It’s Sunday, which means...it’s recap time here on the Retirement Quick Tips Podcast

This week the theme was: 2021 Year-End Tax Planning Checklist

In case you missed any episodes, here are a few essential tax-planning todos to check off your list before the end of the year:

• Gifting
• Maxing out your 401k
• How to handle capital gains and tax loss harvesting
• Roth conversions

Here’s the bottom line: No one knows what the future tax climate will look like, but if it makes sense for your situation, I think there’s an opportunity for gifting, roth conversions, realizing capital gains, and maxing out your 401k that may not be present in future years to take advantage of. All of these strategies for lowering your tax bill have been targeted by lawmakers for change and that may impact your ability to take advantage of these strategies in future years. 

Tomorrow, come on back, because we’re starting a brand new theme: penalty free early withdrawals for retirement. If you retire in your late 50s you have a problem. You can’t start taking withdrawals from your IRA and 401k accounts until age 59 ½. So next week, I’ll talk about ways you can access your retirement accounts penalty free as well as some other considerations if you’re planning to retire in your 50s that you’ll want to think through prior to an early retirement. 

Thank you so much for listening this week! If this podcast is valuable for you (and hopefully it is otherwise you wouldn’t be listening), please share the show with a friend or co-worker who is getting close to retirement. Just go to your favorite podcasting app, hit the share icon, then text or email the show link to a friend and say, “I love this podcast and thought you might enjoy a listen.”

Thanks for sharing the love and spreading the word. My name is Ashley Micciche, this is the Retirement Quick Tips Podcast and lastly, I hope you have a blessed Sunday.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week on the Retirement Quick Tips Podcast, the theme is: your 2021 Year-End Tax Planning Checklist

Today, I’m talking about tax loss harvesting. Tax loss harvesting is using losses in a taxable account (i.e. not an IRA or 401k) to offset gains. This is a very popular strategy for reducing taxes, but it’s become less useful in recent years with the stock market marching higher and higher, you may not have any investments that have unrealized losses to offset your gains. 

But that’s ok, because there’s another worthwhile strategy to consider, and that is accelerating your realization of gains in 2021. I have a client who has own Microsoft stock for a very long time. His adjusted cost basis in the stock in less than $1 per share and it makes up more than 40% of his overall portfolio. We’ve gradually sold some over the years, but we haven’t been able to make much of a dent because the stock has had so much growth in recent years, and my client has been reluctant to sell because the taxes on his gains would give anyone a heart attack. 

But one consideration for certain clients would be to bit the tax bullet and sell part or all of highly appreciated assets in 2021. This strategy is worthwhile for a few reasons. 

1. Taxes on capital gains are pretty low right now. If your income is quite low, you’ll pay $0 in capital gains tax. But even assuming that you’ll have to pay tax on gains, I would rather do that at the 15% level vs. being taxed at my regular income tax bracket, which is what has been proposed many times. 
2. If your income was lower in 2021 than it will be in 2022, this would also be another reason to accelerate capital gains and pay the taxes now vs. in future years where your income could be higher. If you’re still may years from retirement, it’s better to accelerate gains because you likely are in a better position to pay the taxes compared to your future retired self.
3. One of the most beneficial aspects of how capital gains are taxed is that heirs currently get a step up in basis, meaning that an heir can sell a highly appreciated asset - whether that be a stock or a house - and the clock on those gains resets at the time of death when they inherit those assets. It’s a part of the tax code that’s currently on the chopping block. In a speech in April of this year, President Biden said: “ending the practice of ‘stepping-up’ the basis for gains in excess of $1 million ($2.5 million per couple) and making sure the gains are taxed if the property is not donated to charity.”

The bottom line here is that accelerating sales of assets into 2021 for the purpose of paying the taxes now make a lot of sense for certain people in certain situations. Most people won’t do a darn thing because they can’t swallow the tax bill now and would prefer to just kick the tax can down the road. If you do so, it’s potentially to your detriment later on if you know you’re going to need to or want to sell that asset - but you could do so at higher rates. 

As always, talk to your tax advisor - if they’re worth their salt, they will look at this issue from all sides to help you make an informed and prudent decision. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week on the Retirement Quick Tips Podcast, the theme is: your 2021 Year-End Tax Planning Checklist

Today, I’m talking about roth conversions. One thing that has been a consideration for change by lawmakers is banning certain types of Roth conversions, especially backdoor Roth conversions. As of this recording, it’s unclear what will become law and when, but if you have a higher income and big balances in your IRA accounts, you could be locked out of roth conversions in future years. 

Right now, the laws allow Roth conversions no matter what your income. You may make too much money to contribute to a Roth IRA, but you could make $1 million dollars a year right now, and still convert a $1 million IRA to a Roth. 

This is a very powerful way to move some of your investment accounts into a Roth, that won’t be subject to future taxes or future mandatory withdrawals. 

Traditional IRA and 401k accounts recently became the worst account type to inherit after the SECURE act was passed in 2019. Non-spouse beneficiaries now have just 10 years to withdraw all the funds from the IRAs they inherit and pay all the taxes. So from an estate planning perspective - especially if you want to limit future taxation at potentially higher rates to your heirs - now is the time to consider a Roth conversion. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week on the Retirement Quick Tips Podcast, the theme is: your 2021 Year-End Tax Planning Checklist

Today, I’m talking about capital gains surprises in 2021. 

With the stock market up big in 2019, 2020, and now 2021, this year is shaping up to be a big year for mutual fund capital gains distributions, which can be big tax surprises for investors. 

Just looking at one example - one of the most widely held funds among investors is the American Funds Growth Fund of America, with nearly $300 billion in assets in just this one mutual fund. 

The GFA will be paying out a capital gains distribution to shareholders of the fund in late December in the range of 7-10% of the fund’s value. So if you own $100,000 in that fund, you’ll receive a $7-10m capital gains distribution, that is then taxable to you. 

That’s the way the rules work for mutual funds - they must distribute capital gains to shareholders - but it can create some inconvenient tax surprises. 

First of all, it’s important to realize that these capital gains distributions will only be consequential in your taxable accounts. If you own mutual funds in your 401k, IRA, Roth, or some other tax-deferred account - the capital gains distributions won’t cause an additional tax bite for you. But that’s not the case in taxable accounts. 

So it’s important to review the mutual funds you own in your taxable accounts. You should pull a list of the mutual funds you own in taxable accounts and then go to the websites of the fund companies to find out what the capital gains distribution is and the likely impact for you. Or if you’re working with a good, proactive advisor - he or she should be doing this for you. 

If your mutual funds in taxable accounts were purchased recently and you don’t have a large gain, but you’ll be receiving a substantial capital gains distribution, it might make sense to sell the fund before the record date so you can avoid the capital gains distribution, and then buy it back 30 days later or in early 2022. 

Another important takeaway from capital gains distributions is that you should always be cautious about buying mutual funds in taxable accounts in the later part of the year. Many mutual fund companies will post their anticipated capital gains distributions for the year in the early fall, so be sure to check that before you buy mutual funds in the later part of the year. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week on the Retirement Quick Tips Podcast, the theme is: your 2021 Year-End Tax Planning Checklist

Today, I’m talking about one of the best ways to reduce your taxable income in 2021, and that is through maximizing your 401k or other retirement plan contributions.

In 2021, you can contribute up to $19,500 into your 401k account. If you’re over 50, you can contribute an additional $6,500 - getting the total contribution amount to $26,000. Assuming you’re making pre-tax (not Roth contributions), that’s a substantial amount of money that is excluded from your income for the year. Now I mentioned Roth contributions, and that’s a topic for another day...but in general, I think it makes sense to contribute at least some of your 401k into a Roth if you can, but since we’re talking about 2021 taxes, any pre-tax contributions you make to your 401k will reduce your income, and it’s a great way to reduce your taxes.

[Discuss people who think they’re maxing out but aren’t]

So check to see if you’re on track to max out based on this year’s limits. If not, you may be able to defer a higher amount in your remaining paychecks, or switch to a specific $ amount contribution for a couple paychecks to max out that contribution.

And importantly, make sure you adjust your contributions for 2022, where the max will increase by $1000. In 2022, you’ll be able to contribute $20,500 if you’re under 50 with the catch up contribution of $6,500 remaining the same, for a total max contribution of $27,000 if you’re over 50.

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week on the Retirement Quick Tips Podcast, the theme is: your 2021 Year-End Tax Planning Checklist

Today, I’m talking about gifting. Truly, one of the most confusing parts of the tax code - at least in my experience working with clients - are the rules on gifting. 

Gifting, especially during your lifetime, can be a powerful strategy to transfer wealth, business interests, property, and a variety of other assets to your family and heirs, and with the current generous gifting and estate tax rules, now is the time to gift. So a question I pose to you that is very important to consider now is are you in a good financial position to gift now? 

You can give up to $15,000 per gift recipient in 2021 without paying taxes and up to $30,000 per gift recipient if you're married. But what happens if you want to give more than that?

You can actually give substantially more to your heirs without being subject to tax. The additional gift will just be applied to your lifetime exemption. 

Let’s say you own a family business worth $3 million dollars. Would you be shocked to learn that you can actually gift that business to your children during your lifetime without paying tax on that gift? 

That’s because of the lifetime gift tax exemption, which is currently $11.7 million in 2021. This means that you can give up to $11.7 million in gifts over the course of your lifetime without ever having to pay a penny in taxes on those gifts. And if you are married, it’s double that amount. You and your spouse can give away more than $23 million in your lifetime, tax-free.

Even if taxes don’t go higher next year, this high exemption is scheduled to sunset anyways in 2025, so now is the time to gift. Personally, the gift and estate tax exemptions are so high at the moment, that they have big targets on their backs...It’s low hanging fruit for congress, and likely to change - as of this recording it’s uncertain how or when it will change, but I would gift now because the clock may be ticking on you being able to take advantage of the current gift tax rules and these rules may be changed sooner rather than later. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

Welcome to a new week here on the Retirement Quick Tips podcast. I’m your host Ashley Micciche, co-owner of True North Retirement Advisors, an independent financial advisory practice managing $325 million in client assets. I’m a Chartered Retirement Planning Counselor, and I started this podcast because I love helping people just like you gain clarity and make a plan for the retirement you envision. 

The theme this week on the podcast is: 2021 Year-End Tax Planning Checklist

With potential tax increases on the horizon, year-end tax planning for 2021 is even more important than it has been in the past. And since the end of the calendar year is coming up, and the holidays are such a busy time, now is the perfect time...the calm before the holiday storm...to look seriously at your tax situation and take some last minute actions to minimize your taxes for this year and make some adjustments to prepare for the likelihood of higher taxes in the future. 

So this week on the podcast, I’ll talk about:

• Gifting - time may be running out on this 
• Max out 401k - make sure you’re contributing to the limit if you can afford it
• Capital gains - watch out for recently purchased mutual funds in taxable accounts & realize gains now before taxes go higher (which I think high probability that they will go higher)
• Roth conversions - especially with potential for higher taxes in the future or if your income was lower in 2021 than is typical
• Tax loss harvesting (discuss rules and wash sale)

My hope is that at least one or two of these tax-planning tips will apply to you in your situation and can potentially save you money when it comes time to pay Uncle Sam. 

I hope what I have to share with you this week will help you make smart and thoughtful decisions with your retirement. And while I am careful to not lead you astray, personal finance is not an exact science. There is no one-size-fits-all solution for everyone, so I encourage you to disregard anything I say that may not be helpful for you, and to consult your own financial, tax, and legal advisors regarding your own individual situation. 

That’s it for today. Come on back tomorrow, where I’ll dive into why now is a golden opportunity for gifting that may soon disappear. 

Thanks for listening! My name is Ashley Micciche...and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

It’s Sunday, which means...it’s recap time here on the Retirement Quick Tips Podcast

This week the theme was: 5 Ways To Ruin Your Retirement

In case you missed any episodes, here are the 5 ways you can ruin your retirement:  

• Vacation home
• Divorce
• Health Care Costs
• Underspending
• Elder Fraud

Here’s the bottom line: It’s always best to focus on the things that are within your control rather than the things you can’t control. You can’t control inflation, taxes, or the stock market in retirement, but you can control and take preventative measures to protect yourself against some of the ways you can ruin your retirement this week. 

Tomorrow, come on back, because we’re starting a brand new theme: 2021 Year-End Tax Planning Checklist. I’ll talk about steps you can take now to minimize your taxes before the end of the year. This includes tax-loss harvesting, maximizing your charitable giving benefits even if you itemize, gifting now while you still can, and more. 

Thank you so much for listening this week! If this podcast is valuable for you (and hopefully it is otherwise you wouldn’t be listening), please share the show with a friend or co-worker who is getting close to retirement. Just go to your favorite podcasting app, hit the share icon, then text or email the show link to a friend and say, “I love this podcast and thought you might enjoy a listen.”

Thanks for sharing the love and spreading the word. My name is Ashley Micciche, this is the Retirement Quick Tips Podcast and lastly, I hope you have a blessed Sunday.

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

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>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week on the Retirement Quick Tips Podcast, I’m talking about the 5 ways to ruin your retirement...and all have nothing to do with the economy, the stock market, social security, inflation, or interest rates. 

Today, I’m talking about how elder fraud can ruin your retirement. If you’ve ever been a victim of identity theft, had your bank accounts compromised, or even your email or FAcebook account hacked, you know how painful and frustrating it can be to fix the problem. 

Elder fraud is becoming more and more common, and costs older Americans more than $3 billion annually. And that’s likely just the tip of the iceberg...many older Americans may not even be aware that they were scammed, or if they are, they are afraid to report it, since it may cause them to lose their independence and the management of their financial affairs. Older people tend to be polite and trusting, and less aware of the ever-changing schemes of the scammers. 

It’s hard to keep up with the ever-adapting schemes of fraudsters, but one of the most important protections is a healthy level of skepticism about anything unsolicited. Whether that be a phone call, someone at your door, an email - clicking links or opening attachments in emails are often the gateway for hackers. Understanding and appreciating how easy it is for fraudsters to scam you will help you be on guard and less likely to click on the link or respond to the email about the sweepstakes you supposedly just won. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week on the Retirement Quick Tips Podcast, I’m talking about the 5 ways to ruin your retirement...and all have nothing to do with the economy, the stock market, social security, inflation, or interest rates. 

Today, I’m talking about how spending can ruin your retirement. Now when I talk about spending you probably think I’m talking about overspending. And that certainly is one of the easiest ways to ruin your retirement - spend down your assets, run out of money, move in with your kids and live off of social security checks for the rest of your life.

But that’s a rare occurrence. Thankfully, I’ve never had a single client spend down all of their assets in 14 years, and we have about 300 clients. I bet if you polled 10 financial advisors with the same number of clients, they would only have at most 1 or 2 rare tragic case to tell where someone ran out of money in retirement. It’s a big fear, but with careful planning and adjustments along the way, it’s possible to avoid what might scare you the most about retirement.

What I see more often is ruining their retirement by underspending. They are so fearful about spending down their assets that they don’t actually enjoy their retirement years. They stay home rather than take vacations. They deal with lukewarm water in their shower for years rather than paying a plumber to come fix it. They drive around an old, unreliable car, not because they can’t afford a new one, but because they refuse to spend any money. 

Retirement years are meant to be a new adventure, particularly the younger years of retirement when you’re still healthy and active. But I see too many people waste it away watching Fox News or CNN all day and not doing much of anything else that’s meaningful or fulfilling. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance