Imber Wealth Advisors

Tuesday, March 31, 2020

Inheriting a 401(k) Plan

Within the scope of an investment portfolio, the commonplace 401(k) may seem to be a simplistic account. But it’s not, especially when it comes to estate and legacy planning. The named beneficiary on the plan will inherit your 401(k) regardless of your will’s instructions. And from there, a spectrum of various choices emerge based on a plethora of different variables.

First off, you can’t name anyone other than your spouse as the beneficiary unless you get your spouse to sign off on a form that says it’s OK. This rule is designed to protect a spouse from a partner who is considering a divorce and tries to put all of his or her financial accounts under his or her own name before announcing this intention.¹

If you inherit a 401(k) from your spouse, what you decide to do with it and the subsequent tax impacts may depend largely on your age and whether or not your spouse had started taking required minimum distributions (RMDs) before he or she died. In general, you may (1) choose to leave the money in the plan and take distributions; (2) transfer the funds to an inherited IRA; or (3) transfer the money to your own IRA.²

If you are a non-spouse beneficiary of a 401(k) plan, the rules have changed recently. In late 2019, Congress passed legislation that limited a strategy called the “stretch IRA.” This strategy was particularly popular among people who had saved a substantial amount of money in their retirement accounts. It used to be that this type of beneficiary could potentially take distributions from the account throughout decades, based on the beneficiary’s age and life expectancy.³ This meant that those assets could continue growing tax-deferred indefinitely.

Now, as a result of the SECURE Act, most new non-spouse beneficiaries must fully distribute all the account’s inherited assets in 10 years or fewer after the death of the original account holder. If an account owner had previously set up a trust to be beneficiary of a qualified account prior to the SECURE Act, the new rules could lead to undesirable results. If you have such a trust as the account beneficiary, it’s important to have it reassessed to make sure the language doesn’t negatively impact the trust’s beneficiaries or create a tax disadvantage.⁴

There are more factors related to inheriting a 401(k) plan than just the recent SECURE Act provisions, including whether or not the account owner had reached the required date to start taking RMDs before death. The exact date depends on whether the account owner was still working at the company, had retired before age 70 ½ or was working at a different company.⁵

Suffice it to say that many things related to an inherited 401(k) are complex. And, while there are effective strategies, they can be complex, too. For example, you could decide to take advantage of spousal beneficiary strategies instead of naming a non-spouse. This might include the surviving spouse gifting the residual RMDs to other heirs or contributing that income to a taxable account and naming those heirs as beneficiaries upon her death, which may offer a strategic tax advantage.⁶

In short, estate and legacy planning is complicated business — even for something that seems straightforward, like a 401(k) plan. We can work with your estate planning and tax professionals to help you address these issues.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

1 Rebecca Lake. SmartAsset. Oct. 22, 2019. “A Guide to Inheriting a 401(k).” https://smartasset.com/retirement/inherited-401k. Accessed Feb. 24, 2020.

2 Ibid.

3 Greg Iacurci. CNBC. Dec. 17, 2019. “Lawmakers are killing this popular retirement tax break for the wealthy.” https://www.cnbc.com/2019/12/17/lawmakers-may-kill-this-popular-retirement-tax-break-for-the-wealthy.html. Accessed Feb. 24, 2020.

4 Alessandra Malito. MarketWatch. Jan. 9, 2020. “Inheriting a parent’s IRA or 401(k)? Here’s how the Secure Act could create a disaster.” https://www.marketwatch.com/story/inheriting-a-parents-ira-or-401k-heres-how-the-secure-act-could-create-a-disaster-2019-12-26. Accessed Feb. 24, 2020.

5 Rachel L. Sheedy. Kiplinger. May 30, 2019. “Inherited 401(k)s: 6 Questions Heirs Need to Ask.” https://www.kiplinger.com/slideshow/retirement/T001-S004-inherited-401k-6-questions-heirs-need-to-ask/index.html. Accessed Feb. 24, 2020.

6 Rhian Horgan. Nasdaq. Jan. 30, 2020. “2 IRA Changes to Consider Right Now, Thanks to the SECURE Act.” https://www.nasdaq.com/articles/2-ira-changes-to-consider-right-now-thanks-to-the-secure-act-2020-01-30. Accessed Feb. 24, 2020.

Tuesday, March 10, 2020

The Coronavirus & Other Oddball Risks to Retirement

One of the reasons investing never gets boring is because it is an ever-changing, never-sleeping industry that presents new opportunities — and new risks — every day.

One of the most recent threats to the global business economy, and therefore investors, is the coronavirus and its far-reaching impact. China, home to much of the world’s manufacturing, has been hard hit by the epidemic. In its wake, travel has been one of the first casualties. This is bad news not just for tourists, but for the thousands of business representatives who fly in and out of the country each day. The virus outbreak among Chinese workers threatens business trade and supply chain production for markets throughout the world.1

The outbreak of coronavirus is but one example of the types of unexpected risks that can disrupt a wide variety of industries — and one example of why financial advisors recommend diversification. While all investments involve risks, there are additional risks associated with foreign investing, such as currency fluctuations, economic instability and political developments. Building an investment portfolio that includes uncorrelated asset classes can help defend against the wide range of both anticipated and unanticipated risks that investors face. We’re happy to review your portfolio to assess how much market risk you might be exposed to; just give us a call.

If you don’t think the coronavirus has impacted U.S. companies, think again. McDonald’s, Starbucks and H&M have all had to shutter stores in China. Disney closed its Shanghai and Hong Kong theme parks. The Marriott, Hyatt and Hilton hotel companies have suspended some operations in areas most affected by the virus. Carnival and Royal Caribbean Cruises have been forced to cancel scheduled voyages to help curb the spread from one country to another.2

The problem isn’t isolated to retail stores, either. Technology companies like Apple and Google have restricted employee travel either completely or only for “business-critical situations.” Additionally, General Motors, Honda and Nissan have suspended auto production.3

According to Wilbur Ross, the U.S. Secretary of Commerce, there is perhaps a silver lining to the crisis. In a recent interview, he intimated that if U.S. manufacturers returned many of their offshore operations to America, they could better control such risks.4

However, risk is risk — and it takes on many different guises, even domestically. Some investment analysts warn that political campaigns heading toward the November elections may be a primary source of market volatility throughout the year. The two major political parties appear as divided as ever with policies that offer both positive and negative components. Regardless of party affiliation, both offer platforms that seem likely to increase spending and expand our nation’s debt.

This dynamic is likely to stretch U.S. Treasury valuations even further, while the relationship between the Federal Reserve and the investment markets may continue to be strained. While the Fed altered monetary policy in 2019 to accommodate markets, there could be less wiggle room now to combat any further risks to the economy such as rising asset price inflation.5

And then there’s the problem of trade wars promulgated by aggressive 140-character tweets — an approach that tends to pain Republicans and Democrats alike, not to mention Wall Street.6

1 Franklin Templeton. Jan. 24, 2020. “Monitoring China’s Outbreak and Other Potential Market Shocks.” https://www.franklintempleton.ca/en-ca/investor/article?contentPath=html/ftthinks/common/blogs/monitoring-chinas-outbreak-and-other-potential-market-shocks.html. Accessed Feb. 5, 2020.

2 Sergei Klebnikov. Forbes. Jan. 28, 2020. “Coronavirus Hits Big Business: These Companies Are Cutting Operations And Restricting Travel To China As Disease Spreads. https://www.forbes.com/sites/sergeiklebnikov/2020/01/28/coronavirus-hits-big-business-these-companies-are-cutting-operations-and-restricting-travel-to-china-as-disease-spreads/#509d69381264. Accessed Feb. 5, 2020.

3 Megan Cerullo. CBS News. Jan. 30, 2020. “China coronavirus causing chaos for U.S. companies.” https://www.cbsnews.com/news/coronavirus-brings-business-operations-in-china-to-standstill/. Accessed Feb. 5, 2020.

4 BBC News. Jan. 31, 2020. “Wilbur Ross says Coronavirus could boost US jobs.” https://www.bbc.com/news/business-51276323. Accessed Feb. 5, 2020.

5 Sonal Desai. Franklin Templeton. Jan. 14, 2020. “On My Mind: Will the US Survive the Politics in 2020?” https://www.franklintempletonnordic.com/investor/article?contentPath=html/ftthinks/common/cio-views/on-my-mind-will-the-us-economy-survive-the-politics-in-2020.html. Accessed Feb. 5, 2020.

6 Ibid.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Thursday, March 5, 2020

Boomerangers: When the Chickadees Return Home to Roost

That first summer after they graduate from college. When they get laid off. After a divorce. There are plenty of times in life when adult children, albeit reluctantly, move back in with their parents until they can get on stronger financial footing.

Unfortunately, this has a way of happening right about the time when parents may no longer have such financial obligations as college bills and auto loans, and maybe even have paid off the mortgage. It’s the time when they may be in higher earning years and can finally start socking away a larger portion of their income for retirement to help make up for any lost ground.

Then suddenly, the food and utility bills are higher, and they’re also paying for these “boomerang” children’s health and auto insurance, student loans and maybe even their cell phone bill. It can be difficult to teach financial responsibility to adult children when they may be at their lowest point.

If this is your situation, you can’t let your adult children negatively affect you, financially. It’s important that you preserve your assets and keep up with your savings goals. If we can help you figure out ways to adjust your budget to accommodate boomerang kids or explore insurance options for helping you meet your retirement income goals, please give us a call.

A recent Bankrate survey found that half of parents are sacrificing their financial goals to help out adult children — and that’s not exclusive to the ones who move back home. This alarming trend also prevents many near-retirees from downsizing to achieve savings in housing-related costs, including big-ticket expenses like property taxes, homeowners insurance and ongoing maintenance costs.1

Some of the more common suggestions for managing boomerang kids are to set deadlines for how long they can stay; put benchmarks in place for when you expect them to start paying their expenses, including rent; help with their transition to adulthood if necessary; and, if you can’t, let your financial professional be the “bad guy.”2

Today, about one-third of the millennial generation lives at home with their parents, with an average stay of three years. If you think that indicates a lazy generation, you might want to think twice before judging too harshly. While the last recession posed a difficult time for baby boomers and Generation X, it was hardest on millennials, many of whom were just starting out in adulthood. The economic setback set them back as well. As a result, the net worth of today’s young adult is half what it was for baby boomers at that age, and wages are 20% less on an inflation-adjusted basis.3

As for homeownership, widely considered the most common means of growing wealth, millennials clearly lag there as well. The rising cost of residential real estate, the shortage of available homes on the market and large amounts of student debt have proved to be a real game-changer for young homebuyers. In fact, the median age of first-time homebuyers in 2019 was 33, up from 29 in 1981, and the median age for second-time homebuyers is even more surprising: 55, up from age 36 in 1981.4

If you want to help your adult child but want him to have more independence, consider opportunities to give him a place to live that may also benefit you in retirement. You can do this by buying a small rental unit or even building a tiny home on your property, assuming you have the room. Many states are setting up ordinances for what they term “auxiliary or accessory residential units (ADUs).” These are smaller homes on your property that can serve as a guesthouse, in-law apartment, residence for a caregiver — or temporary housing for your boomeranger.5

1 Ron Carson. Forbes. Aug. 11, 2019. “Five Ways To Keep Boomerang Kids From Ruining Your Retirement.” https://www.forbes.com/sites/rcarson/2019/08/11/five-ways-to-keep-boomerang-kids-from-ruining-your-retirement/#29a78f276349. Accessed Jan. 15, 2020.

2 Rodney Brooks. U.S. News & World Report. May 24, 2019. “Don’t Let Boomerang Kids Endanger Your Retirement.” https://money.usnews.com/money/retirement/baby-boomers/articles/dont-let-boomerang-kids-endanger-your-retirement. Accessed Jan. 15, 2020.

3 Amica. 2019. “When Adult Children Move Back Home” https://www.amicalifelessons.com/infographic/when-adult-children-move-back-home/. Accessed Jan. 15, 2020.

4 Jessica Lautz. National Association of Realtors. Jan. 13, 2020. “Age of Buyers is Skyrocketing…But Not for Who You Might Think.” https://www.nar.realtor/blogs/economists-outlook/age-of-buyers-is-skyrocketing-but-not-for-who-you-might-think. Accessed Jan. 15, 2020.

5 Erik J. Martin. Dallas Morning News. Dec. 28, 2019. “Adding an auxiliary dwelling unit on your property may be worth it.” https://www.dallasnews.com/sponsored/real-estate/2019/12/28/adding-an-auxiliary-dwelling-unit-on-your-property-may-be-worth-it/. Accessed Jan. 15, 2020.

Friday, February 7, 2020

Health & Food Trends to Watch in the New Decade

A recent study concluded that half of the U.S. population will be clinically obese within the next 10 years. This isn’t just a weight issue, it’s a financial one. Obesity is a major factor for developing conditions like heart disease, diabetes, joint disorders and even certain types of cancer.1 So if you think health care expenses are high now, imagine how they could escalate over the next decade.

While we can’t always control what ailments we will experience, to some extent we can work on reducing body weight. And given the impact that being overweight can have on your finances and lifestyle, it may be worth putting as much effort into staying healthy as you do planning for retirement. We may not be able to help you with your nutrition and exercise regimen, but we’re here for you when it comes to building a financial future you can have confidence in. We’d be happy to discuss your insurance options based on your unique situation.

Shape up with small changes

As for improving your health, most experts agree on a handful of evidence-based recommendations. For example, sugary drinks like soda and even fruit juices contribute a lot of calories that can be avoided by switching to water. The same can be said for processed junk food. Nutritionists recommend replacing such foods with different types of vegetables, fruits and nuts as staples in your diet. High-quality proteins and fiber-rich foods can help you lose weight.2

If those traditional suggestions sound too boring, there are new ideas associated with better health. For instance, one study in Italy discovered that people who ate chili peppers at least four times a week had a 40% lower risk of dying from a heart attack and 50% lower risk of dying from a stroke.3

Researchers are still working to determine what accounts for the apparently protective effect, and a registered dietitian not connected to the study reminded that this observational study doesn’t show a causal link. “It is plausible people who use chilies, as the data suggests, also used more herbs and spices and as such were likely to be eating more fresh foods including vegetables,” said Duane Mellor, a registered dietitian and senior teaching fellow at Aston Medical School in the U.K., told CNN.4

Try these trendy foods

If the last decade is any indication, food patterns are trending healthier. From 2010 to present, we witnessed the growing popularity of things like avocado toast, Greek yogurt, nut-based milks, Kombucha tea, poke (raw fish salad) and bone broth.5

Looking ahead to 2020, the Food Network predicts that the biggest food trends will include:6

Pellet grills – compressed sawdust pellets heated by an electric rod that generates the easiest, cleanest and tastiest way to grill and smoke foods at the same time

Hudson Valley, New York – the area, comprising communities of growers, cookers and gourmet artisans, will become a popular vacation destination for “foodies”

Taiwanese food – will become increasingly popular, with dishes like beef noodle soup, pork belly buns and oyster omelets

Tajin (pronounced “ta-HEEN”) – this chile-lime salt seasoning will become all the rage

Grab-and-go charcuterie – will increasingly become the “go-to” choice among meals and snacks prepared by grocery store deli departments

1 Alice Park. Time. Dec. 18, 2019. “Half of the U.S. Population Will Be Obese by 2030.” https://time.com/5751551/us-obesity-by-state/. Accessed Dec. 30, 2019.

2 Kris Gunnars. Healthline. June 7, 2019. “27 Health and Nutrition Tips That Are Actually Evidence-Based.” https://www.healthline.com/nutrition/27-health-and-nutrition-tips. Accessed Dec. 30, 2019.

3 Jack Guy. CNN. Dec. 16, 2019. “Eating chilies cuts risk of death from heart attack and stroke, study says.” https://www.cnn.com/2019/12/16/health/eating-chili-pepper-study-scli-intl-scn-wellness/index.html. Accessed Dec. 30, 2019.

4 Ibid.

5 Lucas Kwan Peterson. Los Angeles Times. Dec. 30, 2019. “Cronuts, cold brew and avocado toast: 15 food trends that defined the decade.” https://www.latimes.com/food/story/2019-12-30/food-trends-best-of-decade. Accessed Dec. 30, 2019.

6 Leah Brickley. Food Network. Dec. 12, 2019. “These Are the Food Trends We’ll Be Talking About in 2020, According to Food Network.” https://www.foodnetwork.com/fn-dish/news/2019/12/food-network-food-trends-2020. Accessed Dec. 30, 2019.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

Monday, February 3, 2020

Work World: Late Career Management

The number of workers older than 64 has increased threefold since 1989.1 And while working longer may be a marker of good health for some, it’s a necessity for others who need the income. As a result, we may need to rethink our idea of what retirement looks like in the 21st century.

Consider that working longer could be a problem if you’re relying on it as a retirement savings strategy. That’s because a 2018 study found that more than half of older U.S. workers, many of them mid- and late-career managers, were forced out of their jobs before they chose to retire.2 Working longer has a lot of advantages, such as the ability to save more money and to grow your assets and your Social Security benefit. Unfortunately, sudden job loss — compounded by the difficulty older workers experience finding new jobs — can cause serious financial damage.

If there is one thing we can count on in life, it’s that life is always changing. We encounter great joys and great challenges, and often it’s how prepared we are that helps us recover and persevere. As insurance professionals, we believe it’s important to be prepared for any type of change that may come your way. If we can help you devise an insurance strategy to help you plan for the income you need in retirement, please give us a call.

It used to be more common for people to retire on their own terms, and there may be a way we can get back to that. But it doesn’t mean bucking the system; it requires embracing change. That change, for many people, could mean working in the “gig economy” with a sideline business. Think about it. By the time you are in the latter stages of your career, you likely have more experience than the vast number of colleagues around you. How can you leverage that for independent income?

Today, more than a third of America’s workforce participates in the gig economy, whether full time or part time.3 Even if you do not have knowledge that translates into a sideline business as, say, a consultant, perhaps you’ve developed another skill that could provide you income. Are you a baker or a carpenter? Perhaps you could drive for a rideshare service or walk dogs in your spare time. Working for yourself comes with plenty of perks, such as accepting only the jobs you want and scheduling hours that work for you. Like it or not, the gig economy could be the defining work/life balance solution of this century.

Many people may be uncomfortable with the idea of changing jobs or careers late in the game. That is certainly understandable. But it’s important to remember that many retirees didn’t get to make that decision on their own. So imagine for a moment what you would do if you lost your job late in your career. Would you look for another job in your field? Would you consider starting your own business? Would you go in a completely different direction — perhaps pursue something you’ve always wanted to do?

Let’s say you don’t even need the income; you have plenty of money saved to retire on — you just don’t want to retire … yet. So what would you want to do? Taking time to consider this question could be instrumental in shaping the new, 21st century perspective on retirement.

And why not? Consider that you have a lifetime of experience — both in career and in life lessons learned. If you are in the latter stages of your career, it’s time you take charge by putting together a plan B — just in case.

You could consider your potential career change a gift to the next generation. Many Gen Xers and millennials now say the biggest obstacle in their career path is that more baby boomers are putting off retirement, so there’s little room for promotions to middle- and higher-level jobs.4

That’s a lot to think about. But perhaps the 21st-century vision of retirement isn’t to stop working, but rather to pursue income-producing dreams.

1 Stef W. Kight. Axios. Nov. 16, 2019. “Special report: Retirement becomes more myth than reality.” https://www.axios.com/retirement-myth-reality-d64d1e74-df04-49b7-9629-2cab2609a917.html. Accessed Dec. 18, 2019.

2 Knowledge@Wharton. Dec. 3, 2019. “Forced Out of Your Job Mid-career? Here’s How to Prepare.” https://knowledge.wharton.upenn.edu/article/forced-job-mid-career-heres-prepare/. Accessed Dec. 18, 2019.

3 US Bank. 2019. “Understanding the expanding gig economy.” https://financialiq.usbank.com/index/landing-page/gig-economy.html?c3ch=Paid%20Social&c3nid=TW-21808397. Accessed Dec. 18, 2019.

4 Paul Davidson. USA Today. Nov. 7, 2019. “Millennials, Gen Xers to baby boomers: Can you retire so I can get a job promotion?” https://www.usatoday.com/story/money/2019/11/07/jobs-baby-boomers-older-workers-may-block-millennials-careers/4170836002/. Accessed Dec. 18, 2019.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

Thursday, January 30, 2020

Financial Tips for 2020

The U.S. has enjoyed 10 years of a booming stock market and a growing economy. It’s too early to tell how 2020 will look, but there are some signs that it doesn’t look quite as promising. Between warnings of a possible economic pullback and a contentious presidential election year, investors may want to consider financial moves designed to help protect gains and optimize future opportunities.

For example, while domestic securities were global leaders in 2019, Morgan Stanley believes U.S. stocks and bonds will underperform other developed countries in 2020. The wealth manager predicts the S&P 500 Index will have a small decline to 3,000 points by the end of the year as the dollar weakens, corporate earnings edge downward and “unique” political risks are expected in the run-up to Election Day.1

We recommend that individuals take a long view when it comes to investing, particularly in relation to retirement planning. However, as we approach this new decade, it may be important to review your portfolio’s overall asset allocation, not just within the context of 2020, but for your long-term financial objectives. Please give us a call if we can help you make this assessment.

As for retirement planning, be aware of three changes scheduled to impact Social Security benefits in 2020: 2

The earnings limit subject to FICA payroll taxes is scheduled to increase by $4,800, to $137,700. This means employees who earn at or above that threshold will pay an additional $367 in payroll taxes during 2020.
Retirees received a 1.6 percent boost in Social Security benefits, which translates to roughly $288 (on average) more for the year.
Social Security recipients who haven’t reached full retirement age can earn $600 more in 2020 without a benefits reduction — up to $18,240. Beyond that limit, every $2 in earnings will result in $1 withheld in benefits.

It’s a good idea to consider your income tax status early in the year. A lot of people did not expect the Tax Cuts and Jobs Act to negatively impact their taxes and received an unpleasant surprise when they filed returns last year. You can help prevent having to owe additional taxes on filing day by adjusting your Form W-4 exemptions with your employer so that more income is withheld throughout the year.3

Also, consider making your 2020 contributions to tax-advantaged accounts as early in the year as you can. That’s because any contributions you make to accounts such as IRAs, 529s and workplace retirement plans will have more time to take advantage of tax-deferred compounding growth.4

1 Joanna Ossinger. Bloomberg. Nov. 17, 2019. “Morgan Stanley Sees U.S. as a Laggard in 2020 Across Markets.” https://www.bloomberg.com/news/articles/2019-11-18/morgan-stanley-sees-u-s-underperforming-in-2020-across-markets. Accessed Dec. 18, 2019.

2 Kenneth Terrell. Oct. 28, 2019. “What to Know About Social Security Changes for 2020.” https://www.aarp.org/retirement/social-security/info-2019/social-security-changes-look-ahead.html. Accessed Jan. 15, 2020.

3 Kiplinger. Oct. 29, 2019. “27 Money Moves to Make Now to Prepare for 2020.” https://www.kiplinger.com/slideshow/saving/T023-S002-money-moves-to-make-now-to-prepare-for-2020/index.html. Accessed Dec. 18, 2019.

4 Business Wire. Dec. 16, 2019. “20 Financial Resolutions for 2020 from the AICPA.” https://www.businesswire.com/news/home/20191216005073/en/20-Financial-Resolutions-2020-AICPA. Accessed Dec. 18, 2019.

Our firm is not affiliated with or endorsed by the U.S. government or any governmental agency and does not provide tax advice. Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

Thursday, January 16, 2020

Tax Tips & Updates for the 2019 Filing Season

As we enter a new year, it’s time to start thinking about smart tax moves to help minimize what you’ll owe Uncle Sam on April 15, 2020. Given the fact that the 2017 Tax Cuts and Jobs Act went into effect only last year, taxpayers are still learning the ins, outs and potential undiscovered advantages of the plan. For example, if you did not itemize deductions on your previous federal return, your state tax refund will be tax-free.1

Bear in mind that other clarifications have come to light since the law was passed, such as deducting interest on a home equity line of credit. However, if you actually used the money from a home equity loan to repair or renovate your home, the interest on that loan is still deductible.2

We recognize that tax planning is an onerous task, made more difficult by changes in tax law. If you are wondering how any changes in your investment portfolio may affect your taxes, please give us a call. If we don’t have the exact tax expertise you need, we can help point you in the direction of someone who does.

In addition to doubling the standard deduction, the Tax Cuts and Jobs Act reduced individual income tax rates to between 12% and 37%. However, these cuts are scheduled to expire in 2026. In recent months, the Trump administration has proposed dropping the marginal rate even lower for the current 22% income tax bracket, down to 15%. While this appears to be a strong carrot entering the 2020 campaign year, there’s been no clarification as to how this tax cut would be paid for and, given that it would add roughly another trillion dollars or so to the federal debt throughout the next decade, is not likely to gain traction in Congress.3

If you traditionally deducted substantial mortgage interest as well as state and local real estate and income taxes, you may have seen a noticeable difference in last year’s return. The Tax Cuts and Jobs Act capped these federal deductions at $10,000, which some real estate analysts say is responsible for lower home valuations in some parts of the country.4

It’s also important to stay abreast of the tax-related ins and outs of inherited IRAs. If you are the deceased account owner’s spousal beneficiary, you have several options — one being that you can basically treat the account as your own. However, if you’re a non-spouse beneficiary, your options are limited. Currently, you can either take distributions based on your own life expectancy — the “stretch option” — which allows the funds to continue growing tax-deferred in the account; or, you must liquidate the account within five years of the original owner’s death. Note that as of 2019, Congress is currently considering legislation that would eliminate the stretch option and require full liquidation within 10 years of the account owner’s death.5

For more information on how we may be able to assist you when it comes to incorporating your tax planning into your Retirement Plan, give our office a call at (734) 769-1719 or email us at office@imberwealth.com.

1 Rocky Mengle and Kevin McCormally. Kiplinger. Dec. 2, 2019. “20 Most-Overlooked Tax Breaks and Deductions.” https://www.kiplinger.com/slideshow/taxes/T054-S001-most-overlooked-tax-deductions-breaks-2019/index.html. Accessed Dec. 5, 2019.

2 Andrew H. Friedman. Merrill Lynch. March 19, 2019. “Tax Law Update: New Information on What’s Deductible – and What’s Not.” https://www.ml.com/bulletin/tax-update-the-irs-answers-frequently-asked-questions.recent.html. Accessed Dec. 5, 2019.

3 Knowledge@Wharton. Nov. 19, 2019. “A Middle-class Tax Cut: Weighing the Costs and Benefits.” https://knowledge.wharton.upenn.edu/article/blouin-middle-class-tax-cut/. Accessed Dec. 5, 2019.

4 Knowledge@Wharton. Oct. 22, 2019. “Why Tax Changes Are Hurting the Housing Market.” https://knowledge.wharton.upenn.edu/article/tax-changes-hurting-housing-market/. Accessed Dec. 5, 2019.

5 James Royal. Bankrate. Nov. 19, 2019. “7 inherited IRA rules all beneficiaries must know.” https://www.bankrate.com/retirement/inherited-ira-rules/. Accessed Dec. 5, 2019.