Money Centered BLOG
The Center's Team enjoys sharing their knowledge with the press to help stories come to life, share facts and bring important topics to the forefront. We are also honored when we are recognized by media and publications for our work and service to our profession. Here's what's new:
Timothy Wyman, CFP®, JD was quoted in InvestmentNews on December 4, 2013, in an article titled, “Advisers help clients prepare for sharp decline in pension benefits” by Darla Mercado.
The financial planning profession is full of acronyms such as RMD, IRA, TSA and NUA. One acronym making a comeback due to the increase in the US Equity market is “NUA”. NUA stands for net unrealized appreciation and anyone with a 401k account containing stock might want to better understand it. NUA comes into play when a person retires or otherwise leaves an employer sponsored 401k plan. In many cases, 401k funds are rolled over to an IRA. However, if you hold company stock in the 401k plan, you might be best served by rolling the company stock out separately.
Before getting to an example, here are the gory details: The net unrealized appreciation in securities is the excess of the fair market value over the cost basis and may be excluded from the participant's income. Further, it is not subject to the 10% penalty tax even though the participant is under age 59-1/2, since, with limited exceptions; the 10% tax only applies to amounts included in income. The cost basis is added to income and subject to the 10% penalty, if the participant is under 59.5 and the securities are not rolled over to an IRA.
Suppose Mary age 62 works for a large company that offers a 401k plan. Over the years she has purchased $50,000 of XYZ company stock and it has appreciated over the years with a current value of $150,000. Therefore, Mary has a basis of $50,000 and net unrealized appreciation of $100,000.
If Mary rolls XYZ stock over to an IRA at retirement or termination, the full $150,000 will be taxed like the other funds at ordinary income tax rates when distributed. However, if Mary rolls XYZ stock out separately the tax rules are different and potentially more favorable. In the example above, if Mary rolls XYZ out she will pay ordinary income tax immediately on $50,000 but may obtain long term capital treatment on the $100,000 appreciation when the stock is sold; thus potentially saving several thousand dollars in income tax.
A NUA transaction is complex so care and professional guidance is encouraged.
Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.
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, is not a complete summary or statement of all available data necessary for making an investment decision, and does not constitute a recommendation. 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 Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James. You should discuss any tax or legal matters with the appropriate professional.
The holidays provide us with rare opportunities to gather with family. This is a time to check in with older adult parents to see how things are going and to see what might be changing. Often, we will notice that time (and/or age) are beginning to make everyday life a little more challenging for our parents. This is the perfect time to ask your parents about their plans for their future.
Do they have their financial lives organized and documented to make future planning easier? If not, here is a great resource to give them: https://static1.squarespace.com/static/54341a03e4b08690c01bc8de/54dcf260e4b018fb5adfbec4/54dcf261e4b018fb5adfc6e8/1303923614337/record_system.pdf
If having these conversations makes you feel uneasy, you are not alone. However, giving your parents the opportunity to express their desires and helping them to put an actual plan in place to make their plans a reality is an invaluable gift. And what better time than the holidays to give that gift?
Contact your financial planner for tips on holding these conversations or to schedule a family planning meeting.
Sandra Adams, CFP® is a Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012 and 2013, Sandy was named to the Five Star Wealth Managers list in Detroit Hour magazine. 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.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
In the hustle and bustle of the holiday season, some things get pushed aside. Sound familiar? Well, we may be a little belated on wishing Amanda Toia, Tim Wyman and Matthew Chope a Happy Centerversary, but it’s better late than never!
Client Service Manager Amanda Toia joined The Center team 3 years ago in November. With 3 years under her belt, Amanda says, “It has been a joy to come to the office each day surrounded by great people. The Center is a wonderful place. How lucky I have been these three years!”
It was in December 17 years ago that now-Partner Matt Chope joined the Center. When asked to reflect on his tenure, Matt offered his favorite quote by Yogi Berra: "In theory there in no difference between theory and practice but in practice there is.” Matt says it is humbling to work with so many financial advisors who get it and who are deeply dedicated to forging a good outcome for clients.
Partner Tim Wyman is celebrating 14 years at The Center this month. When we pointed this out to him, he wondered where the time had gone. “Joining The Center 14 years ago was by far the best professional decision I have made and I feel very fortunate to be working alongside 19 other professionals committed to serving others.”
We’re feeling pretty fortunate for Amanda, Matt and Tim. Happy Centerversary to you all!
The upcoming holiday break from school gives you the perfect opening to have conversations with your teenage children about their college plans. Try talking to them about what they are currently interested in studying once they reach college, where they think they might apply, and also your family’s plan for college funding. This includes what you plan to contribute, as well as your expectations about your child’s contribution.
How much is your child’s education likely to cost? Go online and look up tuition rates for the schools your child might be considering. Then find one of the many online college tuition calculators to determine what your child’s costs might be.
How will you plan to pay for school?
Discuss what you have saved (529 College Savings Plans, UTMAs, and other savings).
Discuss opportunities for scholarships and grants. Here are two sites to visit as early as your child’s freshman year in high school:
http://www.studentaid.ed.gov/ -- basic information about college costs, financial aid, etc.
www.fastweb.com -- create a profile to get matched up with scholarship and grant opportunities specific to your child.
Discuss ways for your child to contribute, either now or in the future. This may include part-time work in high school, during summers, or during college. This also includes strong academic performance and/or extra curricular activities now which can put them in a position for academic or other scholarships in the future.
The high cost of a college education makes these family conversations necessary. By framing the discussions around the excitement of planning for your child’s future, you can make this an enjoyable and productive use of the holidays.
Talk to your financial planner about the many ways to save for your child’s college education.
In my next blog, I will talk about holiday financial discussions to have with your older adult parents.
Sandra Adams, CFP®is a Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012 and 2013, Sandy was named to the Five Star Wealth Managers list in Detroit Hour magazine. 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.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
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.
We’ve been eating our veggies and squeezing in our workouts and we have the abs … or rather the award to prove it. The Center was recognized as one of Michigan’s Healthiest Employers for the second consecutive year. Honorees were chosen from employers across Michigan whose policies and programs promote a healthy workforce. The statewide program is sponsored by Priority Health, Crain’s Detroit Business and MiBiz with one simple goal: To showcase how companies are using wellness programs to make a positive impact on their employees’ lives – both at work and at home.
A focus on wellness is part of The Center culture and has been an ongoing initiative since 2007. Planner Laurie Renchik says, “Everyone gets involved in one way or another, either taking ownership in planning activities, supporting ongoing programs or lending a helping hand and encouraging others to participate.”
Winners were chosen in two regions and five categories based on the number of employees. The Center took honors in the Metro Detroit region in the 5 to 99 employee category.
The project was sponsored by Priority health, data was collected by Indianapolis based Healthiest Employer LLC. Crain’s Detroit Business and MiBiz produced the promotional supplement as media sponsors of the project.
The hustle and bustle of everyday life does not always give us the chance to have meaningful conversations with our children about money and charitable giving. The long holiday vacation is the perfect time to have these conversations, but does any child want to spend school break listening to lesson from their parents?
These are just a few ideas to help you instill the spirit of giving in your children this holiday season; to teach them that this time is as much about giving as receiving.
In my next blog, I will provide tips for talking to your teenage children about preparing for college funding.
Sandra Adams, CFP® is a Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012 and 2013, Sandy was named to the Five Star Wealth Managers list in Detroit Hour magazine. 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.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
November 5th marked the second annual Alzheimer’s Association and Institute of Gerontology collaborative conference. Again this year, the conference brought together over 260 caregivers and health professionals to explore and understand a person-centered approach to caring for those living with Alzheimer’s. The Center for Financial Planning was a sponsoring partner for the event.
Sandy Adams served on the planning committee for the 2013 conference, and moderated a panel discussion around the difficult conversations, legal and financial issues that affect those with Alzheimer’s and their families. “This conference is very unique in that it brings together families and professionals to have realistic conversations about caring for those with Alzheimer’s,” Sandy explained. “Participants received great information and enjoyed experiential presentations on alternative therapies involving art, music and exercise.” She is looking forward to serving on the planning committee for the 2014 conference.
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.
Growing up, my sport of choice through high school and college – or at least the sport I didn’t get cut from in tryouts -- was Golf. The term sport is, I think, loosely applied to the game of golf. Anything you can do while eating, drinking and socializing sounded like my kind of sport. While golf isn’t the type of sport you take a time-out in, I still learned to recognize the value a time-out can offer. A time-out gives you a chance to catch your breath, look around and assess the situation.
Recently I took a time-out from my daily duties at The Center to attend a conference in Chicago that gathered some excellent investment managers in one place to discuss current investing themes. One presentation summarized cleanly a theme our investment committee has been working on for the past several months…investing around the world (especially in Europe). It has been compelling to us because the EU recovery lags behind the rebound the United States has enjoyed. With headlines as seen below it appears there could be an excellent investment opportunity for certain investors.
Source: Harris Associates L.P.
When headlines are at their worst, investment opportunity is usually at its greatest. Europe emerging from their recession could have a strong positive impact on international equities in general. So take a time-out to notice what is happening on the international front. While other investors aren’t slowing their game, take a moment to step back and assess. A time-out can be an excellent tool to uncover investment opportunities.
Angela Palacios, CFP®is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.
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. 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 Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Investing involves risk and investors may incur a profit or loss.
Giving back to our community is a value we hold in high regard at The Center. Each member of our team is encouraged to take two days off from work each year to make a difference. Our own Angela Palacios did that at her daughter’s school where she helped spread her love of fitness.
As many of you may know, I have a strong passion for physical fitness in my life. It isn’t always easy to stay motivated and to fit it in with the hustle and bustle of the daily schedule, but I make it a priority and always have since I was about 13 years old. I like to think this has not only had a positive influence on my life, but also that of my family and friends when I encourage them to join me in one way or another.
I feel fitness is an important lesson that I want to pass along to by daughter who is 6. From a very young age we have tried to make exercise a fun, daily occurrence. It isn’t always easy to get her to exercise but it is easy to get her to go to ice skating, dancing, gymnastics, swimming and golf or even just riding her scooter when I take the dog for a walk. As a result she is a very fit little girl with great coordination. So when the opportunity came up to visit her school and try to help bring these habits into other kids’ lives, I felt like that was a natural fit for me.
Each year her school participates in the Presidential Physical Fitness Testing in the spring. However, each fall they do a training session for the kids so they know where they are and what they need to focus on improving. I think this is a great program that is unique to her school (or at least I had never heard of it before) and could not happen without parent volunteers.
I have participated twice and both times the kids have energized me. I have worked with kids from my daughter’s first grade class all the way up to the eighth graders. We taught them the mechanics of stretching, endurance and strength training in a fun way. Young children are inherently physically fit just from playing on the playground. So parents, encourage your kids to go outside and play and most importantly just have fun, which is also a great lesson for us adults to remember. If you love doing it you will stick with it and experience life-long benefits!
