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Are You Covered? Checking in with Your Personal Insurance Needs

When you think about planning for your future, a lot of times you may be thinking long-term toward retirement or some other big financial goal. But short-term financial planning is important too.

One way to keep your current needs in mind is to consider your lifestyle and whether your insurance status aligns with your short-term needs. Sure, you probably review your auto insurance plan at least once a year, but what of your other policies?

Take a few minutes to consult this insurance checklist and ensure that you’re on the right path for meeting your (and your family’s) insurance needs for short-term protection and confidence.

1. Have Your Coverage Needs Changed?

As you go through life transitions and even as policies update from year to year, you may find that your coverage needs have changed since you last reviewed your insurance needs. Check in with your health, life, and homeowners insurance policies to determine whether they are adequate for your current lifestyle.

Don’t forget to account for major life changes, like births, deaths, or retirement, since these can impact the coverage amounts you require. Ultimately, keeping your policies in line can save you money on your monthly payments (if you find you have too much coverage in one or more areas) or will provide a more adequate amount of coverage for you and your family members (if your lifestyle has changed significantly since your last review).

2. Are Your Beneficiaries Up-to-Date?

In addition to checking whether your coverage is up-to-date, you will want to take a moment to review your beneficiaries listed on your policies. This is especially important if you’ve recently added a new family member who might not have made it onto your insurance plan(s) yet.

You also should check whether your beneficiary information is correct. If you have adult children, make sure that their names and addresses listed correctly, since their major life events, like marriage and moves, can require a quick policy update.

3. What Policies Might be Missing?

Are you covered in all of the areas that you need to ensure your family’s security? If you’re recently married or have a growing family, perhaps now is the time to consider that life insurance policy you’ve been putting off. Or maybe it’s time to consider extending your disability coverage or natural disaster protection for your home.

Talk to your financial advisor about how to best cover your lifestyle and protect your family’s assets in the event of an unexpected illness or disaster. You may be surprised at how your coverage needs differ from the coverage you already have.

4. Do You Have Policies You No Longer Need?

On the flip side, you may be paying toward insurance coverage that you don’t really need anymore. Perhaps your life insurance policy carries far more coverage than you and your empty nesting spouse really need. Maybe your asset protection policies cover items you no longer own or use. If you’re insurance coverage exceeds your needs, talk to your financial advisor about amending policies or removing coverage to better reflect your lifestyle needs.

5. Do I Need Help Managing My Personal Coverage Needs?

It can be a big task to sift through your insurance paperwork to determine which policies you have, what your coverage amounts are, and whether these are relevant to your lifestyle and future financial goals. But the good news is that you need not work through these tasks alone.

Talk to a trusted financial professional, like Jacob Sturgill who can help you to work through your lifestyle needs and determine whether you’re on track to meet your personal and family needs. If you’d like to connect with an advisor who will take the time to get to know you personally and develop a customized financial plan, contact Puckett & Sturgill Financial Group today to schedule a consultation.

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Kick off Your Summer with a Mid-Year Financial Checkup

Ah, summertime! The perfect time to kick back, pour a tall glass of iced tea, and enjoy some hard-earned time with family and friends. But before you check out for vacation, take a few moments to review your personal finances and ensure that you’re on track for success throughout the rest of the year. This short financial check-in can give you confidence that your bank account and investments are working hard for you - even while you soak up summer sunshine by the shore. Here are some of the areas you’ll want to review during your mid-year financial checkup.

1. Your Budget

Setting a budget in January is easy. Sticking with that budget throughout the year isn’t always. Summer is a great time to check up on your budget and spending goals and see how your spending adds up. If you know you’re going off-budget in certain areas, don’t ignore the problem and hope it corrects itself. Make the necessary adjustments now to allocate funds from one section to another or cut back on certain expenditures to stay on target.

2. Your Credit Score

When was the last time you checked your credit score? If it’s been a while, take this mid-year opportunity to inspect your score. It’s especially important to know your credit score and develop a strategy for improvement if you plan to make any large financial decisions later on in the year. You also don’t want to let your debt repayment strategy take a break during the summer months. Continue to work down your debts and ensure that you have a bill-pay plan in place even if you will be out of your regular routine for a period of weeks or months this summer.

3. Your Tax Strategy

Just because it’s the middle of the year doesn’t mean you should be sleeping on your tax strategy. If you’re looking to achieve tax savings when you file next year, ensure that you’re taking the right steps today to see those savings later on. Review your earnings, deductions, and special accounts and see whether there are areas where you can allocate funds more effectively. You may also wish to look into ways to offload potential tax liabilities before the end of the year.

4. Your Retirement and Estate Plans

While you’re looking into your portfolio activity, take some time to review your retirement and estate plans. Even if you’re not planning to cash in for many years yet, you want to stay up-to-date with your portfolio performance and make course corrections if necessary. Small adjustments over time will help you to stay in closer range to your long-term financial goals.

5. Your Progress Toward Financial Checkpoints

Regardless of your financial status, spending habits, or future goals, summer is a great time to check in with your financial performance as it pertains to your present and future. Take some time this summer to schedule a meeting with your financial advisor for a tailored financial checkup that’ll keep you in the know as the year goes on. Are you inspired by your mid-year financial checkup to take a more active role in your future financial planning? Contact Jacob Sturgill to learn more about how Puckett & Sturgill’s financial planning services can help you balance your current finances with your short- and long-term goals. [contact-form-7 id="3520" title="Schedule a Free Consultation w Jacob Sturgill"]
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Important Considerations for Small Business Financial Planning

With Small Business Week kicking off the month of May, this is an ideal time of year to consider the unique aspects of small business financial planning. After all, if you are a small business owner, you already know how much goes into the day-to-day of keeping everything running smoothly. As a small business owner, there are resources available to help your business profits go the extra mile. Check out some ways to make the most of your small business income and save for a rainy day.

Keep Track of Your Finances

Of course, the most important aspect of managing your financial resources is keeping track of the money that you bring in. Accounting software can help you manage income, expenses, invoices, and more, so you can focus on the things that you do best. You will also want to prepare a cohesive tax strategy that helps you to determine how much tax you’ll owe at tax time and how you can offset your tax expenses through legitimate business deductions. Before filing, you’ll want to consult with a tax professional to ensure that your numbers are accurate and that you comply with applicable tax codes to avoid unexpected expenses later on.

Prepare for a Graceful Exit

When considering retirement, developing a succession plan makes sense. But life can throw plans off course with a sudden twist, and in these cases, succession plans are even more important. Your succession plan should ideally pinpoint a potential next owner or buyer and should outline how you will go about dispersing business assets, whether you plan to offer a buyout option to a co-owner or key employee or sell the business to an outside party. No matter if you’re a new business owner or a well-established entrepreneur, taking time to draw up a succession plan is an ideal opportunity to consolidate financial and business records and determine key contributors to your business’s success. Your financial advisor may be able to help with organizing these documents and helping you to lay the groundwork for a solid succession plan. With that succession plan in place, you can have enjoy the daily challenges and thrills of running your business with the peace of mind that comes with having a plan for the future.

Add Value for Your Employees

Most of us are familiar with the 401(k) programs large companies establish on behalf of their employees, but even if you’re a small business owner, there are still options for you to offer retirement plans for your employees. Offering a 401(k) program can help you to attract top talent and invest your own retirement savings as the company owner. In fact, preparing a retirement package for your business allows you to take advantage of pre-tax contributions, which will save you money on the personal and business side of things. Many business owners overlook this aspect of financial planning for their business and come to the end of their careers without a nest egg of their own. But you don’t need to let this pitfall endanger your ideal financial future! At Puckett & Sturgill Financial Group, we can walk you through the ins and outs of choosing a retirement plan and can help you develop a customized strategy for implementing a retirement package for your small business. Your next step is as easy as contacting us. [contact-form-7 id="386" title="Schedule a Free Consultation"]
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Ask Deborah: Should I Convert my IRA to a Roth IRA?

Creating a retirement strategy is an important factor in planning for your ideal financial future. Whether you’re at the first steps and are trying to identify your options or are up for a review of existing accounts, you have plenty of decisions to make. Today we’re talking to our very own Deborah Williams, CFP to learn more about a popular retirement topic: should I convert my IRA to a Roth IRA? She’ll answer some questions you may have about who is a suitable candidate for a conversion and what benefits such a decision allows. If you have retirement accounts and are considering an IRA conversion, grab a cup of coffee and stay a couple of minutes as we explore the details of this option for your retirement strategy!

Identifying A Suitable Candidate for a Roth IRA Conversion

Before you determine whether to make the switch from an IRA to a Roth IRA, you want to identify whether this is an appropriate move for you as an individual. While everyone is unique and your retirement needs may likely differ from those of your neighbors or coworkers, there are some general categories of investors for whom an IRA conversion makes sense. Younger investors, for example, can generally benefit from a conversion to Roth IRA, since they have the time to let the investment account compound and grow. If you’re not going to be dipping into your retirement funds for a few decades yet, you may want to consider making the switch. Since Roth IRA accounts offer tax savings on distributions and withdrawals, it may be beneficial for those who are in a lower tax bracket currently and anticipate that they will be in a higher tax bracket during retirement to make a conversion. This way, they will pay less tax on the conversion due to their current bracket but enjoy the break later on when they are taking distributions and are in a higher bracket. Roth IRAs can also be a strategy for investors who are approaching retirement age and want to avoid having to take their required minimum distribution that is mandated at age 70 1/2. In fact, if you plan to sit on your IRA funds and prefer not to use them extensively during your retirement, these accounts are ideal for passing onto your heirs tax-free.

Tax Considerations of Converting to a Roth IRA

For many, the switch from a Traditional IRA to a Roth IRA is motivated by the tax benefits of making such a move. Unlike the IRA there is no tax credit for contributions to a Roth and the value of the account at the time of conversion to a Roth would be added to taxable income for that year. So if your IRA is down in value due to a market loss it may be a good time to consider converting. But if you aren’t able or willing to make the federal and state tax payments that will be attributed to the switch then conversion will not be right for you. Roth IRA conversions can also offer very specific tax benefits for business owners who are recording a net-operating business loss. Under certain situations, they can use the value of their loss to offset the additional taxable income created by the Roth IRA conversion. With proper planning and consultation with the CPA even an unfortunate business loss may benefit the owner’s long term retirement plan. Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

Your Retirement Savings Options

Deciding whether to convert to a Roth IRA is a personal decision that requires careful consideration. If you’d like to learn more about your IRA options or start planning for your retirement, feel free to contact Deborah at Puckett & Sturgill Financial Group for a discovery meeting. [contact-form-7 id="386" title="Schedule a Free Consultation"]
The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
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What Does the SECURE Act Mean for Annuities and Your 401(k)?

Your retirement plans require review and tweaking from time to time. Sometimes, you need to take a step back and review because of life changes on your end. Other times, outside factors, like changing retirement legislation require your attention. If you’ve been following the news, you’ve probably heard about the SECURE Act. This is a proposed retirement reform that’s poised to be signed into law and will have an impact on some of your retirement planning activities, should it become law. While there are a few main areas where the SECURE Act will make a difference in your retirement planning, one big component of this reform is how it’ll impact annuities and 401(k) planning. If you’re curious about how this could change your retirement portfolio or open new investment opportunities, read on to see how you may be able to anticipate the effects of this reform.

Annuities and the 401(k) Mix

Currently, many 401(k) providers don’t add annuities to their plans because annuities are considered a riskier investment and place an unwelcome amount of liability in the provider’s hands. Annuity payouts can fail to materialize, which hurts the investors relying on them as part of their retirement package. Under current laws, plan providers have the fiduciary responsibility to cover the loss of an annuity, which makes them an unpopular part of the 401(k) mix. Under certain provisions of the SECURE Act, the responsibility for a failed annuity shifts from the retirement plan provider to the insurance company that offers the annuity. With this shift in liability, we may see more annuities pop up in different retirement packages.

What are the Prospective Benefits to Investors?

If you’re looking to add new investments to your retirement portfolio or are investing for the first time, you probably want to know: what’s in it for me? Annuities can be an option for investors looking for a long-term plan to payout over a certain period of time. Investors who don’t have a whole lot set away in retirement accounts may enjoy the prospect of reliable monthly income, especially if they don’t have other investments that may provide a similar payout.

What are Some Potential Problems to Look For?

As an investor, you want to be aware of the investments that comprise any retirement package that you invest in. If your employer offers annuities as part of your investment options, you should be able to trust that they are worthy of your consideration. However, there is a certain risk that employers will not have the insight to provide annuity options that are particularly beneficial for you as an investor. There’s also a likelihood that annuities as part of the 401(k) mix will incur extra fees on the investor’s end, as annuity plans tend to come with certain expenses that are often passed onto the consumer. Additionally, as part of the 401(k) mix, annuities may add more limitations to the amount of money you can draw from your retirement account or the age at which you can take these withdrawals.

Have You Reviewed Your Retirement Plan?

An essential factor in choosing your retirement portfolio mix is understanding your options and making decisions that are best suited to meeting your future financial goals. There’s never a bad time to review your existing retirement plan to monitor its performance and change your investment mix, if necessary.

If you’re new to retirement planning and want to learn more about how to invest for your long-term financial planning, contact Jacob Sturgill Financial today for a consultation!

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Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.
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Curious About Investing in the Stock Market? Consider these Factors before Jumping In

When you think of investing, your thoughts may go pretty quickly to the stock market. After all, there’s always a lot of talk about how the stock market is performing, which companies are doing spectacularly well (or spectacularly awful), and why one industry is a better choice than another. People are very interested in and have a lot of opinions about what happens in the stock market. But what does this mean to you? If you’re curious about investing in the stock market, you probably have plenty of questions. Perhaps you’ve even heard certain soundbytes from popular voices in finance or read about stock market trends on your favorite money blogs. Before you decide to run with the bulls and bears, it’s important to understand how the stock market works and how to find quality information about the investments that you’re interested in. This way, you can discern whether investing in the stock market makes sense when planning for your financial future.

Choose a Trusted Advisor

The most important aspect of setting yourself up for the possibility of success in navigating stock market investments - even simply to discern whether investing is right for you - is finding a trusted guide to help you along the way. This is where finding a Certified Financial Planner comes in. A qualified CFP can help you to research your investment options and narrow choices that align with your values and goals for investing. Once your plan is implemented, your financial advisor can help you handle the details and monitor your investments to determine whether they make sense for your portfolio in the long-term.

Evaluate Your Investment Style

One of the first things you’ll do when you meet with an advisor is to sit down to discuss your financial background, ideas for how you’d like to see your financial future unfold, and different tactics that you might take to get there. Your advisor will listen and take notes to learn more about your specific situation and may ask questions to get a better feel for what type of portfolio balance may be preferable. Your advisor may prompt you to share information about your past investment history and show interest in learning more about how risk tolerant you as an investor (or couple) might be. These factors will work to inform your advisor of your personal investment style and will ultimately help the two of you to decide whether stock market investments are worthwhile, and which ones are more likely to help you to achieve your goals. Typically, investment style is graded on a range from conservative to aggressive. If you have a conservative investment style, you’re likely to favor less risky investments that may potentially offer lower, yet more predictable returns over the period of your investment. If you tend toward the aggressive end of the spectrum, likely you have a higher risk tolerance and will favor investments that offer the potential for high returns along with greater volatility.

Establish Your Goals for Investing

In addition to knowing your investment style, you’ll want to establish certain goals for your investing activities. Are you saving for retirement? Looking to cash in within a certain number of years and use the returns as a nest egg for some new endeavor? Whatever your ultimate investment goals may be, you need to be clear about them when discussing your investment strategy with your financial advisor. Perhaps you’re not even certain of what you should be aiming for, but have some ideas - your advisor can help you to work to prioritize your objectives for investing.

Determine How Much to Invest

As with any other aspect of financial planning, you’ll want to set a budget for your investing strategy. This is, again, something that your financial planner will work with you to establish, but some basics for determining an investment budget include setting a goal for how much money you hope to accumulate or how much income you want to draw from your investment later. Additionally, you and your advisor will work to find investments that have the potential to help you start working toward some of those short-term and long-term financial goals. There are a variety of investment vehicles from which to choose, with some requiring a certain investment minimum, so it’s important to establish a budget to give your advisor an idea of which investments are both helpful for pursuing your goals and stay within a reasonable dollar amount for your specific situation.

Diversify Your Portfolio

Even when you’re ready to take the plunge and invest, you want to ensure that you don’t put all of your eggs into the proverbial basket. Diversifying your portfolio allows you to take advantage of the potential returns offered by multiple companies, industries, or investment vehicles while also being able to compensate for a loss or two along the way. Diversification is helpful because it allows you to spread your investment dollars between investments to avoid a total loss from one failure. Your financial advisor should steer you in the direction of portfolio diversification while also keeping your budget, investment style, and goals in mind. Finding this delicate balance is part of where the experienced advisor will prove to be an invaluable guide as you work through your investment strategy and onto your financial future.

Monitor Your Investments

Once you’ve taken the steps to invest in the stock market, you don’t want to simply drop your money and wait for a future payout. You’ll want to stay up-to-date with your portfolio’s performance and make adjustments as necessary. Now, it can be challenging for the average investor to view their portfolio objectively - after all, it’s your money on the line. Market fluctuations, as normal as they may be, take on a whole new meaning when it’s your potential returns rising and falling. Emotional investing behavior is very common and can cause you to make split-second decisions that have large ramifications. This is another area where you can partner with your financial advisor - after all, their job is to view your investments in a professional manner and help you to decide whether to make adjustments or stay the course. Your financial advisor should help you build a strategy and investment portfolio that fits your specific situation and gives you confidence. That way, you can enjoy your day-to-day life without waiting for financial news in your inbox every morning and stressing all day about which factors may influence your bottom line. Do you have questions about your financial future? Do you have a portfolio you feel needs some attention? At Puckett & Sturgill Financial Group, we are a group of CFPs who are experienced in helping clients to navigate the ups and downs of portfolio planning and management.

Contact us today to learn more about our investment services and to schedule a discovery meeting with a CFP to start your investing journey!

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and asset allocation do not protect against market risk. Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
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What are the Benefits of Providing a Company Retirement Plan?

When you’re working through your strategy for adding a retirement plan to your employee benefits strategy, you may wonder what the benefits of providing this perk are for your business and bottom line. Even though you may want to offer a stellar package that attracts top talent or sets your business apart from your competitors, it can be hard to see how else your company might benefit long-term from such an offering. However, you’ll find that offering a generous package can be a win-win scenario for your employees and for your business. Read on to learn more about the perks of your business providing a company retirement plan.

Benefits for You as an Employer:

When you choose to offer a company retirement plan, you can benefit in a direct way through the ability to invest in the plan for yourself. Saving for retirement through a company plan allows you to participate in a plan that you might not otherwise have access to. You can also benefit from company tax breaks and incentives from the federal government when you choose to divert income into employee retirement funds. In fact, you can deduct your employer contributions from your current taxes, which can contribute positively to your company’s tax strategy. Direct financial benefits aside, one of the biggest perks to offering a retirement plan is your ability to set your brand apart as an employer that provides competitive benefits for attracting new employees. If you find yourself competing for top talent or are working in an industry that’s not particularly well-known for going above and beyond when it comes to employee perks, you could find yourself in an enviable position just for adding an attractive retirement plan to your benefits lineup. Even better? If your retirement plan is tied to company profitability, your employees may be more motivated to work hard and push productivity in order to build their retirement income.

Benefits for Your Employees:

Of course, one of your ultimate goals in establishing a retirement plan for your employees is to help them succeed in planning their financial futures. To this end, you should consider their financial well-being and ability to make long-term plans a significant benefit to your brand. Even though it requires extra research and investment to establish and maintain a company retirement plan for your employees, you should consider this an investment in your employees’ overall happiness and job satisfaction. Both of these factors can contribute a significant return on your investment; after all, happy employees can be very motivated employees. When you offer a company retirement plan, you open more savings options for your employees than they might achieve through using a personal IRA investment vehicle alone. Not only can they (and you, as a part of the plan) enjoy the savings benefits of the package, but you and your employees can enjoy the tax benefits of setting aside income for retirement.

Are You Ready to Talk Company Retirement Plans?

Another benefit of choosing a company retirement plan is that you and your employees will gain the opportunity to work closely with the financial advisor associated with your plan. Even if you have questions beyond the scope of your retirement plan, you now have a trusted professional to whom you can turn for personalized financial guidance. If you’re ready to look into your options for adding a retirement plan to your company’s benefits package, contact Jacob Sturgill today to get a personalized look at your brand’s needs and to receive recommendations for moving forward with your retirement planning!
[contact-form-7 id="3520" title="Schedule a Free Consultation w Jacob Sturgill"] For Plan Sponsor Use Only - Not for use with Participants or the General Public. This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
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6 Ways that the SECURE Act Might Impact Your Retirement Planning

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) is a major federal retirement reform measure. This bill puts forth a series of revisions to previous laws governing taxes on retirement income, collection ages, and more.

While it’s not law yet, there is a lot of talk about how the SECURE Act impacts retirement planning for the average American. Investors want to know how this is going to make a difference to their portfolios, present and future. After all, there are a lot of ways in which new regulations can change existing plans for better or worse.

There are dozens of measures included in the SECURE Act, some more significant than others. Here are the ones that are most likely to make a difference to your retirement planning activities or existing portfolio.

1. Provides More Opportunities for Small Businesses to Offer Retirement Plans

Under the SECURE Act, there are more opportunities than ever for small businesses to opt into retirement planning for their employees. This bill has provisions to extend previously unreachable 401(k) sharing options for small businesses by allowing multiple small businesses to work together as a larger group and pool contributions into bigger funds. This would, in effect, give employees of small businesses retirement planning options on par with what they would see if they worked for a larger employer, provided that the owner(s) of the small business join a 401(k) pool.

Until now, small businesses have been limited in their ability to provide a variety of retirement planning options for employees, which can impact a small business’s ability to attract and retain talented employees. Options like SIMPLE IRA and SEP IRA, while adequate, don’t have the same luster as 401(k) options. As a result, many small businesses simply don’t offer retirement plans for their employees. Opening 401(k) options for small businesses can provide value for small business owners and confidence for employees at these companies.

2. Removes Age Limitations for IRA Contributions

Another impact that the SECURE Act would have is the removal of age limitations for IRA contributions. Currently, there is an age limit on IRA contribution that limits individuals over age 70.5 from contributing to IRAs. This seemingly discourages retirement savings for individuals who are approaching or past the traditional retirement age.

Removing the age limitation for IRA contributions will encourage continued IRA contribution, even into one’s 70s and beyond. Interestingly, there is already no age limit for contributions to Roth IRA accounts, so this would bring more balance for investors on the fence about IRA conversion.

3. Add Opportunities for Annuities within Retirement Plans

Provisions in the SECURE Act would provide the opportunity for 401(k) plan providers to add annuities to the 401(k) mix, further diversifying investment options for those who invest in these plans. Until now, there has been hesitation on the part of providers to add annuity options, since annuities have presented a certain level of liability when packaged as part of a 401(k) plan. However, the SECURE Act provisions remove this liability from the provider’s side, which may open more options to add annuities to the 401(k) mix.

4. Extends the Required Minimum Distribution Age

By law, you’re required to take a required minimum distribution (RMD) from certain retirement accounts by the time you reach age 70.5. Some investors don’t appreciate the constriction of this requirement, especially if they’re still working at age 70.5 or don’t plan to fully rely on their retirement savings until a later date.

Under the SECURE Act, investors will see the RMD age moved from age 70.5 to age 72. This provides a cushion for investors to add a final push of savings to their retirement accounts. Of course, if you plan on drawing from those accounts earlier than age 72, you’ll still have the option to do so.

5. Provides Penalty-Free Distribution for Certain Withdrawals

Generally, investors shy away from taking pre-retirement withdrawals from their retirement accounts because of the rate at which those withdrawals are taxed. But in some life circumstances, the future nest egg is a valuable tool that could provide some much needed relief in the short-term.

The SECURE Act, in part, seeks to answer the challenge of accessing retirement funds for certain life changes by removing the penalties associated with these withdrawals. Most notably, the SECURE Act has a provision that allows investors to take qualified withdrawals for the birth or adoption of a child. It opens up to $5,000 in penalty-free withdrawals for a qualified birth or adoption within one year of the child’s birth- or adoption-date.

6. Removes Certain Qualifications from Inherited Accounts

Inherited retirement accounts (401(k)s, IRAs, Roth IRAs) have, in the past, provided beneficiaries with the ability to withdraw funds over the course of their lifetimes. However, under provisions in the SECURE Act, these distributions would be limited to a ten year period.

While this doesn’t necessarily make a big impact for smaller inherited accounts, like 401(k)s, since they’re typically liquidated within a short period of time, it does make a difference for investors collecting so-called “stretch” benefits from inherited IRAs. In a technical sense, IRAs are not strictly retirement accounts. The rationale of the SECURE Act’s limitations is to reduce the length of time that beneficiaries can receive penalty-free inherited IRA distributions and infuse a certain amount of tax money back into the economy, by bringing back penalties for distributions taken outside of the designated decade.

So, How Might the SECURE Act Impact Your Retirement Planning

As an investor, you want the confidence that your investments are working hard for you and will one day, hopefully, help you to reach your future financial goals. With a big piece of legislation, such as the SECURE Act, on the table, there are ways in which today’s planning may not be sufficient for reaching tomorrow’s goals.

Instead of trying to work through this on your own, look to your financial advisor for information about how retirement reform might impact your bottom line. Your advisor can help you to sift through new requirements, evaluate your current accounts, and make adjustments that align you with the track you want to take.

If you have any questions about the SECURE Act or want to learn more about your retirement planning options, contact Puckett & Sturgill Financial Group today for a consultation!

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Tips for Utilizing Your Grad’s 529 Plan

Graduation season is upon us and if you’ve got a newly minted (or soon-to-be minted) high school grad, you’re probably already thinking through this summer’s pre-college plans. With a fresh diploma in your grad’s hand and acceptance letters sign and sent, you’ve likely got a few questions about how the financial aspect of this new chapter is going to play out. If you’ve saved for your child’s higher education through a 529 plan, it’s time to look into how to make the use of this money for your student’s college needs. Here are some ways to put grad’s 529 plan to good use.

Reserve 529 Plan Withdrawals for Higher Education Expenses

Qualified higher education expenses are the only ones for which you can use your student’s 529 plan withdrawals. These include many expenses through your student’s college or university, such as tuition, room and board, meal plans, and textbooks. Other school-related expenses, like tech for your grad to keep up with their studies, can qualify. Expenses like travel to and from campus or dorm decor are not considered qualified expenses by the IRS and can incur a higher tax rate on your 529 withdrawals. In general, it’s best to stick with IRS recommendations for spending your 529 funds and consult your financial advisor with specific questions.

Encourage Your Grad to Keep Relevant Receipts

Since you’re probably not living on campus with your grad and may have a few hundred or thousand miles separating you from your student’s new address, it’s important that your college student is on the same page as you when it comes to allocating education expenses. Clue your student into the expenses that they can count under their 529 plan withdrawals and encourage them to keep relevant receipts for these expenses. With these in hand, your tax time records will be much easier to maintain.

Mind Your Dates

When taking withdrawals from your 529 plan, it’s important to keep your related expenses within the same tax year. If you take money out with plans to pay a future bill, you run the risk of overdrawing your account if you don’t make payments until the following tax year. Plan accordingly when scheduling your bill payments to avoid running into problems with next year’s withdrawals.

Consider Future Contributions

Just because your student is soon to start their college career, you don’t need to stop contributing to their 529 plan. In fact, some parents find that they can increase their college contributions after their student starts school since their household budgetary needs are lower with one less family member living at home. Additionally, since many parents plan for their 529 plan around ballpark figures, some families prefer to add additional funds once they have specific figures based around their children’s actual higher education needs. Talk with your financial advisor to get the best idea of whether your 529 savings are enough to cover your student’s expenses. If you’re looking to make the most of your existing 529 plan or are still a few years away from your children’s graduations and want to start saving, contact Puckett & Sturgill Financial Group to meet CERTIFIED FINANCIAL PLANNER™ Jacob Sturgill. Jake will help you work through your family’s higher education funding needs. [contact-form-7 id="3520" title="Schedule a Free Consultation w Jacob Sturgill"]
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. Non-qualified withdrawals may result in federal income tax and a 10% federal tax penalty on earnings.
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Retirement Checklist

Putting a retirement plan together can be complicated. It requires time and effort to effectively implement, monitor, and update your plan. However, having a solid plan in place can provide confidence for your future financial planning. While getting started early on your retirement planning is ideal, you can certainly make a solid plan even if you’re coming into things a little later in the game. A smart approach to retirement planning is to get started as soon as possible in order to make the most of the time between now and when you plan to retire. And the best part? You don’t have to do this alone. Your CERTIFIED FINANCIAL PLANNER™ practitioner can help you work through your retirement planning strategy and come up with a timeline and portfolio that make sense for your current needs, as well as your desired financial future. As you prepare to start working with your advisor on your retirement planning, use the following checklist to organize your thoughts:

Define Goals

Before you know how much money you need to save, you need to know what exactly it is that you’re saving for. Retirement can be a nebulous concept until you start to put some numbers and specific plans into place for the period of time that is your retirement.

Here are some questions to ask yourself:

  • What does retirement mean to me? For some, retirement means spending more time with family. For others, it’s a long-anticipated time for traveling, starting a new business, or working with a charity.
  • How will I structure my days? Like it or not, your career is an integral part of your identity and many people often spend more time at work than at home. Whether you plan to slow down or start a new journey, your ideal retirement lifestyle is a huge factor in determining how much money you’ll need.
  • Have I determined a realistic retirement age? The ideal retirement age varies from person to person and can impact your ability to collect certain benefits, such as Social Security. Your retirement age, along with other factors, like your health and family circumstances, can also influence the expected length of your retirement.
  • Do I have a written plan? While you don’t need to have a formal written plan before you begin working with an advisor on retirement planning, look through your financial paperwork and locate a written plan if you have anything on hand.

Identify Expenses

Before you can decide how to fund your retirement expenses, you need to know the types of expenses you’ll have and how much to set aside for each. In some senses, your day-to-day expenditures may not change, but because your lifestyle may radically change during retirement, certain figures may be higher or lower than you expect.

Consider the following:

  • What are my essential and discretionary expenses? Essential and discretionary expenses are the combination of expenses that include the things you must have and pay for regularly (essential expenses) and those that you can live without or that will vary from month-to-month, year-to-year (discretionary expenses).
    • Essential expenses include:
      • Housing
      • Food
      • Utilities
      • Healthcare
    • Examples of discretionary expenses include:
      • Gym membership
      • Traveling
      • Dining out
  • Will I spend more on travel or hobbies once I have more time to devote to them? Answers to questions about your retirement lifestyle can help you to understand whether you’ll actually be able to devote your time to your travel and hobbies or whether other commitments will realistically require your time and attention.
  • Do I have any debt? If so, what kinds? Entering retirement with zero debt might be seem ideal but is not always a realistic financial goal.
  • How will my health insurance premiums change once I retire? Many retirees find the shift from an employer’s health insurance plan to Medicare or another health insurance option impacts their month-to-month expenses.
  • Should I stay in my current home or move? Another state might be more retirement friendly, with lower taxes or cost of living. You may also wish to downsize from the home where you raised a family to a smaller, more manageable place to live.
  • Have I thought about taxes? If you are retiring to a lower tax bracket it is important to take advantage of the tax savings on your retirement income.

Evaluate Resources

Do you know where your retirement income will come from? For most investors, this is the (no pun intended) million dollar question. Now that you’ve got an idea of your expenses and long-term financial commitments, it’s time to consider how you’ll fund your retirement lifestyle.

As you work through your retirement figures, take these factors into account:

  • When will I file for Social Security? You can file for Social Security as early as age 62 and as late as age 70. Filing before your full retirement age might result in a permanent reduction in your lifetime benefits, so plan accordingly.
  • When can I start collecting my pension (if applicable)?
  • Do I have annuities that provide income?
  • How much do I need to have saved in IRA’s, 401k’s, and investment accounts? Often, your investments will provide a significant portion of your retirement income. This is why it’s important to strategize your retirement needs and work backward to the present to determine how much you’ll need to save and which investments are ideal for your situation.
  • Am I saving enough per year? Many studies suggest individuals need to save 10%-20% of their gross income each year, including amounts saved from personal deferral and any company match.
  • Do I have a plan for converting investments into an income stream? In most cases, you want to prepare your retirement plan with longevity in mind. However, there are some risks to outliving your benefits. This is a particular issue for pension holders, so if you do qualify for a pension, ensure that you have alternate retirement income to cover the gaps, should they arise.

Dealing with the Unexpected

Retirement investing is contingent on balancing risks. There are plenty of unexpected circumstances that may arise between now and when you’ll begin drawing your retirement income.

Consider these risk factors that have the potential to impact your retirement planning:

  • How will I manage unforeseen market shocks? You can’t predict how markets will behave over the next decades and when your retirement income depends on a certain level of stability, you could risk your future returns if you need to dip into your underlying investments.
  • Do I have a plan to combat inflation? Inflation erodes your purchasing power. That means your dollar today won’t be worth as much in the future and it’s important to plan accordingly.
  • Do I have all the insurance I need? Your insurance needs can change as you transition from working to retirement. Look into how these changes can influence your retirement insurance needs, as well as how your month-to-month expenses will be impacted.
  • Should I purchase long-term care insurance? Long-term care insurance is a safety net to protect your assets should you require extended care at any point during your retirement. Your health history and family factors can influence your decision to purchase long-term care insurance.
  • Do I have an adequate emergency fund? It is typically recommended to have 3-6 months’ worth of living expenses readily available as cash for emergencies. You may need (or want) more in retirement.
  • Do I anticipate any major one-time expenses? There are some one-time purchases that come up from time to time in life - retirement is no exception. If you anticipate some of these larger purchases, such as home repair or college tuition, ensure that you account for these expenses in your retirement planning.

Steps to Take Today

Before you take the leap to retirement, there’s some work to do. But with careful planning, you can create a retirement plan that should ideally be flexible enough to accommodate your retirement lifestyle and expenses.

Here are some steps to take today:

  1. Simplify your portfolio. Consolidate your accounts to make sure you have a clear and accurate picture. Ensure that your assets are invested properly and that your investments make sense for your values and can help you pursue your goals for your financial future.
  2. Prior to retiring, try to live on your projected retirement budget for several months. It’s a good idea to practice a new budget before committing to it full-scale. You may find that you spend more than you think you will and need to make adjustments. There are likely places where you’ll find cost savings and added expenses that you didn’t anticipate in advance.
  3. Don’t be shy about asking for professional advice. You’ve probably never retired before. It’s natural to not know everything about this transition, so find someone who can guide you through the process. A CERTIFIED FINANCIAL PLANNER™ practitioner can help you to prepare for your retirement by thinking through your future needs and identifying savings methods and investments that are suitable for your need.

If you’d like to learn more about preparing for your retirement, contact Jacob Sturgill for a consultation today!

[contact-form-7 id="3520" title="Schedule a Free Consultation w Jacob Sturgill"] This information is not intended to be a substitute for specific individualized financial or tax advice. We suggest that you discuss your specific financial or tax issue with a qualified advisor.
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