TaxConnections

 
 

Access Leading Tax Experts And Technology
In Our Global Digital Marketplace

Please enter your input in search

Tag Archive for Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Know Thyself

Question: What  type of investor are you?

Answer: Some investors are eternal optimists. This can be hazardous to your financial health as impulse may drive your decisions. To compensate, you need a trusted advisor-an attorney or accountant- to act as a filter before making big commitments or signing contracts.

Question:  Are you a glass half-full investor?

Answer: Always looking for problems is a good thing, but may prove too much of a good thing causing you to miss out on certain opportunities.  Being self-aware of this tendency is the first step. Try not to judge quite so hastily.

Read more

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Question: Can capital losses be carried forward indefinitely?

Answer: Yes

Question: What is the “wash sale rule”?

Answer: A wash sale takes place when you sell or trade securities at a loss and repurchase the same or substantially identical securities within thirty days or purchase options or futures contracts to purchase substantially identical securities.

Question: How can I determine what the IRS considers @substantually identical securities?

Answer: IRS Publication 550 or consult a tax professional.

Have a question? Contact Ed Mahaffy.

A GIFT FOR YOU!

Complimentary Copy Of eBook: How To Select A Financial Advisor
(Includes All Graphic Charts)

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Question: Under the proposed Biden tax plan, what will happen to the step-up in cost basis rule that for many years has provided heirs with the advantage of using the date-of-death valuation for inherited assets?

Answer: It will be eliminated.

Question: What is the correct order for using capital losses on investments?

Answer: 

-First, deduct short-term losses against short-term gains

-Second, deduct long-term losses against long-term gains

-Third, net the two totals to determine whether there is a net gain or loss.

Question: What is the maximum amount of capital loss deductible against ordinary income in any one year? 

Answer: $3,000

Have a question? Contact Ed Mahaffy.

A GIFT FOR YOU!

Complimentary Copy Of eBook: How To Select A Financial Advisor
(Includes All Graphic Charts)

 

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions & Answers

Ask Ed: Financial Planning Questions & Answers

Question: If I have a rollover from a 401-k to an IRA, does the rollover count toward the  $1,362,800 cap?

Answer: No

Question: What amounts are protected against general creator protection as opposed to bankruptcy, which is governed by the bankruptcy code?

Answer: The non-bankruptcy protections vary from state to state.

Question: What treatment is applied when a claim is brought against an investment inside the IRA? An accident by a customer of motorcycle rental business owned by the IRA for instance?

Answer: Generally, if an LLC was established as owner of the business inside the IRA, the IRA claim can be mitigated.

Have a question? Contact Ed Mahaffy.

A GIFT FOR YOU!

Complimentary Copy Of eBook: How To Select A Financial Advisor
(Includes All Graphic Charts)

Ask Ed: Financial Planning Questions And Answers (Complimentary Gift Book With This Post)

Ask Ed: Financial Planning Questions And Answers

Ask Ed:  Financial Planning Questions And Answers

These are questions you should ask any financial advisor you are working with or considering retaining to handle your money. These questions and answers can be found in a valuable book written by Ed Mahaffy titled “How To Select A Financial Advisor: The Least You Should Know”. At the bottom of this post you can request a complimentary copy to download this 170 Page book as our gift to you. It is a valuable book we recommend EVERYONE READ!

Question: Is your firm a Registered Investment Advisor(RIA), a broker-dealer or both?

Answer: NAPFA believes that any financial advisor offering comprehensive financial planning services should be registered as an investment advisor with either the Securities and Exchange Commission(SEC) or with the state regulatory agency within the advisor’s state. Information pertaining to both SEC Registered Investment Advisors (and the vast majority of state registered investment advisors) is set forth on Part I of the advisors Form ADV(see www.sec.gov). Unlike other investment professionals, only Registered Investment Advisors owe a fiduciary duty under law to their clients. Employees of broker-dealers do not owe the same duty of client care.

Read more

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series. On Fridays, TaxConnections presents questions often asked of a Financial Planner.

Kat Jennings, TaxConnections, CEO

Ask Ed:  Financial Planning Questions And Answers

Question: Are you currently engaged in any other business, either as a sole proprietor, partner, officer, employee, trustee, agent or otherwise?

Answer: By knowing what other business ventures a financial advisor is involved in you will better understand if there are any conflicts of interest with regard to the advice that you may receive. This is especially important if the advisor is involved with an investment-related entity. Ask for a detailed account of how that relationship will impact the advice he/she will provide you.

Read more

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series. On Fridays, TaxConnections presents questions often asked of a Financial Planner.

Ask Ed:  Special Financial Questions 

Question: The financial challenges of Covid 19 can no doubt cause reductions in retirement contributions. This makes cutting retirement plan expenses even more important. Let’s assume Annual expenses amounting to 0.75%. This may not sound like much but cutting this expense can make a huge difference over time. How much?

Answer: Assume $10,000 annual contributions for 40 years earning a 6 % annual return. Reducing fees by 0.50% could save this participant well over $100,000. It pays to stay on top of your plan expenses.

Question: Is the 60/40 (stock/bond) portfolio asset allocation portfolio still viable with interest rates so low?

Read more

Ask Ed: Financial Planning Questions And Answers

Dear Ed: Financial Planning Questions & Answers

Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series. On Fridays, TaxConnections presents questions often asked of a Financial Planner.

Ask Ed: Financial Planning Questions 

Question: How are you compensated-by commissions, fees or both?

Answer: Many advisors charge a percentage of the value of the assets they manage-typically 1.0% to 2.0%. Most advisors are licensed to sell products and earn commissions as well.

It’s critical to identify all sources of advisor compensation and determine which compensation model makes the most sense for you. Be advised that many financial products have commissions that can be difficult to identify.  Require the advisor to disclose, in writing, any revenue sharing or commission arrangement they may have.

Read more

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series. On Fridays, TaxConnections presents questions often asked of a Financial Planner.

Dear Ed: Financial Planning Questions  

Question: The SECURE Act of December 2019 raised the beginning age for RMDs from 70 1/2 to 72. When should households with higher incomes consider ROth conversions?

Answer: In their first few years of retirement before the temporarily lower tax rates expire at the end of 2025.

Question: The SECURE Act creates problems for IRA trusts, what problems should I be aware of if I have an IRA trust?

Answer: Before the SECURE Act, language in an IRA trust might restrict access to the beneficiary to annual RMDs from the IRA. The intent was to stretch the payments to mitigate taxes however now the maximum stretch period is only ten years. This means there is no RMD due in years 1-9, but distributions must be taken by the end of year 10, after the death of the owner.  This may sense with a Roth, but it can penalize beneficiaries of traditional traditional IRAs who, although they get ten years of tax deferral, will be forced to take a large taxable distribution possibly resulting in higher taxes.

Question: What is one estate planning strategy to consider now that the stretch IRA has been removed?

Answer: Life insurance death benefits can be received free of income tax as well as estate tax free. Proceeds can be used to offset the higher tax liability caused by the  the new 10-year distribution period.

Contact Ed Mahaffy

(How To Select A Financial Advisor – Ed Mahaffy)

Request Copy of eBook In Its Entirety With Charts

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series. On Fridays, TaxConnections presents questions often asked of a Financial Planner.

Dear Ed: Financial Planning Questions  

Question: How much cash reserve should I maintain in the post-Covid environment?

Answer: Obviously, the answer varies depending upon the circumstances, but generally 1.5- 3.0 years of expenses.

Question: What is the best way to access these funds?

Read more

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

As the CEO of www.taxconnections.com, I had been searching for a top expert in Financial Planning. Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series.

On Fridays, TaxConnections presents questions often asked of a Financial Planner. Although the majority of Ed Mahaffy’s clients have in excess of 1M in assets, Ed has made himself available to answer financial planning questions for our readers.

Dear Ed: Financial Planning Questions  

Question: Do individuals have the option to forego a retirement plan required minimum distribution (RMD) in 2020?

Answer: Yes. If taken in 2020, the distribution will be treated as a voluntary distribution. The distribution is still taxable, but the withdrawal can also be converted to a Roth IRA. The RMD waiver applied to SEP, SIMPLE, 401(k), 457(b) as well as 403(b) plans although defined benefit plans are not part of the RMD waiver.

Read more

Ask Ed: Financial Planning Questions And Answers

Ask Ed: Financial Planning Questions And Answers

As the CEO of www.taxconnections.com, I had been searching for a top expert in Financial Planning. Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series.

On Fridays, TaxConnections presents questions often asked of a Financial Planner. Although the majority of Ed Mahaffy’s clients have in excess of 1M in assets, Ed has made himself available to answer financial planning questions for our readers.

Dear Ed: Financial Planning Questions  

Question:  How can I determine my investment expenses?

Answer: Ask your financial advisor to identify, in writing, the total investment expenses incurred by your account last year and what portion – expressed in dollars as well as percentage – his firm received. Have him compare expenses to Vanguard index funds.

Read more