Your Money, Your Wealth

Presidents can bully the Federal Reserve, but they can’t set central bank policy. Joe Anderson, CFP® and Alan Clopine, CPA explain how the Fed impacts overall markets in YMYW podcast 55. They also discuss a recent article covering three reasons why you should ignore Hillary Clinton and Donald Trump’s economic promises. Original publish date August 13, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.  00:00 - Intro 03:06 - “The president doesn’t control the Federal Reserve system. The way the Fed was set up was quasi-independent and answers to Congress on monetary policy.” 07:56 - “Stocks are priced based upon future predictions of what we all think the future’s going to be.” 12:41 - “The moment you turn 50, you can put more into your retirement plans, and then that can give you a better tax benefit via deduction because you can shelter more money via tax or have more money grow tax-free depending on what planning you’re doing.” 15:36 - “Any time you pull money out of a 401(k) or IRA, you have to pay income taxes – federal and state.” 19:32 - “You actually have more control over how much you pay in taxes in retirement, more so than any other time in your life.” 22:43 - “There are always crises, whatever they might be, but we get through them.” 25:38 - “If there’s a lot of inflation and everything has gone up in price, gold will probably go up in price too.” 29:58 - “We are a fee-only Registered Investment Advisor; there are no commissions generated to our firm, we act as a fiduciary 100% of the time.” 32:55 - “If you don’t sign up for Medicare in a timely manner, then when you do sign up you have to pay more for Medicare for the rest of your life.” 37:03 - “The more income that you make, the higher the premium you will have to pay.”

The IRS changed the rules for IRA rollovers and not everyone is catching on. Taxpayers can only perform one 60-day IRA rollover in a 12-month period, no matter how many IRAs they own. Joe Anderson, CFP® & Alan Clopine, CPA go over this new rule and share how you can avoid getting hit with high tax bills in YMYW podcast 54. Original publish date August 6, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.  00:00 - Intro 01:04 - “[We made a] 7-minute video on how to plan your finances in your 20’s and 30’s. The sooner you start, the better off you’ll be.” 04:41 - “We’ve been talking about costly retirement mistakes, and this is a relatively new one [60 day rollover rule]. It’s indirectly rolling more than one IRA in a 12-month period - it’s no longer allowed.” 08:11 - “It’s the direct rollover where the IRS won’t withhold taxes but if you select rollover, they will.” 12:19 - “If you’re pulling money out of your retirement account for your own purposes, whatever they might be, how do you expect your retirement accounts to grow with compound rates of return if you’re taking money out?” 16:54 - “The truth is, taxes don’t stop when your paycheck does – in fact, now you start tapping your retirement accounts and it comes with all new rules and opportunities.” 23:19 - “There are ways around the 10% penalty, but it’s not nearly as flexible as if you just wait until age 59 ½.” 27:10 - “A lot of you who are taking your required minimum distribution or that are going to be taking your distributions might not need to spend it…you don’t have to take that money in cash if it’s in an IRA. You can take shares and put it in your brokerage account.” 31:09 - “There’s a potential tax-saving feature called net unrealized appreciation.” 33:18 - “If you take money out of an IRA before age 59 ½, you have to pay a 10% penalty. If you don’t take your required minimum distribution at 70 ½, the IRS charges you a 50% penalty.”

Joe Anderson, CFP® & Alan Clopine, CPA share common retirement mistakes they’ve seen for years. These mistakes that could cost you thousands, if not more, can easily be avoided if you learn how. Original publish date August 6, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.  00:00 - Intro 02:27 - “What we have found with a lot of you is that potentially you’re not going to be in a lower tax bracket.” 05:37 - “The people we work with have assets in retirement accounts, and in most cases they will be in the same tax bracket or higher because most people that will come into our office want to at least maintain their same lifestyle.” 09:32 - “You have to put a plan together to take a look at a forward-looking strategy.” 13:37 - “The first one (mistake) seems so obvious but we see it over and over again – it’s not having beneficiaries on your retirement plan or IRA or having the wrong ones on your IRA.” 17:34 - “As a CPA (Certified Public Accountant) for over 30 years, it does amaze me how many people fail to get the message about tax planning and strategies until they make a mistake that costs them thousands of dollars.” 22:57 - “There are a lot of different requirements to name the trust as the beneficiary.” 25:49 - “There is good justification for actually having a separate trust; it’s called an IRA trust which has nothing to do with your living trust and you set that trust up in such a way that when you pass away, your beneficiaries become sub-trusts and you can actually have the RMD (required minimum distribution) based upon each individual beneficiary.” 28:02 - “This isn’t so much a mistake but an underutilized strategy because a lot of people don’t really know about it. It’s called net unrealized appreciation (NUA).” 30:55 - “If you keep your tax bracket low enough, you can avoid the capital gains tax so you can get those assets out tax-free to you.” 34:46 - “Interest rates are at all-time lows, markets are volatile, we’re living a lot longer and healthcare costs – the list goes on and on.”

Joe Anderson, CFP® & Alan Clopine, CPA answer frequently asked investing questions and explain key factors to look for when choosing a financial advisor on YMYW podcast 52. Should you choose a fee-only or fee-based advisor and does it matter if they follow the fiduciary standard? Find out. Original publish date July 30, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.  00:00 - Intro 02:27 - “I’m currently employed by two employers, which brings my yearly income to $170K. I understand my pre-tax contributions. One of my employers now offers a Roth contribution. Am I eligible to contribute to only one employer's Roth?” 04:54 - “Yes, you can contribute to both plans…can you contribute to a Roth in either or both plans? The answer is yes.” 08:15 - “I just purchased a home in January 2015 and I'm now wanting to sell with a potential profit of about $60K. I am newly married as of May 2016, and would like to file Head of Household to avoid paying Capital Gains. My income alone is $44K and married we are at $74K. I would like to be sure that I am under the radar and not having to pay capital gains tax if I sell today.” 09:32 - “When you’re married, you can’t file head of household unless you’ve been separated for six months and have not lived with your spouse for six months.” 15:46 - “You want to work with a fiduciary 100% of the time where there are no other licenses. If they have a broker-dealer affiliation, they sell products.” 20:45 - “An overwhelming percentage of retirees are very satisfied or somewhat satisfied with their financial health.” 25:39 - “If you look at the average 401(k) or IRA balances of those who are 55-64…it’s $100,000. If you look at all people age 55-64, the median retirement account balance is $12,000 (Source: TIAA CREF Survey).” 28:52 - “My wife and I both draw on our Social Security Insurance benefits. We are both 68 years old. We just adopted 3 grandchildren. Does this change our benefits in any way?” 30:38 - “I will be retiring in a month or so and will be about 2 years before the mandatory withdrawal. Where can I park my money so that I have the least management fees and can earn some returns?”

On YMYW podcast 51, Joe Anderson, CFP® & Alan Clopine, CPA discuss three major tax-saving strategies that might be going away: the backdoor Roth IRA, net unrealized appreciation (NUA) and the stretch IRA. Learn how you can take advantage of them before it’s too late. Original publish date July 30, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 04:07 - “That’s why the government is trying to get rid of it (the backdoor Roth IRA), because it’s a way for those who make a lot of money to do a Roth contribution kind of the backdoor way.” 05:25 - “The downside of doing a conversion is that you have to pay the tax on the dollars that go into the Roth.” 05:45 - “If you’re under 70 ½ and you have earned income, you can contribute to a traditional IRA.” 09:57 - “The most important investment, by far that you can make is an investment you make in yourself.” 11:56 - “Our opinion is that if you don’t have a Roth [IRA], start one now.” 17:17 - “You want to make sure you understand all of these rules to truly maximize the amount of tax-free income you have in retirement.” 20:32 - “We’re talking about a couple different strategies that you might want to consider before the door closes on you. We talked about backdoor Roth IRAs and here’s another one – net unrealized appreciation.” 24:04 - “Capital gain rates – event though they’re a lot cheaper than ordinary income rates, in some cases about half of ordinary income rates – the higher your capital gain, the higher the rate goes up.” 31:15 - “If you pass away with a retirement account, it is completely different from any other asset that you will pass on to the next generation.” 35:04 - “It’s a matter of taking control over your own taxes to figure this out so not only yourself will be in a better spot or your spouse, but your kids as well with regards to your IRA.”

How often do you come out on top if you try to beat the odds? Most active-fund managers fail to beat the market. Joe Anderson, CFP® and Big Al Clopine CPA share a more reliable way to invest for your future in YMYW podcast episode 50. Original publish date July 23, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.  00:00 - Intro 04:12 - “As the market declines, we are buying the same great companies at a discount, so now is the time to invest.” 06:24 - “You want to make sure you’re diversified.” 07:03 - “Small companies and value companies tend to outperform large and growth companies over the long-term. But we haven’t seen that the last few years. Does that mean we abandon that strategy? No, it still works if you give it enough time – that’s where patience is really important.” 11:01 - “We have all-time lows for the 10-year treasury…” 12:29 - “If you’re a U.S. investor and getting 60% of your portfolio going to return 6% and 40% going to return 1%, you’re talking about a 4% return which is half of the nominal return that the typical 60/40 portfolio has earned over the last 90 years. That’s a real problem for many investors who make the mistake of relying on historical returns; they’re likely to end up alive with no money.” 13:20 - “Clearly there are problems in the global economy. The credit markets are telling us a different story than the stock markets. They think that economic growth is very weak and likely to continue to be very weak. The stock market, on the other hand – at least in the U.S. where stock valuations are high – one assumes then that the market thinks growth will be somewhat reasonable.” 17:27 - “Bonds are not for return. They are to dampen the risk of the overall portfolio to an acceptable level…” 20:00 - “Whatever your political views are, I think it’s important that you hear this message. What the academic research shows is the following: when the party you favor is in power, you earn higher returns than the people in the opposing party.” 22:25 - “It’s important to not let your political biases or your political views influence your [investing] decisions.” 29:47 - “REITs (Real Estate Investment Trust), to me are the riskiest investments – or at least among them right now – as you can get a higher expected return by investing in a 10-year CD with a hell of a lot less risk.” 32:50 - “Get realistic on your budget; take a look at your bank statement… try to figure out where that money is going, what kind of retirement lifestyle you want and then start figuring out a savings plan and start early.”

Markets are at all-time highs despite recent events. In episode 49 of the YMYW podcast, Joe and Al share smart investment strategies you can learn from past performance and give advice for investing in a bull market versus a bear market. Original publish date July 23, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.  10 Steps to Improve Investing Success - free download 00:00 - Intro 02:33 - “If you’re invested in the stock market today, the question is: now what? Should you keep your money in the market? If you’ve been sitting on the sidelines sitting in cash, is it a good time to jump in?” 03:23 - “Trying to time the market is a fool’s game, not to mention pretty dangerous.” 05:36 - “By being fully invested when you need to be fully invested – that’s the appropriate way to do it. Get invested properly and stay invested.” 09:02 - “Because the stock market is volatile and you can lose money, over the long term you make a lot more money and that’s the premium that you have to pay to make that extra return.” 16:42 “Most of you have assets inside your 401(k) plans, IRAs, 403(b)s – that’s where a bulk of your retirement assets are. Guess what? There’s a tax risk there because every dollar that comes out of that plan is taxed at ordinary income rates.” 21:59 “Donald Trump would like to change our tax structure with four brackets, starting at 0% and the highest bracket being 25%...the highest bracket right now is 39.6%.” 27:21 “When’s the last time you fully reviewed your portfolio? Are you having conversations about Social Security, taxes and Medicare?” 31:32 “No one knows when these asset classes are going to perform so you want to have some of each. People chase near term performance all the time…that’s not a good formula."  

Your generosity can pay off in more ways than one: when you give a charitable gift, the IRS will forgive a tax. In episode 48 of the YMYW podcast, Joe Anderson, CFP® and Big Al Clopine, CPA share how to make tax-smart charitable donations. Original publish date July 16, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 – Intro 02:47 – “Here’s what does create a tax deduction for volunteering: your mileage to and from some type of charitable event you go to…supplies you purchase directly for charity, and there are some fundraising expenses that will qualify for tax deductions. A lot of people miss those deductions. Those deductions reduce your taxable income which ultimately reduces the amount of taxes you pay.” 04:36 – “If you’re spending money for charitable purposes or for a specific charity, then those expenses may be tax-deductible.” 07:00 – “Give appreciated stock directly to charity because the tax deduction you get is the current value of the stock on the day you donated, and you don’t have to pay tax on the gain.” 12:04 – “If you can get a little more sophisticated in your tax planning and combine a couple of these different strategies together, you can save money in tax and actually create more income.” 14:00 – “It’s called a donor-advised fund. You can actually set up a fund at a brokerage firm, it’s a special account where you control the investments and then you decide which charities get what amounts…here’s the key: the key is that the year you set up the account and put the money in the account – that’s the year you get the tax deduction.” 20:02 – “You can take money out of your IRA and give it directly to charity.” 25:42 – “There’s no harm in getting a tax benefit. The IRS encourages it; you just have to know what’s available and what to do.” 29:44 – “Once you get a better picture on how all of this looks, you’ll make better decisions.” 35:07 – “You have more control over taxes now than any other time in your life.”

The landscape of retirement is changing. The cost of living is rising and we are living longer than ever before. In episode 47 of the YMYW podcast, Joe Anderson, CFP® and Big Al Clopine, CPA share financial tips for this new age of retirement and they welcome Medicare expert, Dr. Katy Votava to share her best ways of coping with rising Medicare premiums in 2016. Original publish date July 16, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.  Download the Medicare Checkup Guide 00:00 - Intro 01:57 - “When you turn age 62 or 63, the income that you make is going to determine what your Medicare premiums are.” 07:58 - “A lot of you are probably overspending or will overspend for your Medicare coverage and healthcare coverage so we want to talk to Dr. Katy to figure out what the solution is there to make sure you keep a little more money in your pocket.” 12:11 - “We see five different expenses on the horizon that can threaten your lifestyle in retirement and that could dramatically impact anyone who’s thinking about retiring over the next five years.” 15:13 - “When you look at spending money in retirement you have to take a look at a lot of different factors and risks, and one of them is healthcare.” 16:32 - “Having an income strategy is key and look at all the potential risks in front of you.” 18:23 - Start of Interview with Dr. Katy Votava 19:22 - “People don’t know when to enroll and when they don’t have to. You need to get in at certain times - there are windows to get in and if you don’t when you need to, then you’ll have lapses and gaps in coverage and penalties down the road…enrollment periods are really key.” 21:45 - “I always say it’s important not to leave money on Medicare’s table because if you don’t tell Social Security about your change in circumstance, they won’t know. But if you meet the criteria, you can do your own reporting and then most people are granted that lower premium during that current year.” 23:32 - “At what age do you think people should start thinking about planning for Medicare?” 23:55-  “It’s a really good idea to start planning by the time you’re 62.” 28:10 - End of Interview with Dr. Katy Votava 29:20 - “Medicare premiums are based upon your income level because different people pay different amounts to Medicare.” 34:17 - “A lot more people should be converting [to a Roth IRA] than you might think, and the reason for that is when you look at your future tax brackets in retirement, in many cases it’s higher than you think because of the income you’re going to be receiving.”

There are plenty of options when it comes to IRAs, but with plenty of options can come plenty of mistakes. In episode 44 of the YMYW podcast, learn from Joe Anderson, CFP® and Big Al Clopine, CPA how to ensure you don’t blow it with your IRA. Find out how to avoid the 10 most common IRA mistakes you don’t want to make. Original publish date Junly 2, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.  00:00 - Intro 01:09 - “Now we’re in the month of July and the Baby Boomers are turning 70 ½ and having to take the required distributions. There are a lot of mistakes (made) and a lot of penalties.” 07:14 - “With regards to the 401(k), if you are still working in the company and you’re not more than a 5% owner of that company, you’re able to delay that required beginning date to April 1st of the following year that you finally separate from service” 09:22 - “I’ve been a CPA for over thirty years and it does amaze me how many people fail to get the message about tax planning and the rules until they make mistakes that could cost them thousands.” 12:49 - “If you’re inheriting retirement accounts, you have to know what is going on. Unfortunately, they’re one of the most complex tax rules when it comes to these things because of the benefits you get while you’re alive.” 17:13 - “If there’s more than one beneficiary, let’s say three children, then the inherited IRA must be split by the end of the year into separate properties, separately titled inherited IRAs in order for each beneficiary to take advantage of the stretch IRA based upon his or her own life expectancy.” 21:17 - “If your spouse is significantly older than you and passes away and you keep it in the decedent spouse’s name, then that IRA will have to take a required distribution as if that spouse was still alive.” 27:22 - “Seeking professional advice on this stuff is so critical. If it’s not with us, find someone who understands taxes in retirement and can put all of this together [for you].” 32:37 “Should I do the Roth provision [in the 401(k)] or should I do the pre-tax? Look at line 43 of your tax return because it will determine what portion of your income is taxable.” 37:07 - “If you save money in taxes, your money is going to last you that much longer.”