Here's How to Keep Your State from Taking Your Money
Hidden within the layers of bureaucracy of every state government lies the office of unclaimed property. This office serves at the pleasure of both the state treasurer and chief financial officer and is responsible for carrying out the process of escheatment. Escheatment refers to an archaic process whereby the title of financial assets such as bank deposits, retirement accounts, security deposits, pension checks, tax refunds, uncashed paychecks, insurance policies, and orphaned safe deposit boxes that have been dormant for some time are transferred to a state authority.
When pressed on this issue, state officials often explain that the escheatment process keeps corporations from turning one’s forgetfulness into their profit. It can be argued, however, that states are guilty of the same.
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How to Save for Retirement as a One Income Household
When a couple makes the decision to live exclusively on the salary of one spouse or partner, they may take the time to review their monthly cash flow and cut out any unnecessary expenses prior to making it official. However, a topic that is likely to be put on the back burner is the issue of retirement – specifically, how to save for two on the income of one.
Planning and saving for retirement as a one-income household presents its own unique challenges. Thankfully, there are a few planning tools available that are specifically designed with this group in mind.
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Here's How to Access the Value of Your Concentrated Stock Position Without Creating a Big Tax Bill
As a senior manager or executive of a publicly traded company, you are likely paid a significant portion of your total compensation in the form of company stock, making it easy to build up a concentrated position in that stock over time. And should you need access to a large amount of cash, it is equally as easy to sell some or all of those stock shares and transfer the proceeds to your bank account following settlement. However, turning those stock certificates into actual dollars will almost always create a taxable event.
There is an option available through most major brokerage firms called a Securities-Backed Line of Credit (SBLOC), which allows you to borrow against a stock portfolio the same way a mortgage company allows homeowners to borrow against the equity in their house using a home equity line of credit (HELOC). Using this strategy allows you to maintain your stock position(s), participate in any long-term growth of the shares, and avoid adding to your tax bill all at once, thereby allowing you to have your cake and eat it too.
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Here’s How to Know Whether to Self-Prepare Your Taxes or Hire a Professional
Every year, somewhere between January 1st and April 15th, millions of Americans work their way through the five stages of grief as they prepare and file federal and state tax returns with the Internal Revenue Service (IRS). And although, for a very small few, this time of year can bring about feelings of elation, for most, it is an unwelcomed source of stress and anxiety. This variance of emotions exists because during this season, the government determines whether you have either under or overpaid your annual tax bill.
In general, there are two options available to help taxpayers complete and submit their annual tax return. On one hand, there is the option to self-prepare your return. And on the other, you might choose to hire a professional to do the heavy lifting for you.
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Considering an Early Retirement Offer from Your Employer? Here's What to Consider First
Right now, a growing number of employers are offering more tenured workers large, lump sum payments to turn in their key cards and credentials and retire early. In times of economic uncertainty, companies will immediately begin to reassess payroll costs and make decisions on how and where to reduce overhead to lower their fixed expenses. An early retirement offer typically includes a few months’ salary, extended health insurance coverage, and accelerated vesting on any 401(k), stock, or pension-related payouts owed.
These offers can sometimes be customized for individual employees. But in many cases, buyout offers are uniform and extend to an entire organization, a particular department, or to any employee who has fulfilled a minimum length of service. Early retirement packages often target people with seniority, a group that tends to earn higher salaries and have increased healthcare costs.
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Ways to Make Your Charitable Giving Count Come Tax Time
When it comes to financial planning, charitable giving is a well-established tool often used to assist individuals and small businesses with year-end tax planning. With strategic and well-timed donations, you can minimize your tax liability while executing a broader philanthropic strategy and supporting the causes you hold dear. Traditionally, people think of charitable giving as simply writing a check to a few nonprofits near the end of the year and claiming a deduction on that year’s tax return. While that approach can certainly be valuable, it is a bit limited in its ability to maximize philanthropic impact as well as tax minimization.
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Time to Negotiate Your Next Pay Increase? Ask for Stock Instead of More Cash
If you are fortunate enough, there comes a point where you are making enough money and the next dollar in salary you are able to command will not be very additive to your overall net worth. Though it may sound counterintuitive, once you reach a certain income threshold, every next dollar earned has a diminishing return. That does not mean that it should not be welcomed with open arms, but that by delaying the receipt of that dollar, you are able to unlock more of its value. Ultimately, your concern should be less about how much you make and more about how much you get to keep.
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Life Insurance Is Not a Financial Plan
These days, life insurance is often improperly sold as a complete financial plan. Life insurance salespeople are generally concerned with the amount of insurance a person has the capacity to pay for rather than the amount of coverage they actually need. As a result, the sales conversation often focuses on the death benefit of the policy and its ability to build up cash value instead of what it's designed to do - provide the insured’s beneficiaries with some level of financial security upon their death.
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If You Own Property in More Than One State, You Need a Trust
In the world of personal finance, rarely is it possible to find advice that is cut-and-dry and delivers a definitive yes or no. However, in this case, the rule of thumb applies almost uniformly. Any person who owns real, fixed assets (houses, land, buildings, etc.) in multiple states can save their loved ones months of extra paperwork and unnecessary fees by utilizing a living trust.
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Your Employer Just Granted You Stock Options. Now What?
Stock options are no longer just for the few executives at the very top of the org chart. Many publicly traded companies now make them available to non-executive staff. And while splitting annual compensation between cash and stock has some real benefits, it can certainly be confusing. Be sure to remain aware of your choices, the term of your options, and the tax consequences of your exercise decisions. Although plans and grants from various companies may resemble each other in many ways, no standard stock option plan exists.
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You Just Turned 50 and You're Behind on Your Retirement Savings. Here's How to Catch Up
When it comes to saving for retirement, it is never too early to start, but the last decade or so before you reach retirement age can be especially critical. By then, you will probably have a pretty good idea of when (or if) you want to retire, and, more importantly, still have some time to make any necessary adjustments. With the proper planning and a willingness to save and invest, the odds of catching up are not insurmountable.
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The TCJA Blessed the Backdoor Roth IRA. Why Aren’t More People Using It?
Buried in the text of the 2017 Tax Cuts and Jobs Act (TCJA) lies a statement that Congress approved, blessing the so-called “back-door” Roth IRA. The back-door Roth IRA conversion strategy allows high-income taxpayers to take advantage of the fact that while there is a limitation on who can contribute to a Roth IRA directly, there is neither an income limit on contributing to a traditional IRA nor income restrictions on converting an existing traditional IRA to a Roth IRA. So, by utilizing the back-door approach, your contributions will still make their way into the Roth IRA eventually..
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How Much is Too Much When It Comes to Owning Stock in the Company You Work For?
For many executives and senior level managers, compensation comes in the form of a set salary, a cash bonus (or two), and some form of equity ownership in the company. For those leaders of publicly traded companies, equity ownership typically comes in the form of company stock. And while one’s natural instinct is to accumulate as much stock in the company, while still an employee, as possible, is that always the best choice?
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Roth IRAs Are Not for Everyone. Here’s Who They Are For
The key advantage to utilizing a Roth Individual Retirement Account (IRA) is that when done properly, your withdrawals in retirement are not taxed. For that reason, it has become the most coveted retirement vehicle there is. Roth IRAs prompt many savers to wonder whether they should either begin contributing to or converting a portion or all of their taxable retirement funds into one.
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Just Inherited a Retirement Account from a Loved One? Here’s How to Keep the IRS from Taking Half
Baby Boomers are set to pass along somewhere between $60-75 Trillion to their heirs over the next 20 or so years. With that in mind, it is a safe bet that the IRS is licking its chops waiting to get its hands on those inherited assets before they flow to their intended beneficiaries. The more assets inheritors are able to keep, and ultimately defer from taxation, the more successful this massive wealth transfer will be.
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Should You Invest or Pay Off Debt? It Depends
It is not uncommon for individuals to experience a sudden windfall from either an inheritance, a legal settlement, a gift, or a bonus from their employer. If you have the good fortune to find yourself in this situation, there are several steps you should consider in order to help those dollars have their biggest impact. As common as it is, the decision on whether to pay off debt or invest is anything but cut-and-dry.
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The Intangible Benefits of Working with a Financial Advisor
In the last decade or so, there has been a fundamental shift in the personal finance industry, moving away from product sales and towards holistic planning involving one or multiple financial goals. Decades ago, the financial advice industry was designed to be great for the stockbroker. Today, it is far better for the investor. With less of a focus on asset management and more on honest, unbiased advice, it is becoming more about helping clients understand the best ways to save, spend, and invest their resources than it is about selling financial products.
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Why It Matters That Your Financial Advisor Is A Fiduciary
In April 2016, the Department of Labor released its “Fiduciary Rule” to the public. Though the rule was formally vacated in 2018, consumers’ awareness of the term fiduciary remained. By definition, a fiduciary is an individual or organization that takes on the responsibility of acting on behalf of another person or entity. They are duty-bound to act with the utmost honesty and integrity in any matters of law and/or finance.
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The Pros and Cons of Variable Annuities
At first glance, variable annuities sound like a great retirement income solution for any pre-retiree who wishes to simplify their financial planning efforts. While variable annuities do have their place in the world, they are not a one-size-fits-all solution. When deciding whether to put money into a variable annuity versus another type of investment vehicle, it is advisable to first weigh the pros and cons.
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