Bruce Starks, CPA, CFP® – Page 43

Solving for Annual Equivalent Rate

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: I am confused as to how to get the correct answer for question number 4. Jackie invests her bonus at the beginning of this calendar year. If she earns 7% compounded monthly, what is the annual equivalent rate? Round your answer to two decimal places. I solve for the future value…

Good to Know: Is The Stretch IRA Dead?

It’s been reported that the Stretch IRA is dead for eternity (or at least until Congress changes the rules again). A Stretch IRA, of course, is the strategy of delaying required minimum distributions from an inherited IRA for decades if not generations. Before the SECURE Act of 2019, the Stretch IRA strategy was highly effective…

High Deductible Health Plan Deductible and Out-of-Pocket

Course: Income Tax PlanningLesson 7: Arriving at Adjusted Gross Income Student Question: Regarding the minimum deductible and maximum out-of-pocket limits for a high deductible health plan, could you explain more clearly “The minimum deductible must be at least $1,400 (single) or $2,800 (family)“. Does that mean, if single, an individual will pay at least $1,400 per doctor visit/procedure, but no more than the maximum out-of-pocket…

CFP® Certificants in the News: Where Will Tomorrow’s CFP® Certificants Come From?

CFP Board Center for Financial Planning – Workforce Development Initiative CFP Board reports1 a “growing number of financial planners [will] retire” and sounds the alarm to avoid a “shortage of CFP® professionals to serve the increasing demand of the public.” One of the ways CFP Board is “building the talent pipeline” is through the Financial…

Good to Know: Act Now to Take Advantage of Disaster Relief Provisions

The property and emotional damage left in the wake of a natural disaster may be compounded by financial stresses. For qualified disaster losses, recent legislation by our federal government could soften the financial impact. First, we’ll define what losses may qualify and then we will summarize key provisions of the legislation. A qualified disaster loss…

CFP® Certificants – Strong Growth in 2019

The results are in. According to CFP Board’s January 15, 2020, report entitled CFP BOARD REPORTS STRONG GROWTH IN 2019, the Board summarized the results of key diversity programs as follows: “The Certified Financial Planner Board of Standards finished the year [2019] with very strong numbers, reflecting the results of CFP Board initiatives as well…

Interest Rate Risk in a Bond

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What am I missing? Michael…

Reprieve from the Student Loan Debt Warden: Student Loans in Default Can Look to 529 Plans

Good to Know 5.2 Million The number of student loans in default in early 2019 according to the Ascent’s Student Loan Debt Statistics for 2019 That’s the bad news. The good news is that there may be a way out for students with balances remaining in their 529 Qualified Tuition Program. Before the SECURE Act, distributions…

Ownership of Property in a Trust

Course: Estate PlanningLesson 3: Understanding Trusts and Trust Documents Student Question: Perhaps a slightly mundane question, but here we go: It had been my understanding that property in a trust was held and owned by the trust itself, as a separate legal entity. However, several times in this course there has been reference to the trustee having ownership of the property. Is there…

SECURE Act: Good News and Bad News for Retirement Planning

The long-awaited bipartisan SECURE Act (the Act) was finally approved by the House on December 17, 2019, after a seemingly interminable process that began in March 2019. The Senate approved the measure at the speed of light (at least by legislative standards) on December 19. President Trump signed the measure into law the next day,…