Blog

SECURE Act: Good News and Bad News for Retirement Planning

By Bruce Starks, CPA, CFP®

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,…

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Unused Premiums in Term Insurance

By Bruce Starks, CPA, CFP®

Course: Insurance Planning Lesson 12: Types of Life Insurance Student Question: Could you help clarify the term “unused premiums” as it relates to term life insurance? I guess I don’t see how you could have a premium not used in term life. Thanks! Michael Instructor Response: Michael, Assume you pay $6,000 in annual prepaid premiums on January 1, 2020, for coverage for…

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Basis of Inherited Property

By Dan Madden, CFP®

Bill Farmer bought 1,000 acres of farmland for $300,000. When his oldest son married, Bill gave him 400 acres for a farm. When Bill died this year, the remaining 600 acres were divided in Bill’s will between his two younger sons. The 600 acres had a fair market value at Bill’s death of $600,000. Which…

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Annual Background Checks of CFP® Certificants

By Bruce Starks, CPA, CFP®

CFP Board’s December 17, 2019, Independent Task Force Report Apparently, there’s a new Sheriff in town.  As a result of a recent task force analysis, CFP Board will now conduct annual background checks on CFP® Certificants.  An overview of the Board’s report follows: Overview On July 30, 2019, the Board of Directors of CFP Board (“The Board”)…

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Distributable Net Income Application

By Bruce Starks, CPA, CFP®

Course: Estate Planning Lesson 9: Income Taxation of Trusts and Estates Student Question: Hi Bruce When a Trust has an income accumulation year, must the Trust pay taxes on that accumulation of DNI in the year of accumulation? If so, why do that – why would a Trust hold income at the confiscatory Trust income tax rates? If not, how many years can a…

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Qualified Pension Plan Ratio Percentage Test

By Dan Madden, CFP®

Assume that, of the 100 employees eligible for participation in G Company’s qualified pension plan, 20 are highly compensated employees and all 20 participate. What is the minimum number of G Company’s non-highly compensated employees that must participate in G Company’s qualified pension plan to meet the ratio percentage test? 20 50 56 70 CLICK…

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Good to Know: Dangerous Mistakes In Retirement – Wrong Spend Down Strategies Slows Portfolio Growth

By Bruce Starks, CPA, CFP®

Good to Know Savvy financial advisors know that prudence in taking retirement distributions is balancing income tax efficiency in the current year against long-term retirement portfolio growth. While each client may present unique needs, a discussion starter to the question “where should I take my distributions from?” follows: First – Take the full amount of…

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Percentage of Completion Method

By Bruce Starks, CPA, CFP®

Course: Income Tax Planning Lesson 10: Recognition of Expenses, Losses, and Deductions Student Question: Question 5 (below) did not make sense to me. I started out by breaking down by year – 400,000/2,100,000*3,000,000 and so forth, but did not arrive at the correct answer. So then I tried adding up 3 year – 400+650+700/2100000*3,000,000. That…

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Power of Attorney over Financial Affairs

By Dan Madden, CFP®

Laura is concerned she will develop Alzheimer’s disease later in life similar to her mother. Which of the following documents should Laura execute to make sure her son is able to handle her financial affairs in the event she does develop Alzheimer’s disease? Durable springing power of attorney Nondurable springing power of attorney Durable nonspringing…

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