#GivingTuesday 2017: 10 Perspectives on Giving

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Giving Tuesday is NOVEMBER 28 this year.

We resume our annual tradition of 10 inspirational considerations for your charitable endeavors updated from years' past.

  1. With tax legislation pending, keep the future in mind. Current tax proposals could significantly reduce the percentage of Americans who are able to itemize deductions. If the tax legislation passes with days to spare prior to year-end, you may want to increase your charitable gifts for this calendar year. You can do that with a donor advised fund (described below) or gifts directly to organizations. Work in coordination with your financial planner and tax professional can help to guide you for gift maximization.
  2. Qualified Charitable Distribution for the win. Qualified Charitable Distributions (QCD) might still feel new, as they have only been permanent for a couple years. If you are over age 70.5 and subject to Required Minimum Distributions (RMD), you can replace your gifts out of cash with a gift of your distribution directly to a charitable organization. The results? This income is not reportable as taxable income like a normal RMD. Make sure to keep track of your records, make your gift in accordance with QCD rules, and report your qualified gift to your tax professional.
  3. Get on a first name basis with organizations that matter to you. Charities appreciate your gifts and dollars. They also enjoy hearing from you about what the organization means to you and the impact that you hope your gifts will have. Getting involved and building relationships is valuable for the organization and can also be rewarding to you. 
  4. Spread the word or give in groups. Giving Tuesday is a social phenomenon for good. Sharing your own charitable endeavors can create communication and encourage generous behavior within your network. So hashtag away! #GivingTuesday
  5. Take advantage of your corporate match. If you work for a company who provides a match to donations, your time for making it count this calendar year is fleeting. Decide how you would like your match to be utilized and make sure to dot your i's and cross your t's with the appropriate paperwork or process to get the money into the right hands.
  6. Gift appreciated stock for a double-tax plus. What's better than a charitable gift that multiplies its power with a current tax deduction and reduced future tax liability? If you gift appreciated assets like stocks in taxable accounts that have grown over time, you're doing just that. You would potentially get a charitable deduction and take away future tax liability on realized capital gains. Not sure how to make this happen? We would be happy to coordinate with you and the organization you want to help to take care of the details at your instruction. 
  7. Define your philanthropy in a document. If you want to dig deeper into the scope and meaning of your gifts, we have a workbook to assist. Download a Philanthropic Values Statement to get started. https://static1.squarespace.com/static/54341a03e4b08690c01bc8de/t/56607eade4b07de43e2ccb23/1449164461431/philanthropic_values_statement_worksheet.pdf
  8. Establish or add to a Donor Advised Fund. A donor advised fund allows you to combine the opportunity for gifts of appreciated stock (see #6 above) as well as taking an immediate deduction and spreading out your gift over time if you prefer. This may become more relevant if new tax legislation is passed this year. Also, in peak earning years with presumed lower earnings in the future (read, near retirement), you can preload future gifting in a year that may be very impactful for your finances. Looking for more details, reach out to us or read here. http://www.centerfinplan.com/money-centered/2014/10/30/are-donor-advised-funds-right-for-you.html?rq=Donor%20advised%20fund 
  9. Make your donations generational. Shared philanthropy projects can help to introduce younger children to important money topics or provide governance practice for adult children. You can see how family dynamics work and teach about money with less self-interest. Plus, donating time, effort, and money just plain feels good. Call it family bonding.
  10. Cost of living adjustment. Inflation is real, and it might be growing over the coming years. If you've kept your gifts static, it might be time to review things and give them a boost so they keep up with the value of today's dollar.

Philanthropy and charitable giving are deeply personal. #GivingTuesday is a great opportunity to review and upgrade your game plan. Looking for the optimal financial results? Coordinate with your trusted advisors to plan and execute for maximum impact for you and the organizations that matter to you and your family.

Melissa Joy, CFP®, CDFA® is Partner and Director of Investments at Center for Financial Planning, Inc.® In 2013, Melissa was honored by Financial Advisor magazine in the Research All Star List for the third consecutive year. In addition to her contributions to Money Centered blogs, she writes investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.


Financial Advisor magazine's inaugural Research All Star List is based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and evaluation of challenges faced in the job and actions taken to overcome those challenges. Evaluations are independently conducted by Financial Advisor Magazine.

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 information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Melissa Joy and not necessarily those of Raymond James. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Guidance on How to Care for Your Aging Parent

Contributed by: Sandra Adams, CFP® Sandy Adams

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More and more often as we meet with clients, one of the major topics that comes up is the responsibility of caring for an aging parent.  The topic is one that causes a great deal of stress and anxiety, as most clients that find themselves in this role have no idea where to start.  I am always looking for tools and resources that might be helpful for both clients and planners in assisting our clients in this area, and recently read a book called “The Bittersweet Season” by Jane Gross that I consider a must read for anyone who is a caregiver now or might be in the near future.

Jane Gross, the author of “The Bittersweet Season” and creator of the New York Times New Old Age blog, shares her personal journey becoming a caregiver for her aging mother.   Jane and her brother are suddenly thrust into the world of advocacy and planning for their aging mother as her health suddenly declines in her 80’s.  Jane tells of their trials, tribulations, errors and successes as they navigate the unknown worlds of healthcare, Medicare and Medicaid, senior housing, caregiving and elder law.  She shares her best tips based on lessons learned – both through personal experience and through others based on her New Old Age blog.  Two of her greatest lessons learned were not to act before checking in with experts and to ask for help – there is no need to try to do everything on your own.

In the book, Jane also discussed the successes and failures of the roles of caregiving between siblings; determining whose strengths matched which roles best and how to best manage emotions so as not to let the stress of caregiving destroy the relationship between her and her brother.  She also tells a wonderful story about the ups and downs of the relationship between she and her mother during the caregiving relationship, and how, ultimately, the experience brought she and her mother closer together. And how she wished she’d had just a little more time to get to know her mother – the end of her life was the end of their bittersweet season.

For recommendations on additional resources and tools for caregiving, or to discuss how caregiving for an aging parent might impact your own financial plan, contact your financial planner at The Center.

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.


Any opinions are those of Sandra D. Adams and not necessarily those of Raymond James.

Webinar in Review: Year-End Tax Planning

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

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On November 14th, Melissa Joy, CFP® and I hosted The Center’s annual Year-End Tax Planning Opportunities and Strategies webinar which continues to be one of our best attended discussions throughout the year.  In 2016, Melissa and I hosted the webinar two days after the presidential election and this year, the presentation was held several days after the latest GOP tax reform proposal.  Needless to say, it’s been a great chance for our team to share timely updates with clients and strategic partners! 

If you weren’t able to attend the webinar live, we’d encourage you to check out the recording below.  Here are a few key points and takeaways from our discussion:

Potential Tax Reform Highlights  

  • Moving from seven tax brackets down to three or four: 12%, 25%, 35% and 39.6%
  • Elimination or caps on popular deductions:  State and local taxes, medical expenses, student loan interest, mortgage deduction cap, property tax cap
  • Larger standard deduction (almost doubling from $12,700 for married filers to $24,000)
  • Repeal of Alternative Minimum Tax (AMT)
  • Corporate tax reduction (moving down to 25%)
  • Estate tax exemption (almost doubling from $5.5M to $11M, with the goal of repealing the estate tax completely within 6 years)

2018 Updates

  • Social Security Cost of Living Adjustment (COLA), Medicare premium adjustments, retirement plan contribution and income limit adjustments, etc.)

Retirement Planning   

  • Evaluate your savings rate moving into the new year and if you’re not maxing out your 401k ($18,500 or $24,500 if over the age of 50), consider increasing your savings percentage by 1% - 2% each year
  • Work with your advisor to determine if the Traditional (pre-tax) or Roth (after-tax) retirement vehicles makes sense for your situation given your current and projected future tax bracket  

Charitable Giving

  • Consider utilizing a Donor Advised Fund to gift appreciated securities from a brokerage account – allows you to take a tax deduction and also avoid paying capital gains tax
  • Consider utilizing the Qualified Charitable Distribution (QCD) if you’re over the age of 70 ½ - allows you to gift funds directly to charity from your IRA

Investment Planning  

  • Review your allocation before year end to see if your mix between stocks and bonds is appropriate for your situation
  • Consider the asset location of your portfolio to potentially improve after-tax returns
  • Consider proactive planning such as tax-loss harvesting

As mentioned during the webinar, don’t forget to check out our Year-End Planning Opportunities guide in the resources portion of our website.  This guide acts as a helpful tool to help organize your financial picture before year and also provides further insight on retirement planning strategies to consider as well as a detailed overview of proposed tax reform.  Please feel free to contact your financial planning team at The Center with any questions or concerns, we’re here to help.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.


This information is being provided for educational purposes only and is not intended as specific tax or investment advice. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. 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.

2018 Increases Retirement Plan Contribution Limits and Other Adjustments

Contributed by: Robert Ingram Robert Ingram

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Several weeks ago, the IRS released updated figures for retirement account contribution and income limits for 2018.  Like the recent Social Security cost of living adjustment, the adjustments are minor but certainly worth noting. 

Employer Retirement Plans (401k, 403b, 457, and Thrift Savings Plans)

  • $18,500 annual contribution limit (up from $18,000 compared to 2017 – first increase in 3 years!)

  • $6,000 “catch-up” contribution if over the age of 50 remains the same as 2017

  • Total amount that can be contributed to defined contribution plan including all contribution types (employee deferrals, employer matching and profit sharing) increases to $55,000 (up from $54,000 compared to 2017) or $61,000 if over the age of 50 ($6,000 catch-up)

    • Consider contributing after-tax funds if available and cash flow allows for it.

In addition to the contribution limits increasing for employer-sponsored retirement plans, the IRS adjustments provide some other increases that can help savers in 2018.  A couple of highlights include:

Traditional IRA deductibility income limits:

Contributions to a Traditional IRA may or may not be tax deductible depending on your tax filing status, whether you are covered by a retirement plan through your employer, and your modified adjusted gross income (MAGI).  The amount of your Traditional IRA contribution  that is deductible is reduced (“phased out”) as your MAGI approaches the upper limits of the phase out range.  For example,

  • Single: Covered under a plan
    • Phase out begins at $63,000 up to $73,000 compared to 2017 (phase out: $62,000 to $72,000)
  • Married filing jointly: Spouse contributing to the IRA is covered under plan
    • Phase out begins at $101,000 to $121,000 compared to 2017 (phase out: $99,000 to $119,000)
  • Spouse contributing is not covered by a plan but other spouse is covered under plan

    • Phase out begins at $189,000 to $199,000 compared to 2017 (phase out:  $186,000 to $196,000)

Roth IRA contribution income limits:

Whether or not you can make the maximum contribution to a Roth IRA,  ($5,500 in 2018 plus a $1,000 “catch-up” for individuals age 50 and above) depends on your tax filing status and your MAGI.  The contribution you are allowed to make is reduced ("phased out") as your MAGI approaches the upper limits of the phase-out range.  In 2018 for example,

  • Single

    • Phase out begins at $120,000 to $135,000 compared to 2017 (phase out:  $118,000 to $133,000)

  • Married filing jointly

    • Phase out begins at $189,000 to $199,000 compared to 2017 (phase out: $186,000 to $196,000)

If your income is over this limit and you cannot make a regular annual contribution, you might consider a popular planning tool known as the “back-door” Roth conversion.

As we enter 2018, these updated figures will be on the forefront when updating your financial game plan.  However, as always, if you have any questions surrounding these changes, don’t hesitate to reach out to our team!

Robert Ingram is a Financial Planner at Center for Financial Planning, Inc.®


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 reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Bob Ingram, CFP® and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. 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. The above hypothetical examples are for illustration purposes only. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Risk Expectations – Markets Go Down Every Year

Contributed by: Nicholas Boguth Nicholas Boguth

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Investing is risky: the price of securities can go down, but there are strategies to help mitigate this risk: diversifying and sticking to your plan.

The chart below shows the price return (gray bar) and the largest intra-year decline (red dot) of the S&P 500 since 1980. This is one of my favorite charts because it reminds me that stock prices have indeed gone down at some point during EVERY year, but ultimately returned a positive number a vast majority of the time.

It states an appalling statistic: the average intra-year decline of the S&P 500 over this period is more than 14%. I say appalling because despite the average decline being -14%, the average return by the end of each year is over 8%, and this does not even include dividends! This acts as a great reminder to stay invested and don’t change your plan when the markets take a dive.

Our ultimate goal is to diversify in order to reduce that average intra-year drawdown, without sacrificing too much return. It is not easy for most investors to stomach watching their money decline by 14%, which is why risk management is a key part of the investment process. The right amount of risk is going to be different for everyone; working with us to determine your financial goals and capacity/willingness to take risk is step one in building your personalized portfolio.

Nicholas Boguth is an Investment Research Associate at Center for Financial Planning, Inc.® and an Investment Representative with Raymond James Financial Services.


This information has been obtained from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock 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. Past performance does not guarantee future results. Dividends are subject to change and are not guaranteed. Diversification does not ensure a profit or guarantee against loss. There is no assurance that any investment strategy will ultimately be successful, profitable nor protect against loss.

Jacki Roessler, CDFA™ Joins The Center as a Divorce Financial Planner

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Jacqueline (Jacki) Roessler, CDFA(TM), joined The Center this month as a divorce financial planner. Jacki builds out The Center's divorce financial consulting practice. Attorneys refer their clients to Jacki to make educated financial decisions during divorce.  She works with individuals and couples to develop and analyze various divorce settlement options that address their short term and long term financial needs and goals. Issues she addresses range from setting up a temporary financial agreement while the divorce is pending to the optimal division of retirement accounts, determining the affordability of keeping the house, minimizing taxes and arriving at an equitable settlement, to name a few. your short-

 It is the goal of The Center to empower people with wisdom to make financial decisions with confidence. Jacki's expertise in the nuanced field of financial advice during divorce compliments The Center's existing focus of financial planning for generations. Her thought leadership and in-depth knowledge on Michigan divorce financial topics is sought by attorneys and people going through divorce for hourly consultations and engagements.

Jacki is past Executive Vice President of The Institute of Certified Divorce Analysts. She is frequently quoted on divorce financial matters in national media including Money Magazine, Fortune, Kiplingers Personal Finance, Bloomberg's Wealth Manager, and Investment News. She has published articles in the Michigan Family Law Journal and Michigan Lawyers' Weekly. 

She is a frequent lecturer to attorneys (the Institute for Continuing Legal Education (ICLE), the Family Law Section of the State Bar of Michigan, various local bar associations), financial organizations around the country (FPA and NAPFA groups), community events, local universities and divorce support groups on the financial issues surrounding divorce. As a specialist in the QDRO and pension arena, she has conducted seminars around the country, teaching lawyers, judges and financial professionals the intricacies of QDRO’s and pension valuations in divorce cases. Jacki also develops software applications to assist divorce attorneys settle the financial aspects of their cases through her outside firm, Divorce Axis.

In her personal time, Jacki enjoys spending time with her two kids. Jacki currently serves on the Advisory Committee of the Women’s Divorce Resource Centerhttp://womensdivorce.org, the Board of Trustees for the Michigan Opera Theatre, the Board of Directors for the Magic of Life Foundation http://www.themagicoflife.com/programs/the-magic-of-life-foundation/ and is an active member of Impact100  Metro Detroit http://impact100metrodetroit.org.


Center for Financial Planning, Inc. is a privately held wealth management firm located in Southfield, Michigan. The firm provides financial planning services to more than eight hundred families in 38 states. Founded in 1985, The Center manages more than $1 billion in assets for individuals and families.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Military Veteran’s – Are you Entitled to Benefits?

Contributed by: Sandra Adams, CFP® Sandy Adams

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As we honor our servicemen and women, it is a good time to be mindful of valuable financial benefits that military veterans may be eligible for, but not aware of – namely Service Related Disability Compensation and Veteran’s Pensions (and Aid and Attendance Benefits for Long Term Care needs).

Disability Compensation:

Disability Compensation is a tax free financial benefit paid to Veterans with disabilities that are the result of a disease or injury incurred during active military service.  Compensation may also be paid for post-service disabilities that are considered related or secondary to disabilities occurring in service and for disabilities presumed to be related to military service.  Compensation is tied to the degree of disability and is designed to compensate for considerable loss of working time.  There is also a tax free Dependency and Indemnity Compensation (DIC) benefit payable to a surviving spouse, child or dependent parents of Service members who died while in active duty or training, or survivors of Veterans who died from their service-connected disabilities.

Pension Benefits:

Veteran’s Pension benefits may be available for Veterans or dependent family members who need to pay for health care expense and certain other living expenses.  The pension benefit is a needs based program and is based on income and asset requirements set by Congress. 

General Eligibility Requirements:

  • Must have served at least 90 days active duty service, at least one day during a wartime period, AND
  • Must be 65 or older, OR
  • Must be totally and permanently disabled, OR
  • A patient in a nursing home receiving skilled nursing care, OR
  • Receiving Social Security Disability Insurance, OR
  • Receiving Supplementary Security Income

Veterans or surviving spouses who are eligible for VA pensions and are housebound or require the aid and attendance of another persona may be eligible for an additional monetary payment.  Applying may require the counsel of a VA counselor or an Elder Law attorney knowledgeable about Veteran’s Benefits.

In addition to these two major financial benefits, the VA provides assistance for Veteran’s with housing, education, insurance and other areas of concern and interest for Veteran’s.  If you are a military Veteran and are not aware of the benefits you might be eligible for, contact your local Veteran’s Service Agency today.  And remember to mention to your financial planner that you are a military Veteran – the benefits you might be eligible for could be an important piece in your overall planning puzzle!

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.


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 Sandra Adams, CFP® and not necessarily those of RJFS or Raymond James. You should discuss any tax or legal matters with the appropriate professional.

Melissa Joy, CFP® Named to Top Wealth Advisor Moms List

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Southfield, MI – Melissa Joy, CFP® and firm partner located at Center for Financial Planning, 24800 Denso Drive. Suite 300, Southfield MI 48033, was recently named to the Working Mother magazine and SHOOK Research’s “Top Wealth Advisor Moms” list. The ranking measures the best practices of an advisor learned through telephone and in-person interviews, and considers such factors as their service models, investing process, revenue generated for their firm and assets under management.

“I proudly congratulate Melissa Joy on this significant recognition,” said Michelle Lynch, vice president of the Raymond James Network for Women Advisors. “One of the many benefits of the financial advisory profession is the flexibility it can provide to working mothers. You can be successful and have a meaningful work-life balance. This recognition is a testament to Melissa’s commitment to both her family and profession. We are honored to affiliate with such dedicated and accomplished women advisors like Melissa.”

“The Center is committed to helping all team members balance their responsibilities both at home and at the office. You might say it’s in our DNA. Being a successful mom and advisor can be quite a challenge.  Our long history of women ownership and commitment to a Balance Life as a firm value remain two pillars in supporting team members in their role as parent and advisor. It is a privilege and honor to recognize Melissa and colleagues who strive to care for their families and career each and every day.” Timothy Wyman, CFP®, JD, and firm partner.

Joy, who joined The Center for Financial Planning- Raymond James in 1999, has more than 19 years of experience in the financial services industry. Melissa works primarily with high net worth individuals and families. She coordinates The Center's investment management and financial planning services as Director of Wealth Management. Melissa is a CERTIFIED FINANCIAL PLANNER™ and Certified Divorce Financial Analyst professional.

To reach Joy or the advisors at The Center, more information can be found at http://www.centerfinplan.com/melissa-joy or by calling 248.948.7900.


Center for Financial Planning, Inc. (The Center) is a privately held wealth management firm located in Southfield, Michigan. Working with over 800 families, the firm provides comprehensive financial planning services to individuals and families and manages more than $1 billion in assets as of October 2017.

Data provided by SHOOKTM Research, LLC as of July 2017.The Working Mother and SHOOK research ranking is based on an algorithm of qualitative and quantitative data. SHOOK Research considered wealth advisers who are mothers with at least one child living at home and under the age of 18 with a minimum 5 years of industry experience. Ranking algorithm is based on qualitative measures derived from telephone and in-person interviews and surveys: service models, investing process, client retention, industry experience, review of compliance records, firm nominations, etc.; and quantitative criteria, such as assets under management and revenue generated for their firms. Investment performance is not a criterion because client objectives and risk tolerances vary, and advisers rarely have audited performance reports. Rankings are based on the opinions of SHOOK Research LLC. Neither SHOOK nor Working Mother receives compensation from the advisers or their firms in exchange for placement on a ranking. Raymond James is not affiliated with Working Mother or Shook Research, LLC.  This ranking is not indicative of advisor’s future performance, is not an endorsement, and may not be representative of individual clients’ experience. Neither Raymond James nor any of its Financial Advisors or RIA firms pay a fee in exchange for this award/rating. For more information, see www.SHOOKresearch.com. 

About Working Mother Media: Working Mother Media (WMM), a division of Bonnier Corporation (bonniercorp.com), publishes Working Mother magazine and its companion website, workingmother.com. The Working Mother Research Institute (workingmother.com/wmri), the National Association for Female Executives (nafe.com) and Diversity Best Practices (diversitybestpractices.com) are also units within WMM. WMM’s mission is to serve as a champion of culture change. 

About SHOOK Research: As America’s only wealth adviser research organization, SHOOK Research recognizes the most outstanding wealth advisers in the business. The firm’s host of quantitative and qualitative deep due-diligence measures includes telephone and in-person meetings. The firm shares its best practices research through conferences and speaking engagements.

High Deductible Health Plans and HSAs

Contributed by: Matthew E. Chope, CFP® Matt Chope

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I am a big fan of High Deductible Health Care Plans. As individual and group premiums rise, employers are pushing their employees to take more responsibility for their health and healthcare costs, and offering High Deductible plans is one way they are doing this.  You can have a High Deductible plan as an individual or in a group plan.

There are some basics about these health care plans that you need to understand.  Basically, high deductible plans are not allowed to offer any co-pay benefits – like paying $10 for a generic prescription or $35 for a doctor visit. Thus, they usually work well for healthy people, although more and more, they work even if you know you’re going to hit your out of pocket maximum for the year because of their lower premiums. 

If you have a High Deductible Health Care Plan, you can take advantage of a HSA (Health Savings Acccount) which is typically opened at a bank or credit union. If you have an HSA plan, you are allowed to make pre-tax contributions to that account.  The maximum contribution will be $6900 in 2018 for a family and $3450 for an individual. If you are 55 or older, you can add another $1000 to those figures. If you get your insurance through your employer, you may find that your employer offers the HSA account for you and even makes a contribution to it during the year. In which case, you would count this money as part of your contribution limit.

You might be thinking, what’s so great about this if my insurance covers almost nothing unless I hit my deductible and/or out of pocket maximum? (They are often, but not always, the same amount.)

The High Deductible Health Care Plan is a wonderful planning tool for several reasons

  1. First, they operate the way insurance is supposed to operate: a smaller cost for an unlikely (but potentially catastrophic) event... think fire insurance on your home.  Going to the doctor or filling a prescription are not unlikely events at all, so really, when a plan offers copays for things like doctor appointments and prescription medication, that’s not really insurance, that is a discount plan. Consider it as though you are paying for the discount in the premium.
  2. Second, HSAs offer a great tax break: the money is contributed with pre-tax dollars, the account grows tax-free… and best of all… none of it is taxed coming out.  (as long as you use them for qualified medical expenses.) Yes, there are rules about what is a qualified medical expense but in a nutshell most legitimate expenses for healthcare are okay.  You can’t use them for: the actual premium cost of the insurance, supplements, massage, or elective surgery (this is usually the case but there are exceptions). The HSA is the only vehicle where the money isn’t taxed going in or coming out, if you follow the fairly simple rules.*
  3. Third, HSA dollars can be used on things that insurance doesn’t typically cover, such as alternative care with a chiropractor or acupuncturist for example.  You can also use HSA money to pay for things like the dentist or eye doctor. (See IRS Pub. 502 for a list of qualified medical expenses.)

Some people also use the HSA as another savings vehicle.  They max out their contribution each year, but instead of spending the money on medical costs, they pay for their costs with regular old post-tax dollars.  They still get the tax deduction, because the deduction is based on the contribution, not on the spending.  Then in retirement they’ve got an account they can use for health care costs.

Taking the Strategy One More Step

If you have a large expense pre-retirement and you pay for it with post-tax dollars (i.e you just write a check), you can reimburse yourself for the cost years later.  That means you can make a tax free withdrawal in retirement for a pre-retirement healthcare expense.  This could make sense for a large ticket item, like a hospital bill.   Having a tax-free account such as an HSA could really help you be strategic with retirement income. (Consult with your CPA, and save those receipts for this strategy!)

The High Deductible Health Care plan/HSA Strategy isn’t for everyone, but to figure out if it makes sense for you, it’s best to speak with someone who can analyze your individual situation and advise you.  Brokers’ services are free to you, as they are compensated by the insurance carrier you choose.  You can also contact us for help with deciding if this strategy makes sense for you.

* May be subject to State or local taxes.

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.


This information does not purport to be a complete description of High Deductible Insurance Policies or Health Savings Accounts, it has been obtained from sources deemed reliable but its accuracy and completeness cannot be guaranteed. Opinions expressed are those of Matthew Chope and are not necessarily those of Raymond James. Investing involves risk, investors may incur a profit or loss regardless of the strategy or strategies employed. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. 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.

A Summary of Proposed Tax Changes + How It Might Affect You

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On November 2, House GOP unveiled the proposed tax legislation now known as the “Tax Cuts Job Act.” The proposal has generated excitement as well as concern depending on the perspective of the taxpayer or special interest affected. Taxes for many Americans would be lower and the corporate tax rate would also be lowered. To cover the associated costs of these reductions, many deductions and credits will be eliminated or changed.

You can read the proposed legislation here as well as the legislative summary here. Nick Defenthaler, CFP® and I will be spending much of our upcoming “Year-End Tax Planning” webinar discussing the proposed changes. You can sign up to attend the webinar or receive a recording of it here. If you have questions about the proposed changes based upon your personal circumstances, please contact us here at The Center to discuss.

As with any legislation, the political process can be messy. No one should be shocked if compromises occurred as the bill makes its way through the House and eventually the Senate in order to move into law. Further, while this is closer to significant tax reform than we’ve been since the ‘80s, there is no certainty until the ink is dry on a signed law. Stay tuned for updates as we know more.

In the meantime, we’ve summarized a list of potential changes, their impacts which are color-coded based on potential reduction or increase to your taxes, and a column for you to make note as to whether the proposed change might have an effect on your tax situation. The table is below and you can also download the PDF here.

This synopsis was primarily sourced and summarized from Michael Kitces’ more lengthy and technical blog article on November 3rd.

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Melissa Joy, CFP®, CDFA® is Partner and Director of Investments at Center for Financial Planning, Inc.® In 2013, Melissa was honored by Financial Advisor magazine in the Research All Star List for the third consecutive year. In addition to her contributions to Money Centered blogs, she writes investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.


Financial Advisor magazine's inaugural Research All Star List is based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and evaluation of challenges faced in the job and actions taken to overcome those challenges. Evaluations are independently conducted by Financial Advisor Magazine.