain your financial independence while still being the supportive and loving grandparent you want to be. You don’t have to choose between caring for your family and caring for your future—you just need a plan that honors both.

Let’s work together to create a retirement plan that supports your family role without sacrificing your financial stability.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Smart Tax Strategies to Protect Your Retirement Income

Contributed by: Matt Trujillo, CFP®

You've spent decades building your nest egg—now it's time to enjoy it. But without the right tax strategies, Uncle Sam could take a bigger bite out of your retirement income than you expected. The good news? With some thoughtful planning, you can minimize your tax burden and make your savings last longer. Below are key strategies to help protect your retirement income from unnecessary taxation.

1. Understand Your Tax Bracket in Retirement

Most retirees assume their tax rate will drop, but that's not always the case. Required Minimum Distributions (RMDs), Social Security, pensions, and investment income can all push you into a higher bracket than you planned. Know your projected income sources and work with a tax professional to estimate your future tax brackets.

2. Use Tax Diversification in Your Accounts

Ideally, your retirement savings should be spread across three types of accounts:

• Tax-deferred (Traditional IRA, 401(k)): taxed when withdrawn.

• Tax-free (Roth IRA, Roth 401(k)): tax-free withdrawals if rules are followed.

• Taxable brokerage accounts: taxed annually on dividends and capital gains.

This mix gives you the flexibility to manage income and control tax exposure each year.

3. Delay Social Security (If You Can)

Delaying Social Security benefits until age 70 increases your monthly payout and can reduce the number of years your benefits are taxed. Since up to 85% of Social Security benefits can be taxable depending on other income, using withdrawals from tax-free or low-tax sources early on can help keep those benefits tax-efficient later.

4. Use Roth Conversions Strategically

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA. You pay tax now at current rates, but future withdrawals are tax-free. This strategy is particularly powerful in years when your income is temporarily lower—such as early retirement before RMDs start at age 73 (for those turning 72 after 2022).

Tip: Be careful not to trigger a higher tax bracket or affect Medicare premiums (IRMAA surcharges) when doing a conversion.

5. Withdraw in a Tax-Efficient Order

Here's a general rule of thumb (though personal situations vary):

1. Withdraw from taxable accounts first (use capital gains rates if favorable).

2. Then tax-deferred accounts (IRA, 401(k), subject to ordinary income tax).

3. Save Roth accounts for last, allowing them to grow tax-free as long as possible.

This approach helps manage taxes today while preserving long-term tax-advantaged growth.

6. Manage RMDs Carefully

Once you hit RMD age, you must begin taking minimum distributions from your traditional retirement accounts, which are taxed as ordinary income. Failure to take RMDs results in severe penalties. Strategies to reduce future RMDs include:

• Roth conversions before RMD age.

• Qualified Charitable Distributions (QCDs), which let you donate up to $100,000 per year directly to charity tax-free.

7. Take Advantage of the Standard Deduction and Tax Credits

In retirement, many people itemize less and rely on the standard deduction, which increases with age (currently higher for taxpayers 65+). Smart timing of deductions or capital gains can help you stay under taxable thresholds. Also, check for available tax credits, such as the Credit for the Elderly or Disabled.

8. Be Aware of State Taxes

State taxes can significantly impact your retirement income. Some states tax Social Security, pensions, or IRA withdrawals, while others (like Florida, Texas, or Nevada) have no state income tax. If you're planning a move in retirement, consider the state's tax treatment of retirees as part of your decision.

Taxes don't stop when your paychecks do, but with the proper planning, you can keep more of your hard-earned retirement savings. Whether you're just starting retirement or already enjoying it, work with a financial advisor or tax professional to tailor a strategy that fits your goals, lifestyle, and income needs.

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Enjoyed this blog? Boost your financial confidence with our book, Finding Your Center: Achieving Confidence Through Financial Planning. Click HERE to learn more and get your copy.

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Matthew Trujillo, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® A frequent blog contributor on topics related to financial planning and investment, he has more than a decade of industry experience.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the author and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability. Conversions from IRA to Roth may be subject to its own five-year holding period. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals of contributions along with any earnings are permitted. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion. Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor for more information. 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Contributions to a Roth 401(k) are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Unlike Roth IRAs, Roth 401(k) participants are subject to required minimum distributions at age 72.

Thinking About Retiring Early? Don’t Overlook the Rule of 55

Contributed by: Sandra Adams, CFP®

As a financial advisor, one of the most common questions I hear from clients considering early retirement is: "How can I access my retirement funds before age 59 ½ without penalty?" If you are asking that too, let's discuss an often-overlooked option: the Rule of 55.

The Rule of 55 allows you to withdraw money from your 401(k) or 403(b) without the usual 10% early withdrawal penalty if you leave your job in the year you turn 55 or later. This can be a helpful tool if you are retiring early and need income before other sources like Social Security, pensions, or IRAs kick in.

Here is the key: this rule applies only to the retirement account with your most recent employer. It does not work with old 401(k)s you have rolled into an IRA, so timing and account structure matter. That is why reviewing your plan before making any moves is important.

I have worked with clients who successfully used the Rule of 55 to bridge the income gap during early retirement—while keeping their long-term investments on track. With the right strategy, it can be part of a broader plan that balances your ability to draw income now with the freedom to draw from other sources of income later. And even if you don't ultimately need to draw on the funds, but you might, keeping at least a portion of your 401(k) balance in-tact to allow you the ability to draw on it "in case" could be a smart move until you reach that magic age 59 ½ if you haven't built up significant reserve savings or after-tax investment account balances to draw on.

If you are thinking about retiring before 59 ½ and may need access to your retirement savings, it is best to map out the best path for your unique situation. There's no one-size-fits-all solution, but with careful planning, you can avoid surprises and make the most of your hard-earned savings.

Early retirement is possible—just make sure you are stepping into it with a plan that supports your lifestyle and your future. If you or anyone you know is considering early retirement and might need to think through their options, do not hesitate to reach out. We are always happy to help! Sandy.Adams@CenterFinPlan.com.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Giving Back Without Giving Away Too Much: Tax-Smart Strategies for Charitable Donations

Contributed by: Lauren Adams, CFA®, CFP®

We all have an interest in making the world a better place for our families and the generations to come. That’s why many of us give money, time, and resources to help support charities we believe in to make a difference for others in need, the towns and cities we live in, and the planet. But what if you could donate to organizations to support their efforts and get a tax deduction while doing it? Well, you can, and the tax code even incentivizes it!

At The Center, one of our favorite ways to improve lives is by helping our clients make a positive impact on the world through what we call “tax-savvy charitable giving.” While many people give charitably by writing a check, digging into their wallets for cash, or putting a donation on their credit cards, we’re here to tell you there’s a better way! We can deploy several key strategies to help our client’s charitable dollars stretch even further while lowering their tax burden.

Strategy #1: Gifting Securities Instead of Cash

Our first strategy deals with taxable assets like the ones in brokerage accounts. Instead of donating cash, donating securities that have appreciated in value—like stocks, ETFs, or mutual funds—could be a better way.

If you’ve been investing for a long time, you likely have shares that have increased in value. Normally, whenever you sell those shares, you pay taxes on the capital gains associated with that growth. But if you give those appreciated shares to charity, you can deduct the fair market value of those shares without paying capital gains taxes. You can even decide to buy those shares right back after you donate them, which raises the cost basis of your holdings and, ultimately, helps lower your future tax bill if and when you decide to sell (lowering your tax burden in retirement when you start drawing on your portfolio).

In addition to being a tax-advantaged way to donate to charity, this strategy can also help if you have a large concentrated stock position—where a considerable percentage of your portfolio is composed of one or a few stocks—to trim that concentration risk without triggering a hefty tax bill.

Again, there are caveats: You need to make sure you’ve held the security for more than a year, and there are IRS limits on how much you can deduct in a given year as a percentage of your overall income. And if the stocks depreciate in value, the tax benefits don’t apply. And make sure to keep your tax preparer in the loop along the way.

Strategy #2:  Donating Directly From Your IRA

This strategy involves a concept called the Qualified Charitable Distribution (QCD). How does it work? Instead of taking a distribution from your IRA, paying taxes on the amount withdrawn, and sending that money to your checking account, QCDs allow you to send money directly from your IRA to the charity of your choice. In essence, it’s a transfer of assets from your IRA to one or more qualified nonprofits.

However, there are some caveats: You need to be at least 70.5 years old, and the charity has to be a 501(c)(3), meaning a tax-exempt nonprofit whose earnings support the advancement of its charitable cause. Also, there are limits on how much you can give each year—but that number is relatively high. In case you’re wondering, in 2025, it’s up to $108,000 per person per year.

Usually, distributions from your IRA are taxed when they’re received. But with a QCD, they become tax-free as long as they’re transferred to an eligible nonprofit organization. Giving directly from your IRA results in those dollar amounts not being included in your gross income for that year, which results in a lower tax bill for you. It can also lower the amount you may pay for Medicare premiums and the portion of Social Security taxable to you, depending on your situation and income level.

For those of you who have reached the milestone age, a QCD also counts toward satisfying the distributions you must take each year for your Required Minimum Distribution, the amount the government makes you withdraw from your IRA each year once you hit a certain age (generally, 73-75). This is especially useful if you don’t need your full RMD to live on or plan to give charitably (now you’re doing so in a more tax-efficient manner!).

Strategy #3:  Exploring Donor Advised Funds

Let’s start with a quick history lesson. The 2017 Tax Cuts and Jobs Act significantly raised the standard deduction many now enjoy on their tax returns. This means you have to give a lot more to charity than you did in the past to push you above the standard deduction amount to see a reduction in your tax bill for the charitable dollars you donate.

For this reason, we often recommend clients lump or bunch several years of charitable gifts to help push them over that standard deduction amount in one year. This works to a client’s advantage if they’ve had an exceptionally high-income year due to something like selling a business before retirement. That’s when we suggest a Donor Advised Fund or Family Foundation, which is like a charitable investment account where you can donate, get the tax benefit now and then give a gift to the charities you care about later. And guess what? These strategies can be combined, meaning you can decide to gift appreciated securities to one of these special accounts, allowing you to avoid capital gains tax and lump together your gifts to maximize the overall deductions you’re able to recognize over time. For instance, a client in one of their highest income years may decide to bunch 5-10 years of future gifting into a charitable account AND use appreciated securities to do so!

Strategy #4 (and Beyond): Estate Planning Techniques

To further increase our clients’ charitable tax planning, we often collaborate with their estate planning attorneys to shift the beneficiaries of their pre-tax retirement accounts to the charities they would like to support upon their death. That leaves their investment accounts and other after-tax assets to friends and family. Because charities (unlike people) don’t pay income taxes when they are beneficiaries, this strategy could end up saving our clients’ heirs thousands of dollars in future income taxes when they eventually inherit retirement account money.

These are just a few of the strategies we recommend for our clients. But regardless of the strategy employed, one thing is always true for us at The Center: Helping our clients get the most bang for their charitable buck is one of the many reasons why we love what we do!

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Enjoyed this blog? Boost your financial confidence with our book, Finding Your Center: Achieving Confidence Through Financial Planning. Click HERE to learn more and get your copy.

If you're in the Metro Detroit area, join our book tour and receive a FREE copy!

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Lauren Adams, CFA®, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She works with clients and their families to achieve their financial planning goals.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Lauren Adams, CFA®, CFP® and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

What is an “In-Service” Rollover?

Contributed by: Nick Defenthaler, CFP®, RICP®

When you hear "rollover," you typically think of retirement or changing jobs. For the vast majority of clients, these two situations will really be the only time they will complete a 401k rollover. However, you might not know about another type of situation in which you can move funds from your company retirement plan to your IRA. This is what's known as the "in-service" rollover and is an often-overlooked planning opportunity. 

Rollover Refresher

A rollover is a pretty simple concept. It is the process of moving your employer retirement account (401k, 403b, 457, etc.) over to an IRA that you have complete control over and is entirely separate from your employer plan. Most people do this when they retire or switch jobs. If completed properly, rolling over funds from your company retirement plan to your IRA (and vice versa) is a tax and penalty-free transaction because the tax characteristics of a 401k and IRA are generally the same.

What is an "In-Service" Rollover?

Unlike the "traditional" rollover, an "in-service" rollover is probably something you've never heard of, and for good reason. First, not all company retirement plans allow for it, and second, even for those that do, the details can be confusing to employees. The bottom line: An in-service rollover allows an employee (often at a specified age such as 55 or 59 ½) to be able to roll their 401k to an IRA while still employed with the company. The employee can also still contribute to the plan, even after the rollover is complete. Most plans allow this type of rollover once per year, but depending on the plan, you could potentially complete the rollover more often for different contribution types (ex., 'after-tax' contributions that you could possibly roll over to a Roth IRA for future tax-free growth).

Why Complete an "In-Service" Rollover?

More investment options: With any company retirement plan, you will be limited to the plan's investment options. By having the funds in an IRA, you can invest in just about any mutual fund, ETF, stock, bond, etc. Having access to more options can potentially improve investment performance, reduce volatility, and make your overall portfolio allocation more efficient. In my experience, most employer plans have decent options for stock funds but are very limited when it comes to bond options. This can become problematic as one gets closer to retirement and needs to position their portfolio more conservatively.

Coordination with your other assets: If you're working with a financial planner, they can coordinate an IRA into your overall plan far more efficiently than a 401k. How many times has your planner recommended changes in your 401k that simply don't get completed? (Tisk, tisk!) If your planner is managing the IRA for you, those recommended changes are going to get completed instead of falling off your personal "to-do" list.   

Additional flexibility: IRAs allow certain penalty-free withdrawals that aren't available in a 401k or other company retirement plans (certain medical expenses, higher education expenses, first-time homebuyer allowance, etc.). Although using an IRA for these expenses should be a last resort, it's nice to have the flexibility if needed.

Exploring "In-Service" Rollovers

So what now? The first thing is to always keep your financial planner in the loop when you retire or switch jobs to see if a rollover makes sense for your situation. In many cases, it might make more sense to keep your employer retirement plan as is. Factors such as cost of professional management, flexibility on distributions (ex., special age 55 penalty-free distribution rules), and possible increase of creditor protection should all be considered when determining if a rollover could be right for you and your long-term financial plan. Just like most things in financial planning, there is almost never a 'black and white' answer when it comes to rollovers. Ideally, you may want to consider working with a Certified Financial Planner when making this determination for you. CFPs must typically adhere to the ethics and standards conduct of the CFP® board by acting in your best interests.

Nick Defenthaler, CFP®, RICP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® Nick specializes in tax-efficient retirement income and distribution planning for clients and serves as a trusted source for local and national media publications, including WXYZ, PBS, CNBC, MSN Money, Financial Planning Magazine and OnWallStreet.com.

Article written by Nick Defenthaler, Partner, Financial Planner with Center for financial Planning, Inc. 24800 Denso Drive, Suite 300, Southfield, MI 48033, 248-948-7900. If you've changed jobs or are retiring, rolling over your retirement assets to an IRA can be an excellent solution. It is a non-taxable event when done properly - and gives you access to a wide range of investments and the convenience of having consolidated your savings in a single location. In addition, flexible beneficiary designations may allow for the continued tax-deferred investing of inherited IRA assets. In addition to rolling over your 401(k) to an IRA, there are other options. Here is a brief look at all your options. For additional information and what is suitable for your particular situation, please consult us. Leave money in your former employer's plan, if permitted. Pro: May like the investments offered in the plan and may not have a fee for leaving it in the plan. Not a taxable event. Roll over the assets to your new employer's plan, if one is available and it is permitted Pro: Keeping it all together and larger sum of money working for you, not a taxable event. Not all employer plans accept rollovers. Rollover to an IRA Pro: Likely more investment options, not a taxable event, consolidating accounts and locations: usually fee involved, potential termination fees. Cash out the account: Con: A taxable event, loss of investing potential. Costly for young individuals under 59 ½; there is a penalty of 10% in addition to income taxes. Be sure to consider all of your available options and the applicable fees and features of each option before moving your retirement assets. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Center for Financial Planning, Inc.®, is not a registered broker/dealer and is independent of Raymond James Financial Services. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making any investment decision, you should consult with your financial advisor about your individual situation. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Earnings withdrawn prior to 59 1/2 would be subject to income taxes. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

May Book Tour Recap: Big Conversations, Bold Insights, and What’s Coming Next

Contributed by: Jaclyn Jackson, CAP®

May was a moment. Our Finding Your Center book tour made its Brighton debut, and the conversations were as vibrant as the venue itself. Hosted at the stylish and welcoming All Heart Garage, each event brought together community members eager to learn, connect, and take real steps toward financial confidence.

At the heart of it all? A dynamic panel of experts who didn’t hold back. From debunking overpriced annuities that don’t align with your goals to smart takes on tax strategies in today’s shifting political landscape to thoughtful commentary on tariffs and their market ripple effects—there was something for everyone.

But it wasn’t just high-level thinking—it was practical, personal, and powerful. Attendees left with new insights, real tools they could use, and a renewed sense of purpose when it comes to building a secure and meaningful financial future.

Why You Should Join Us Next Time

Each guest received a free copy of our newly released book, Finding Your Center: Achieving Confidence Through Financial Planning—a resource that’s already sparking “a-ha” moments and empowering readers to take charge of their financial story.

This isn’t your average finance book. It’s filled with real-life tips, conversation starters for families, and strategies that actually make sense for today’s economy. Reading it is just the beginning—our events bring the pages to life.

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What’s Next: June and July—Mark Your Calendars!

📅 June Events

REGISTER HERE

We’re tailoring deep-dive sessions for executives, entrepreneurs, and high earners nearing retirement. If you’ve been wondering how to maximize your savings and minimize your tax bill, these events are designed with you in mind.

📅 July Events

REGISTRATION DETAILS COMING SOON

Our July series kicks off with a family-friendly financial literacy event that’s both fun and informative. Bring the grandkids! There’ll be interactive games, lunch, and a panel hosted by Brooke Allen, plus free books and activities led by Junior Achievement. Two powerful follow-up events will dive into chapters on legacy building, charitable giving, and smart college funding strategies—perfect for grandparents and parents alike.

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🎉 Come for the conversation. Leave with clarity.

We’d love to see you at one (or all!) of our upcoming events. Whether you’re planning for retirement, looking to support the next generation, or simply curious about how to make smarter financial decisions—this tour was built for you.

Your center is waiting.

Jaclyn Jackson, CAP® is the Director of Marketing at Center for Financial Planning, Inc.®

Any opinions are those of Jaclyn Jackson, CAP®, and not necessarily those of Raymond James.

Taking Charge of Your Financial Future: A Busy Professional's Guide

Contributed by: Kelsey Arvai, CFP®, MBA

Let’s face it: life moves fast. Back-to-back meetings, inbox and voicemail full, and trying to squeeze in a workout or some semblance of a social life. It’s no wonder financial planning often gets pushed to the bottom of the to-do list, especially for busy professionals.

Busy professionals understand that their financial future isn’t some far-off idea. They see in real-time how their future is being shaped right now with every decision they make, every dollar they spend, their job, their family, and several elements outside their control and purview.

Luckily, all you need is a plan and to stick to said plan.

This guide was created for the ambitious, over-extended, high-achieving professionals who want their money working as hard as they do.

1. Know Thy Numbers. Understand what matters and what doesn’t. What matters: your net worth, your savings rate, your monthly cash flow, and your progress toward your big-picture goals. With Financial Freedom as the goal, the way you get there is slowly over time. It’s decisions that compound (either upwards or downwards) that will set you in the direction you’re going.

2. Automate Often. Learn Your Plan. Automation is a busy professional’s bestie. Consider setting up auto-transfers for bills, savings, and everything in between. You might start with high-yield savings, even if it’s $50 bucks a paycheck—choose an amount that you will never have to stop saving until you have at least 3 to 6 months of spending in cash. It’s prudent to consider deferring at least up to the employer match (typically 4%) to your employer retirement plans (401k, 403b, etc.). Work your way up to saving 15-20% of your total household income, even if it’s by increasing your deferral by 1% each year until you max out your retirement plan. Utilize target date funds based on your age 65, set it, and then forget it. Understand your benefits you want to understand how your money is being allocated.

3. Taxes Are Cool! Tax planning is a year-round adventure. Every financial decision we make has some tax implication (for better or worse). Tax strategies can impact the longevity of your plan and help to ensure that your money lasts as long as you do or increase your probability of accomplishing your legacy goals.

4. Protect Yourself. The root of your plan should be defined by what you feel is success—whatever that looks like to you. Ensure you have appropriate insurance coverage to protect against unexpected losses. Regularly review and update policies as your circumstances change.

5. DIY Only Sometimes. There is power in delegation. Hiring a financial planner to create a personalized strategy for you and keep you accountable. More importantly, we are here through every change, expected or unexpected.

Financial Planning is not about perfection; it’s about intention. So, take pause often and ensure you are heading in the direction that YOU want to go. And if not, take the steps to course-correct with courage, clarity and probably a spreadsheet or two.

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Enjoyed this blog? Boost your financial confidence with our book, Finding Your Center: Achieving Confidence Through Financial Planning. Click HERE to learn more and get your copy.

If you're in the Metro Detroit area, join our book tour and receive a FREE copy!

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Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kelsey Arvai, MBA, CFP®, and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through the Center for Financial Planning, Inc. The Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

401(k) and 403(b) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.

Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor for more information.

"Staying the Course" Isn’t a Snooze Button

Contributed by: Mallory Hunt

"The key to making money in stocks is not to get scared out of them." – Peter Lynch

When it comes to investing, the phrase "stay the course" is practically gospel. It's repeated in market downturns, shared in financial blogs (this may currently resonate…), and printed on motivational coffee mugs. And rightly so—emotional decisions are one of the biggest threats to long-term investment success. While staying the course is a powerful mindset for long-term investors, it can often be seen as a call for inaction, and you very well may be sick of hearing the phrase, but it's not inaccurate. Just like a plane on autopilot still needs a pilot in the cockpit, your portfolio still needs your eyes—just not your panic.

Staying the Course ≠ Doing Nothing Forever

Yes, staying invested during market volatility is usually the right move, but does that mean your investments should go untouched for decades? Of course not. Your financial life isn't static, nor is the world around you. Life changes. Goals shift. The markets evolve. And your investment strategy needs to reflect that. Think of your portfolio as a garden. Staying the course means letting your plants grow, not digging them up every time a storm rolls in. BUT it doesn't mean ignoring weeds, forgetting water, or never pruning. Good gardeners check in regularly—so should good investors.

This chart below, created by my colleague, Nick Boguth, effectively illustrates the undeniable relationship between risk and return. While drawdowns can be unsettling, we are here to provide guidance and support during these uncertain periods. However, it is important to notice that significant periods of volatility are often followed by substantial growth. The blue line below signifies how markets have continued to grow despite volatility and drawdowns (orange line). While those drawdowns can be deep and painful to live through in the moment, you can see that they tend to be only temporary

What Staying the Course Really Means

It means sticking to a well-thought-out plan, not ignoring it altogether. It means:

• Rebalancing regularly – Markets move, and over time, your portfolio drifts from its original allocation. Rebalancing brings it back in line with your risk tolerance and goals. Luckily, we are already doing this for you! We review accounts frequently throughout the year and rebalance when they deviate from your set goals.

• Reviewing goals and timelines – Are you still saving for that early retirement? Has your timeline changed? Are you nearing a big purchase? Your investments should reflect those life updates. Guess what? We do this for you, too! These items are usually discussed during your Annual Review Meetings with your planner.

• Avoiding emotional reactions – This one remains true. Don't let headlines or temporary downturns dictate your moves. We know this can be difficult, but again, staying calm isn't the same as being passive. We are always available to answer any questions that you may have.

The Bottom Line

Staying the course is about consistency, not complacency. The most successful investors stay engaged, review their plans periodically, and always keep the big picture in mind. So no, you don't need to micromanage your portfolio every week, but it shouldn't be stashed away or forgotten. Check in, stay informed, and above all else, trust the process.

Mallory Hunt is a Portfolio Administrator at Center for Financial Planning, Inc.® She holds her Series 7, 63 and 65 Securities Licenses along with her Life, Accident & Health and Variable Annuities licenses.

The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Mallory Hunt and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

How Much is Enough? Calculating Your Retirement Savings Goal

Contributed by: Josh Bitel, CFP®

Retirement may seem far off, but knowing how much you need to save is a crucial first step toward financial security. The answer to "How much is enough?" isn't one-size-fits-all—it depends on your lifestyle expectations, health, location, and longevity. However, there are some "rules of thumb" that can help you put a pulse check on your retirement plan:

Start with the 80% Rule

A common rule is that you'll need about 70% to 80% of your pre-retirement income to maintain your lifestyle in retirement. For example, if you currently earn $100,000 annually, plan on needing around $70,000–$80,000 per year after you stop working. This accounts for lower expenses—such as commuting, work clothing, or mortgage payments—but you may spend more on healthcare or travel.

Use the 25x Rule

Once you have your annual income target, multiply it by 25 to estimate your total retirement savings goal. If you need $70,000 a year, that means you should aim for $1.75 million. This rule is based on the 4% withdrawal strategy, which assumes you can withdraw 4% of your retirement savings annually without running out of money for at least 30 years, a popular strategy for estimating the strength of a financial plan.

Factor in Other Income Sources

Remember to account for other income sources like Social Security, pensions, or rental income. If Social Security is expected to provide $20,000 a year, and you need $70,000, then your savings only need to cover the $50,000 gap—meaning a goal closer to $1.25 million instead of $1.75 million.

Adjust for Inflation and Healthcare Costs

Healthcare expenses tend to rise with age, and inflation steadily erodes purchasing power. It's wise to build a cushion by overestimating your needs rather than falling short. Consider using retirement calculators or working with a financial advisor to model different scenarios.

Start Early, Save Consistently

The earlier you begin saving, the more time your investments have to grow through compound interest. Even modest contributions can grow significantly over time. Don't worry though, it is never too late to get started! If you start later, increasing your savings rate or delaying retirement by a few years can make a big difference.

Ultimately, your retirement goal should reflect your unique vision for the future. Take time to define that vision, crunch the numbers, and revisit your plan regularly. Your future self will thank you. And, of course, don't hesitate to seek advice from a financial planner if you are curious about your retirement path.

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Enjoyed this blog? Boost your financial confidence with our book, Finding Your Center: Achieving Confidence Through Financial Planning. Click HERE to learn more and get your copy.

If you're in the Metro Detroit area, join our book tour and receive a FREE copy!

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Josh Bitel, CFP® is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® He conducts financial planning analysis for clients and has a special interest in retirement income analysis.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Josh Bitel, CFP® and not necessarily those of Raymond James.

Investing involves risk and investors may incur a profit or a loss regardless of strategy selected, including asset allocation and diversification.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc®. Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.