Good to Know

Good to Know The answer posed by the blog title is no. That’s good news. The bad news is that only a short list of beneficiaries is eligible for stretch IRA treatment at the death of the original IRA owner. Only an eligible designated beneficiary can stretch distributions from Traditional IRAs where the original owner…

Good to Know This blog is the first in a series to identify common psychological influences that can lead clients to financial decision errors. We begin this series with a common influence referred to as Anchoring. Anchoring Defined Anchoring is regarded by some as one of the most powerful psychological influences in the human brain.…

Good to Know One of the beauties of Social Security Retirement benefits is the cost-of-living adjustment (COLA). The COLA is simply an increase to a covered worker’s benefit to maintain their purchasing power. A covered worker is a worker from whose compensation Social Security taxes have been withheld. The long-term average annual COLA is 2.2%,…

Good to Know CFP Board expects a certificant to serve a spectrum of client demographics based upon factors such as age, gender, culture, and net worth.  This blog summarizes a unique income tax strategy for high and ultra-high net worth clients.  Private Placement Life Insurance (PPLI) can help a client: Avoid income tax on investment…

Good to Know The 5 habits to passing the CFP® exam are not complicated. In fact, they’re quite simple in concept. But here’s the rub, simple is not always easy. For example, here’s the simple equation for losing weight: Calories out > Calories in = Weight loss Yet seven of every ten Americans, the author…

Good to Know We introduced the concept of Behavioral Finance in the author’s most recent blog. Specifically, we learned that financial decisions that are rational to our subconscious, primal survival instincts can be breathtakingly irrational to our conscious, objective brains. One of the most perplexing and frustrating examples of this phenomenon is buying high and…

Good to Know Client decisions, including financial ones, may be driven more by psychology than just cold, hard, rational facts. The chart below identifies four powerful psychological influences.  Client Psychology—Influences Values Fundamental personal beliefs Attitude The tendency to view an investment positively or negatively based on our beliefs and experience Bias A behavioral tendency Heuristic…

Good to Know Can you deduct the interest you pay on loans used to make investments? Conventional wisdom would have you believe the rules are complex. Yet, we only need to address the following three questions to gain clarity. What kinds of interest paid on investment loans are deductible? How do dividend income and capital…

Good to Know The Child and Dependent Care Credit (a potentially refundable tax credit for 2021) is to incent employment. Employed taxpayers receive a tax credit if they have dependents who need child care. The credit is available to those taxpayers currently employed and those seeking employment. Restrictions, conditions, and coordination rules apply. Restrictions The…

Good to Know Conventional wisdom would have us believe that personal umbrella liability policies are needed only when one’s net worth exceeds $1,000,000. The purpose of this blog is to challenge that potentially dangerous assumption. As background, we live in an amazing country, land of the free because of the brave. Yet the United States…