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WP_Query Object ( [query] => Array ( [showposts] => 5 [post_type] => post [post_status] => publish ) [query_vars] => Array ( [showposts] => 5 [post_type] => post [post_status] => publish [error] => [m] => [p] => 0 [post_parent] => [subpost] => [subpost_id] => [attachment] => [attachment_id] => 0 [name] => [pagename] => [page_id] => 0 [second] => [minute] => [hour] => [day] => 0 [monthnum] => 0 [year] => 0 [w] => 0 [category_name] => [tag] => [cat] => [tag_id] => [author] => [author_name] => [feed] => [tb] => [paged] => 0 [meta_key] => [meta_value] => [preview] => [s] => [sentence] => [title] => [fields] => [menu_order] => [embed] => [category__in] => Array ( ) [category__not_in] => Array ( ) [category__and] => Array ( ) [post__in] => Array ( ) [post__not_in] => Array ( ) [post_name__in] => Array ( ) [tag__in] => Array ( ) [tag__not_in] => Array ( ) [tag__and] => Array ( ) [tag_slug__in] => Array ( ) [tag_slug__and] => Array ( ) [post_parent__in] => Array ( ) [post_parent__not_in] => Array ( ) [author__in] => Array ( ) [author__not_in] => Array ( ) [ignore_sticky_posts] => [suppress_filters] => [cache_results] => 1 [update_post_term_cache] => 1 [lazy_load_term_meta] => 1 [update_post_meta_cache] => 1 [posts_per_page] => 5 [nopaging] => [comments_per_page] => 50 [no_found_rows] => [order] => DESC ) [tax_query] => WP_Tax_Query Object ( [queries] => Array ( ) [relation] => AND [table_aliases:protected] => Array ( ) [queried_terms] => Array ( ) [primary_table] => wp_333_posts [primary_id_column] => ID ) [meta_query] => WP_Meta_Query Object ( [queries] => Array ( ) [relation] => [meta_table] => [meta_id_column] => [primary_table] => [primary_id_column] => [table_aliases:protected] => Array ( ) [clauses:protected] => Array ( ) [has_or_relation:protected] => ) [date_query] => [request] => SELECT SQL_CALC_FOUND_ROWS wp_333_posts.ID FROM wp_333_posts WHERE 1=1 AND wp_333_posts.post_type = 'post' AND ((wp_333_posts.post_status = 'publish')) ORDER BY wp_333_posts.post_date DESC LIMIT 0, 5 [posts] => Array ( [0] => WP_Post Object ( [ID] => 65047 [post_author] => 125924 [post_date] => 2022-08-04 08:27:06 [post_date_gmt] => 2022-08-04 13:27:06 [post_content] => By Ryan Yamada, Senior Wealth Planner When putting away for retirement, we often dream about all the things we’ll be able to do with that money – traveling, going out to eat, maybe trying new hobbies. Of course, there are always the everyday household expenses to account for in your post-retirement budget. But one budget line that doesn’t always get enough attention? Health care. If you think your health care costs will be similar to what you paid in your pre-retirement years, think again. Fidelity’s annual study found that the average 65-year-old couple retiring in 2022 will need $315,000 saved to cover their health care expenses throughout retirement.1 It’s a number that just keeps rising, too. This estimate is up $15,000 from last year’s study. Oh, and it doesn’t account for things like over-the-counter medications, dental care or long-term care costs. In other words, health care may be the single biggest purchase you make in retirement. Whether your retirement is still years away or you’re already retired, there are things you can do now that may help you pay for this major expense. Let’s dig into some ideas.Ways to Start Planning Early for Retirement Health Care Costs
Let’s start with the obvious: savings plans. Purpose-specific accounts, such as health savings accounts (HSAs), often have built-in tax incentives that can make them a worthwhile option. In some cases, HSAs can offer a triple tax-advantage – tax deductions for contributions, tax deferral during the accumulation period and tax-free distributions for qualified health-related expenses. Be sure to check what HSA deductions are available in your state before you jump in.2 Another option is adding insurance coverage that can help pay for some of the more significant health events. Before going down this path, it’s important to ask yourself what you’re trying to protect against. Here are two of the more standard coverage options that people can choose from.
- Critical illness coverage. Standalone critical illness policies can provide lump-sum or itemized benefits for things like cancer, heart attacks or strokes. Additionally, some life insurance policies have optional riders that can be added to help cover for these conditions or events.
- Extended care or long-term care coverage. Insuring for an extended care event or for long-term care can be done in a number of ways, including standalone policies and policy riders on life insurance or annuity contracts. With insurance companies making regular changes to these policies and how benefits are paid out, it's important to work with a local, independent insurance advisor who can help you find the best options for your situation.
What to Do When You’re Nearing Retirement
As you prepare to leave the workforce, it's important to get a handle on all of your expenses – that includes what health insurance options are available to you. Are you eligible for Medicare or do you need to buy coverage in the marketplace? (Hint: Take a look at your most recent paystub and consider your employer's health care subsidy. It might surprise you!) When do you need to sign up for Medicare so you won’t miss out on your open enrollment window and incur penalties? Additionally, have you thought about any procedures you might want to have done while employed? Planning out these expenses could be a great way to reduce costs post-retirement. If you’re retiring before 65, you probably won’t be eligible for Medicare yet, so you’ll want to figure out how to get coverage in the meantime. Some early retirees are lucky enough to be covered under their previous employer. Others may find part-time employers who will help to subsidize the cost. Other options may include health sharing or co-op plans, self-insuring or even moving abroad. As you approach Medicare open enrollment, you can start working with a trusted and independent Medicare expert. Be sure to choose someone who's familiar with the plans in your state. If you’re a “snow bird,” be sure to ask them about each of the states you plan to reside in, as coverage needs can change from state to state. Once you’re enrolled in Medicare, you should decide whether to sign up for a Supplement or Medicare Advantage plan or purchase dental, vision or long-term care coverage. Be sure to look at how all these plans work together to determine your maximum out-of-pocket costs. Then, you can build those costs into your retirement income plan.Preparing for the Unknown
Now that you’ve retired, you can only hope that all your careful preparations will meet your needs. But the one constant in life is unpredictability. If a time comes when you need more money than you’ve put away or something arises that you’re not covered for, there are additional strategies to consider. First, don’t panic. Then, call your financial advisor. They’ll be able to provide professional guidance based on your own specific situation. If you don’t already have an advisor, we can help you find one in your area. 1 “How to plan for rising health care costs,” Fidelity. May 25, 2002. https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs 2 The Finance Buff, “California and New Jersey HSA Tax Return Special Considerations.” December 4, 2018. https://thefinancebuff.com/california-new-jersey-hsa-tax-return.html#:~:text=Because%20the%20state%20of%20California%20does%20not%20recognize,gross%20pay%20for%20calculating%20the%20federal%20tax%20withholdings. [post_title] => Paying for Health Care in Retirement [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => paying-for-health-care-in-retirement [to_ping] => [pinged] => [post_modified] => 2022-08-04 08:33:09 [post_modified_gmt] => 2022-08-04 13:33:09 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?p=65125 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [1] => WP_Post Object ( [ID] => 65033 [post_author] => 12175 [post_date] => 2022-08-02 10:06:37 [post_date_gmt] => 2022-08-02 15:06:37 [post_content] => By Jamie Hopkins, Managing Director, Wealth Services Sonu Varghese, Director, Investment Platforms; and Ryan Detrick, Chief Market Strategist, contributed to this report. Senate Democrats have reached a general agreement on a bill to address climate change, taxes, health care, inflation and the deficit, according to a White House statement. This agreement came as a surprise to many after the Build Back Better Act of 2021 was unable to gain enough traction in the Senate. But after months of negotiations, Senate Democrats have released a text of the bill, 725 pages, outlining the new spending and tax revenue provisions. The bill is not yet finalized, though it appears lawmakers are motivated to take action before the midterm elections. And because Democrats plan to pass the bill through budget reconciliation, it can avoid a filibuster and pass in the Senate with a simple majority. The Senate plans to address the bill next week before the Senate breaks. The bill would then need to pass through the House before it lands on President Joe Biden’s desk for a signature. The major provisions of this bill include:- Installing a 15% minimum corporate tax revenue for certain large firms
- Medicare and prescription drug reform
- Spending to increase IRS enforcement and efficiency to enable more audits of companies and high-income individuals and to cut back on fraud
- Closing the carried interest loophole
- Lowering drug and health care costs through expansion of the Affordable Care Act
- Expansion of Medicare Part D Low Income Subsidies
- Tax credits for electric cars and other energy investments
- Investments into clean and renewable energy and environmental issues

S&P 500 Earnings Are Likely to Moderate
Based on what we’re seeing so far, we anticipate that S&P 500 earnings could climb 10% this year. While this might not match the astonishing 50% rebound we saw last year, the moderation in growth shouldn’t be taken as bad news. After all, last year’s growth benefited from easy comparisons to quarters heavily affected by the COVID-19 pandemic. This year, the comparisons are far tougher. Not only was the economy more open last year, but those quarters benefited from consumers making up for low spending in 2020 and from large amounts of government aid. Two sectors that could skew earnings are energy and retail, primarily due to inflation and supply chain concerns. Earnings-per-share may be pushed higher if energy stocks report big gains due to higher prices, but short-term earnings shocks upward aren’t as valuable as margin or sales growth that can be sustained for long periods. And supply chain issues may continue causing headaches for the big box retailers. We’ll be watching both of these areas closely.Valuations Could Move to a More Normal Range
The decline in the equity market pushed valuations down to levels in line with the period between 2015 and 2020. The difference is that interest rates are much higher today – and that tends to push fair price-to-earnings values lower. While uncertainty is a bigger challenge to markets, valuations could rise if other factors move in the right direction.Q3 2022’s Five Big Risks
Each quarter, we identify five big risks we think will affect markets. Here’s what we see as potential challenges to look out for in the third quarter of 2022:- Inflation: Will the effects of low interest rates, excessive fiscal stimulus and supply constraints make the inflation surge too strong to be controlled? The populace seems very worried about inflation.
- Recession: Will the Federal Reserve raise rates too high and push the economy into a recession?
- Virus variants: Will virus mutations undo the economic recovery? Many people have arrived at their new normal. Some are still taking their last steps to a new normal. A more powerful COVID variant could undo some of those gains.
- Russia: Putin’s decision to invade Ukraine provided a stark reminder of a world filled with people of ambition and a desire for power. Escalation remains the biggest market risk, followed by collateral damage to the European economy.
- Investor behavior: Will the return of risk scare people out of the market? Markets rose more than 10% annually during the Cold War even amid the strife and uncertainty of the free world’s conflict with Communism. History offers encouragement to stay invested.
Are We Due for an Upswing?
Only time will tell if we’ve hit bottom yet. But from our view, the signs are pointing to the beginnings of a recovery. Markets have already gone down, and much of the bad news is reflected in prices. Inflation, big rate hikes and Russian aggression can get worse, but they aren’t going to be new problems in this cycle. Inflation seems to be moderating, and some data points driving inflation are dropping. Energy prices recently fell. Unfilled positions are starting to decline. And other data show some slowing inflation pressure. Historically speaking, we’re in the worst year for markets in the four-year presidential cycle. The “honeymoon period” with a new administration is wearing off, which often leads to uncertainty. And there has been extra uncertainty this year – with more people mistakenly conflating their investments with their political views. As we get closer to November, uncertainty should begin to wane. And what about talk of recession? The jobs data indicate it’s unlikely this year. The future may be more challenging, but we aren’t there yet. Regardless of the short-term economic trend, it’s rational to have faith in a system that has worked so well for long-term investors. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing. The views stated are not necessarily the opinion of Cetera Advisor Networks and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. [post_title] => Quarterly Market Outlook: What Lies Ahead for the Third Quarter of 2022? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => quarterly-market-outlook-what-lies-ahead-for-the-third-quarter-of-2022 [to_ping] => [pinged] => [post_modified] => 2022-07-27 11:03:40 [post_modified_gmt] => 2022-07-27 16:03:40 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?p=65100 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 64989 [post_author] => 182131 [post_date] => 2022-07-19 14:47:37 [post_date_gmt] => 2022-07-19 19:47:37 [post_content] => By Craig Lemoine, Director of Consumer Investment ResearchThe four elements of effective executive compensation plans
Executive compensation plans require knitting together four quadrants to form a total compensation and benefit strategy: direct compensation and benefits, short-term (annual) bonuses and incentives, longer-term bonuses and incentives, and special retirement plans. Organizational structure, size, fundamental economic cycles and industry norms dictate the magnitude and offering of each quadrant.
Direct Compensation & Benefits |
Short-Term (Quarterly/Annual) Bonuses and Incentives |
Longer-Term Bonuses and Incentives |
Nonqualified Defined Contribution and Split Dollar Life Insurance Plans |
Direct Compensation and Benefits
These generally start with a strong salary and benefits. Salaries are typically determined by an executive compensation committee and take into consideration industry salary comparisons, annual revenue and sales growth. In addition to a base salary executives receive benefits that go far and above those offered to non-key employees. Employee benefits, such as health insurance or group life insurance, generally provide tax deductions to the employer. Executive benefits are designed to differentiate between classes of employees and lose some of their tax deductibility and shine. Executive benefits can include company-provided vehicles, housing stipends, extensive moving expenses, access to a corporate jet, country club memberships, sporting-event seating, executive dining, and supplemental disability, life, healthcare and wellness plans. These benefits can be critical in stakeholder management and building financial success.Short-Term (Quarterly/Annual) Bonuses and Incentives
These incentives can help align executive behavior with organizational goals and performance. Short-term cash bonuses can be tied to shareholder goals – such as share price, revenue or profit metrics – and/or organizational values. Cash compensation is also tied to ESG measures, employee retention, community involvement or other mission-driven metrics. Attractive short-term incentives can nudge behavior and help an executive drive more than financial performance.Longer-Term Bonuses and Incentives
Often given in the form of stock bonus plans, these incentives prioritize retention while aligning behavior with long-term organizational and shareholder objectives. These plans are generally stock based with vesting restrictions rewarding organizational financial health and time spent with an organization. Two popular long-term stock bonus strategies are incentive stock options (ISOs) and restricted stock units (RSUs). ISOs are frequently offered to executives of public or soon-to-go-public private companies. An ISO allows the executive to purchase stock at the granted option price. ISOs are statutory and must be exercised within ten years of the grant date. ISOs offer a favorable tax effect to executives who hold the ISO for at least one year before exercising, then hold the underlying shares an additional twelve-months. ISOs frequently have three-year vesting schedules, meaning if an executive leaves an organization before ISOs vest, they lose the options. Similar to some other forms of executive compensation, the employer may not receive a tax deduction on ISOs. ISOs may vest upon death or disability. Assume Camille is the CFO at Zippy Drone Company. She was hired January 1, 2020 and granted 1,000 Incentive Stock Options at $10 per share. The options have a three-year cliff-vesting period, meaning Camille will be able to exercise these and buy 1,000 shares of Zippy at $10 per share on or after January 1, 2023. If on January 2, 2023 Zippy Drone Company shares are priced at $100 a share, Camille can exercise the ISOs and purchase the shares for $10,000. As long as Camille holds this $100,000 position for one year, she can then sell the entire position as a long-term capital gain and take advantage of more favorable tax rates. If Camille leaves prior to the option vesting date she forfeits this portion of her compensation. Exercising the ISO may trigger an Alternative Minimum Tax event. ISOs have become less popular in the last decade, as companies must book them as expenses the year they are issued. As an alternative, many businesses have started offering RSUs instead. RSUs grant an executive shares of stock, with either a cliff- or a grated-vesting schedule. With a cliff-vesting schedule RSUs are available to sell after they are vested. Executives do not receive dividends or voting rights on RSU shares until they vest, and RSUs are forfeited if the executive leaves an organization prior to being vested. RSUs may vest on death or disability. Assume Bianca is the CEO of Zippy Drone Company. She was hired January 1st of 2020 and granted 1,000 RSUs at $10 per share. These RSUs have a four-year grated vesting schedule, with 25% of RSUs vesting each year. Bianca will receive 250 shares every year. She must include the market value of these shares as income as they are delivered to her. Once delivered she is free to hold or sell the shares. Organizations make additional grants of ISOs and RSUs. In our earlier example Camille may receive an additional 1,000 ISO grants annually, Bianca annual RSU awards. Additional grants and awards keep executives targeting long-term performance goals and encourage retention.Nonqualified Defined Contribution Plans and Split Dollar Life Insurance
These provide the ability to thoughtfully prepare for an executive’s eventual retirement or departure from the company. Deferred compensation plans can benefit both the employer and highly paid employee by deferring income into future years. Some traditional qualified retirement plans, such as 401(k) Plans and SIMPLE IRAs, allow employees to defer wages into tax favored accounts. These accounts work well for most employees, but all have limitations that might make them fall short for highly paid executives. In 2022 the most an employee can defer into a 401(k) plan is $20,500 ($27,000 if an employee is 50 or older). A SIMPLE plan allows a $14,000 deferral ($17,000 if an employee is 50 or older). But when an executive earns close to a million dollars annually, setting $20,500 aside annually falls short. Nonqualified Deferred Compensation Plans (NQDCP) are formal agreements allowing an executive to defer a much larger portion of their salary to a future date. An NQDCP can defer salary and cash bonuses giving an executive great flexibility in retirement savings. An NQDCP must be in writing, specifying the amount paid, payment schedule and triggering events (such as a retirement age) that will distribute plan assets. Nonqualified compensation plans offer similar savings vehicles to 401k plans (employer stock, mutual fund options, stock and bond options and fixed accounts). Distributions are taxable to the employee, much like a 401(k) plan. However these plans do carry some additional risks. Plan assets are considered general assets of the employer and are subject to creditor risk. Accounting requirements can be onerous and funds cannot be used for non-triggering events. Additionally, the employer can customize the plan and limit the plan offering to specific classes of employees rather than all employees. Assume Nellie is the CMO of Zippy Drone Company. Her base pay is $600,000 annually. Nellie defers $20,000 into the Zippy 401(k) plan but is worried about her future retirement. Assuming Zippy has a Nonqualified Deferred Compensation Plan Nellie could Contribute another $200,000 into that plan. Both plans can have similar retirement funding options. Zippy Drone Company benefits Lastly, executive compensation plans may include split-dollar life insurance. Split-dollar life insurance is a way for an executive to receive life insurance coverage leveraging employer dollars and premium payments. Employers are able to offer up to $50,000 of group life insurance to all employees and deduct the premiums. Executives looking for additional cash-value insurance protection and growth can benefit from split dollar plans. Split dollar life insurance takes two forms:- Economic Benefit Arrangement. With an economic benefit arrangement the employer owns the policy, pays the premium but allows the executive to appoint a beneficiary who would receive a death benefit if the executive died prematurely. The executive will have an income tax liability to the extent of the death benefit, and may be able to borrow against the cash value of the policy based on the nature of the agreement.
- Loan Agreement. In a loan agreement split dollar plan the employee owns the policy and employer pays the premiums in the form of loans to the employee. The employee provides a collateralized interest back to the employer to recover loan proceeds. In the event of death or retirement the employee owns the policy and employer is reimbursed.
Get Professional Advice on Executive Compensation Plans
Taken together, these financial tools allow organizations to build executive compensation plans that can attract, retain and reward high value employees. Compensation can be tied to performance, values and deferred to encourage retention. Have questions? Your financial advisor is here to help – whether you are the employer or the employee. Talk to your advisor today, or contact us if you are looking for a professional advisor in your area. The hypothetical investment results are for illustrative purposes only and should not be deemed a representation of past or future results. Actual investment results may be more or less than those shown. This does not represent any specific product [and/or service]. Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. [post_title] => Culture From the Top Down: Executive Compensation Plans Explained [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => culture-from-the-top-down-executive-compensation-plans-explained [to_ping] => [pinged] => [post_modified] => 2022-07-19 15:06:11 [post_modified_gmt] => 2022-07-19 20:06:11 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?p=65085 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 64954 [post_author] => 182131 [post_date] => 2022-07-12 14:33:31 [post_date_gmt] => 2022-07-12 19:33:31 [post_content] => By Craig Lemoine, Director of Consumer Investment ResearchRegistration Standards for Financial Advisors
The first step in the competency stairway is regulatory compliance. The financial service profession is regulated at the federal or state level, and professionals who sell products or provide financial advice to clients for a fee are required to meet minimum required regulatory standards. If a financial service professional represents an insurance company, they must be legally appointed by that company as an agent. Before being appointed, that professional will have to pass one or more state insurance exams, agree to a code of ethics, and maintain their license annually through continuing education. The insurance company they work with must register in states where it does business and meet statutory requirements. The securities industry weaves the Financial Industry Regulatory Authority (FINRA) and state securities commissioners into a regulatory quilt, also requiring stockbrokers and their registered agents to pass registration exams and complete annual compliance training. Investment adviser representatives (IARs) who charge clients fees are also required to take their licensing exams, among many other legal requirements. Registration exams are required to talk to a customer or client. They may be challenging at the time but are the bare minimum of competence. They are the first step on the road to becoming a professional.Professional Certifications for Financial Advisors
Professional certifications and degrees, or the letters that come after a name, represent additional steps an advisor has taken on their professional journey. Letters behind an advisor’s name can be delineated into three categories: conferred degree abbreviations, broad financial planning designations and niche or specialized designations. Others, unfortunately, are false signals and are backed by questionable rigor and merit.Conferred Degrees
Conferred degrees are generally issued by accredited educational institutions. Degree quality varies; an MBA from Yale was hopefully more in-depth than one from an online university with few admission requirements and an unknown reputation. Ask financial planners about their degrees, where they are from, what they are in and when they earned the degree. Degrees do not require continuing education and rarely any ongoing ethical commitment. Knowledge earned in school fades over time, even for the best of us. In the financial planning profession, graduate degrees are generally listed behind a name, while undergraduate degrees tend to be omitted. Common degrees used in financial planning include: MBA – Master of Business Administration. An MBA prepares students for general success in business, running established or start-up enterprises. MBAs may be focused on leadership or entrepreneurism. MSFS – A Master of Science in Financial Services. An MSFS is a graduate degree more focused than an MBA and may target specific elements of financial services. Most MSFS programs will contain financial planning classes within their curriculums. Ph.D. – Doctor of Philosophy is a graduate degree awarded in the sciences, branches of economics and social or behavioral areas. Someone with a Ph.D. degree is trained to research and has a deep knowledge of a specific discipline. DBA – Doctor of Business Administration is a graduate degree awarded by a business college. A DBA is trained in research and has a deep knowledge of business entities and practices. JD/Esquire – Juris Doctor (JD) is awarded by a law school, esquire is an honorific used to signify someone has passed a state bar exam. Attorneys play a critical role in the financial planning process, particularly in estate planning. They can draft wills, trusts and legal documents as well as represent clients during life transitions. LLM – Master of Laws, is a graduate qualification in the field of law. In financial services, you might encounter an LLM in tax or estate planning.Broad Based Financial Planning Designations
Broad financial planning designations are different than degrees. Designations generally require experience, fulfilling courses, examination or some measure of competence, an ethical pledge and continuing education. Three broad financial planning designations include: CFP® - CERTIFIED FINANCIAL PLANNER™. Using the CFP® designation behind your name requires three years of experience, taking courses in financial planning, investments, risk management, estate planning, retirement planning, education planning and psychology. Candidates must pass a capstone class, comprehensive exam and agree to a rigorous code of ethics pledging to act as a fiduciary when engaging in the financial planning process. The CFP® designation was first issued in the 1970s and is recognized today as an industry standard in financial planning certifications. A CFP® professional is required to earn an undergraduate degree and take 40 hours of continuing education every two years, a portion of which must be in ethics. The CFP® designation is administered by the CFP®, Board and CFP® professionals who break their ethical obligations are subject to sanctions and public discipline.i ChFC® – Chartered Financial Consultant. Using the ChFC® designation requires three years of experience and completing a rigorous combination of courses in financial planning, including an advanced investment course, income tax classes, planning for families with special needs and solving applied case studies. Candidates must pass a capstone class but are not required to complete a comprehensive exam or pledge to act as a fiduciary. ChFC® professionals must agree to act according to a code of ethics and maintain recertification on an annual basis. The ChFC® designation is administered through The American College of Financial Services.ii PFS – Personal Financial Specialist. Only a Certified Public Accountant (CPA) can hold a PFS designation. The PFS requires an accountant to earn 75 to 105 hours of financial service focused education across 12 disciplines and pass corresponding exams.iii The PFS is administered through the ACIPA, requires an unrevoked CPA permit ongoing and 20 hours of annual continuing education. CPA – Certified Public Accountant. While not a general financial planning designation in a traditional sense, CPAs are required to take college-level accounting courses, often earn a degree and pass a rigorous four-part comprehensive exam. CPA professionals often focus on auditing, tax or accounting functions.Specialized Financial Planning Designations
Specialized financial planning designations are as plentiful as stars in the sky. Some shine bright, others are new and bold and a sad few twinkle and grow dim. This summary considers designations by topic frequently used by financial advisers and omits those used in the property-casualty, insurance operations and underwriting.iv There are hundreds of specialized designations. This list includes some of the better-known industry designations but is not intended to be comprehensive.Retirement
CRPC® – Chartered Retirement Planning Counselor™. The CRPC is a designation for experienced advisers who are focused on retirement planning needs for individuals. The CRPC sets a focus on pre- and post-retirement income needs and contains some investment and estate content. The CRPC is managed by The College for Financial Planning.v RICP® – Retirement Income Certified Planner™ is a three-course program in retirement planning offered by The American College of Financial Services. The RICP was developed by over 45 retirement and academic professionals. A RICP® professional has training in identifying retirement risks, sources of retirement income and managing retirement income.vi RMA® - Retirement Management Adviser™ is a comprehensive retirement planning designation offered through the Investments & Wealth Institute. The RMA is a strong program teaching advisers to take an in-depth look at retirement and teaches strategies through a client’s retirement story. CSA – Certified Senior Adviser is a designation that can be earned over a three-day class. This designation was discussed in the financial media as an example of a less rigorous retirement designation when compared to alternatives.viiLife Insurance
CLU – Chartered Life Underwriter™ is one of the oldest financial service designations, first being granted in 1928. The CLU is a comprehensive insurance designation requiring certificates to study multiple insurance lines and take a deep dive into life insurance. The CLU® remains robust and helps distinguish an insurance professional. The CLU® is managed by The American College of Financial Services. LUTCF® - The Life Underwriter Training Council Fellow is a designation for new insurance agents. A three-course designation, the LUTCF® covers the basics of risk management. The LUTCF® is managed jointly by the College of Financial Planning and the National Association of Insurance and Financial Advisers (NAIFA).viiiInvestments and Wealth Management
CFA® – Chartered Financial Analyst™ is a premier designation in managing wealth. The CFA® designation requires years of study, passing multiple difficult examinations and is well respected among investment and wealth management professionals. The CFA® is a global designation overseen by the CFA® institute.ix CIMA® – The Certified Investment Analyst™ designation is a practical investment management designation and portfolio construction designation held by investment consultants. The CIMA® is commonly held by client-facing investment advisers and contains strong portfolio theory and behavioral finance elements. The CIMA® is overseen by the Investments & Wealth Institute.xOther Specialized Designations
EA® – An Enrolled Agent is a federally authorized tax practitioner who can assist and represent a client’s tax return. There are multiple study programs to become an enrolled agent, but they all lead to a common outcome. Enrolled Agents have a strong understanding of our tax-code and how financial planning strategies can complement unique tax situations. EAP® – The Accredited Estate Planner designation is held by financial service professionals who have a deep understanding of the estate planning process. The AEP® is administered by the national association of estate planners and councils and requires extensive education in estate and financial planning. When evaluating a financial planner, consider designations as additional steps up the competency ladder. Financial service designations are not required to give advice or sell insurance. They are optionally sought out by advisers who are furthering their scope of knowledge to better help their clients. After becoming Registered financial professionals generally pursue a generalist certification (CFP®, ChFC® or PFS®) and then move into more focused designations. If your adviser has a designation that is not on this list, ask them about it. Do a quick Google search. There are hundreds of quality designations in the financial service world, and most of them showcase competency and professionalism. Craig Lemoine is not affiliated or registered with Cetera Advisor Networks LLC. Any information provided by Craig Lemoine is in no way related to Cetera Advisor Networks LLC or its registered representatives. [post_title] => What Do Financial Adviser Designations Mean? What are the Letters after a Name? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => what-do-financial-adviser-designations-mean-what-are-the-letters-after-a-name [to_ping] => [pinged] => [post_modified] => 2022-07-19 10:26:01 [post_modified_gmt] => 2022-07-19 15:26:01 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?p=65052 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 5 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 65047 [post_author] => 125924 [post_date] => 2022-08-04 08:27:06 [post_date_gmt] => 2022-08-04 13:27:06 [post_content] => By Ryan Yamada, Senior Wealth Planner When putting away for retirement, we often dream about all the things we’ll be able to do with that money – traveling, going out to eat, maybe trying new hobbies. Of course, there are always the everyday household expenses to account for in your post-retirement budget. But one budget line that doesn’t always get enough attention? Health care. If you think your health care costs will be similar to what you paid in your pre-retirement years, think again. Fidelity’s annual study found that the average 65-year-old couple retiring in 2022 will need $315,000 saved to cover their health care expenses throughout retirement.1 It’s a number that just keeps rising, too. This estimate is up $15,000 from last year’s study. Oh, and it doesn’t account for things like over-the-counter medications, dental care or long-term care costs. In other words, health care may be the single biggest purchase you make in retirement. Whether your retirement is still years away or you’re already retired, there are things you can do now that may help you pay for this major expense. Let’s dig into some ideas.Ways to Start Planning Early for Retirement Health Care Costs
Let’s start with the obvious: savings plans. Purpose-specific accounts, such as health savings accounts (HSAs), often have built-in tax incentives that can make them a worthwhile option. In some cases, HSAs can offer a triple tax-advantage – tax deductions for contributions, tax deferral during the accumulation period and tax-free distributions for qualified health-related expenses. Be sure to check what HSA deductions are available in your state before you jump in.2 Another option is adding insurance coverage that can help pay for some of the more significant health events. Before going down this path, it’s important to ask yourself what you’re trying to protect against. Here are two of the more standard coverage options that people can choose from.- Critical illness coverage. Standalone critical illness policies can provide lump-sum or itemized benefits for things like cancer, heart attacks or strokes. Additionally, some life insurance policies have optional riders that can be added to help cover for these conditions or events.
- Extended care or long-term care coverage. Insuring for an extended care event or for long-term care can be done in a number of ways, including standalone policies and policy riders on life insurance or annuity contracts. With insurance companies making regular changes to these policies and how benefits are paid out, it's important to work with a local, independent insurance advisor who can help you find the best options for your situation.
What to Do When You’re Nearing Retirement
As you prepare to leave the workforce, it's important to get a handle on all of your expenses – that includes what health insurance options are available to you. Are you eligible for Medicare or do you need to buy coverage in the marketplace? (Hint: Take a look at your most recent paystub and consider your employer's health care subsidy. It might surprise you!) When do you need to sign up for Medicare so you won’t miss out on your open enrollment window and incur penalties? Additionally, have you thought about any procedures you might want to have done while employed? Planning out these expenses could be a great way to reduce costs post-retirement. If you’re retiring before 65, you probably won’t be eligible for Medicare yet, so you’ll want to figure out how to get coverage in the meantime. Some early retirees are lucky enough to be covered under their previous employer. Others may find part-time employers who will help to subsidize the cost. Other options may include health sharing or co-op plans, self-insuring or even moving abroad. As you approach Medicare open enrollment, you can start working with a trusted and independent Medicare expert. Be sure to choose someone who's familiar with the plans in your state. If you’re a “snow bird,” be sure to ask them about each of the states you plan to reside in, as coverage needs can change from state to state. Once you’re enrolled in Medicare, you should decide whether to sign up for a Supplement or Medicare Advantage plan or purchase dental, vision or long-term care coverage. Be sure to look at how all these plans work together to determine your maximum out-of-pocket costs. Then, you can build those costs into your retirement income plan.Preparing for the Unknown
Now that you’ve retired, you can only hope that all your careful preparations will meet your needs. But the one constant in life is unpredictability. If a time comes when you need more money than you’ve put away or something arises that you’re not covered for, there are additional strategies to consider. First, don’t panic. Then, call your financial advisor. They’ll be able to provide professional guidance based on your own specific situation. If you don’t already have an advisor, we can help you find one in your area. 1 “How to plan for rising health care costs,” Fidelity. May 25, 2002. https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs 2 The Finance Buff, “California and New Jersey HSA Tax Return Special Considerations.” December 4, 2018. https://thefinancebuff.com/california-new-jersey-hsa-tax-return.html#:~:text=Because%20the%20state%20of%20California%20does%20not%20recognize,gross%20pay%20for%20calculating%20the%20federal%20tax%20withholdings. [post_title] => Paying for Health Care in Retirement [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => paying-for-health-care-in-retirement [to_ping] => [pinged] => [post_modified] => 2022-08-04 08:33:09 [post_modified_gmt] => 2022-08-04 13:33:09 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?p=65125 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [comment_count] => 0 [current_comment] => -1 [found_posts] => 328 [max_num_pages] => 66 [max_num_comment_pages] => 0 [is_single] => [is_preview] => [is_page] => [is_archive] => [is_date] => [is_year] => [is_month] => [is_day] => [is_time] => [is_author] => [is_category] => [is_tag] => [is_tax] => [is_search] => [is_feed] => [is_comment_feed] => [is_trackback] => [is_home] => 1 [is_privacy_policy] => [is_404] => [is_embed] => [is_paged] => [is_admin] => [is_attachment] => [is_singular] => [is_robots] => [is_favicon] => [is_posts_page] => [is_post_type_archive] => [query_vars_hash:WP_Query:private] => 6b5c18c1252b6c6a9f5f8613c74e0017 [query_vars_changed:WP_Query:private] => [thumbnails_cached] => [stopwords:WP_Query:private] => [compat_fields:WP_Query:private] => Array ( [0] => query_vars_hash [1] => query_vars_changed ) [compat_methods:WP_Query:private] => Array ( [0] => init_query_flags [1] => parse_tax_query ) [tribe_is_event] => [tribe_is_multi_posttype] => [tribe_is_event_category] => [tribe_is_event_venue] => [tribe_is_event_organizer] => [tribe_is_event_query] => [tribe_is_past] => )Senate Addresses Taxes, Deficit, Inflation, Health Care in Proposed Bill
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Already established in her career as an accountant for a large insurance firm, Caroline married a bit later, at 33. Today, she’s a financial controller for the same firm. Her spouse owns his own landscaping business. Caroline is the high-wage earner in the family.
Unfortunately, both women are now surprised to be facing a “gray” divorce: a divorce involving couples in their 50s or older. Each will need to make some tough choices as they deal with the emotional devastation of unraveling a long-term marriage. Although my focus as a financial planner is to help my clients find their financial footing during and after divorce, I also encourage clients to build a strong network of family and friends as well as a therapist or clergy person to offer critical emotional support during this time.
Read full article on Kiplinger.com
[post_title] => Emerging Financially Healthy After a Gray Divorce [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => emerging-financially-healthy-after-a-gray-divorce [to_ping] => [pinged] => [post_modified] => 2022-04-25 14:44:13 [post_modified_gmt] => 2022-04-25 19:44:13 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=news&p=64886 [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 53316 [post_author] => 55227 [post_date] => 2020-01-28 10:38:21 [post_date_gmt] => 2020-01-28 16:38:21 [post_content] => By Jamie HopkinsRoth conversions can be a powerful tax and retirement planning technique. The idea behind most Roth conversions is to take money from an IRA and convert it to a Roth IRA. Essentially, you’re paying taxes today instead of paying taxes in the future.
The Tax Cut and Jobs Act lowered taxes for many Americans and with the SECURE Act Roth IRAs became even more powerful as an estate planning vehicle to minimize taxes, so it’s a convenient time to take advantage of Roth conversions. However, Roth conversions can come with some issues. Before you engage in one, be aware of these common problems as it can be hard to undo the transaction.Conversions After 72
IRAs and Roth IRAs are both retirement accounts. It’s easy to assume Roth Conversions are best suited for retirement, too. However, waiting too long to do conversions can actually make the entire process more challenging. If you own an IRA, it’s subject to required minimum distribution rules once you turn 72, as long as you had not already reached age 70.5 by the end of 2019. The government wants you to start withdrawing money from your IRA each year and pay taxes on the tax-deferred money. However, Roth IRAs aren’t subject to RMDs at age 72. If you don’t need the money from your RMD to support your retirement spending, you might think, “I should convert this to a Roth IRA so it can stay in a tax-deferred account longer.” Unfortunately, that won’t work. You can’t roll over or convert RMDs for a given year. So, if you owe a RMD in 2020, you need to take it and you cannot convert it to a Roth IRA. Despite the fact you can’t convert an RMD, it doesn’t mean you can’t do Roth conversions after age 72. However, you need to make sure you get your RMD out before you do a conversion. Your first distributions from an IRA after 72 will be treated as RMD money first. This means, if you want to convert $10,000 from your IRA, but you also owe an $8,000 RMD for the year, you need to take the full $8,000 out before you do a conversion. Full article on ForbesFor a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice."
"Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. Converting from a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.
[post_title] => 3 Roth Conversion Traps To Avoid After The SECURE Act [post_excerpt] => Roth conversions can be a powerful tax and retirement planning technique. The idea behind most Roth conversions is to take money from an IRA and convert it to a Roth IRA. Essentially, you’re paying taxes today instead of paying taxes in the future. [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 3-roth-conversion-traps-to-avoid [to_ping] => [pinged] => [post_modified] => 2020-02-28 16:01:10 [post_modified_gmt] => 2020-02-28 22:01:10 [post_content_filtered] => [post_parent] => 0 [guid] => https://divi-partner-template.carsonwealth.com/?post_type=news&p=53316 [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 51325 [post_author] => 6008 [post_date] => 2019-12-06 10:26:33 [post_date_gmt] => 2019-12-06 16:26:33 [post_content] => By Jamie Hopkins People plan on having a good day, a good year, a good retirement and a good life. But why stop there? Why not plan for a good end of life, too? End of life or estate planning is about getting plans in place to manage risks at the end of your life and beyond. And while it might be uncomfortable to discuss or plan for the end, everyone knows that no one will live forever. Estate planning and end of life planning are about taking control of your situation. Death and long-term care later in life might be hard to fathom right now, but we can’t put off planning out of fear of the unknown or because it’s unpleasant. Sometimes it takes a significant event like a health scare to shake us from our procrastination. Don’t wait for life to happen to you, though. Full article on Kiplinger [post_title] => 10 Common Estate Planning Mistakes (and How to Avoid Them) [post_excerpt] => Estate planning and end of life planning are about taking control of your situation. Death and long-term care later in life might be hard to fathom right now, but we can’t put off planning out of fear of the unknown or because it’s unpleasant. Don’t wait for life to happen to you, though. [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 10-common-estate-planning-mistakes-and-how-to-avoid-them [to_ping] => [pinged] => [post_modified] => 2020-02-28 16:02:24 [post_modified_gmt] => 2020-02-28 22:02:24 [post_content_filtered] => [post_parent] => 0 [guid] => https://divi-partner-template.carsonwealth.com/?post_type=news&p=51325 [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 63308 [post_author] => 273 [post_date] => 2019-11-11 16:27:38 [post_date_gmt] => 2019-11-11 21:27:38 [post_content] => By Jamie HopkinsEveryone’s heard the stories of celebrities who died without a proper estate plan in place. It’s been a hot topic in the last few years with Prince and Aretha Franklin serving as unfortunate faces of the phenomenon. But it’s not just freewheeling entertainers. Abraham Lincoln – a lawyer by trade – didn’t have one either, which leads me to say something you’ve probably never heard anyone say: don’t be like Abraham Lincoln.
Most people want to plan for a good life and a good retirement, so why not plan for a good end of life, too? Let’s look at four ways you can refine your estate plan, protect your assets and create a level of control and certainty for your loved ones.1. Review Beneficiary Designations
Many accounts can pass to heirs and loved ones without having to go through the sometimes costly and time-consuming process of probate. For instance, life insurance contracts, 401(k)s and IRAs can be transferred through beneficiary designations – meaning you determine who you want to inherit your accounts after you die by filing out a beneficiary form. You can often name successors or backup beneficiaries, and even split up accounts by dollar amount or percentages between beneficiaries with these forms. Full article on Forbes [post_title] => 4 Ways To Improve Your Estate Plan [post_excerpt] => Most people want to plan for a good life and a good retirement, so why not plan for a good end of life, too? Let’s look at four ways you can refine your estate plan, protect your assets and create a level of control and certainty for your loved ones. [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 4-ways-to-improve-your-estate-plan [to_ping] => [pinged] => [post_modified] => 2020-02-28 17:02:59 [post_modified_gmt] => 2020-02-28 22:02:59 [post_content_filtered] => [post_parent] => 0 [guid] => https://retirementextender1.carsonwealth.com/insights/news/4-ways-to-improve-your-estate-plan/ [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 5 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 64691 [post_author] => 90034 [post_date] => 2022-05-26 08:18:44 [post_date_gmt] => 2022-05-26 13:18:44 [post_content] => By Erin Wood, Senior Vice President, Financial Planning and Advanced Solutions Just a few years ago, Rose retired with a decent-sized 401(k). With some careful budgeting and a part-time job, her retirement finances were on track. Rose was looking forward to traveling, reigniting her passion for photography and spending time with her son and her grandkids. The pandemic changed everything. Her son contracted COVID-19 in the early days of the pandemic. His health deteriorated quickly and he died at only 35 years old. He didn’t have life insurance. A gig worker without a 401(k), he had very minimal retirement savings. Rose’s grandchildren, ages 2 and 6, joined the more than 140,000 U.S. children under the age of 18 who lost their primary or secondary caregiver due to the pandemic from April 2020 through June 2021. That’s approximately one out of every 450 children under age 18 in the United States. Rose’s ex-daughter-in-law battles drug addiction and had lost custody of the kids during the divorce, so Rose became the children’s primary caregiver. She quickly discovered that caring for young children as an older adult is more physically challenging than when she raised her son, so she made the difficult decision to leave her part-time job to have the energy to care for her active grandchildren. She wants to do everything for these kids who have lost so much — but it puts her financial security at risk. Sadly, she is far from alone. Read the full article [post_title] => COVID’s Financial Toll Isn’t What You Think [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => covids-financial-toll-isnt-what-you-think [to_ping] => [pinged] => [post_modified] => 2022-05-26 08:33:22 [post_modified_gmt] => 2022-05-26 13:33:22 [post_content_filtered] => [post_parent] => 0 [guid] => https://carsonhub.wpengine.com/?post_type=news&p=64940 [menu_order] => 0 [post_type] => news [post_mime_type] => [comment_count] => 0 [filter] => raw ) [comment_count] => 0 [current_comment] => -1 [found_posts] => 6 [max_num_pages] => 2 [max_num_comment_pages] => 0 [is_single] => [is_preview] => [is_page] => [is_archive] => [is_date] => [is_year] => [is_month] => [is_day] => [is_time] => [is_author] => [is_category] => [is_tag] => [is_tax] => [is_search] => [is_feed] => [is_comment_feed] => [is_trackback] => [is_home] => 1 [is_privacy_policy] => [is_404] => [is_embed] => [is_paged] => [is_admin] => [is_attachment] => [is_singular] => [is_robots] => [is_favicon] => [is_posts_page] => [is_post_type_archive] => [query_vars_hash:WP_Query:private] => 8bbea74eca9b0e937ac286f0d22d32a8 [query_vars_changed:WP_Query:private] => [thumbnails_cached] => [stopwords:WP_Query:private] => [compat_fields:WP_Query:private] => Array ( [0] => query_vars_hash [1] => query_vars_changed ) [compat_methods:WP_Query:private] => Array ( [0] => init_query_flags [1] => parse_tax_query ) [tribe_is_event] => [tribe_is_multi_posttype] => [tribe_is_event_category] => [tribe_is_event_venue] => [tribe_is_event_organizer] => [tribe_is_event_query] => [tribe_is_past] => )
In the News
In the News
COVID’s Financial Toll Isn’t What You Think
Emerging Financially Healthy After a Gray Divorce
3 Roth Conversion Traps To Avoid After The SECURE Act
10 Common Estate Planning Mistakes (and How to Avoid Them)
4 Ways To Improve Your Estate Plan
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- The Consumer Price Index (CPI) was flat last month, and core inflation increased 0.3%. Both numbers were 0.2% lower than expected.
- Expectations for future interest rate hikes fell in response to the CPI report after the previous week’s strong jobs report prompted them to rise.
- Market breadth is improving; 80% of the S&P 500 is above its 50-day moving average.

- The U.S. economy created 528,000 net new jobs in July, more than doubling expectations for a 250,000 increase.
- Unemployment reached the pre-pandemic low of 3.5% last month, while wages rose 0.5%.
- Earnings are expected to have grown approximately 6.7% in July, but without energy stocks earnings have declined.


- The Federal Reserve raised rates 0.75% to a range of 2.25-2.50%.
- U.S. gross domestic product declined 0.9%, restrained by falling goods purchases and slower inventory growth.
- The S&P 500 gained 9.2% in July, its best month since COVID vaccine data was released in November 2020.


- The European Central Bank joined the inflation fight, raising rates 0.5%. Japan left rates unchanged.
- The United Kingdom continues to lead all G7 countries with a 9.4% inflation rate.
- Housing starts fell 2% last month as higher interest rates pushed demand lower.


- The Consumer Price Index jumped 1.3% in June, beating expectations. Inflation has now increased 9.1% in the last year.
- Retail sales surged 1.0% as higher prices and strong employment helped retail demand stay robust in the face of higher inflation.
- Chinese GDP fell 2.6% in the second quarter. Lockdowns and a weaker property market caused the Chinese economy to shrink.


- The Consumer Price Index (CPI) was flat last month, and core inflation increased 0.3%. Both numbers were 0.2% lower than expected.
- Expectations for future interest rate hikes fell in response to the CPI report after the previous week’s strong jobs report prompted them to rise.
- Market breadth is improving; 80% of the S&P 500 is above its 50-day moving average.



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Tax-loss harvesting is a strategy that lowers your taxable earnings after you sell taxable investments and use those losses to offset the gains you have to claim as income. It can also allow you to push your capital gains further out, allowing you to save on your taxes in future years when your tax bill might be higher. For example, if you sold some of your investments this year at a loss, but your portfolio is doing well, you can lower your taxable income by claiming that loss. Also, if your losses exceed your gains, you can claim up to $3,000 on your taxes to offset ordinary income. Let’s look at a specific, strategic and tax-efficient example. Say you have stock in Verizon that you want to sell and purchase stock in another cell phone company, AT&T. If you had a big loss in Verizon, you want to capture that loss while maintaining exposure to a cell phone company. Or, you might want to sell Verizon stock while it’s down to lower your tax footprint and soon after repurchase, because you believe it will rebound. A savvy investor might turn to either of those strategic scenarios. But before you move on this strategy, remember the wash sale rule.The Wash Sale Rule
Let’s talk about the wash sale rule for a minute. This Internal Revenue Service (IRS) rule prevents you from taking a tax deduction for a security sold in a wash sale. A wash sale occurs when you sell or trade securities at a loss and you also do three things within 30 days before or after the sale:
- Buy a substantially identical security
- Acquire substantially identical securities in a fully taxable trade
- Acquire a contract or option to buy substantially identical securities
Who Should Engage in Tax-Loss Harvesting?
Generally, tax-loss harvesting is ideal for people in higher tax brackets since the idea is to help lower tax bills. A group of researchers from MIT and Chapman University found that tax-loss harvesting yielded a tax alpha, or outperformance by using available tax-saving strategies, of 1.10% per year from 1926 to 2018. However, it could also be useful for people in a lower tax bracket, since you could carry those losses forward to times when you might have a higher tax bill, like if you get a higher-paying job or the government raises tax rates. Tax-loss harvesting will play a huge role in planning if we move into a higher-tax environment. Higher tax rates call for investors to pay closer attention to tax efficiency of their taxable accounts. There are certain situations in which you should consider tax-loss harvesting:- Your investments are subject to capital gains tax.
- You are able to use tax-deferred retirement plans to postpone paying taxes until you retire.
- You anticipate you’ll change tax brackets.
- You invest in individual stocks.
Questions to Ask Your Advisor About Tax-Loss Harvesting
If you don’t yet have an advisor, and you’re in the process of interviewing one, you should ask them to tell you about their process of rebalancing portfolios. They should explain to you how they do so and in what type of account they do so. Here are a few more questions you can ask:- Do you do tax-loss harvesting?
- How does tax-loss harvesting fit into your overall investment philosophy?
Connect With a Financial Advisor
While we tend to focus on tax-loss harvesting now at the end of the year, it could be a beneficial strategy all year, especially as we gear up to potentially enter a higher-tax era. But it’s imperative that you discuss this with your financial professional to determine the frequency and timing of tax-loss harvesting for your particular situation. Reach out to our team today to discuss your financial plan and how tax-loss harvesting can fit into your strategy. Kevin Oleszewski is not affiliated with Cetera Advisor Networks LLC. Any information provided by Kevin is in no way related to Cetera Advisor Networks LLC or its registered representatives. [post_title] => Any Time is Tax-Loss Harvesting Time [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => any-time-is-tax-loss-harvesting-time [to_ping] => [pinged] => [post_modified] => 2021-12-15 12:31:47 [post_modified_gmt] => 2021-12-15 18:31:47 [post_content_filtered] => [post_parent] => 0 [guid] => https://retirementextender1.carsonwealth.com/insights/monthly-newsletters/any-time-is-tax-loss-harvesting-time/ [menu_order] => 0 [post_type] => monthly-newsletters [post_mime_type] => [comment_count] => 0 [filter] => raw ) [1] => WP_Post Object ( [ID] => 64118 [post_author] => 6008 [post_date] => 2021-12-02 11:02:48 [post_date_gmt] => 2021-12-02 17:02:48 [post_content] => Many people have the idea that tax planning is only about paying less money right now, and that’s not the case. Tax planning is about paying less money over time. There are many avenues to do that. As we’re nearing the end of 2021, it’s prime time to get your finances in order for the upcoming tax season, and hopefully this article can help you figure out how to pay less money over time. In this article, we’ll focus on a few areas for your end-of-year tax planning: tax-loss harvesting and rebalancing, charitable giving, retirement plan contributions and Roth conversions.Tax-Loss Harvesting and Rebalancing
Rebalancing your portfolio in the most tax-efficient way is key. You want to make sure you are pairing up gains and losses. In other words, if you have gains in your portfolio, you should pair them with losses to offset or minimize your tax exposure. I recently wrote about this strategy, tax-loss harvesting, which is essentially a method that helps you lower your taxable earnings after selling taxable investments and using those losses to offset the amount of gains you have to claim as income. Tax-loss harvesting can also let you push your capital gains further out, allowing you to save on your taxes in future years when your tax bill might be higher.Charitable Giving
Giving directly to a charity is good for your soul, but maybe not for your tax bill, especially if you aren’t itemizing. You won’t get to deduct the full donation if you aren’t itemizing, but you’ll still get a $300 above-the-line deduction. Since the standard deduction for 2021 is so high – $25,100 for married filing jointly and $12,550 for single filers – more taxpayers have chosen to take it over itemizing deductions. CNBC reported that 16.7 million households claimed itemized deductions on their 2018 income tax returns, down from 46.2 million in the 2017 tax year. There are two avenues to explore charitable giving this time of year: establishing a donor-advised fund and making qualified charitable distributions from your IRA. A donor-advised fund allows you to bunch your charitable contributions this year so that you’ll be able to get a tax break. For example, you can bunch your charitable contributions for the next five years – say $10,000 a year – into a DAF and still be able to take the full tax deduction this year. This $50,000 donation will definitely get you over the standard deduction. If you want to get more in-depth on donor-advised funds, check out our blog post on DAFs and charitable remainder trusts. Qualified charitable distributions (QCDs), on the other hand, are good for people who have to take required minimum distributions (RMDs) but don’t need the money. QCDs allow you to donate $100,000 per taxpayer (so a married couple can donate $200,000) per year to a charity directly from your IRA if you’re over age 70½. The benefit here is you don’t have to pay income tax on that amount while also satisfying your RMD.Establish and Contribute to Retirement Accounts
If you’ve taken a break from contributing to your retirement account, now is the time to catch up if you are able. The maximum amount you could donate this year is $19,500. If you are a small business owner and have yet to set up a retirement account, doing so by the end of the year is a good idea. First, you’ll want to explore which option is right for you. For example, if you don't foresee yourself going over the $6,000 contribution limit for traditional IRAs, that would be a good option for you. But if you anticipate you’ll contribute more than that, the SEP IRA or solo 401(k) are also both viable vehicles. These two options have different rules. For example, SEP IRAs are more cost-effective to set up and you can contribute 25% of your qualified business income or $58,000, whichever is less for 2021. So for example, if you’re self-employed and your qualified business income is $100,000, you can donate $25,000. With a solo 401(k), the contribution limit is $58,000 plus a $6,500 catch-up contribution or 100% of earned income, whichever is less for 2021. So long as you establish your solo 401(k) by year end (December 31, 2021), you have until your company’s tax return deadlines (including extensions) to make contributions.Roth Conversions
Roth conversions are when you transfer money from a traditional IRA and convert it to a Roth IRA, which is a taxable event. Essentially, you would pay taxes on that conversion as it becomes part of your taxable income now, versus paying taxes on that money in the future. Let’s look at an example: Say you have $50,000 in an IRA and you want to transfer it into a Roth IRA. Your taxable income will now be $50,000 more than it would have been before. You and your financial professional need to evaluate whether this would be a good idea for your situation. There are many benefits to doing the Roth conversion. First, we don’t know what is going to happen with taxes in the future, so if you anticipate you’ll be in a higher tax bracket next year, you can do your Roth conversion now and take advantage of this low-tax-rate environment. Second, Roth IRAs don’t have RMDs, so you won’t be required to take from this bucket in retirement. Also, you don’t have to pay taxes on the earnings from the Roth IRA if you meet certain IRS criteria. And since you’re contributing after-tax dollars, you can withdraw your contributions tax- and penalty-free. Lastly, Roth IRAs are a tax-efficient asset to leave to heirs. While they still must draw down the account in 10 years, when they do inherit the funds and draw down, it’s not a taxable event. One more thing to keep in mind when doing a Roth conversion: pay the taxes on it with cash, your taxable investment account or a trust account, instead of paying with the conversion.In Conclusion
Planning what you’re going to serve for the holidays might be top of mind right now, but you want to make some space for your tax planning so you can maximize your savings. Taxes are inevitable, and good tax planning will help you pay less over time. It’s imperative that you connect with your trusted financial professionals to make the best tax plan for your unique situation. Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. Converting from a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes. Re-balancing may be a taxable event. Before you take any specific action be sure to consult with your tax professional. [post_title] => Areas of Focus for End-of-Year Tax Planning [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => areas-of-focus-for-end-of-year-tax-planning [to_ping] => [pinged] => [post_modified] => 2021-12-02 13:52:36 [post_modified_gmt] => 2021-12-02 19:52:36 [post_content_filtered] => [post_parent] => 0 [guid] => https://retirementextender1.carsonwealth.com/insights/monthly-newsletters/areas-of-focus-for-end-of-year-tax-planning/ [menu_order] => 0 [post_type] => monthly-newsletters [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 64014 [post_author] => 6008 [post_date] => 2021-11-04 09:14:03 [post_date_gmt] => 2021-11-04 14:14:03 [post_content] => Each person’s relationship with charitable giving has an origin story. Maybe it was when your grandmother would cook dinner for people in your community who were less fortunate. Or you were required by parental contract to give up a certain percentage of your allowance to the church collection basket. No matter how it started, now you’re grown and you are still a charitably-minded individual who wants to give to causes you care about. You’re not the only one. Charitable giving, giving back through volunteering and donations soared during the COVID-19 pandemic, as exemplified by these statistics:- 88% of affluent households gave to charity in 2020 (according to Bank of America and the Indiana University Lilly Family School of Philanthropy).
- Americans gave $471.44 billion in 2020, up 5.1% from 2019 (according to the National Philanthropic Trust).
- Giving in every sector increased, but especially gifts that benefit the public/society (up 15.7%), the environment and animal rights (up 11.6%) and individuals (up 12.8%) (according to the National Philanthropic Trust).
- 86% of affluent households maintained – and in some cases increased – giving, despite uncertainty caused by the pandemic (according to the National Philanthropic Trust).
Deeper in the DAF
A donor-advised fund (DAF) is a tool that can help you maximize your charitable giving. Essentially, you make an irrevocable contribution to the DAF of either cash or other assets, like appreciated securities. While there is no startup cost associated with a DAF, the initial contribution with some DAFs is at least $5,000. The DAF is sponsored by a 501(c)(3) nonprofit organization, which subsequently owns those assets and handles all the administrative tasks and the grant administration process. Some DAFs allow the financial advisor of your choice to manage the investments in your DAF so make sure you know all of the requirements as DAFs vary. Although you recommend where the money is donated to, the sponsor has the final say-so as to where the money goes. While you may get a tax deduction at the time of the original donation to the DAF, you cannot deduct the amount again when the money is distributed from the fund to the qualified charity. National Philanthropic Trust reported that grantmaking from DAFs to qualified charities increased 93% between 2015 and 2019. With DAFs, no mandatory amount has to come out of the fund. Their popularity has grown in recent years, making them the fastest-growing philanthropic vehicle, due to their flexibility and ease of use. If you were never one for the limelight or the credit, another benefit of the DAF is that you can make anonymous charitable gifts. Some restrictions with DAFs, according to the National Philanthropic Trust, include that donors can’t:- Advise grants be made to individuals.
- Receive goods in exchange for donation.
- Advise grants be used for tuition.
Cracking the CRT
A charitable remainder trust is an irrevocable trust established to provide annual payments to current beneficiaries – which can be you – with the remainder balance distributed to a charity. CRTs are a little bit different from DAFs, as they are a trust, customized to your situation and more of an estate planning tool. Essentially, you have your attorney create a trust, you determine what asset you’re going to put into it and your professionals will run the numbers to determine the current and remainder payout parameters. The lifetime beneficiary payout has to be at least 5% of the trust assets, but cannot exceed 50%. The chosen charity must receive at least 10% of actuarial value of the assets initially transferred to the CRT at the end of its term. Keep in mind that if the assets you donate are not cash or publicly traded securities, they may need to be appraised. The type of appraisal you get depends on the type of asset it is. For example, if you are contributing art to your CRT, you will need an art appraiser. Your financial professional can help you figure out which type of appraisal to get. There are two types of CRTs:- Charitable Remainder Unitrust (CRUT): distributes a fixed amount each year, but no additional contributions can be made.
- Charitable Remainder Annuity Trust (CRAT): distributes a fixed percentage on the balance of trust assets, but additional contributions can be made.
Working with a Professional is Key
The main reason people give to charity is because they want to help a cause, which is also among the reasons people employ these tools. But there are also benefits to using these tools, nuances you should be aware of and pitfalls to avoid. Your financial advisor can help you determine the right solution and also run point with your other professionals, like your CPA or attorney, to craft the ideal solution for your unique situation. This piece is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. [post_title] => Tools for the Charitably Minded: Donor-Advised Funds and Charitable Remainder Trusts [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => tools-for-the-charitably-minded-donor-advised-funds-and-charitable-remainder-trusts [to_ping] => [pinged] => [post_modified] => 2021-11-04 09:14:03 [post_modified_gmt] => 2021-11-04 14:14:03 [post_content_filtered] => [post_parent] => 0 [guid] => https://retirementextender1.carsonwealth.com/insights/monthly-newsletters/tools-for-the-charitably-minded-donor-advised-funds-and-charitable-remainder-trusts/ [menu_order] => 0 [post_type] => monthly-newsletters [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 63943 [post_author] => 6008 [post_date] => 2021-10-07 09:02:07 [post_date_gmt] => 2021-10-07 14:02:07 [post_content] => There’s a scene in the TV show Friends where Rachel gets her very first paycheck as a waitress at Central Perk. “Who is FICA and why is he getting all my money?” she poses to the gang. Some people age 65 and older might have a similar sentiment when they get their Social Security check and see a chunk missing that’s gone to IRMAA. “Who is IRMAA and why is she getting some of my money?” you might ask. IRMAA is your income-related monthly adjustment amount, which you pay on top of both your Medicare Part B (medical coverage) and Part D premiums (prescription coverage). We’re going to get into the subject of IRMAA in this article, as well as give you some pertinent background information necessary to understand it. We’re also going to offer you some planning tips and common mistakes to avoid.What Is IRMAA?
When we set up retirement plans for clients, oftentimes we'll send them a worksheet and ask them to work through and itemize all their monthly expenses. Typically, when we do this with somebody who is about to retire, they’ll list their dining-out trips, their Netflix and other streaming subscriptions, but they’ll forget their health insurance costs. Many people have the misconception that all Medicare is free because they’ve paid into it all their working lives. We have to tell them that’s only partially correct. You may be getting your Medicare Part A for free, but you must pay for your Medicare Part B (medical coverage) and Medicare Part D (prescription coverage) and, based on your income, your income-related monthly adjustment amount for both Part B and Part D. IRMAA is an extra surtax you pay based on your income. I was working on a financial plan the other day for clients who are high net worth individuals. Because of their current income and projected income, we had to add an extra $400 per person per month for IRMAA to their budget. This created some discussion. The clients thought they were good with a $6,000 per month budget. But then we added on this IRMAA piece, which is essentially an additional $9,600 per year ($800 per month) – an amount that could’ve gone to a travel fund or annual gifts to family members. According to Medicare.gov, Medicare Part B premiums (which already include IRMAA) for 2021, plus Part D IRMAA surcharges based on income from 2019, are as follows:- Monthly premium of $207.90 + $12.30 IRMAA per person for single filers making between $88,000 and $111,000, and for married filing jointly filers who made between $176,000 and $222,000.
- Monthly premium of $297.00 + $31.80 IRMAA per person for single filers making between $111,000 and $138,000, and married filing jointly filers who make between $222,000 and $276,000.
- Monthly premium of $386.10 + $51.20 IRMAA per person for single filers making between $138,000 to $165,000, and married filing jointly making between $276,000 and $330,000.
- Monthly charge of $475.20 + $70.70 IRMAA per person for single filers making between $165,000 and $500,000, married filing jointly making between $330,000 and $750,000, and married filing separately making between $88,000 and $412,000.
- Monthly charge of $504.90 + $77.10 IRMAA per person for single filers making $500,000 and above, married filing jointly making $750,000 or above, and married filing separately making $412,000 or above.
Laying the Groundwork and Planning Tips
To give you a more robust picture of IRMAA, let’s examine some things that might impact the amount you will owe. Right now, Roth conversions are in the news because people are concerned about impending tax hikes. Roth conversions bump up your adjusted gross income (AGI), and that will impact your IRMAA. Many clients come to us thinking they are diversified from an investment standpoint – however, they might not have thought about tax diversification. If you look at the tax triangle, on one side are tax-deferred accounts like 401(k)s and IRAs, which are typically the easiest ways to save. On another side, you have taxable money, like brokerage accounts – clients will typically start building those up after they’ve built up some of those tax-deferred buckets. On the third side, you have the tax-free bucket, which includes Roth IRAs, Roth 401(k)s and the like. Under the current rules, you won’t have to pay taxes when you pull money out from the third side of the triangle. Many clients find themselves overweighted in tax-deferred money. Regardless of whether somebody is retiring with $500,000 or $5 million, I have yet to see a client retirement picture that has more tax-free money than tax-deferred money. This is relevant to the IRMAA conversation because movement of money among these three sides of the triangle – as well as pulling money from any of them – has implications on your modified adjusted gross income used to determine how much you pay in IRMAA. For example, because a Roth conversion moves money from a tax-deferred vehicle to a tax-free vehicle, it’s seen as income reported on your 1099-R. When your income is bumped up, your adjusted gross income and your modified adjusted gross income also bump up, which is what IRMAA is tied to. IRMAA looks back two years in arrears. In other words, your 2022 coverage will be based on your 2020 income. So the time to start planning for it is at age 63, two years before you have to enroll in Medicare. If you’re thinking of Roth conversions now, it may impact your IRMAA two years down the road.Avoid Common Mistakes with IRMAA Planning
There are three common mistakes you might make when it comes to IRMAA planning. Be sure to steer clear of these: Not factoring it into your retirement budget. It’s easy to skip over how much your health insurance is going to cost. IRMAA is a significant addition to your monthly budget. It can potentially add up to $1,000 per month, in addition to what you’re already planning. If you’re on a fixed income, this could make a big difference – especially if you’re in a higher income bracket during retirement. Making sure you account for IRMAA in your retirement roadmap and monthly expenses is important. Not realizing how much income you’ll have in retirement. I have had some clients who make more in retirement than they did while they were working. However, the sources of their income are fixed, so they don’t have the ability to decrease them – like pension, Social Security or required minimum withdrawals from tax-deferred accounts, which increase every year. Many clients realize that they’ve done well and saved up, which leads to their income going up in retirement – but also has an adverse consequence on their IRMAA adjustment. Not having a plan for where you’re pulling income from. Pulling $200,000 from cash vs. pulling $200,000 from an IRA has very different tax consequences that could impact IRMAA adjustments. In your working years, you get used to getting a paycheck and knowing where your income is coming from. But in retirement, you have to create your own income by turning assets into income. This could get a little confusing. It’s important to consult a professional so that you can plan. If you need some guidance specific to your own situation, call your financial professional. This piece is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Converting from a traditional IRA to a Roth IRA is a taxable event. [post_title] => Who is IRMAA and Why Is She Getting My Money? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => who-is-irmaa-and-why-is-she-getting-my-money [to_ping] => [pinged] => [post_modified] => 2021-10-07 09:02:07 [post_modified_gmt] => 2021-10-07 14:02:07 [post_content_filtered] => [post_parent] => 0 [guid] => https://retirementextender1.carsonwealth.com/insights/monthly-newsletters/who-is-irmaa-and-why-is-she-getting-my-money/ [menu_order] => 0 [post_type] => monthly-newsletters [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 63849 [post_author] => 6008 [post_date] => 2021-09-02 08:25:43 [post_date_gmt] => 2021-09-02 13:25:43 [post_content] => Are you healthy? Or are you anticipating some hefty medical bills coming up? Or do you want to save money in a tax-advantaged way for future medical expenses? If so, a health savings account (HSA) might be a good choice. An HSA is a tax-favored savings and investment account that’s used for qualified health care expenses and tethered to high-deductible health plans (HDHPs). There are three tax benefits to HSAs: The first is that contributions are pre-tax if they’re coming through payroll, and if they’re not made pre-tax, the account owner will get a tax deduction; second, the growth on the account – interest or returns – is tax-free; and third, if distributions are made to pay for qualified health care costs, those come out tax-free. Outside of tax benefits, you could also get a contribution into the account from your employer when you sign up for an HSA. HSAs could also potentially play a role in retirement planning, to the extent that people are fortunate enough that they don’t use the HSA regularly. There’s an opportunity to build up that account over the years and take out the funds tax-free to pay medical expenses later in life when those costs are higher. Maybe you’re considering an HSA, or maybe you already have one. Either way, you can learn from this article how to avoid common mistakes and other ways to maximize your HSA.Who are HSAs For?
First of all, you have to meet some criteria before you can get an HSA. According to Benefit Resource, those criteria are that you:- Be covered in a qualified high-deductible health plan
- Can’t be claimed as a dependent on someone else’s taxes
- Can’t be enrolled in Medicare
- Can’t be covered by a non-qualified health plan
Common HSA Mistakes to Avoid
The first way to maximize your HSA is to avoid common mistakes. There’s room for making mistakes with HSAs because they’re flexible. Here are some to avoid:- Confusing HSAs with FSAs. People might be more familiar with flex spending accounts. Unlike with FSAs, when you put money into an HSA, you don’t have to use it that year – you can just let it sit and grow as long as you save your receipts. With HSAs, the entire amount you contribute can be rolled over year after year. Also, HSAs are portable, meaning you can take them with you when you change jobs or retire.
- Not keeping your receipts. Save receipts whether you have an HSA debit card or not, because at the end of the year when you’re filing your taxes, the IRS will get a document from your HSA custodian detailing how much money went in and how much went out. You want to ensure you keep receipts should there be a tax issue.
- Not having outside assets to cover medical care. Getting started with an HSA might be a challenge – if you don’t get the HSA funded right away and you have a medical expense early on, you might need to pay for it with assets outside of the HSA. Not having those backup funds upfront is a common mistake people make.
- Banking on not needing medical care. The Mayo Clinic reports that people wanting to save more in their HSA sometimes forgo medical treatment. You should get medical treatment when you need it. You also can’t predict medical emergencies. Some years, you will be able to stack money in your HSA; other years, you might use everything you put in. The good news is if you do have a medical emergency, the out-of-pocket contribution is capped with HDHPs. Also, it’s nice that you still get that triple tax benefit even if you don’t get the long-term growth.
Ways to Maximize Your HSA
If you have an HSA, there are four ways to maximize it:- Maximize your contributions to your HSA. The maximum contribution limits for 2021 are $3,600 for self-only coverage or $7,200 for family coverage. For 2022, those limits are $3,650 for self-only coverage and $7,300 for family coverage. Also, if you are 55 and older, you can contribute up to $1,000 additional dollars each year.
- Be aware of the investment options available. If you are in a position to invest funds in your HSA, find out if that option is available to you. HSA plans differ, and some plans have an opportunity to invest the way you do with regular investment accounts. Also be aware that, as with any investment, there is risk.
- Have the cash flow to pay medical costs. If you are able, paying your medical costs with your cash flow or other accounts can allow your HSA to grow for the long-term. It’s also a must to have some assets outside your HSA while you’re building up the account. Keep in mind the out-of-pocket limits mentioned above.
- Work with your financial advisor. As with everything, you need intentional planning based on your situation. Among the best ways to maximize your HSA is to work with your advisor to put together a plan specific to you.
What Is Tax-Loss Harvesting?
Tax-loss harvesting is a strategy that lowers your taxable earnings after you sell taxable investments and use those losses to offset the gains you have to claim as income. It can also allow you to push your capital gains further out, allowing you to save on your taxes in future years when your tax bill might be higher. For example, if you sold some of your investments this year at a loss, but your portfolio is doing well, you can lower your taxable income by claiming that loss. Also, if your losses exceed your gains, you can claim up to $3,000 on your taxes to offset ordinary income. Let’s look at a specific, strategic and tax-efficient example. Say you have stock in Verizon that you want to sell and purchase stock in another cell phone company, AT&T. If you had a big loss in Verizon, you want to capture that loss while maintaining exposure to a cell phone company. Or, you might want to sell Verizon stock while it’s down to lower your tax footprint and soon after repurchase, because you believe it will rebound. A savvy investor might turn to either of those strategic scenarios. But before you move on this strategy, remember the wash sale rule.The Wash Sale Rule
Let’s talk about the wash sale rule for a minute. This Internal Revenue Service (IRS) rule prevents you from taking a tax deduction for a security sold in a wash sale. A wash sale occurs when you sell or trade securities at a loss and you also do three things within 30 days before or after the sale:- Buy a substantially identical security
- Acquire substantially identical securities in a fully taxable trade
- Acquire a contract or option to buy substantially identical securities
Who Should Engage in Tax-Loss Harvesting?
Generally, tax-loss harvesting is ideal for people in higher tax brackets since the idea is to help lower tax bills. A group of researchers from MIT and Chapman University found that tax-loss harvesting yielded a tax alpha, or outperformance by using available tax-saving strategies, of 1.10% per year from 1926 to 2018. However, it could also be useful for people in a lower tax bracket, since you could carry those losses forward to times when you might have a higher tax bill, like if you get a higher-paying job or the government raises tax rates. Tax-loss harvesting will play a huge role in planning if we move into a higher-tax environment. Higher tax rates call for investors to pay closer attention to tax efficiency of their taxable accounts. There are certain situations in which you should consider tax-loss harvesting:- Your investments are subject to capital gains tax.
- You are able to use tax-deferred retirement plans to postpone paying taxes until you retire.
- You anticipate you’ll change tax brackets.
- You invest in individual stocks.
Questions to Ask Your Advisor About Tax-Loss Harvesting
If you don’t yet have an advisor, and you’re in the process of interviewing one, you should ask them to tell you about their process of rebalancing portfolios. They should explain to you how they do so and in what type of account they do so. Here are a few more questions you can ask:- Do you do tax-loss harvesting?
- How does tax-loss harvesting fit into your overall investment philosophy?
Market Commentary
Market Commentary
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