Archive for the ‘Retirement & Financial Planning’ Category


March 20th, 2018 No comments


Many persons complain about the very low interest that money market accounts pay. While that is of concern, how many persons hold U.S. treasury bonds that have matured? Do they realize that these bonds, once they have matured, pay zero interest?

In addition to checking your own portfolio, be sure to check with your parents and other elderly family members who may be on a fixed income to make sure that they are not holding bonds that are not throwing off any income.

The U.S. Treasury has a Savings Bond Calculator on its website that calculates the final maturity date, reflects current interest rate being earned, the next accrual date for payment of interest, and year-to-date interest earned.

To learn more about U.S. Treasury Bond Planning, we suggest Read more…


How to Lose Social Security Benefits

December 26th, 2017 No comments

If you are self-employed and procrastinate filing your personal income tax returns, you not only run the risk of losing a tax refund because your Form 1040 return was filed after the statute of limitations for claiming a refund had expired, but you will also lose social security credits which may impact your social security benefits.

The social security code (42 U.S.C. 405(c)(4)) says you have to report the SE income Read more…


Revocable Trust vs. Irrevocable Trust

October 10th, 2017 No comments

Financial planning includes periodically meeting with an experienced estate tax attorney to ensure that one’s estate plan is current and meets the objectives of the individual. When meeting with legal counsel, one would be well served by understanding the differences between a revocable trust and an irrevocable trust. All comments here are personal and should not be considered the rendering of legal advice. We are not attorneys. Only attorneys can render legal advice which is why we recommend that you seek competent legal advice on these matters.

In its most simplistic terms, a revocable trust (RT) is where the grantor of the trust (you) continue to own the assets in the trust. The trust is reported under your social security number and all income of the trust is reported by you. RTs are often referred to as “grantor trusts” or “living trusts” and are essentially just an extension of your will.

A RT differs from an irrevocable trust (IT) where the ownership of the assets is transferred Read more…


The Cost of Borrowing from Your 401(k) Plan

September 26th, 2017 No comments

If your employer has a 401(k) plan, the plan likely has a provision that allows you to borrow from the plan. Although the plan will charge you interest on the amount borrowed, the repayment of the interest and amount borrowed go back into your 401(k) plan. So regardless of the rate of interest charged, whether it is 3% or 5%, isn’t your net cost of borrowing zero because you are paying yourself? Doesn’t it sound like an interest-free loan?

If it were truly an interest-free loan, would it not make sense to borrow as much as possible from your 401(k) plan? After all, if the plan charges a 5% interest rate, where in today’s market can you earn 5% guaranteed? Should you borrow the max from your 401(k) plan to maximize your financial wealth?

The misconception about these plans is that Read more…


The Medicare Coverage Trap

July 25th, 2017 No comments

Do not fall into the Medicare coverage trap!

Let’s look at a hypothetical situation. You find yourself retiring and your employer has a very good medical plan. Rather than signing up for Medicare (Part B) which covers the cost of healthcare services like regular physician visits, outpatient surgeries and diagnostic procedures, you decide to go on COBRA to keep your employer’s great health care benefits.

Eventually you notice that your employer’s plan has begun to reject your medical claims.  Since you have religiously been paying your COBRA premiums in full and on time each month, you call the employer’s health care provider to inquiry why it is not paying your medical claims. You learn Read more…


PA Filial Law and Long-Term Care Insurance

July 18th, 2017 No comments

With the demographically large baby boomer generation moving into retirement, we may see an increasing number of people without the financial resources to support themselves in their golden years. What if these “retirees” do not have the financial resources to pay for the cost of health care, long-term care, or nursing care?

As we discussed in our July 2, 2012 post, YOU may be liable for your relatives’ unpaid bills.

How is this possible? You can become liable for the health care bills of your family members due to Read more…


Planning for College Tuition

June 27th, 2017 No comments

If you are a parent with young children, it is never too early to begin to save for the high cost of a college education. Here are two popular tax-favored programs you can consider. Keep in mind that the earlier you begin to participate in these programs, the greater the amount that will be available for tuition.

Qualified Tuition Program (QTP). A qualified tuition program (also known as a 529 plan for the section of the Tax Code that governs them) may be a state plan or a private plan. A state plan is a program established and maintained by a state that allows taxpayers to contribute to an account for paying a student’s qualified higher education expenses. Similarly, private plans, provided by colleges and groups of colleges allow taxpayers to contribute a student’s qualified education expenses. These 529 plans have, in recent years, become a popular way for parents and other family members to save for a child’s college education.

529 plan distributions are tax-free as long as they are used to pay qualified higher education expenses for a designated beneficiary. Qualified expenses include tuition, required fees, books and supplies. For someone who is at least a half-time student, room and board also qualifies as higher education expense.

Though contributions to 529 plans are not deductible for federal income tax purposes, they are deductible for PA personal income tax. Be sure to read our May 2, 2017 blog regarding PA 529 plan contributions and its restrictions on tax deductions. In addition, PA is considering restricting the tax deductibility of 529 contributions to PA plans only. (The current rules allow tax deductions for contributions made to out-of-state plans).

Coverdell education savings accounts. Coverdell education savings are custodial accounts similar to IRAs. Funds in a Coverdell ESA can be used for K-12 and related expenses, as well as higher education expense. The maximum annual Coverdell ESA contribution is limited to $2,000 per beneficiary, regardless of the number of contributors. Excess contributions are subject to an excise tax.

Entities such as corporations, partnerships, and trusts, as well as individuals can contribute to one or several ESAs. However, contributions by individual taxpayers are subject to phase-out depending on their adjusted gross income. The annual contribution starts to phase out for married couples filing jointly with modified AGI at or above $190,000 and less than $220,000 and at or above $95,000 and less than $110,000 for single individuals.

Contributions are not deductible by the donor and distributions are not included in the beneficiary’s income as long as they are used to pay for qualified education expenses. Earnings accumulate tax-free. Contributions generally must stop when the beneficiary turns age 18, except for individuals with special needs. Parents can maximize benefits, however, by transferring the older siblings’ account balance to a younger brother, sister or first cousin, thereby extending the tax-free growth period.


In addition to the above two plans, other ways to save for a college education include: Read more…


You Need to Update Your Beneficiaries

June 13th, 2017 No comments

Unfortunately, it seems that every tax season we learn that a client’s spouse passed away and there was no will. Perhaps the plan was to have this matter done at a later date.

Let us assure you that if you do not have a will (or some other form of estate planning), there is no better time than today to get started on your estate plan. You do not want to have your grieving spouse’s life to be further complicated financially and emotionally because no estate plan was in place. Spending a couple of hours thinking about your estate plan may help you avoid costly mistakes and unintended consequences. Topics of discussion you should consider having with a very good estate planning attorney are Read more…


How to Avoid a Geriatric Surprise Bill

March 21st, 2017 No comments

Erin Arvedlund of recently wrote an article alerting consumers about health care providers and “bed hold” charges. We believe that many persons are unaware as to what a “bed hold” charge is and can potentially incur significant unexpected charges.

What is a “bed hold” charge? An example would be when a resident at an assisted-living facility has a mishap and is transferred to a hospital for medical treatment. The assisted-living facility can charge its residents Read more…


6.5 Million Individuals in U.S.A. Are Age 112 or Older. Really?

March 7th, 2017 No comments

We think it relevant to remind individuals to periodically check on their Social Security earnings and future benefits. The Social Security Administration (SSA) provides an online service which we discussed in our December 2, 2014 and March 12, 2013 blog postings.

The SSA Office of the Inspector General issued an audit report showing that there are 6.5 million SS numbers who are age 112 or older that do not have a death entry. Are Americans living longer, or are the SSN’s records in error? Ironically, the Gerontology Research Group reported Read more…

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