Your Money, Your Wealth

It's been 30 years since the last tax reform, but President-elect Trump is planning for a change. Joe Anderson, CFP® and Alan Clopine, CPA take a comprehensive look into Trump's proposals in YMYW podcast episode 81 and discuss how his potential tax law changes could affect you. Original publish date November 12, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. Reduce income tax brackets from seven brackets (10-39.6%) to three (12%, 25%, 33%) Increase standard deduction Remove personal exemptions 03:03: "Right now we have 7 [tax brackets] and Trump is proposing to go down to three." 03:10 "A lot of people are predicting that these first 100 days that Trump is in office, we might see a lot of action." 05:30 "[Trump] is combining the 10% and 15% tax bracket to 12%." 05:48 "It all depends on what happens with the standard deduction. They are looking at doubling up the standard deduction. So for lower wage income earners that doubling up of the standard deduction will potentially have less money taxed going into that 12%, where before they might have been taxed a little bit earlier on the 10%." 06:08 "The exact numbers if you're single, you get a standard deduction right now of $6,300 and $12,600 if you're married..." 06:40 "The new numbers being proposed would be a standard deduction of $15,000 if you're single and $30,000 if you're married." 06:50 "However, right now we get an exemption of about $4,050 per person, including dependents. Trump plans to get rid of that." 08:30 "The biggest tax savings will be clearly for those who make a lot of money." 08:34 "LeBron James, he's going to save $15 million in taxes." 10:05 "The last major reform was 1986, Reagan years. That was the tax simplification act." 11:40 "How you get to your taxable income today is after your exclusions and exemptions." 13:00 "[The proposed tax changes] could hurt those with a lot of kids." 15:15 "Let's get into capital gains. If you follow what Trump is saying, capital gains is not going to change except for the net investment income tax on top of capital gains." 15:38 "The net investment income tax is not taxed on ordinary income." 15:45 "The capital gains rate, as well as what's proposed by Trump, is as a married couple, the first $75,000 of taxable income, capital gains are taxed at 0%. There is no tax, they are actually tax free." 16:16 "Then you look at, up to the 25% tax bracket into the 39.6% bracket, you're at 15% and then it's at 20%. Basically the new capital gains law, and Trump's side is the same. If you look at Paul Ryan's it's a little bit different. It's 6.5% and then it goes to 12.5% to 16.5% - those are the three different levels depending on your holding period." 16:47 "One difference with Trump is that the 20% rate will kick in at the highest bracket which he's proposing at $225,000 of taxable income and right now for a married couple that highest rate doesn't happen until about $460,000 of taxable income. So that would actually be a slight increase." 18:15 "Right now is such a key time to be thinking about year-end tax planning because the tax law may change." 23:00 "That's a great way to create tax-free income in retirement is to net your losses with your capital gain income and then you don't pay any tax on that."

Joe Saul-Sehy, host of the top-rated personal finance podcast Stacking Benjamins joins Joe Anderson, CFP® and Big Al Clopine, CPA on Your Money, Your Wealth® podcast episode 80. Saul-Sehy talks about what investors or anyone interested in personal finance can learn from his unorthodox show focused on headlines and impressive guest perspectives. Joe and Big Al wrap up the show answering listeners personal finance questions. Original publish date November 5, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:29 - Start of Interview with Joe Saul-Sehy 03:41 - "Our goal is headlines – it's a magazine-style show…we have great discussions about current events, financial planning and making sure people have the type of great advice that's out there." 06:02 - "That's kind of how "Stacking Benjamins" was born – it allowed me to talk about money in a way where we kind of learn through play." 08:05 - "There's all this noise going on – you've got big media outlets with talking heads…everyone is talking about what you need to do now, yet you know most of the time the thing you should do is absolutely nothing. Study after study shows that the thing a great advisor brings to the table is convincing you that holding the line is the perfect thing for you to do." 12:44 - "When I was an advisor, every smart person that was a client of mine could have done my job on their own but they always went to an advisor to look over their shoulder." 15:12 - "I found that the more blunt I got, and the more I challenged people about their thinking when I disagreed with it, the more they wanted to hire me. That's probably who you should be searching for when you're looking for an advisor." 16:00 - End of Interview with Joe Saul-Sehy 19:25 - "What are some examples of a value-added tax?" 21:26 - "I am 60 years old and plan to retire at 67. I have a 403(b), a HSA, and a couple mutual funds, but I keep hearing I should start a Roth IRA. Why would I want to start a Roth on the home stretch?" 24:30 - "If you're in a low tax bracket right now, you might even want to look at Roth conversions relative to your retirement. There a lot of things we'd have to know about you to see if that's a good idea or not." 27:29 - "How much income can I make a year before my Social Security payments reduce?" 30:23 - "Can I apply to have 401(k) funds pay for a home purchase instead of an existing loan?"

Are you making these mistakes that could sabotage your retirement? In episode 79 of the YMYW podcast, learn tips to avoid making costly financial mistakes with your nest egg. Original publish date November 5, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 03:15 - "You've got public pension plans and private pension plans, and sometimes they play by different rules." 06:43 - "The problem with some of these defined benefit plans and why there is $1.7 trillion underfunded is the assumptions are a little off." 09:43 - "The point is, you don't have any control over these defined benefit plans." 12:18 - "Mistake one is failing to plan for medical expenses." 17:00 - "Mistake number four is helping out adult kids." 19:03 - "When it comes to retirement, you have to pull money out of your IRAs and 401(k)s and you pay taxes on that. A lot of people don't realize that. In many cases when you've done a great job saving you're in a higher tax bracket even when you're working because of that required minimum distribution." 22:04 - "[one of] the seven scariest retirement moves…is holding most of your retirement funds in a single company stock." 24:32 - "If you do have company stock and you're heavily weighted there, before you diversify out – just make sure that you understand net unrealized appreciation." 33:11 - "Here's another scary retirement move: thinking you can actually beat the stock market." 36:20 - "No tax diversification - that means you've got all your assets in your retirement accounts…"

Joe Anderson, CFP® and Alan Clopine, CPA discuss some of the 2016 California propositions and how they affect your finances, in episode 78 of the YMYW podcast. Plus, what's the difference between gross income and taxable income? Original publish date October 29, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 07:02 - "Prop 13 is when you buy a home in year number two and your property taxes can only go up 2% regardless of how much the home increases in value." 09:24 - "What is the difference between gross income and taxable income?" 10:49 - "There's something called itemized deductions and exemptions. Itemized deductions would be like a home mortgage, estate taxes, property taxes and things like that." 15:26 - "For those who have the Roth provision in your 401(k) plan – you want to look at your taxable income." 17:40 - "What should I do with a lump sum pension in an IRA?" 23:52 - "I took out a personal loan of $8,000 for debt consolidation purposes with my credit union. I'm simply wondering if this loan will affect my income tax in any way. Do I report the loan on my taxes? Will it make a difference in how much my refund will be?" 25:03 - "Can I obtain a loan on a quitclaim property?"

What is the Social Security spousal benefit? Joe and Big Al explain in episode 77 of the YMYW podcast. Plus, how leveraging your home equity in a reverse mortgage can help you generate retirement income. Original publish date October 29, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:57 - "If you're married you have a spousal benefit, or if you were married and divorced and were married to that individual for ten years, you could potentially qualify for that spousal benefit on your ex-spouse as long as you haven't re-married." 05:23 - "If I take the spousal benefit prior to my full retirement age, I would receive a reduction in that benefit. You can take Social Security benefits as early as 62." 08:17 - "When you look at a restricted application, that goes hand in hand with your spousal benefit." 14:19 - "A lot of us are living longer and you've got to think of Social Security as maybe longevity insurance." 17:23 - "The difference between [taking your Social Security] at age 62 versus age 70 is a 76% increase." 23:03 - "[Hillary Clinton] wants to keep the tax brackets that we have right now as is except she wants to add a surtax if your adjusted gross income is over $5 million." 25:31 - "Trump would actually like to reduce our taxes; he wants to take it to three brackets – 12%, 25% and 33%. Right now our lowest bracket is 10% and our highest is 39.6%." 35:57 - "Costs of buying and selling a home only to do it again during retirement might cost you more money."

In episode 76 of the YMYW podcast, Joe Anderson, CFP® and Alan Clopine, CPA answer investors' questions about bond returns, how interest rates affect bond prices, the difference between short term vs. long term bonds, and more. Original publish date October 22, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 00:44 - "Is it sensible to live on my own?" 04:06 - "Will I be penalized for a 401(k) withdrawal?" 04:59 - "I am about to turn 21 and currently in my junior year of college. I have budgeted my income so that I have a portion of it stashed in my savings every month. What sort of investments should I look into to generate more income with the excess income I receive?" 11:36 - "We should stress that we are going to talk taxes and strategies, not politics." 12:12 - "Should I invest in bonds now or after the presumed interest rate hike?" 17:05 - "The shorter term of the bond, the less risk that you're taking, hence less volatility." 18:12 - "What's the advantage of going into a short-term bond versus staying in cash?" 24:20 - "With bonds, there are two sides to this: the price and the coupon rate." 29:40 - "If you have a SIMPLE plan, can you still contribute to an IRA?" 34:16 - "Should I move my 401(k) into a money market account?"

Joe Anderson, CFP® and Alan Clopine, CPA discuss Social Security strategies for couples claiming spousal benefits in episode 75 of the YMYW podcast, as well as strategies for single people to consider. "Big Al" closes the hour discussing the downsides of annuities. Original publish date October 22, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:25 - "Many Americans will be living solely off Social Security... people are going to need to play catch-up." 04:50 - "There are new law changes that happened with Social Security last year when it comes to restricted application and file and suspend." 06:24 - "There are two different benefits that you claim from Social Security if you're married: you can claim your own or you can claim the spousal benefit. The spousal benefit represents 50% of your spouse's benefit." 10:10 - "Just a couple of years deferring your Social Security and deferring your overall retirement means added savings and added benefits." 11:10 - "The full retirement age right now is age 66…but you can delay it as late as age 70. Every month you delay Social Security you get an increased benefit." 11:58 - "If you look at us collectively, it makes sense to wait. But if you look at us individually, it's a whole different matter. Even though we try to tell people to wait until they're 70, there are situations when you should take it early. One situation is if you're disabled." 13:38 - "If you push it (your Social Security benefit) out three years, it adds 30% more income." 21:45 - "Which annuity is better for a hands on investor?" 25:25 - "Variable annuities are very expensive…understand that variable annuities have high internal costs…and people are purchasing them for guaranteed income." 29:19 - "You have to look at the present values of those future cash flows to figure out what your internal rate of return is." 30:34 - "In most cases I would not recommend a variable annuity, I would recommend an immediate annuity. An immediate annuity means you're going to give your money to an insurance company and immediately receive income. That's the cleanest way to receive guaranteed income." 37:35 - "When it comes to retirement accounts, one of the things that is often overlooked is taxes."

In YMYW podcast episode 74, Joe Anderson, CFP® and Alan Clopine, CPA answer questions about investing for retirement, covering investment options for 403(b) accounts, tax implications of moving part of your IRA and how to avoid tax penalties when withdrawing from an IRA. Original publish date October 15, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 06:30 - "If you have a 401(k) that has a Roth option, you can put $18,000 (per year) into that Roth 401(k)." 07:51 - "If you have a 401(k) that allows you to put yet more money into the 401(k) after you max out, some plans allow you to put after-tax money into that 401(k)... here's why this could be such a good idea, particularly if you're close to retirement…" 11:11 - "How should I invest my 403(b)?" 14:38 - "Our advice is always to maximize those (employer's retirement) plans." 22:05 - "What are the tax implications of moving a portion of an IRA to open a new IRA with a different firm?" 27:17 - "With a 401(k) by law it's mandatory to withhold 20% in taxes if you do that with the 401(k)." 28:44 - "Taxes don't stop when your paycheck does – once you start tapping that retirement nest egg for your living expenses, there are all kinds of new rules and opportunities." 30:14 - "Will I be penalized for an IRA withdrawal?" 32:08 - "There is no age limit for Roth IRA conversions …so if you take money from your IRA and move it into a Roth IRA, there is no 10% penalty on that conversion. The IRS classifies that as a rollover. There would be a 10% penalty if you're under 59 ½ and you withheld taxes when you did the conversion." 32:36 - "Here's another mistake: don't withhold taxes when you do a conversion – pay the tax the following year in April when you do your taxes. If that tax bill is too high, re-characterize some, part or all of the IRA that you converted back into the IRA."

Most women take their Social Security benefits early causing them to lose out on an increased benefit amount. Joe Anderson, CFP® and Alan Clopine, CPA discuss Social Security claiming strategies so you can get the most out of your benefit in episode 73 of the YMYW podcast. Original publish date October 15, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 10:34 - "According to Investment News, most women claim Social Security early (before full retirement age)." 12:14 - "The answer we'll always give you is to push it [your Social Security benefit] out to age 70 if you have normal life expectancy." 15:39 - "It's especially important for women because women live on average four to five years longer than men. If you can wait and take those benefits later, you'll have a lot more money to work with in retirement." 17:38 - "Social Security benefits are based on your highest 35 years of earnings." 22:30 - "When you put a tax strategy or tax plan into place with your retirement savings, you can stretch those dollars out more than you think." 26:31 - "Worst case is 15% of your Social Security income is 100% tax-free…California does not count Social Security as taxable income." 33:41 - "When you do a Roth IRA conversion… set up a separate Roth IRA." 37:51 - "When someone makes a mistake, they finally get serious about getting advice. The truth is you can save more in taxes than you think."

Your 401(k) plan options probably include at least one target-date fund. Joe Anderson, CFP® and Alan Clopine, CPA discuss this one-step strategy for investing for retirement in episode 72 of the YMYW podcast, then answer listeners' investing questions. Original publish date October 8, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:47 - "Unfortunately, a lot of you are not using these target-date funds correctly…first of all, a target-date fund has its own allocation." 07:53 - "There are two expenses in any investment: expense ratios and then the other cost is risk." 11:32 - "Should I withhold my taxes when purchasing a home?" 17:06 - "Will I be taxed if I don't touch the funds in a transferred IRA?" 19:21 - "We now have a monthly standing lunch n' learn; it's called Road to Retirement…it's an introduction to financial planning and the key areas you should look at. We'll go into some specific strategies when it comes to taxes, Social Security, investments." 22:02 - "What are the pros and cons of investing before/after tax dollars into a 401(k)?" 26:34 - "If we were disciplined enough to save those tax savings and invest it, we'd probably come out ahead…but most of us don't do that and we just spend whatever we have." 28:59 - "What should I do with my portion of my ex-husband's IRA?" 32:47 - "I am 51 years old and finally in a job which offers a 401(k) option…should I invest in my 401(k) or pay off my debt?" 35:58 - "Even if I don't have an [employer] match, I still want to save for retirement and I don't want to ignore it. The longer you give that money to compound, the more you're going to have. So the sooner you start saving, the better."