Savant Blog
Savant offers perspective on a variety of topics. Entries range from current events to timeless insights in the world of finance and investments.
17
Oct
October 17, 2017
Retirement plan trigger events (death, disability, separation from service, or reaching age 59 ½) come with an opportunity. If you have company stock in an employer-qualified retirement plan, you may have an opportunity to elect net unrealized appreciation (NUA), allowing you to roll your company stock into a taxable account for potential tax savings.
Potential Tax Savings with NUA
Electing NUA is trading ordinary income tax rates for capital gain tax rates.
When an NUA election is made, only your cost basis (the
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17
Oct
October 17, 2017
Why You Need to Wipe Your Cell Phone Before You Toss it and Other Critical Cyber Hygiene Guides
Pause for a moment and recall how you disposed of your last cell phone. If you didn’t wipe it before you sold, traded-in, donated or otherwise disposed of, you were handing off a gold mine for an identity thief.
Our cell phones store a considerable amount of personal and sensitive information on them. Data stored on your device may include:
Location history
Contacts in your address
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29
Aug
August 29, 2017
Negotiating for a major purchase, such as a new car or home, is often a source of anxiety. We want our hard earned (and saved) money well spent and to get the most value for every dollar. It is important to be knowledgeable about what we are buying (for example, knowing the gas mileage of a new car). It’s also important to be prepared for the negotiation process ahead. Taking time to ready ourselves can help make our purchasing experience more positive and
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31
Jul
July 31, 2017
Income tax rates in Illinois increased effective July 1, 2017. Because this decision came in the middle of 2017, it created some confusion regarding how to calculate 2017 taxes and how it affects estimated tax payments.
The income tax change affects individuals as well as corporations residing in the state of Illinois. For individuals, trusts, and estates, state income tax will increase from 3.75% to 4.95%. For corporations (excluding S corporations), state income tax will increase from 5.25% to 7%. The
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06
Jun
June 06, 2017
Fiduciary: a legal term that has always been near and dear to us at Savant, a word that has long been toxic to brokerages and traditional investment firms, and a concept generally not understood by consumers at large.
In layman’s terms, a fiduciary is someone who is legally and morally bound to stand in your shoes, look through your eyes, and advise you and your family on important financial decisions in the same way he would make them for himself or
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17
May
May 17, 2017
One of the top concerns for Americans in their 60s is how to pay for retirement. Consider focusing on a plan for these five areas of financial planning to help gain confidence as you approach or enter retirement. Interestingly, many individuals’ first anxiety is loss of principal – particularly with 2008 still in our collective rearview mirrors. However, given that retirement may last 30 years or longer, workers approaching retirement need to be just as focused on loss of purchasing
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12
May
May 12, 2017
Young adulthood often marks the passage of several major life events including beginning a career, getting married, starting a family, and buying a first home. As young adults ourselves, my husband and I welcomed our first child, moved states for a new career, and bought our first home, all in the past year.
While settling into being first-time parents and exploring our new neighborhood, another important item lingered on our to-do list: ensuring our son would be taken care of, if
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29
Mar
March 29, 2017
There is usually some permanent damage done when you lose someone you love. Most of the time, this comes in the form of grieving for that special person. From the benefit of time, the intense grieving usually fades away. Survivors are left with the burden of surviving, and, financially speaking, sometimes there is little available to help.
When Social Security was passed in 1935 it was strictly a benefit for retirees. It wasn’t until 1939 that a change was added to
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13
Mar
March 13, 2017
The news tends to over-dramatize the subject matter on which it is reporting. All too often this results in strong opinions or flat-out false statements. When it comes to Social Security benefits, the most common opinion I hear is that Social Security is going broke. It’s the elephant in the room as nervous clients jokingly comment that these benefits cannot be counted on any longer.
Social Security benefits are not going bankrupt.
It has been and still is in a
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17
Feb
February 17, 2017
You want to help your child buy a house, while ensuring that you do so in a tax-smart way. While you may have the best intentions, helping out in the wrong way can cause you or your child, or both, to lose tax benefits.
So, what’s the best way to assist your child in buying a home?
The good news is that there are several strategies for helping your child that also preserve tax benefits related to home ownership. Two considerations are
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04
Jan
January 04, 2017
The new year brings with it an update to Social Security benefit payments and premiums for Medicare beneficiaries. Understanding these adjustments allows you to plan for your cash flow needs and helps you determine how any changes may impact various planning strategies (such as realizing capital gains or doing Roth conversions).
First, let’s look at Social Security benefits. Each year Social Security increases by an annual cost of living adjustment (COLA) tied to the Consumer Price Index (CPI). The increase occurs
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06
Dec
December 06, 2016
4 Ways to Protect Yourself While Holiday Shopping
‘Tis the buying season once again! Many people are eager to share their generosity and spread good cheer. Unfortunately, the holiday Grinches are on the prowl for your credit card information as you make online purchases, look up account balances at your bank website, or share other personal information to receive company promotions. Identity theft is a constantly evolving threat, and it is important to stay informed about the ways you can protect
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02
Dec
December 02, 2016
When you hear the term tax planning, what comes to mind? Do you think of the proverbial shoebox that holds all your receipts? Is tax planning just a matter of keeping track of your expenses and income? Or is it much more than that? The answer is yes! Tax planning is much more than just keeping a record of your income and expenses. It is the practice of effectively using available strategies to avoid or postpone taxes. It is the
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03
Nov
November 03, 2016
Six out of ten self-employed individuals are not making regular contributions to their retirement savings, according to a 2015 survey conducted by TD Ameritrade. What is interesting is that self-employed individuals have perhaps more retirement options than any other type of worker.
If you are self-employed, there are many options that may allow a tax savings opportunity, as well as a vehicle to reach your retirement savings goal. In many cases, you are allowed to make contributions to your plan under
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05
Oct
October 05, 2016
Most people dread the annual ritual of gathering all their tax documents, preparing their return, and the April 15th tax due date. Some people even choose to avoid the deadline and file an extension, prolonging the process. No matter how you approach it, your taxes will have to be filed.
The IRS has its own agenda for auditing tax returns each year. In general, here are some known areas the IRS likes to target when looking for individuals or entities to
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01
Sep
September 01, 2016
Retiring or changing employers is a big transition for most people. One way to maximize this time of change is to utilize a unique opportunity to roll your 401(k) monies from your old employer’s plan into an IRA. Doing so provides you with more flexibility and control over your retirement savings.
When leaving an employer you generally have three options for your 401(k) monies:
Leave your funds in the 401(k) plan
Take a direct distribution of the funds (penalties may apply if you
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02
Aug
August 02, 2016
Let’s face it…summer is almost over. You can blame Earth’s axis for not standing up straight, but you’re probably too busy trying to soak up the last of the sun’s warmer rays. While relaxing pool side, check out these 10 tips to help you gear up for college this fall.
1. Call the Financial Aid Office
Did you fill out the FAFSA? Make sure your college has an updated version to ensure your financial aid is current and not delayed. Check out
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27
Jul
July 27, 2016
You may be a fan of do-it-yourself (DIY) projects. A visit to Home Depot or a search through Pinterest shows the popularity of a wide variety of DIY projects. Many folks are taking the DIY approach with their estate plan. Online document preparers offer a low-cost solution for simple estate planning. But beware of many pitfalls to this approach.
Complexities are often hard to detect.
You might not realize what complexities exist in your situation. Family circumstances, asset characteristics, net worth, and
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19
Jul
July 19, 2016
Many in the financial media tout the benefits of the early paydown of the home mortgage as one of the best financial strategies a family can implement. Unfortunately, this is one of those cases in which the rule of thumb can be completely wrong, particularly when it is not adapted for individual circumstances. Similar to consulting with a doctor before starting an exercise regimen, families should consult with a qualified financial professional before launching an accelerated mortgage paydown
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07
Jul
July 07, 2016
For charitably inclined individuals, many strategies exist that allow you to meet your philanthropic goals while creating tax savings. One strategy to consider is a Qualified Charitable Distribution, or QCD. QCDs are distributions that come directly from your IRA to a qualified charity of your choice. This type of IRA distribution is not included in the taxpayer’s AGI. QCDs became permanent with the Protecting Americans from Tax Hikes (PATH) Act of 2015, and this strategy allows individuals to
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03
Jun
June 03, 2016
You may be able to receive subsidies from the government for your health insurance premiums. In order to make health insurance more affordable, the Affordable Care Act allows eligible individuals to receive a premium tax credit if they obtain health insurance through the Marketplace.
The Marketplace is a health care exchange that was established by the government under the Affordable Care Act and is also referred to as “Obamacare.” It was signed into law March 23, 2010. This legislation requires all
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20
May
May 20, 2016
In early 2000 I knew I wanted to be a financial planner. It merged two of my favorite loves: working with people and math. (I loved math so much that I took classes over the summer of my teenage years so I could finish Calculus in my sophomore year of high school. I know, I know…youth is wasted on the young.) The problem was that my university did not offer a degree in financial planning, so I was on my
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27
Apr
April 27, 2016
When I first learned to drive, my father taught me how to jump start a car. When attaching the jumper cables, he instructed, always match the positive cable to the positive side, and the negative cable to the negative side. Failure to align the charge could result in serious damage to the car and a shower of sparks. The same can be said when designing your estate plan. Once your estate plan is properly drafted and signed, it is imperative
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01
Apr
April 01, 2016
I earned my undergraduate degree in the late 1990s, a time that was truly fascinating to be taking classes in Investments. Alan Greenspan’s ominous warning of “irrational exuberance” was already fading to distant memory, and I remember one of my professors teaching us about the “New Economy” and openly questioning – in all seriousness – whether the United States would ever have another recession. The thesis was that the Federal Reserve may have become so good at feathering the monetary
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28
Mar
March 28, 2016
It’s a tough market out there. Investors are nervous, and rightfully so! Although I’m an optimist, each day the market drops a little (or a lot!), I get a sickening feeling in my stomach. It’s not because I am invested in the stock market…I’m 31 years old and 100% in a diversified stock portfolio. I’m worried for my clients, who are my family, friends, and those with whom I have become newly acquainted. All of them are hard-working (or were
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07
Mar
March 07, 2016
At the beginning of each tax season, the IRS releases a list called the Dirty Dozen, featuring the top tax scams for the year. Identity theft makes a repeat appearance on the 2016 Dirty Dozen. In mid-February the IRS reported that there was a surge in phishing and malware incidents as the 2015 tax season began. Identity theft is a constantly evolving threat, and it is important to stay informed about the ways you can protect yourself.
Beware of Phishing
Thieves are
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17
Feb
February 17, 2016
There’s no question that we experience emotional pain and anxiety when our portfolios are losing money due to market downturns. Behavioral scientists tell us that we feel losses twice as keenly as positive returns.
But that doesn’t tell us what we really want to know, which is: other than selling at the wrong time and locking in losses, how do we make these downturns less painful?
Economist Richard Thaler conducted a stock market experiment that offers
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03
Feb
February 03, 2016
Tax season is upon us, and many investors may receive an unpleasant surprise on the 1099 forms from their investment accounts. Box 2a on Form 1099-DIV reports total capital gain distributions from mutual funds and exchange-traded funds (ETFs). These distributions represent gains realized by the funds and are taxed as long-term capital gains in the year they are paid to the investors. Translated into plain English: you have to pay tax on capital gain distributions.
Typically, actively
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13
Jan
January 13, 2016
Whenever a lottery reaches a crazy amount, many people who are not typical gamblers start to dream and buy a ticket. I would personally argue that the wistful dreaming of a better life than the one we currently have is an unhealthy exercise. If I can afford a Toyota for my new car purchase, I don’t walk into a BMW dealership: I will like the Toyota I ultimately end up buying far less than I otherwise would have.
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13
Jan
January 13, 2016
How often do you conduct business electronically? You may be surprised at the answer!
Any time you check your bank account online, have your paycheck or Social Security payment directly deposited, make contributions to your IRA, pay for your home utilities, make a purchase online, file your taxes, or use social media, you are sending or receiving information electronically. You have an electronic account in some form or another with almost every organization with which you transact.
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