, , ,

The Last Day for 2016 IRA Contributions is Coming Soon!

, , ,

Contributed by: Jeanette LoPiccolo, CRPC® Jeanette LoPiccolo

Just like last year, the 2017 federal tax return deadline doesn't fall on the usual date of April 15. With the 15th falling on a Saturday and a holiday on the 17th, income tax filings for the 2016 tax year and federal tax payments are due on Tuesday, April 18th, 2017.

The last day to make a contribution to an IRA for any tax year is when taxes are due.

So, April 18th, 2017 is the last day to make a contribution to your individual retirement account for the 2016 tax year. Even if you file for an extension on your tax return, the deadline for 2016 IRA contributions is still April 18th.

Individuals who are 50 or older can contribute up to $6,500 to an IRA during a tax year, whereas younger savers can contribute $5,500. Making a contribution to an IRA before the tax deadline is a great way to catch up if you didn't maximize your IRA contribution during the last calendar year. 

Contributing to your retirement account is not just a smart decision for your future. Making a contribution to a traditional IRA can potentially reduce taxes you owe or result in a larger refund for the 2016 tax year. 

In addition, did you know that the Saver’s Credit is available to some taxpayers who make IRA contributions? While not everyone reading this blog may be eligible for this deal, you may have a friend or family member who is. You can pass along this info because helping others save money feels good too, right? 

It’s called the Retirement Savings Contributions Credit (aka the Saver’s Credit). Nick Defenthaler, CFP®, wrote a great blog about it.

Want a quick example of how the Saver’s Credit works? Jill, who works at a retail store, is married and earned $37,000 in 2016. Jill’s husband is finishing college and didn’t have any earnings. Jill contributed $1,000 to her IRA for 2016 before the 4/18/17 deadline. After deducting her IRA contribution, the adjusted gross income shown on her joint return is $36,000. Jill may claim a 50% credit, $500, for her $1,000 IRA contribution.

For more information, check out the IRS website link here.

If you have any questions or want to contribute to your retirement account, please feel free to contact us or your CERTIFIED FINANCIAL PLANNER™ professional.

Jeanette LoPiccolo, CRPC® is a Client Service Manager at Center for Financial Planning, Inc.®

This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Opinions expressed are those of Jeanette LoPiccolo and are not necessarily those of RJFS or Raymond James. 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 issues. You should discuss tax matters with the appropriate professional. Links to third party websites are being provided for informational 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.

Sources:
irs.gov
google image 1 and google image 2

, ,

Webinar in Review: 2017 Economic and Investment Update

, ,

Contributed by: Jaclyn Jackson Jaclyn Jackson

As the current bull market for U.S. stocks nears its eighth anniversary, is there potential room to grow or could we be heading for the next recession? In the face of slow growth, low interest rates, and low inflation how could "Trumped-Up" economics and an increasingly hawkish Federal Reserve, affect the economy and the markets going forward?

On February 21st, 2017, Vanguard Investment Strategy Group Education Specialist, Maria Quinn, and Center for Financial Planning Director of Investments, Angela Palacios, CFP®, teamed up to tackle these pressing questions with a market and economics insights webinar.  While Maria discussed market themes and outlooks, Angela focused on policy changes and their potential impact on investments.

Here is a recap of key points from the “Economic & Investment Update” webinar (as well as a link to the webinar replay).

  • Global growth should stabilize, not stagnate. Risks to the global growth outlook is more balanced this year as U. S. and European policy adds to increasingly sound economic fundamentals that should, in part, offset weakness in the United Kingdom and Japan. Aided by labor productivity rebound, Vanguard believes U.S. growth could be 2.5% in 2017. Vanguard’s long term 2% U.S. growth trend is influenced by lower population growth and the exclusion of consumer-debt-fueled boost to growth evident between 1980 and the Global Financial Crisis.

  • Deflationary forces are cyclically moderating. Central banks (globally) will struggle to meet 2% inflation targets. U.S. core inflation may modestly overshoot 2% this year, prompting the Fed to raise rates. U.S. wage growth has increased slightly and may continue to rise with productivity gains. Euro-area inflation will move towards target, but will like stay below it. There is deflation in Asia and monetary easing is not having the desired effect on nominal wage growth.

  • Cautiously optimistic outlook indicates modest portfolio returns underscoring the value of investment discipline, realistic expectations, and low-cost strategies. Keep in mind, diversification doesn’t work every time, but it can work over time.

  • Corporate tax and trade reform could have mixed implications. The U.S. has one of the highest corporate tax rates among developed countries. A lower corporate tax policy may curve current incentives for U.S. businesses to operate in other countries or take on too much debt. Lowering the corporate tax rate could benefit U.S. stock price performance or potentially increase the amount of dividends paid back to investors. On the other hand, it could increase inflation which may cause higher interest rates and strengthen the dollar.

    With respect to trade reform, a tariff, value added tax, or border added tax on imports could increase the cost of goods and build inflation in the U.S. Additionally, other countries may retaliate with tariffs on U.S. products, triggering trade wars. Another thought is that U.S. goods could become more expensive at home and in other countries creating a scenario where U.S. goods have higher prices and with lower demand.

  • Tips for strategic action when markets are up include: planning for upcoming cash needs; rebalancing portfolios; making charitable contributions; and maintaining plan discipline.

If you missed the webinar, please check out the replay below. As always, if you have questions about topics discussed, please give us a call!

Jaclyn Jackson is a Portfolio Administrator and Financial Associate at Center for Financial Planning, Inc.®

Any opinions are not necessarily those of Raymond James and are subject to change without notice. Raymond James is not affiliated with and does not endorse the opinions of Maria Quinn or Vanguard. 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. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance may not be indicative of future results. Dividends are not guaranteed and must be authorized by the company’s board of directors. There is no guarantee that any statements, opinions or forecasts provided herein will prove to be correct. An investor who purchases an investment product which attempts to mimic the performance of an index will incur expenses that would reduce returns. Standard & Poor’s 500 (S&P 500): Measures changes in stock market conditions based on the average performance of 500 widely held common stocks. Represents approximately 68% of the investable U.S. equity market. US Bonds represented by Barclay’s US Aggregate Bond Index a market-weighted index of US bonds. The Bloomberg Commodity Index (BCOM) is a broadly diversified commodity price index distributed by Bloomberg Indexes. The BCOM tracks prices of futures contracts on physical commodities on the commodity markets. The BofA Merrill Lynch U.S. T-Bill 0-3 Month Index tracks the performance of the U.S. dollar denominated U.S. Treasury Bills publicly issued in the U.S. domestic market with a remaining term to final maturity of less than 3 months. 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 21 developed nations. The MSCI Emerging Markets is designed to measure equity market performance in 25 emerging market indices. The index's three largest industries are materials, energy, and banks. Dow Jones Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. 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. Barclays US Corporate High Yield Index represents the universe of fixed rate, non-investment grade debt. The corporate sectors included in the index are Industrial, Utility, and Finance. The Barclays Capital US Aggregate Corporate Index (BAA) is an unmanaged index composed of all publicly issued, fixed interest rate, nonconvertible, investment grade corporate debt rated BAA with at least 1 year to maturity. TR—Total Return, includes performance of both capital gains as well as dividends reinvested. NR—Net Return indicates that this series approximates the minimum possible dividend reinvestment. The information contained in this presentation does not purport to be a complete description of the securities, markets, or developments referred to in this material. This material is being provided for information purposes only and is not a complete description, nor is it 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 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 Angela Palacios and Maria Quinn and not necessarily those of Raymond James. Investments mentioned may not be suitable for all investors. 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. 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. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. Raymond James is not affiliated with and does not endorse the opinions or services of Maria Quinn.

,

Beware of Potential Tax Seasons Scams

,

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

Scams are everywhere in the world we live in today. It seems as if it’s a daily occurrence to see a report on the nightly news of a new ploy to take advantage of consumers. Recently, the U.S. Federal Trade Commission (FTC) said it tracked a nearly 50% increase in identity theft complaints in 2015 and that the biggest contributor to this massive spike was due to tax refund fraud. Thousands of Americans have realized when going to file their taxes, that their return has already been processed! This could easily occur if a cybercriminal gets a hold of your Social Security number. 

With tax season now in full swing, avoiding an IRS/tax return related scam or a “phishing” ploy is top of mind for many. Below are some helpful tips the IRS has provided:

  • The IRS will NOT…

    • E-mail or text taxpayers

    • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.

    • Demand that you pay taxes and not allow you to question or appeal the amount you owe.

    • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.

    • Ask for your credit or debit card numbers over the phone.

    • Threaten to bring in police or other agencies to arrest you for not paying. 

If you’re contacted by someone who claims to work for the IRS or is demanding you to take action, the best course of action is to not provide any personal information, immediately hang up and contact the IRS directly by phone at 800-829-1040. Click here to visit the IRS’ website for more tips on protecting yourself from a potential tax related scam.   

Also, if you haven’t already, I’d recommend watching the webinar we hosted in early 2016 with Andy Zolper, Chief IT Security Officer with Raymond James to learn more about the measures we take to ensure the integrity of client information. Andy also offers some great advice on how to protect yourself from cyber threats at home and on your mobile devices. 

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 has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links to third party websites are being provided for informational 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. Raymond James Financial Services Inc. and its advisors do not provide advice on tax or legal issues, these matters should be discussed with a tax or legal professional.

, ,

Preparing for Aging: Baby Boomers vs. Generation X

, ,

In our day-to-day work with clients, Baby Boomer and Generation X clients, assist their parents and sometimes grandparents (those in the “Silent Generation,” born in the mid-1920s to early 1940s) plan for their aging years. But are those “children” planning for their own aging years? Are they learning any lessons from watching family members age? Who is planning better at preparing for aging – Baby Boomers or Generation X?

As it turns out, neither generation is as prepared as they should be, but Generation X is actually LESS prepared for aging than the Baby Boom generation. Why is that?

  • Generation X has more debt (student loan debt, credit card debt, etc.), which caused them to start saving later.

  • Generation X has less access to pensions and feels less secure in their promised future Social Security benefits.

  • Generation X is even more of a “sandwich generation” than the Baby Boomers. Call it a club sandwich with multi layers: Generation Xers can be stuck in the middle of supporting grandparents, parents, children, and grandchildren all at the same time all while trying to hold down a job and going back to school to get additional education or credentials. Wonder why we can’t pay attention to our own health and well-being? (Yes, I am a Generation Xer!!)

  • In addition to having no time to visit physicians and do the routine self-care that should be done due to the multi-levels of our responsibilities, recent studies by MDVIP, Inc. (WHSV 2014) indicate that this generation is also afraid of receiving bad news, which also deters them from visiting the doctor (which of course, may prevent getting information on conditions early, when they could be treated).

With each generation, we anticipate that life expectancy assumptions get a little bit longer if only for improvements in health care and technology. Therefore, each generation needs to be even more prepared, financially, physically, psychologically and otherwise for a longer life that may occur. Both the Boomers and the Generation Xers have a lot of work cut out for them if they want to be prepared!

If you feel that you are behind in your plan for aging and need some assistance, we can help! If you’re in Generation X, take the time to view our webinar dedicated to planning for your retirement. If you have any questions, free to reach out to me at Sandy.Adams@centerfinplan.com.

Sandra Adams, CFP® , CeFT™ 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.

This information has been obtained from sources considered to be reliable, but we do not guarantee that this material is accurate or complete. Opinions expressed are those of Sandy Adams and are not necessarily those of RJFS or Raymond James.

,

If Tom Brady was your Financial Planner

,

Contributed by: Timothy Wyman, CFP®, JD Tim Wyman

What if Tom Brady, one of the all-time great quarterbacks, was your financial planner? Just imagine, what if he decides that after leading his team to a comeback victory in this year’s championship game that he is done with football and becomes a financial planner instead?  And, he accepts you and your family on his client roster.

I have heard Tom Brady discuss keys to his and his team’s success many times. He speaks of preparation, trusting the process, and being associated with high integrity teammates and organizations. My sense is that financial planner Tom Brady would apply much of the same to his financial planning advice. 

Prepare yourself for a successful retirement or financial independence.

Put a plan in place taking into consideration your current realities and where you want to go (the end zone). Identify how you will make first downs as you continue to strive for the goal line; save the correct percentage of income, utilize tax advantaged accounts such as 401k’s and 403b’s, invest for growth but don’t take unnecessary risks until you’re 4th down and 8 in the 4th quarter. This preparation occurs year round – not just when it is convenient.

Tom Brady would also be a financial planner stressing the importance of trusting the process. 

If you have a plan in place that reflects your personal goals, you practice it Monday through Saturday, and then trust it on game day.  My sense is that Tom Brady would be one of the best at closing the gap between what financial markets return and what investors actually gain due to less than ideal investment behavior. Tom would be a master at behavior finance because he would give his clients the courage and confidence to trust the process and continue to trust it during games. I can picture him in the huddle with ten other professionals – the fans are going crazy – the clock is winding down and Tom calmly says, “We’ve been through this before, we have prepared, we have planned for this, now let’s go win the game.” Maybe just as important, I am quite certain Tom Brady wouldn’t say, “Let’s abandon our process – for this last quarter of the game let’s switch to the Air Raid offense and hope we are right.” Financial planner Tom Brady would most likely instill discipline in his practice for the benefit of his clients.

If Tom Brady was a financial planner, I feel he’d want to be associated with a firm that espoused the same values as him rather than being the largest in size or in the market.

He would want an organization that has history and owners that shared his passion for excellence. He would want to be associated with an organization that put his interests first, not a commissioner or Wall Street.

Lastly, if Tom Brady was a financial planner he would share and celebrate in your success. The accomplishment of goals such as attaining a successful retirement or perhaps winning a football game on a specific Sunday are unique and not everyone will experience either. Tom would be on the podium with you – thanking all that had a hand in reaching the goal – shedding a tear or two before he got back to the office to prepare for his next client.

Until Tom Brady announces his career change, please feel free to let us be your Tom Brady. Our financial planners and entire team are here to help you prepare and can’t wait to celebrate your success.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc.® and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

Opinions expressed are those of Timothy Wyman and are not necessarily those of RJFS or Raymond James. Investing involves risk, investors may incur a profit or loss regardless of the strategy or strategies employed. Raymond James is not affiliated with Tom Brady. This content is hypothetical and has been provided for illustrative purposes only.

,

Dow Milestone Making Headlines

,

Contributed by: Angela Palacios, CFP® Angela Palacios

In late January the Dow Jones Industrial Average eclipsed a much awaited level of 20,000. Many investors are left wondering “Does this mean I should buy or should I sell?” Depending on who you listen to, you could get very conflicting answers. Valuations are in the eye of the beholder. Depending on the metrics you utilize to judge valuations the markets can look overvalued to even slightly undervalued. Perhaps a history lesson of Dow milestones is in order.

Dow 2,000

30 years ago on January 8th, 1987 the Dow first hit 2,000. Many felt that the Dow would likely take a breather and trade sideways for a while. Eight months later, however, the Dow nearly reached 2,800! Little did investors know that later in October the Dow would experience a day that would live on in infamy: Black Monday. 

The Dow went on to finish the year out positively.

Dow 10,000

At the height of the dotcom bubble in March 1999, the Dow eclipsed 10,000 and shortly thereafter, 11,000. The excitement was palpable. I recall this very vividly as I had just started my career. No one wanted to even think about owning bonds in their portfolio even though the ten year treasury was paying a rate of 6% (wouldn’t that be nice!). The next three years the DOW experienced a gut wrenching drop back below 7,000.

Dow 15,000

You probably don’t even remember headlines from this milestone reached in early 2013 as investors still didn’t believe in the bull market run after living through the depths experienced in March 2009. This market, as you know has quietly proceeded to hit the 20,000 mark less than four years later.

Dow 20,000

That brings us full circle back to today. Many industry professionals have welcomed this milestone with indifference. Milestones contain exactly zero information regarding what the future holds for the market. What I do know, is that excitement is not palpable like the euphoria experienced back in the late 90’s. Regardless of whether or not you traded brilliantly around these milestones, sticking to your investment discipline and simply staying invested through the time periods from Dow 2,000 to Dow 20,000 has created some handsome returns regardless of the bumps along the way. Who would have thought back in 2009 when the Dow was trading right around 7,000 at its low we would be celebrating Dow 20,000 just 8 short years later?

Angela Palacios, CFP® is the Director of Investments at Center for Financial Planning, Inc.® Angela specializes in Investment and Macro economic research. She is a frequent contributor The Center blog.

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index used to measure the daily stock price movements of 30 large, publicly owned U.S. companies. 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. This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. This content does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk, investor may incur a profit or loss regardless of the strategy or strategies employed.

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index used to measure the daily stock price movements of 30 large, publicly owned U.S. companies. 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. This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. This content does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk, investor may incur a profit or loss regardless of the strategy or strategies employed.

, , ,

Tax Terms: Carried Interest and the Buffett Rule

, , ,

Contributed by: Matt Trujillo, CFP® Matt Trujillo

If you followed the 2016 campaign coverage as closely as I did, than you probably heard some tax-related terms repeated time and time again. Two terms in particular were “carried interest” and the “Buffet Rule.” For those that aren’t terribly familiar with these terms I will attempt to give a brief description of each.

What is "Carried Interest?”

Carried interest refers generally to the compensation structure that applies to managers of private investment funds, including private-equity funds and hedge funds. As a result of the carried interest rule, fund managers' compensation is taxed at lower long-term capital gain tax rates rather than at ordinary income tax rates. Both Clinton and Trump released plans calling for carried interest to be taxed as ordinary income.

What is the "Buffett Rule?”

In a 2011 opinion piece, Warren Buffett, chairman and CEO of Berkshire Hathaway, argued that he and his "mega-rich friends" weren't paying their fair share of taxes, noting that the rate at which he paid taxes (total tax as a percentage of taxable income) was lower than the other 20 people in his office (Warren E. Buffett, "Stop Coddling the Super-Rich," New York Times, August 14, 2011).

As Buffett pointed out, this is partially attributable to the fact that the ultra-wealthy typically receive a high proportion of their income from long-term capital gains and qualified dividends, which are generally taxed at lower rates than those that typically apply to wages and other ordinary income.

The "Buffett Rule" has since come to stand for the tenet that people making more than $1 million annually should not pay a smaller share of their income in taxes than middle-class families pay. As a result, some have proposed that those making over $1 million in annual income should have a flat minimum tax of 30%.

What is the right thing to do? That is not for this humble author to decide. But at least now, some of you can be better informed about what these terms mean the next time you hear them on the news!

The tax environment is evolving rapidly. Be sure to talk to a qualified professional before implementing any changes to your tax and investment strategy.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc.® Matt currently assists Center planners and clients, and is a contributor to Money Centered.

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 Matt Trujillo, CFP®, and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. 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.

, , ,

More Potential Changes Under the Trump Administration

, , ,

Contributed by: James Smiertka James Smiertka

The New Year always brings changes, but this year may be particularly notable. We have a new U.S. President & our Congress is ruled by a Republican majority. This surely brings a new direction for the country and also the prospect of policy and regulatory changes.

As we know, President Trump made tax reform a key issue during his campaign, and he has proposed wide-ranging changes to the U.S. tax system. Additionally, with the GOP with majority control of the House and the Senate, there is a better chance for an overhaul of the federal tax system than in the past. Changes will most likely not be quickly completed, and it is likely that any tax reform will not take place until late 2017 or early 2018.

Here are some of the potential changes:

Estate Tax

  • Trump’s plan seeks to repeal the current estate tax as well as the alternative minimum tax (AMT) and generation-skipping transfer tax (GSTT)

  • Total repeal is unlikely

  • $10 Million exemption (per couple)

    • Assets above this amount would be subject to capital gains tax

  • Likely change to the asset basis step-up for heirs

    • Date of death value rules likely preserved for heirs of smaller estates

    • Limited basis step-up for heirs inheriting from larger estates

  • There is also the potential for state estate taxes to disappear as they are based on the federal estate tax system

Gift Tax

  • Will most likely stick around in some form

    • Prevents income shifting from donors in high tax brackets to the donated in lower tax brackets

  • If the estate tax is repealed, we could be looking at a change to the lifetime gift tax exemption in the neighborhood of around $1 Million or higher (lifetime), with the annual gift tax exclusion preserved (currently $14,000/year)

There are a wide range of possible combinations of estate & gift tax reform, and potential tax planning opportunities depending on the details of that reform. Here are some potential scenarios, per Michael Kitces:

While there are many potential planning scenarios for both individuals and businesses, nothing is certain. Only very broad strokes have been “painted” thus far. Regardless, Center for Financial Planning, Inc. is always staying up to date with the most recent changes. Make sure to speak with your financial advisor if you have questions on any of these topics.

Also, make sure to check out our previous blog on the new administration’s potential impact to marginal tax brackets, standard deductions, and capital gains tax.

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.®

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. 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 James Smiertka and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Sources:

  • Kiplinger Tax Letter, Vol. 92, No. 2 (1/27/17)
  • http://www.forbes.com/sites/ashleaebeling/2016/11/09/will-trump-victory-yield-estate-tax-repeal/#aef41902bf2a
  • https://www.kitces.com/blog/repeal-estate-gift-taxes-and-carryover-basis-under-president-trump/
  • http://www.forbes.com/sites/nextavenue/2016/12/12/what-the-trump-tax-proposals-mean-for-high-net-worth-retirees/#5f7253b17ef4
  • http://www.cnbc.com/2017/01/22/how-trumps-proposals-may-affect-every-income-tax-bracket.html

,

The Connection between Home Renovations and Financial Planning

,

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

About two months ago, my wife and I decided that it was time to take the plunge and finish our basement.  As I’m sure many of you can relate to, our 18 month old son’s toys have quickly taken over our living room. What was once a peaceful area for us to relax and watch some TV, has literally turned into a mini-jungle gym! We wanted more room for his play area as well as give us some extra space for entertaining friends and family. Home renovations are a pain. We’ve all been there. They’re expensive, stressful, and can often time end up being a money pit. After much thought and months of saving, however, we decided it was the right time to move forward with our project.

I think it’s important to note that I am NOT a do-it-yourself kind of guy. The extent of my handyman skills are changing lightbulbs and hanging a picture. I think acknowledging this as a weakness is extremely important. Since I know home improvements are not my forte, we’ve elected to delegate this work and hire a professional to make sure our project was done properly and to our liking. Even if I had the expertise to do some of the work on my own, I know I wouldn’t want my spare time to be consumed working on the basement. I’d much rather spend that time with my family and friends. 

We spent several weeks interviewing different contractors to determine who we felt would be the best fit for our project. Many things were taken into account throughout this process. Referrals from friends and family, quality of work, level of comfort and cost, just to name a few. We probably met with five contractors who all wanted the job, and who were all fairly close in price. Jack, the contractor we ended up hiring, was not the cheapest, but he wasn’t the most expensive. We decided to move forward with him because we gained a level of trust with him and knew he did quality work for mutual friends and family members. Jack won me over when I called him about five times within two days, asking him what probably seemed like simple, and more than likely, dumb questions. To Jack’s credit, however, he never lost his patience with me or made me feel silly for asking them. He was willing to make sure my mind was at ease, knowing this was not something I was an expert in. Although the process has been stressful at times, Jack has kept us in the loop the entire time, been extremely honest and overall, has done a phenomenal job building out our basement to how we had envisioned. 

As our basement is in the final stages of completion, I couldn’t help but take a step back and realize how many similarities existed with our home renovation and how we work together with clients at The Center. Over our 30+ year history, in my opinion and experiences, the clients that have the most potential success are those who realize that investing and financial planning is not an area of expertise or something they want to spend free time on. They value delegating, have the desire to hire a professional they trust and know we will be with them throughout each step of life to help them achieve their personal and financial goals. One of the best pieces of advice I was ever given was to always identify and accept the things you are not an expert in, and hire a professional to do the work right for you. I firmly believe those who find the most success in life are masters at this. By doing so, it allows us to focus more energy on the areas we are truly passionate about. Time is hard to come by, why not try to spend more of it on the things that create more meaning and happiness for us and our family? So give us a call when you’re ready to delegate, we’re always here to help and answer your questions!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

Any opinions are those of Nick Defenthaler, CFP®, and not necessarily those of Raymond James.

Live YOUR Plan™