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Data Privacy and Your Financial Planner

              Data Privacy and Your Financial Planner Updated January 13, 2023: Data privacy week is January 22 – 28, 2023.  Here are some tips to help investors safeguard  personal information when it comes to working with a financial advisor. 2021 was a record year for the number of data … Read more

“Have you enjoyed your money?” And other financial planning questions you should ask yourself in 2021

By Paul Parnell

Photo of Paul Parnell

“Have you enjoyed your money?” This is a question I often ask my clients. Too often I see investors who work and save diligently for a lifetime and yet never actually enjoy the fruits of their labor.  

After a year of life in a pandemic, I’m seeing a shift, and more families are taking time to reevaluate their priorities in terms of how they truly want to spend their time and money. Here are some common questions and points of consideration to reflect on for your personal financial plan.

Have you reevaluated any major priorities?

For example, I have clients say they plan to travel more once things open again. Some desire to move closer to family, to downsize, to retire earlier. Sadly, there have been many stark reminders this year that life is short, and our health is never guaranteed.  I see families that are more reflective on leaving a legacy and making significant changes to their trusts to protect their assets.

Any effective financial plan must take these elements into consideration.

Did the pandemic impact your job or career?

Early retirement, a career change, or job loss means impact to employee benefits that are tied to your long-term goals.

Specifically, Cobra was extended again – for at least another 6 months beyond May. This offers the unemployed more time to find new work and maintain their healthcare benefits – an important component of your financial plan. Accordingly, if you’ve lost your job, you may need to evaluate whether or not you can benefit from rolling your 401K over to an individual retirement account.

Volatility in the markets over the last year impacted executive compensation plans. It’s important to reevaluate your stock options, RSUs, or any additional incentives for consequences.

I am also seeing that, for people who have retained their jobs, many have accumulated more cash reserves than normal. If your cash reserve is beyond the recommended 3-6 months of expenses, you should consider shifting some to longer term investments.

Has your risk tolerance changed?

Risk tolerance often changes when you go through major life events. I’ve heard clients say, “Life too short and I want to retire early,” and they are willing to buckle down and live on less in retirement.

Meet with your financial planner and evaluate your current risk tolerance. Is it enough to maintain a high probability of your assets lasting? Cash and more conservative investments like CD’s aren’t paying much of anything these days. With interest rates so low, and plans for new economic expansion, historically this is a time to be more aggressive. Ensure that your portfolio is balanced to meet your future goals.

How might taxes impact your financial plan?

There are likely some big tax law changes coming over the next couple years. This is the time to be looking at tax shelters and maximizing your retirement plans, if you can. At Ballast Advisors, we also have an affiliated CPA practice, so this is a comprehensive service we may offer our clients.  We work with our client’s other advisors—including accountants, attorneys, and bankers—to ensure the seamless execution of your plan.

Capital Gains tax are likely to increase to historical levels, and this is something to be planning for earlier than perhaps you had planned. It’s something to be watching very carefully.

Questions and Answers

Any successful investment strategy requires getting to know our clients- to understand their dreams, goals and create a complete picture of their financial situation. 

Anytime you have major life change or shift priorities – be they personal or financial –your financial plan needs to reflect those changes. It is equally important to update your estate plan. It’s important to consult with your financial professionals to ensure that you are on track to meet your goals, no matter what life brings.

Whatever your passion is – from travel to grandkids – make sure you build in a plan to enjoy your money.

IMPORTANT DISCLOSURES The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice.  Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

 The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request.

Plan Your Finances as You Would Your Exercise

You exercise to benefit from your sweat equity in the future, right?

Waking up early in the dark mornings of winter to exercise comes hard. Once your workout ends, though, you often begin the day with the payoff of a tremendous energy boost. Can the same process apply to your finances?

If you’re like most people, you exercise for many reasons but expect to benefit from your sweat equity in the future, not just in the current moment. We will all encounter health issues at some time and the medical world assures us that we’ll deal better with problems if we get – and stay – physically fit. Preparation matters.

So, what does exercise have in common with financial planning and investing? The answer: Very few individuals prepare to invest, except maybe when selecting from choices in a retirement plan.

Or not: One study shows that in 2020 – in the teeth of the COVID-pandemic and perhaps the most volatile market year since maybe 2008 – most 401(k) retirement plan participants made no changes to their contributions.

planning your finances

Exercise Helps Limit Our Injuries

Getting back to the fitness analogy, exercise’s greatest benefits come from the stress we intentionally place on our muscles so that when a health problem arises, our bodies are in better condition to deal with the situation. Regarding investments, if you choose to go it alone, you need a methodical (and regularly visited) regimen for taking in and processing market data. You also need a strategy to accommodate unforeseen yet inevitable future events, such as market downturns.

Don’t let random financial news clips guide your decisions when determining how to act. For the record, you need not re-allocate asset classes or otherwise change your portfolio just because something in the market changed.

You do need to be prepared to consider adjustments when the information dictates that conditions shifted, such as stocks increasing to a higher portion of your portfolio than you want.

Your Planning Routine

We call this an investment policy statement or some prefer the term “investment playbook.” The playbook outlines your holdings and specifies how you intend to respond to change with a disciplined approach aimed at particular objectives – as opposed to the usually heated emotions most of us feel in a suddenly rough market.

How are your holdings doing against benchmarks such as the S&P 500 Index? At specifically what point will market shifts make you re-allocate percentages of stocks and bonds in your portfolio?

Your playbook also describes what you’re trying to achieve as an investor – pay for retirement or for college tuition, for example – and how you’ll react to market changes. You might plan to sell or buy only if the S&P 500 hits a certain number or invest in oil if the cost per barrel drops to a pre-set price. A well-designed playbook keeps you from panicky decisions or from freezing up during Wall Street roller coasters.

Your playbook needs to clearly document your investment information sources, the technology involved in your investing and why you bought a particular investment. Remember: Great stock or mutual fund opportunities may arise and shimmer, but if they don’t match your playbook, you pass.

At the gym, you can wander among the clanking weights or plan exactly how to invest your energy. You know which method works better.

Investing is no different

Copyright © 2021 FMeX. All rights reserved. Distributed by Financial Media Exchange. Originally posted March 2, 2021

This material is provided for general information and educational purposes only and should not be considered as investment advice. Past performance is not indicative of future results. Nothing contained herein constitutes as an offer or recommendation to buy or sell a particular security or investment product. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training.

Changing Jobs? Know Your 401(k) Options

If you’ve lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan account. It’s important to understand your options.

Originally Published on: Jul 1, 2019

 What will I be entitled to?

If you leave your job (voluntarily or involuntarily), you’ll be entitled to a distribution of your vested balance. Your vested balance always includes your own contributions (pre-tax, after-tax, and Roth) and typically any investment earnings on those amounts. It also includes employer contributions (and earnings) that have satisfied your plan’s vesting schedule.

Nest with eggs labeled with the financial planning terms house, pension, 401K, IRAIn general, you must be 100% vested in your employer’s contributions after 3 years of service (“cliff vesting”), or you must vest gradually, 20% per year until you’re fully vested after 6 years (“graded vesting”). Plans can have faster vesting schedules, and some even have 100% immediate vesting. You’ll also be 100% vested once you’ve reached your plan’s normal retirement age.

It’s important for you to understand how your particular plan’s vesting schedule works, because you’ll forfeit any employer contributions that haven’t vested by the time you leave your job. Your summary plan description (SPD) will spell out how the vesting schedule for your particular plan works. If you don’t have one, ask your plan administrator for it. If you’re on the cusp of vesting, it may make sense to wait a bit before leaving, if you have that luxury.

Don’t spend it

While this pool of dollars may look attractive, don’t spend it unless you absolutely need to. If you take a distribution you’ll be taxed, at ordinary income tax rates, on the entire value of your account except for any after-tax or Roth 401(k) contributions you’ve made. And, if you’re not yet age 55, an additional 10% penalty may apply to the taxable portion of your payout. (Special rules may apply if you receive a lump-sum distribution and you were born before 1936, or if the lump-sum includes employer stock.)

If your vested balance is more than $5,000, you can leave your money in your employer’s plan at least until you reach the plan’s normal retirement age (typically age 65). But your employer must also allow you to make a direct rollover to an IRA or to another employer’s 401(k) plan. As the name suggests, in a direct rollover the money passes directly from your 401(k) plan account to the IRA or other plan. This is preferable to a “60-day rollover,” where you get the check and then roll the money over yourself, because your employer has to withhold 20% of the taxable portion of a 60-day rollover. You can still roll over the entire amount of your distribution, but you’ll need to come up with the 20% that’s been withheld until you recapture that amount when you file your income tax return.

Should I roll over to my new employer’s 401(k) plan or to an IRA?

Assuming both options are available to you, there’s no right or wrong answer to this question. There are strong arguments to be made on both sides. You need to weigh all of the factors, and make a decision based on your own needs and priorities. It’s best to have a professional assist you with this, since the decision you make may have significant consequences — both now and in the future.

Reasons to consider rolling over to an IRA:

  • You generally have more investment choices with an IRA than with an employer’s 401(k) plan. You typically may freely move your money around to the various investments offered by your IRA trustee, and you may divide up your balance among as many of those investments as you want. By contrast, employer-sponsored plans generally offer a limited menu of investments (usually mutual funds) from which to choose.

 

  • You can freely allocate your IRA dollars among different IRA trustees/custodians. There’s no limit on how many direct, trustee-to-trustee IRA transfers you can do in a year. This gives you flexibility to change trustees often if you are dissatisfied with investment performance or customer service. It can also allow you to have IRA accounts with more than one institution for added diversification. With an employer’s plan, you can’t move the funds to a different trustee unless you leave your job and roll over the funds
  • An IRA may give you more flexibility with distributions. Your distribution options in a 401(k) plan depend on the terms of that particular plan, and your options may be limited. However, with an IRA, the timing and amount of distributions is generally at your discretion (until you reach age 70½ and must start taking required minimum distributions in the case of a traditional IRA).

 

  • You can roll over (essentially “convert”) your 401(k) plan distribution to a Roth IRA. You’ll generally have to pay taxes on the amount you roll over (minus any after-tax contributions you’ve made), but any qualified distributions from the Roth IRA in the future will be tax free.

Reasons to consider rolling over to your new employer’s 401(k) plan (or stay in your current plan):

 

  • Many employer-sponsored plans have loan provisions. If you roll over your retirement funds to a new employer’s plan that permits loans, you may be able to borrow up to 50% of the amount you roll over if you need the money. You can’t borrow from an IRA — you can only access the money in an IRA by taking a distribution, which may be subject to income tax and penalties. (You can give yourself a short-term loan from an IRA by taking a distribution, and then rolling the dollars back to an IRA within 60 days; however, this move is permitted only once in any 12-month time period.)

 

  • Employer retirement plans generally provide greater creditor protection than IRAs. Most 401(k) plans receive unlimited protection from your creditors under federal law. Your creditors (with certain exceptions) cannot attach your plan funds to satisfy any of your debts and obligations, regardless of whether you’ve declared bankruptcy. In contrast, any amounts you roll over to a traditional or Roth IRA are generally protected under federal law only if you declare bankruptcy. Any creditor protection your IRA may receive in cases outside of bankruptcy will generally depend on the laws of your particular state. If you are concerned about asset protection, be sure to seek the assistance of a qualified professional.
  • You may be able to postpone required minimum distributions. For traditional IRAs, these distributions must begin by April 1 following the year you reach age 70½. However, if you work past that age and are still participating in your employer’s 401(k) plan, you can delay your first distribution from that plan until April 1 following the year of your retirement. (You also must own no more than 5% of the company.)

 

  • If your distribution includes Roth 401(k) contributions and earnings, you can roll those amounts over to either a Roth IRA or your new employer’s Roth 401(k) plan (if it accepts rollovers). If you roll the funds over to a Roth IRA, the Roth IRA holding period will determine when you can begin receiving tax-free qualified distributions from the IRA. So if you’re establishing a Roth IRA for the first time, your Roth 401(k) dollars will be subject to a brand new five-year holding period. On the other hand, if you roll the dollars over to your new employer’s Roth 401 (k) plan, your existing five-year holding period will carry over to the new plan. This may enable you to receive tax-free qualified distributions sooner.

When evaluating whether to initiate a rollover always be sure to (1) ask about possible surrender charges that may be imposed by your employer plan, or new surrender charges that your IRA may impose, (2) compare investment fees and expenses charged by your IRA (and investment funds) with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of your employer plan.

What about outstanding plan loans?

In general, if you have an outstanding plan loan, you’ll need to pay it back, or the outstanding balance will be taxed as if it had been distributed to you in cash. If you can’t pay the loan back before you leave, you’ll still have 60 days to roll over the amount that’s been treated as a distribution to your IRA. Of course, you’ll need to come up with the dollars from other sources.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice

If you’re interested in receiving additional financial advice, contact Ballast Advisors for a complimentary consultation at a location near you:

Ballast Advisors – Woodbury

683 Bielenberg Dr., Suite 208
Woodbury, MN  55125-1705
Tel: 651.478.4644

 Ballast Advisors – Arden Hills

3820 Cleveland Ave. N, Ste. 500
Arden Hills, MN  55112-3298
Tel: 651.200.3100

 Ballast Advisors – Punta Gorda 

223 Taylor St., Suite 1214
Punta Gorda, FL  33950-3901
Tel: 941.621.4015

Financial Planning: Helping You See the Big Picture

 
 

*There is no assurance that working with a financial professional will improve investment results.

Common financial goals

  • Saving and investing for retirement
  • Saving and investing for college
  • Establishing an emergency fund
  • Providing for your family in the event of your death
  • Minimizing income or estate taxes

 

 

 

Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial goals that may be important to you, and each comes with a price tag attached.

That’s where financial planning comes in. Financial planning is a process that can help you target your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.

Why is financial planning important?

A comprehensive financial plan serves as a framework for organizing the pieces of your financial picture. With a financial plan in place, you’ll be better able to focus on your goals and understand what it will take to reach them.

One of the main benefits of having a financial plan is that it can help you balance competing financial priorities. A financial plan will clearly show you how your financial goals are related–for example, how saving for your children’s college education might impact your ability to save for retirement. Then you can use the information you’ve gleaned to decide how to prioritize your goals, implement specific strategies, and choose suitable products or services. Best of all, you’ll know that your financial life is headed in the right direction.

The financial planning process

Creating and implementing a comprehensive financial plan generally involves working with financial professionals to:

  • Develop a clear picture of your current financial situation by reviewing your income, assets, and liabilities, and evaluating your insurance coverage, your investment portfolio, your tax exposure, and your estate plan
  • Establish and prioritize financial goals and time frames for achieving these goals
  • Implement strategies that address your current financial weaknesses and build on your financial strengths
  • Choose specific products and services that are tailored to help meet your financial objectives*
  • Monitor your plan, making adjustments as your goals, time frames, or circumstances change

Some members of the team

The financial planning process can involve a number of professionals.

Financial planners typically play a central role in the process, focusing on your overall financial plan, and often coordinating the activities of other professionals who have expertise in specific areas.

Accountants or tax attorneys provide advice on federal and state tax issues.

Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death.

Insurance professionals evaluate insurance needs and recommend appropriate products and strategies.

Investment advisors provide advice about investment options and asset allocation, and can help you plan a strategy to manage your investment portfolio.

The most important member of the team, however, is you. Your needs and objectives drive the team, and once you’ve carefully considered any recommendations, all decisions lie in your hands.

Why can’t I do it myself?

You can, if you have enough time and knowledge, but developing a comprehensive financial plan may require expertise in several areas. A financial professional can give you objective information and help you weigh your alternatives, saving you time and ensuring that all angles of your financial picture are covered.

Staying on track

The financial planning process doesn’t end once your initial plan has been created. Your plan should generally be reviewed at least once a year to make sure that it’s up-to-date. It’s also possible that you’ll need to modify your plan due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan:

  • Your goals or time horizons change
  • You experience a life-changing event such as marriage, the birth of a child, health problems, or a job loss
  • You have a specific or immediate financial planning need (e.g., drafting a will, managing a distribution from a retirement account, paying long-term care expenses)
  • Your income or expenses substantially increase or decrease
  • Your portfolio hasn’t performed as expected
  • You’re affected by changes to the economy or tax laws

Common questions about financial planning

What if I’m too busy?

Don’t wait until you’re in the midst of a financial crisis before beginning the planning process. The sooner you start, the more options you may have.

Is the financial planning process complicated?

Each financial plan is tailored to the needs of the individual, so how complicated the process will be depends on your individual circumstances. But no matter what type of help you need, a financial professional will work hard to make the process as easy as possible, and will gladly answer all of your questions.

What if my spouse and I disagree?

A financial professional is trained to listen to your concerns, identify any underlying issues, and help you find common ground.

Can I still control my own finances?

Financial planning professionals make recommendations, not decisions. You retain control over your finances. Recommendations will be based on your needs, values, goals, and time frames. You decide which recommendations to follow, then work with a financial professional to implement them.

 

 
 

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019
 IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice
 
 

2018 Year-End Tax Planning Basics

Timing of itemized deductions and the increased standard deduction

The Tax Cuts and Jobs Act, signed into law in December 2017, substantially increased the standard deduction amounts and made significant changes to itemized deductions, generally starting in 2018. (After 2025, these provisions revert to pre-2018 law.) It may now be especially useful to bunch itemized deductions in certain years; for example, when they would exceed the standard deduction.

Required minimum distributions

Once you reach age 70½, you’re generally required to start taking required minimum distributions (RMDs) from traditional IRAs and employer-sponsored retirement plans (special rules apply if you’re still working and participating in your employer’s retirement plan). You have to make the withdrawals by the date required — the end of the year for most individuals. The penalty for failing to do so is substantial: 50% of the amount that wasn’t distributed on time.

  

2018 Year-End Tax Planning Basics

The window of opportunity for many tax-saving moves closes on December 31, so it’s important to evaluate your tax situation now, while there’s still time to affect your bottom line for the 2018 tax year.

Timing is everything

Consider any opportunities you have to defer income to 2019. For example, you may be able to defer a year-end bonus, or delay the collection of business debts, rents, and payments for services. Doing so may allow you to postpone paying tax on the income until next year. If there’s a chance that you’ll be in a lower income tax bracket next year, deferring income could mean paying less tax on the income as well.

Similarly, consider ways to accelerate deductions into 2018. If you itemize deductions, you might accelerate some deductible expenses like medical expenses, qualifying interest, or state and local taxes by making payments before year-end. Or you might consider making next year’s charitable contribution this year instead.

Sometimes, however, it may make sense to take the opposite approach — accelerating income into 2018 and postponing deductible expenses to 2019. That might be the case, for example, if you can project that you’ll be in a higher tax bracket in 2019; paying taxes this year instead of next might be outweighed by the fact that the income would be taxed at a higher rate next year.

Factor in the AMT

Make sure that you factor in the alternative minimum tax (AMT). If you’re subject to the AMT, traditional year-end maneuvers, like deferring income and accelerating deductions, can have a negative effect. That’s because the AMT — essentially a separate, parallel income tax with its own rates and rules — effectively disallows a number of itemized deductions. For example, if you’re subject to the AMT in 2018, prepaying 2019 state and local taxes won’t help your 2018 tax situation, but could hurt your 2019 bottom line.

Special concerns for higher-income individuals

The top marginal tax rate (37%) applies if your taxable income exceeds $500,000 in 2018 ($600,000 if married filing jointly, $300,000 if married filing separately). Your long-term capital gains and qualifying dividends could be taxed at a maximum 20% tax rate if your taxable income exceeds $425,800 in 2018 ($479,000 if married filing jointly, $239,500 if married filing separately, $452,400 if head of household).

Additionally, a 3.8% net investment income tax (unearned income Medicare contribution tax) may apply to some or all of your net investment income if your modified AGI exceeds $200,000 ($250,000 if married filing jointly, $125,000 if married filing separately).

Note:  High-income individuals are subject to an additional 0.9% Medicare (hospital insurance) payroll tax on wages exceeding $200,000 ($250,000 if married filing jointly or $125,000 if married filing separately).

IRAs and retirement plans

Take full advantage of tax-advantaged retirement savings vehicles. Traditional IRAs and employer-sponsored retirement plans such as 401(k) plans allow you to contribute funds on a deductible (if you qualify) or pre-tax basis, reducing your 2018 taxable income. Contributions to a Roth IRA (assuming you meet the income requirements) or a Roth 401(k) aren’t deductible or made with pre-tax dollars, so there’s no tax benefit for 2018, but qualified Roth distributions are completely free from federal income tax, which can make these retirement savings vehicles appealing.

For 2018, you can contribute up to $18,500 to a 401(k) plan ($24,500 if you’re age 50 or older) and up to $5,500 to a traditional IRA or Roth IRA ($6,500 if you’re age 50 or older). The window to make 2018 contributions to an employer plan typically closes at the end of the year, while you generally have until the April tax return filing deadline to make 2018 IRA contributions.

Roth conversions

Year-end is a good time to evaluate whether it makes sense to convert a tax-deferred savings vehicle like a traditional IRA or a 401(k) account to a Roth account. When you convert a traditional IRA to a Roth IRA, or a traditional 401(k) account to a Roth 401(k) account, the converted funds are generally subject to federal income tax in the year that you make the conversion (except to the extent that the funds represent nondeductible after-tax contributions). If a Roth conversion does make sense, you’ll want to give some thought to the timing of the conversion. For example, if you believe that you’ll be in a better tax situation this year than next (e.g., you would pay tax on the converted funds at a lower rate this year), you might think about acting now rather than waiting. (Whether a Roth conversion is appropriate for you depends on many factors, including your current and projected future income tax rates.)

Previously, if you converted a traditional IRA to a Roth IRA and it turned out to be the wrong decision (things didn’t go the way you planned and you realized that you would have been better off waiting to convert), you could recharacterize (i.e., “undo”) the conversion. Recent legislation has eliminated the option to recharacterize a Roth IRA conversion.

Changes to note

Recent legislation has modified many provisions for 2018.

  • Personal exemptions have been eliminated.
  • Standard deductions have been substantially increased to $12,000 ($24,000 if married filing jointly, $18,000 if head of household).
  • The overall limitation on itemized deductions based on the amount of adjusted gross income (AGI) was eliminated.
  • The AGI threshold for deducting unreimbursed medical expenses was reduced from 10% to 7.5% for 2017 and 2018, after which it returns to 10%.
  • The deduction for state and local taxes has been limited to $10,000 ($5,000 if married filing separately).
  • Individuals can deduct mortgage interest on no more than $750,000 ($375,000 for married filing separately) of qualifying mortgage debt. For mortgage debt incurred before December 16, 2017, the prior $1,000,000 ($500,000 for married filing separately) limit will continue to apply. A deduction is no longer allowed for interest on home equity indebtedness. Home equity used to substantially improve your home is not treated as home equity indebtedness and can still qualify for the interest deduction.
  • The top percentage limit for deducting charitable contributions is increased from 50% of AGI to 60% of AGI for certain cash gifts.
  • The deduction for personal casualty and theft losses is eliminated, except for casualty losses attributable to a federally declared disaster.
  • Previously deductible miscellaneous expenses subject to the 2% floor, including tax preparation expenses and unreimbursed employee business expenses, are no longer deductible.

Expired provisions

A number of provisions are extended periodically. The following provisions have expired and are not available for 2018 unless extended by Congress.

  • Above-the-line deduction for qualified higher-education expenses
  • Ability to deduct qualified mortgage insurance premiums as deductible interest on Schedule A of IRS Form 1040
  • Ability to exclude from income amounts resulting from the forgiveness of debt on a qualified principal residence
  • Nonbusiness energy property credit, which allowed individuals to offset some of the cost of energy-efficient qualified home improvements (subject to a $500 lifetime cap)

Talk to a professional

When it comes to year-end tax planning, there’s always a lot to think about. A tax professional can help you evaluate your situation, keep you apprised of any legislative changes, and determine whether any year-end moves make sense for you.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

If you’re interested in receiving additional financial advice as a business owner, contact Ballast Advisors for a complimentary consultation at a location near you:

Ballast Advisors – Woodbury
683 Bielenberg Dr., Suite 208
Woodbury, MN  55125-1705
Tel: 651.478.4644		 Ballast Advisors – St. Paul
3820 Cleveland Ave. N, Ste. 500
St. Paul, MN  55112-3298
Tel: 651.200.3100		 Ballast Advisors – Punta Gorda
6210 Scott St., Suite 117
Punta Gorda, FL  33950-3901
Tel: 941.621.4015 
IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. This communication is strictly intended for individuals residing in the state(s) of AZ, CA, CO, FL, GA, ID, IL, IN, IA, LA, MN, ND, OH, PA, TX, VA, WA and WI. No offers may be made or accepted from any resident outside the specific states referenced.
 

 

3 Tips for Personal Finances During the Holiday Season

Ballast Financial Professionals share tips for your personal finances this holiday season.

(originally published November 2018)

Between holiday gifts, parties and meals — this time of year is one of inevitably higher spending.

No matter what your regular habits are around your personal financial planning, it’s a good practice this time of year to give your household budget a once-over and pay extra attention to your spending.

Even if your gifting budget is unlimited, there are a few reasons an extra eye on your expenditures is recommended.

Professionals from Ballast Advisors share three best practices for personal finances this holiday season.

Tip #1: Plan Ahead

Santa shouldn’t be the only one making lists and checking them twice.

“Plan ahead and stick to your budget,” recommends wealth advisor Scott Peterson of Ballast Advisors, who has twenty-seven years of experience in the financial services industry. 

Consider planning for the not so obvious — smaller expenses like hostess gifts and extra groceries for out of town company can add up quickly, so factor them in advance.

There are even some apps that can help you plan your giving. Santa’s Bag is an easy-to-use Christmas themed shopping app that helps you budget and track your gift giving by recipient.

Ultimately, you can’t calculate where you’re going financially unless you know where you stand now, so cash flow and budget analysis is key.

Christmas shopping list

Tip #2: Shop Early

Even if you’re not a die-hard Black Friday shopper, don’t wait until Christmas Eve to do your shopping, or you will likely spend more.

“Start shopping early,” says Paul Parnell, Founding Partner of Ballast Advisors.  Paul has over twenty-three years of experience in guiding clients and helping them prepare for a sound financial future.

“From personal experience, last minute shopping is much more expensive,” adds Parnell.

Again if you couple this second tip with planning ahead, you’re on track to wiser spending.

Tip #3: Evaluate Regularly

As the saying goes, “the road to Hell is paved with good intentions” —and the same logic applies to your holiday shopping.

Even if you start off with a budget, a plan, shop early — if you don’t actually stick to it, it’s not worth much.

“Don’t wait until after the Holidays to evaluate what you spent,” says CFP®  certified financial professional Richard Juckel, who is responsible for overseeing the advice and wealth management operations and serves on the Investment Committee at Ballast Advisors.

Not only is it important to make a budget, but it’s equally important to track it closely. Hang on to your receipts, spend that extra time entering your spend against your budget.

Unfortunately, this time of year is also a time where theft is on the rise. Keep track of your transactions to be sure there isn’t any unauthorized spending.

These simple steps put into action will help you keep on track this season.

For more information on how Ballast Advisors helps Twin Cities professionals discover their financial needs and goals

 

 

For more information on how Ballast Advisors helps professionals discover their financial needs and goals, contact Ballast Advisors for a complimentary consultation at a location near you:

Ballast Advisors – Woodbury

683 Bielenberg Dr., Suite 208
Woodbury, MN  55125-1705
Tel: 651.478.4644

 Ballast Advisors – St. Paul

3820 Cleveland Ave. N, Ste. 500

St. Paul, MN  55112-3298
Tel: 651.200.3100

Ballast Advisors – Punta Gorda
223 Taylor Street, Suite 1214
Punta Gorda, FL  33950-3901
Tel: 941.621.4015

 Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request. The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice.

Steven Schmidt, CFP®, APMA®, ChFC®, CLU®

Tel: 651.200.3113
[email protected]
3820 Cleveland Ave N, Suite 500
Arden Hills, MN 55112-3298
ballastadvisors.com

Steven Schmidt, CFP®, APMA®, ChFC®, CLU®

Managing Partner | Wealth Advisor | CERTIFIED FINANCIAL PLANNER™ 

Steve is a Founding Partner at Ballast Advisors. He is a seasoned investment manager with over 24 years of experience.  Since 1993 he has advised small business owners and professionals with wealth management in St. Paul, MN  and serves on the firm’s Executive and Investment Policy Committees.

Steve earned his Bachelor of Arts degree from Saint Olaf College in Northfield, MN.  In addition, Steve has earned designations as a Certified Financial Planner (CFP®), Accredited Portfolio Management Advisor (APMA®), the Chartered Financial Consultant (ChFC®), and Chartered Life Underwriter (CLU®).  He is  a member of the Financial Planning Association (FPA).  

Steve and his wife Mari reside in Arden Hills, MN with their four children.  In his spare time he enjoys reading, spending time outdoors – including the Boundary Waters,  and golfing with family and friends.

 

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