Category

Advice

Keep an Eye on Buying & Selling by Corporate Executives

By | Advice

Provided by American Wealth Management

To some, the buying and selling of a company’s stock by corporate officers and directors can be an indicator of Wall Street sentiment.

In July 2020, the ratio of companies with executive buying compared with executive selling touched 0.27 – the lowest level in nearly 20 years.1

By contrast, the ratio set an 11-year high of 1.75 in March 2020.1

Corporate officers and directors are referred to as “insiders,” so you’ll often see this reported as “insider trading” by the financial press. But it’s critical to know nothing is wrong or illegal with this type of buying and selling.

“Insider” buying can indicate executives are confident in their company’s outlook and believe purchasing stock may be a sound investment decision.

“Insider” selling, on the other hand, can indicate executives want to pursue other opportunities and are choosing to sell some or all of their company stock. Keep in mind that executives have many restrictions on when they can sell or buy shares, including the time before and after a quarterly report, for example.

Investing involves risk, and the return and principal value of investments will fluctuate as market conditions change. Investment opportunities should take into consideration your goals, time horizon, and risk tolerance. When sold, investments may be worth more or less than their original cost. Past performance does not guarantee future results.

To add a little perspective, you can expect more executives to be sellers than buyers over the long term. Executives are often rewarded company stock as part of their overall compensation, so selling shares allows them to realize a portion of their total pay package.

Insider trading activity is one of many indicators that financial professionals watch to get a perspective on the financial markets. This trend can offer some insight but also has limitations. If you see any indicator that piques your interest, give us a call. We’d welcome the chance to hear your perspective.

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. 

Citations.

1. CNBC.com, July 24, 2020

Retirement Plan Options for Small Businesses

By | Advice

The SECURE Act and CARES Act may complicate the decision.

Provided by American Wealth Management

As a small-business owner, figuring out retirement choices can be a little intimidating. How do you pick the most appropriate retirement plan for your business as well as your employees?

There are three main types of retirement plans for small businesses: SIMPLE-IRAs, SEP-IRAs, and 401(k)s. Read on below to learn more about each type of retirement plan. Also, keep in mind that recent legislative changes that occurred with the passing of the SECURE Act and CARES Act may complicate the decision.

SIMPLE-IRAs. SIMPLE stands for Savings Incentive Match Plan for Employees. This is a traditional IRA that is set up for employees and allows both employees and employers to contribute. If you’re an employer of a small business who needs to get started with a retirement plan, a SIMPLE-IRA may be for you. While this plan doesn’t require an employee to contribute, employers must contribute 2% of their employee’s salary to a retirement fund. If you do choose to offer a matching contribution to your employee’s SIMPLE-IRA plan, you can match up to 3% of your employee’s compensation. Employees can also participate in a SIMPLE-IRA plan by having automatic deductions go straight from their paycheck to their SIMPLE-IRA.1,2,3

Distributions from SIMPLE-IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. However, during the 2020 calendar year, the CARES Act allows eligible participants to take an early distribution of up to $100,000 without paying the 10% penalty. Generally, once you reach age 72, you must begin taking required minimum distributions.

For a business to use a SIMPLE-IRA, it typically must have fewer than 100 employees and cannot have any other retirement plans in place. There are also no filing requirements required by the employer.2

SEP-IRAs. SEP plans (also known as SEP-IRAs) are Simplified Employee Pension plans. Any business of any size can set up one of these types of retirement plans, including a self-employed business owner. This type of retirement plan may be an attractive option for a business owner because a SEP-IRA does not have the start-up and operating costs of a conventional retirement plan. It also allows for a contribution of up to 25% of each employee’s pay. This is a type of retirement plan that is solely sponsored by the employer, and the contribution to each employee’s SEP-IRA must be the same amount. Employees are not able to add their own contributions. Unlike other types of retirement plans, contributions from the employer can be flexible from year to year, which can help businesses that have fluctuations in their cash flow.4

Much like SIMPLE-IRAs, SEP-IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. The CARES Act applies to SEP-IRAs too. Generally, once you reach age 72, you must begin taking required minimum distributions.

401(k)s. 401(k) plans are funded by employee contributions, and in some cases, with employer contributions as well. In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 72. Withdrawals are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. As of right now, the CARES Act exemptions apply only in the 2020 calendar year.5

Because of the recent legislative changes, resulting from the passage of the SECURE Act and the CARES Act, let’s talk further about which of these plans may work best for you and your business.5

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.

Citations.
1 – IRS.gov, January 15, 2020
2 – IRS.gov, January 8, 2020
3 – IRS.gov, January 9, 2020
4 – IRS.gov, January 15, 2020
5 – U.S. Chamber of Commerce, February 20, 2020

Making a Charitable Contribution

By | Advice

There are benefits and limitations when you decide to donate stock.

Provided by DJ Lee, CFA

Why sell shares when you can gift them? If you have appreciated stocks in your portfolio, you might want to consider donating those shares to charity rather than selling them.

Why, exactly? Donating appreciated securities to a tax-exempt charity may allow you to manage your taxes and benefit the charity. If you have held the stock for more than a year, you may be able to deduct from your taxes the fair market value of the stock in the year that you donate. If the charity is tax-exempt, it may not face capital gains tax on the stock if it sells it in the future.1

Keep in mind this article is for informational purposes only. It’s not a replacement for real-life advice. Make sure to consult your tax, legal, and accounting professional before modifying your gift-giving strategy.

When is donating stock a better choice than gifting cash or just selling the shares? There are several reasons to consider donating highly appreciated stock to a tax-exempt charity. For example, you may own company stock and have the opportunity to donate some shares. There also are potential tax benefits to consider if you donate appreciated securities that you have owned for at least one year.2

If you sell shares of appreciated stock from a taxable account and subsequently donate the proceeds from the sale to charity, you may face capital gains tax on any potential gain you realize, which effectively trims the tax benefit of cash donation.3

When is donating cash a choice to consider? If you provide the charity with a cash gift, there may be some limitations. Cash gifts are deductible up to 50% of adjusted gross income. As an example, if a donor in the top 37% federal tax bracket gives a 501(c)(3) non-profit organization a gift of $5,000, the net cost can work out to just $3,150 with $1,850 realized in tax savings. A donor may also need to consider possible implications of state taxes in addition to federal.2

If you donate shares of depreciated stock from a taxable account to a charity, you can only deduct their current value, not the value they had when you originally bought them.3

Remember the tax rules for charitable donations. If you donate appreciated stock to a charity, you may want to review I.R.S. Publication 526, Charitable Contributions. Double-check to see that the charity has non-profit status under federal tax law, and be sure to record the deduction on a Schedule A that you attach to your 1040.4,5

If your contribution totals $250 or more, the donation(s) must be recorded – that is, the charity needs to give you a written statement describing the donation and its value and whether it is providing you with goods or services in exchange for it. (A bank record or even payroll deduction records can also denote the contribution.)

If your total deduction for all non-cash contributions in a tax year exceeds $500, then complete and attach Form 8283 (Noncash Charitable Contributions) to your 1040 when filing. If you donate more than $5,000 of property to a charity, you will need to provide a letter from a qualified appraiser to the charity (and by extension, the I.R.S.) stating the monetary value of the gift(s).4,5

Gifting cash or securities to an organization is a wonderful opportunity. But keep in mind that tax rules are constantly being adjusted, and there’s a possibility that the current rules may change. Make certain to consult your tax, legal, and accounting professionals before starting a new gifting strategy if you intend to use the gift as a tax deduction.

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DJ Lee is an Investment Adviser Representative of American Wealth Management (“AWM”), an SEC‐registered investment adviser. Any opinions or views expressed by Mr. Lee are solely those of Mr. Lee and do not necessarily reflect the opinions or views of AWM or any of its affiliates, or any other associated persons of AWM. Any such views are subject to change without notice. You should not treat any opinion expressed by Mr. Lee as investment advice or as a recommendation to make an investment in any particular investment strategy or investment product. Mr. Lee’s opinions and commentaries are based upon information he considers credible, but which may not constitute research by AWM. Mr. Lee does not warrant the completeness or accuracy of the information upon which his opinions or commentaries are based.

Neither Mr. Lee nor AWM has any duty or obligation to update the information contained herein. Further, no representations are being made, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss.

This article is for informational and educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning investment product types, economic trends and performance is based on or derived from information provided by independent third‐party sources. Neither Mr. Lee nor AWM can guarantee the accuracy of such information and neither Mr. Lee nor AWM have independently verified the accuracy or completeness of such information or the assumptions on which such information is based.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – Fidelity.com, October 9, 2019

2 – Forbes.com, October 19, 2019

3 – Schwab.com, August 13, 2019

4 – Vanguardblog.com, September 19, 2019

5 – IRS.gov, March 3, 2020

Roth IRA Conversion in the Era of COVID-19: Is it right for you?

By | Advice, Uncategorized

Provided by DJ Lee, CFA

Difficult times may open doors to new possibilities. Businesses are changing their ways of operating, and individuals are exploring new avenues for investment. It may be time for you to consider some opportunities, as well.

What is a Roth Conversion? A Roth conversion refers to the transfer of an Individual Retirement Account (IRA), either Traditional, SIMPLE, or SEP-IRA, into a Roth IRA. With Roth IRAs, you pay tax on the money before it transfers into the account.

One benefit to having your money in the Roth IRA is that, unlike a Traditional IRA, you currently are not obligated to take Required Minimum Distributions (RMDs) after you reach age 72 (RMDs would be required to any non-spousal beneficiaries, however).

Another benefit is that since the money was taxed before going into the Roth IRA, any distributions are tax-free. Keep in mind that tax rules are constantly changing, and there is no guarantee that Roth IRA distributions will remain tax-free.1,2

Why Go Roth in 2020? In the face of the market downturn after the COVID-19 outbreak, you may be in a unique financial situation. For example, suppose you have an IRA account that was worth $1 million before the downturn, but it’s currently worth $800,000.

Perhaps your income has also decreased, potentially putting you in a lower tax bracket. Maybe you own one or more businesses, such as restaurants, that have been closed. You may not yet know if these businesses will be opening again in 2020. Your income could hypothetically be considerably lower this year than last year.

But: this may present an opportunity. Less earned income may mean lower total taxes due on a Roth conversion, especially if the overall account value has dropped.

Keep in mind, this article is for information purposes only and is making an assumption on an IRA account’s value and applying a hypothetical drop in earned income. We recommend you contact us before modifying your retirement investment strategy.

No Turning Back. While this may be a good time for you to consider converting to a Roth IRA, remember that there’s no turning back once you do. The Tax Cuts and Jobs Act of 2017 decreed that Roth conversions could no longer be undone.3

A Roth IRA conversion is a complicated process, and it’s wise to involve a trusted financial professional. Please feel free to reach out to us with any questions you have about your situation.

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DJ Lee is an Investment Adviser Representative of American Wealth Management (“AWM”), an SEC‐registered investment adviser. Any opinions or views expressed by Mr. Lee are solely those of Mr. Lee and do not necessarily reflect the opinions or views of AWM or any of its affiliates, or any other associated persons of AWM. Any such views are subject to change without notice. You should not treat any opinion expressed by Mr. Lee as investment advice or as a recommendation to make an investment in any particular investment strategy or investment product. Mr. Lee’s opinions and commentaries are based upon information he considers credible, but which may not constitute research by AWM. Mr. Lee does not warrant the completeness or accuracy of the information upon which his opinions or commentaries are based.

Neither Mr. Lee nor AWM has any duty or obligation to update the information contained herein. Further, no representations are being made, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss.

This article is for informational and educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning investment product types, economic trends and performance is based on or derived from information provided by independent third‐party sources. Neither Mr. Lee nor AWM can guarantee the accuracy of such information and neither Mr. Lee nor AWM have independently verified the accuracy or completeness of such information or the assumptions on which such information is based.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – Investopedia.com, November 26, 2019.
2 – Investopedia.com, January 17, 2020.

3 – Congress.gov, December 22, 2017.

Business Continuity Plans: Prepare now to better protect your business

By | Advice, News

As a business owner, you’ve worked hard for your success. The long hours, the difficult decisions, and the sacrifices you have made have led to where you are today. The last thing you want is to suffer a disruption to your business. However, in the event that you do experience an unavoidable mishap­, it may be smart to have a Business Continuity Plan (BCP) in place.

What is a Business Continuity Plan (BCP)? A BCP is a document that maps out a business’ system of prevention and recovery from potential threats or disruptions. A sound BCP ensures that personnel and assets are protected and empowered to take quick action in the event of a disaster. It is important to remember that a BCP should be conceived in advance and may involve input from key stakeholders and personnel.1

What is considered a “business disruption”? In general, a “disruption” is anything that causes a business to suffer a loss due to unforeseen events, such as damage to one’s facility, the breakdown of essential machinery, a supplier failing to deliver essential goods, or a technology-related malfunction.2

What are the components of a BCP? A BCP should be unique to your business, but there are some common factors consistent among all continuity plans. Creating a business continuity plan includes four steps:

  1. Conduct a business impact analysis to identify time-sensitive or critical business functions. Be sure you have the resources to support those tasks.
  2. Identify, document, and implement processes that are essential to the recovery of your business.
  3. Create a continuity team and compile a step-by-step plan that they can enact during a business disruption.
  4. Make certain your team is trained and ready. This may take the form of testing or other exercises to evaluate the strength and viability of your recovery strategy.3

Be prepared. A BCP is only helpful if it’s put in place early and updated regularly. Some time, care, and training now may help your business weather a storm down the road. Don’t delay; start putting your business continuity plan together soon.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.
Citations.
1 – Ready.gov, 2020
2 – Investopedia.com, 2019
3 – Ready.gov, 2020

Key Provisions of the CARES Act

By | Advice, News

Recently, the $2 trillion “Coronavirus Aid, Relief, and Economic Security” (“CARES”) Act was signed into law. The CARES Act is designed to help those most impacted by the COVID-19 pandemic, while also providing key provisions that may benefit retirees.1

To put this monumental legislation in perspective, Congress earmarked $800 billion for the Economic Stimulus Act of 2008 during the financial crisis.1

The CARES Act has far-reaching implications for many. Here are the most important provisions to keep in mind:

Stimulus Check Details. Americans can expect a one-time direct payment of up to $1,200 for individuals (or $2,400 for married couples) with an additional $500 per child under age 17. These payments are based on the 2019 tax returns for those who have filed them and 2018 information if they have not. The amount is reduced if an individual makes more than $75,000 or a couple makes more than $150,000. Those who make more than $99,000 as an individual (or $198,000 as a couple) will not receive a payment.1

Business Owner Relief. The act also allocates $500 billion for loans, loan guarantees, or investments to businesses, states, and municipalities.1

Your Inherited 401(k)s. People who have inherited 401(k)s or Individual Retirement Accounts can suspend distributions in 2020. Required distributions don’t apply to people with Roth IRAs; although, they do apply to investors who inherit Roth accounts.2

RMDs Suspended. The CARES Act suspends the minimum required distributions most people must take from 401(k)s and IRAs in 2020. In 2009, Congress passed a similar rule, which gave retirees some flexibility when considering distributions.2,3

Withdrawal Penalties. Account owners can take a distribution of up to $100,000 from their retirement plan or IRA in 2020, without the 10-percent early withdrawal penalty that normally applies to money taken out before age 59½. But remember, you still owe the tax.4

Many businesses and individuals are struggling with the realities that COVID-19 has brought to our communities. The CARES Act, however, may provide some much-needed relief. Contact your financial professional today to see if these special 2020 distribution rules are appropriate for your situation.


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Under the CARES act, an accountholder who already took a 2020 distribution has up to 60 days to return the distribution without owing taxes on it. This material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Under the SECURE Act, your required minimum distribution (RMD) must be distributed by the end of the 10th calendar year following the year of the Individual Retirement Account (IRA) owner’s death. Penalties may occur for missed RMDs. Any RMDs due for the original owner must be taken by their deadlines to avoid penalties. A surviving spouse of the IRA owner, disabled or chronically ill individuals, individuals who are not more than 10 years younger than the IRA owner, and children of the IRA owner who have not reached the age of majority may have other minimum distribution requirements.

Under the CARES act, an accountholder who already took a 2020 distribution has up to 60 days to return the distribution without owing taxes on it. This material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Under the SECURE Act, in most circumstances, once you reach age 72, you must begin taking required minimum distributions from a Traditional Individual Retirement Account (IRA). Withdrawals from Traditional IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. You may continue to contribute to a Traditional IRA past age 70½ under the SECURE Act, as long as you meet the earned-income requirement.

Accountholders can always withdraw more. But if they take less than the minimum required, they could be subject to a 50% penalty on the amount they should have withdrawn – except for 2020.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.

Citations.
1 – CNBC.com, March 25, 2020.
2 – The Wall Street Journal, March 25, 2020.
3 – The Wall Street Journal, March 25, 2020.
4 – The Wall Street Journal, March 25, 2020.

COVID-19 Resources for Reno and Sparks Residents

By | Advice, News

In households, communities, and cities across the U.S., it feels like we’re not only building a car while driving down the highway, we’re also learning to drive.

Luckily, we’re all having the same experience. We’re in this together! Thank you to those who are working hard to make sure we all make it through these challenging times. 

While many people are helping on the frontlines, a lot of us are at home searching for ways to keep ourselves and our families fed, healthy, and safe. To help with that, we have compiled a list of resources to help local clients navigate life in Reno during the COVID-19 pandemic.

Reno Grocery Stores Offering Delivery or Online Ordering for Pickup

First up, let’s look at Reno grocery options. Many of the grocery stores have bolstered their delivery and pick-up options, making it both easier and safer to order food and supplies online.

Restaurant Delivery Options in Reno

It’s more important now than ever to support local restaurants. There are plenty of options in the Reno area that offer delivery through third-party delivery services like Door Dash and Grub Hub. You can explore all the options and order directly from the website or app using the links below.

If ordering delivery isn’t your thing, many local Reno restaurants have drive-thru options or have adapted their services to provide curbside pickup. You can find an up-to-date listing of those restaurants in the Reno Gazette-Journal article below.

Current COVID-19 Health Information

Do you have questions about current CDC guidelines, how Nevada is handling the pandemic, how to stay healthy, when and where to go for care, or statewide COVID-19 statistics? You can find those answers and more on the websites below.

Online Educational Resources

If you’re a parent, you may be feeling a little lost as to how to keep your kids entertained and learning while they are home. No matter what age your children are, there are plenty of free, or temporarily free, options available to help you establish a routine and keep their hands busy and their minds engaged and stimulated. 

Resources to Help with Stress, Anxiety, & Sleep

Even if you don’t need medical care due to direct exposure to COVID-19, we’re all feeling some level of stress and anxiety. Making time to address your mental health is just as important as staying vigilant in your avoidance of social gatherings and handwashing—especially if you aren’t sleeping well. From meditation and exercise apps to sleep sounds and read-alongs, the article below has a great list of resources that can help you reduce stress, sleep more, and improve your mental health. 

We hope some of these resources will help as you try to navigate this new national reality.

We have clients all over the U.S. and want to serve each of you the best we can. If you do not live in the Reno area and are looking for local resources, email dee@financialhealth.com to reach our Director of Customer Experience.

We are eager to help!

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.

Retirement: You’ve Got This!

By | Advice

Not everyone is financially prepared for retirement. Earlier this year, the Employee Benefit Research Institute estimated almost 41 percent of American households will run short of money in retirement. That’s an improvement over 2014 when almost 43 percent of 35- to 64-year-olds were unprepared.1

Here is some good news: Many Americans are doing better financially in retirement than they expected.2

Each year, T. Rowe Price conducts a survey of Americans who participate in or are eligible to participate in employer-sponsored 401(k) plans. The results have consistently confirmed retirees’ experience exceeds workers’ expectations.2

For instance, people who have been retired for 10 or more years were asked, “Given your savings, income, and expenditures, which of the following statements are true of your retirement?” The answers may be surprising to some:2

  • 81 percent have enough money to pay for health care
  • 72 percent live as well as or better than when they were working
  • 66 percent will be able to leave money to family m embers or charity
  • 28 percent will be able to help out younger family members with tuition/housing
  • 11 percent will work at least part-time in retirement
  • 10 percent will run out of money

While retirement has a different story for everyone, the survey found satisfied retirees tended to have more income than unsatisfied retirees:2

  • Median household income: $90,000 vs. $65,000
  • Average household debt: $15,000 vs. $24,000
  • Money in retirement accounts: $370,000 vs. $281,000

Even when you have set aside significant savings and investments, transforming accumulated wealth into a steady stream of income that will support you throughout retirement can be challenging. Many strategies for generating retirement income include one or more of the following resources:

Social Security: Nine out of 10 Americans receive Social Security benefits in retirement. It’s a steady source of income that is periodically adjusted for inflation. The average monthly benefit in June 2019 was $1,471.3, 4

Retirement plan savings: A fair number of American workers have set aside savings in defined contribution plans, like 401(k), 403(b), or 457 plans. When it’s time to retire, talk with an investment professional before taking any action. Taking the right steps can ensure you don’t lose tax advantages or pay too much in taxes when you take plan distributions.3

Pensions: Just 17 percent of Americans working in the private sector have pension plans that will provide steady income after retirement. If you have a pension, the amount of income will be determined by your tenure, earnings, and retirement age. If you’re not sure whether your employer offers a pension, talk with the Human Resources department.5

Other retirement accounts: Many people own traditional IRAs, Roth IRAs, and other types of retirement accounts that can provide income during retirement. Distributions from traditional IRAs are usually taxed as ordinary income, while distributions from Roth IRAs are tax-free, as long as certain conditions are met.*6

Stocks and bonds: Many people have savings invested in stocks and bonds. Some stocks pay dividends and some bonds pay interest. Both can be sources of retirement income.7

Health Savings Accounts (HSAs): If you have high-deductible health insurance, then you may qualify for an HSA. It provides an opportunity to save pre-tax money in an account that can be used to pay qualified medical expenses today or in retirement. You can invest the savings in your HSA, too.8

Inheritance: Receiving an inheritance from parents or loved ones is less common than many people think. The most recent research from the Bureau of Labor Statistics found from 1989 to 2007, just 21 percent of American households received an inheritance. If you’re one of the lucky few, the assets you receive can be used to generate income in retirement or leave a legacy for your heirs.9

Guaranteed income sources: Having a stable and predictable income is a high priority for many retirees. The 2019 Retirement Confidence Survey reported income stability is a higher financial priority than conserving wealth for two out of three retirees. There are a variety of products in the market that offer guaranteed income.10

Home equity: Your home is probably one of your most valuable assets. Your equity – the difference between the value of your home and what you owe on your home – could be a source of retirement income. Home equity loans and reverse mortgages can help you access home equity without selling your home.11

The first step in building a retirement income strategy is deciding what you want life in retirement to be like. Once you know, you can estimate costs and develop a plan. Typically, a sound retirement income strategy will have guaranteed income, flexibility, and growth potential.

*Distributions from Roth IRAs generally will be tax-free and penalty-free, as long as the account has been owned for five or more years and the owner is age 59½ or older.

Sources:
1 https://www.ebri.org/content/retirement-savings-shortfalls-evidence-from-ebri-s-2019-retirement-security-projection-model
2 https://www.troweprice.com/content/dam/fai/Collections/DC%20Resources/helping-workers-prepare-for-successful-retirements/DCSystemSuccess.pdf
3 https://www.finra.org/investors/learn-to-invest/types-investments/retirement/managing-retirement-income/sources-retirement-income
4 https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
5 https://money.usnews.com/money/retirement/articles/a-guide-to-getting-a-pension
6 https://www.investopedia.com/ask/answers/102714/how-are-ira-withdrawals-taxed.asp
7 https://www.investopedia.com/articles/financial-advisors/020116/are-dividend-stocks-good-substitute-bonds.asp
8 http://www.hsabank.com/hsabank/learning-center/health-savings-accounts
9 https://www.bls.gov/osmr/research-papers/2011/ec110030.htm
10 https://www.ebri.org/docs/default-source/rcs/2019-rcs/2019-rcs-short-report.pdf
11 https://www.investopedia.com/mortgage/reverse-mortgage/reverse-mortgage-or-home-equity-loan/

This material was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer or firm.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.

2020 Financial To-do List

By | Advice

What financial, business, or life priorities do you need to address for the coming year?

Now is a good time to think about the investing, saving, or budgeting methods you could employ toward specific objectives, from building your retirement fund to managing your taxes. You have plenty of choices. Here are a few ideas to consider:

Can you contribute more to your retirement plans this year? In 2020, the contribution limit for a Roth or traditional individual retirement account (IRA) remains at $6,000 ($7,000 for those making “catch-up” contributions). Your modified adjusted gross income (MAGI) may affect how much you can put into a Roth IRA: singles and heads of household with MAGI above $139,000 and joint filers with MAGI above $206,000 cannot make 2020 Roth contributions.1

Before making any changes, remember that withdrawals from traditional IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½.

Make a charitable gift. You can claim the deduction on your tax return, provided you itemize your deductions with Schedule A. The paper trail is important here. If you give cash, you need to document it. Even small contributions need to be demonstrated by a bank record, payroll deduction record, credit card statement, or written communication from the charity with the date and amount. Incidentally, the Internal Revenue Service (I.R.S.) does not equate a pledge with a donation. If you pledge $2,000 to a charity this year, but only end up gifting $500, you can only deduct $500.1

These are hypothetical examples and are not a replacement for real-life advice. Make certain to consult your tax, legal, or accounting professional before modifying your strategy. 

Open an HSA. A Health Savings Account (HSA) works a bit like your workplace retirement account. There are also some HSA rules and limitations to consider. You are limited to a $3,550 contribution for 2020, if you are single; $7,100, if you have a spouse or family. Those limits jump by a $1,000 “catch-up” limit for each person in the household over age 55.4

If you spend your HSA funds for non-medical expenses before age 65, you may be required to pay ordinary income tax as well as a 20% penalty. After age 65, you may be required to pay ordinary income taxes on HSA funds used for nonmedical expenses. HSA contributions are exempt from federal income tax; however, they are not exempt from state taxes in certain states.

Pay attention to asset location. Tax-efficient asset location is an ignored fundamental of investing. Broadly speaking, your least tax-efficient securities should go in pretax accounts, and your most tax-efficient securities should be held in taxable accounts.

Asset allocation is an approach to help manage investment risk. Asset allocation does not guarantee against investment loss.

Review your withholding status. Should it be adjusted due to any of the following factors?

  • You tend to pay a great deal of income tax each year.
  • You tend to get a big federal tax refund each year. 
  • You recently married or divorced.
  • A family member recently passed away.
  • You have a new job and you are earning much more than you previously did. 
  • You started a business venture or became self-employed. 

These are general guidelines and are not a replacement for real-life advice. So, make certain to speak with a professional who understands your situation before making any changes.

Are you marrying in 2020? If so, why not review the beneficiaries of your retirement accounts and other assets? When considering your marriage, you may want to make changes to the relevant beneficiary forms. The same goes for your insurance coverage. If you will have a new last name in 2020, you will need a new Social Security card. Additionally, the two of you may have retirement accounts and investment strategies. Will they need to be revised or adjusted with marriage?

Are you coming home from active duty? If so, go ahead and check the status of your credit and the state of any tax and legal proceedings that might have been preempted by your orders. Make sure any employee health insurance is still there and revoke any power of attorney you may have granted to another person.

Consider the tax impact of any upcoming transactions. Are you planning to sell any real estate this year? Are you starting a business? Do you think you might exercise a stock option? Might any large commissions or bonuses come your way in 2020? Do you anticipate selling an investment that is held outside of a tax-deferred account? 

If you are retired and older than 72, remember your year-end RMD. Retirees over age 72 must begin taking Required Minimum Distributions from traditional IRAs and 401(k), 403(b), and profit-sharing plans by December 31 of each year. The I.R.S. penalty for failing to take an RMD can be as much as 50% of the RMD amount that is not withdrawn.5

See if you can take a home office deduction for your small business. If you are a small-business owner, you may want to investigate this. You may be able to legitimately write off expenses linked to the portion of your home used to exclusively conduct your business. Using your home office as a business expense involves a complex set of tax rules and regulations. Before moving forward, consider working with a professional who is familiar with home-based businesses.3

Lastly, should you make 13 mortgage payments this year? If your house is underwater, this makes no sense – and you could argue that those dollars might be better off invested or put in your emergency fund. Those factors aside, however, there may be some merit to making a January 2020 mortgage payment in December 2019. If you have a fixed-rate loan, a lump-sum payment can reduce the principal and the total interest paid on it by that much more. 

If you’re considering making 13 payments, consider working with a tax, legal, or accounting professional who is familiar with your situation.3

Vow to focus on being healthy and wealthy in 2020. And don’t be afraid to ask for help from professionals who understand your individual situation.

American Wealth Management may be reached at 775.332.7000 or info@financialhealth.com.


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Investment advice offered through American Wealth Management (AWM), an SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (MSH), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. 

Citations.

1 – thefinancebuff.com/401k-403b-ira-contribution-limits.html [7/16/19]

2 – irs.gov/newsroom/charitable-contributions [6/28/19]

3 – nerdwallet.com/blog/taxes/home-office-tax-deductions-small-business/ [1/22/19]

4 – cnbc.com/2019/06/03/these-are-the-new-hsa-limits-for-2020.html [6/4/19]

5 – forbes.com/sites/leonlabrecque/2019/04/09/bigger-iras-proposed-new-tax-law-may-let-you-build-a-bigger-ira-in-retirement/ [4/9/19]

Your Financial Co-Pilot

By | Advice, News, Published Articles

If anything happens to you, your family has someone to consult.

If you weren’t around, what would happen to your investments? In many families, one person handles investment decisions, and spouses or children have little comprehension of what happens each week, month, or year with a portfolio.

In an emergency, this lack of knowledge can become financially paralyzing. Just as small business owners risk problems by “keeping it all in their heads,” families risk problems when only one person understands investments.

A trusted relationship with a financial professional can be so vital. If the primary individual handling investment and portfolio management responsibilities in a family passes away, the family has a professional to consult – not a stranger they have to explain their priorities to at length, but someone who has built a bond with mom or dad and perhaps their adult children.   

You want a professional who can play a fiduciary role. Look for a financial professional who upholds a fiduciary standard. Professionals who build their businesses on a fiduciary standard tend to work on a fee basis or entirely for fees. Other financial services industry professionals earn much of their compensation from commissions linked to trades or product sales.1

Commission-based financial professionals don’t necessarily have to abide by a fiduciary standard. Sometimes, only a suitability standard must be met. The difference may seem minor, but it really isn’t. The suitability standard, which hails back to the days of cold-calling stock brokers, dictates that you should recommend investments that are “suitable” to a client. Think about the leeway that can potentially provide to a commission-based professional. In contrast, a financial professional working by a fiduciary standard always has an ethical requirement to act in a client’s best interest and to recommend investments or products that clearly correspond to that best interest. The client comes first.1

You want a professional who looks out for you. The best financial professionals earn trust through their character, ability, and candor. In handling portfolios for myriad clients, they have learned to watch for certain concerns and to be aware of certain issues that may get in the way of wealth building or wealth retention. 

Many investors have built impressive and varied portfolios, but lack long-term wealth management strategies. Money has been made, but little attention has been given to tax efficiency or risk exposure.

As you near retirement age, playing defense becomes more and more important. A trusted financial professional could help you determine a risk and tax management approach with the potential to preserve your portfolio assets and your estate.

Your family will want nothing less. With a skilled financial professional around to act as a “co-pilot” for your portfolio, your loved ones will have someone to contact should the unexpected happen. When you have a professional who can step up and play a fiduciary role for you, today and tomorrow, you have a financial professional whose service and guidance can potentially add value to your financial life.  If you’re the family member in charge of investments and crucial financial matters, don’t let that knowledge disappear at your passing. A will or a trust can transfer assets, but not the acumen by which they have been accumulated. A relationship with a trusted financial professional may help to convey it to others.


American Wealth Management may be reached at 775.332.7000 or info@financialhealth.com.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities.