Bruce Starks, CPA, CFP® – Page 18

Taxpayer-Friendly Changes to Retirement Plan Penalties

Good to Know Distributions from Traditional IRAs and employer-sponsored retirement plans such as 401(k) plans are generally subject to a penalty for taking the money out too early (premature distribution) or too late (delayed distribution penalty). Secure Act 2.0 gives welcome penalty relief effective for tax years beginning on or after January 1, 2023. Terminal…

Current Ratio and Primary Residence

Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: What role does the client’s primary residence play in the current ratio calculation? Is their outstanding mortgage loan amount considered a liability? Instructor Response: That’s a great question. The residence is not considered a liquid asset and is excluded from “assets” for the current ratio. Only debt…

Your Smart Watch Can Void Your Passing Score on the CFP® Board Exam

CFP® Certificants in the News CFP Board’s recently revised PATHWAY TO CFP® CERTIFICATION AGREEMENT (PATHWAY) highlights key requirements for certification. We’ll address select topics contained within this CFP Board publication, beginning with when you can publicly represent yourself as a “Candidate for CFP® Certification. Candidate for CFP® Certification You can represent yourself in this manner…

Using Future Value Versus Present Value in Multi-Step Questions

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: I am attempting to understand when to use PV or FV in the second step of the multi-step problems…the payment calculations. I understand that we will need to first calculate the required capital for the financial goal (Ex: retirement or college) and that would…

3 Ways to Help Protect Against Income Tax Fraud

Good to Know You just received a letter from the IRS that doesn’t make sense. It may not be cause for alarm, but consider this—the letter may be a red flag for the potential theft of your confidential income tax information. Cybercriminals can use this information to wreck your finances, for example by: Taking out…

Understanding the Relationship Between Coupon Rates and Duration

Course: Investment PlanningLesson 9: Fixed Income Securities Student Question: There is a question regarding duration that I continue to struggle with.Which of the following are true: Can you explain #1 and #3? Instructor Response: Thank you for your question. This can become a bit convoluted. Let’s unpack the word “duration” first. Duration is nothing more than…

Dependent Care Assistance Plan

Course: Retirement PlanningLesson 9: Building Retirement Wealth by Maximizing Fringe Benefits Student Question: Is a Dependent Care Assistance Plan (DCAP) funded by an Flexible Spending Account the same thing as a Dependent Care FSA? If not, could you provide some additional info as to how the two would work together (could an individual utilize both…

Do You Really Need a Calculator for the CFP Board Exam?

Good to Know We’re financial professionals, right? So let’s analyze the question posed in this article’s title. The CFP Board exam (the exam) consists of 170 questions. Anecdotally, the average exam has from 8 to 12 calculation questions which rank from moderately difficult to highly difficult. It’s been said (but not by us!) that studying…

Making Sense of the Duty to Report Information to CFP Board

CFP® Certificants in the News Are CFP® Certificants obligated to report merely being charged with a felony or misdemeanor to CFP Board? How about being notified of a regulatory investigation or action? Read on to get the answers, based on CFP Board’s Duty to Report Information publication. Text in quotation marks is taken from this…

Daily Compounding

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: Why is 360 used for compounded daily? Shouldn’t this be 365 days?? Instructor Response: 360 is used by most banks for two reasons: