Uncategorized

Home/Uncategorized

CARES Act Commentary – April 13, 2020

Goddard Financial Planning remains “open for business” albeit in new configurations with the team working remotely. We are busily working with clients who need help navigating the current landscape. Note that currently e mail is our preferred means of communication. While we strive to respond to client inquiries within 24 hours, that is not always possible based on our workloads. We appreciate your patience and understanding in this unique time.

We wanted to communicate with clients about the recent Coronavirus Aid Relief and Economic Recovery Act (CARES), which was passed into law on March 27, 2020. While the changes cover a broad array of topics, here are several items we think could have the largest impact on our clients:

Required Minimum Distributions (RMDs) Waived for 2020

We expect this provision to impact a significant number of clients. 2020 RMDs are waived for IRAs and most 401(k)/403(b)/457 plans. This also applies to Inherited IRA RMDs. If you have already taken your 2020 RMD from an employer-provided plan, it may be possible to roll back the distribution if you don’t need the money. This roll back feature does not apply to an inherited IRA Required Minimum Distribution.

Small Business Owners may be eligible for loans through the Paycheck Protection Program

If you qualify as a small business owner, you may be eligible for various programs including the Paycheck Protection Program. A business is eligible if it has less than 500 employees and it can also include independent contractors and sole proprietors. The maximum loan amount is 2.5 times your average monthly payroll costs for the previous year. If you are interested in learning more, visit the Small Business Association website or inquire with your current bank. This provision is time-sensitive, and we encourage you to apply as soon as possible.

Stimulus payments

Stimulus payments will be coming to some of our clients and are based on the adjusted gross income on your most recent tax return. Payments of $1,200 (single/head of household filers) and $2,400 (joint filers) will be sent to eligible taxpayers. An additional $500 payment is made for each dependent child. Payments begin decreasing if the AGI on your tax return exceeded $75,000 (single), $112,500 (HOH), or $150,000 (joint). The payments will be sent automatically, so if you are eligible, there is nothing you need to do in order to receive the payment.

Some retirement plan distributions for COVID-19 related reasons are not subject to penalty

Distributions from qualified retirement plans (such as IRAs, 401(k)s, 403(b)s and 457s) received during 2020 of up to $100,000 for COVID-19 related purposes are allowed without a 10% penalty for pre-59 ½ distributions. These distributions will be taxed evenly over 3 years beginning with year of distribution and may be recontributed within 3 years. Related purposes include a COVID-19 diagnosis for you, your spouse or dependent, and financial hardship as a result of business closures, reduced work hours, lay off, furlough, lack of childcare or other factors as determined by the Treasury.

y to evaluate whether any of these changes might impact your plans immediately or as part of your next Annual Review meeting. Consider the information in this newsletter to be an initial interpretation of the CARES law and not personalized advice.

If you have any questions or would like to set up a meeting, please reach out to info@goddardfinancialplanning.com.

CARES Act Commentary – April 13, 20202020-04-14T23:15:44+00:00

SECURE Act Commentary – January 29, 2020

While most of the country was enjoying the holidays in late December, Congress was busy putting the final touches on the Setting Every Community Up for Retirement Enhancement Act, better known by its acronym of the SECURE Act. After being signed into law, the new provisions went into effect January 1st , 2020, marking the most notable changes to retirement accounts in several years. While the changes cover a broad array of topics, here are three items we think could impact the highest number of our clients:

Required Minimum Distribution (RMD) Age Increasing From 70 ½ to 72

It all comes down to one important date: June 30, 1949

If you were born on or before June 30, 1949, the RMD start age is still 70 ½. If this applies to your situation, it is likely you have already taken your first RMD.

If you were born after June 30, 1949, the age at which you must take your first RMD from a retirement account is now 72.

For our retired clients who haven’t reached RMD age yet, this change could extend the window for performing partial Roth IRA conversions or harvesting long-term capital gains while in a lower income tax bracket, or it could simply extend the period of tax-deferred growth for your retirement assets by another 18 months.

For those clients who make direct charitable contributions from an IRA, the minimum allowable age for making Qualified Charitable Distributions from an IRA remains age 70 ½, even though the age at which you must begin RMDs may increase to age 72.

Non-Spouse Inherited IRA Distribution Rule Changes

For those who might pass away on or after January 1, 2020 with non-spouse beneficiaries (i.e. children who inherit from a deceased parent), there are new Inherited IRA distribution rules. While there will no longer be annual RMDs, the new rules will require the Inherited IRA to be fully distributed by the end of the 10th year. This has the potential to cause unexpected tax consequences for a beneficiary in prime working years who might inherit a sizable IRA from a deceased parent.

Please note that for non-spouse beneficiaries who inherited IRAs prior to January 1, 2020, there is NO change to your previous distribution schedule (which allowed clients to “stretch” distributions using annual RMDs over their own life expectancy).

Age Limitation Removed for Traditional IRA Contributions

For clients over age 70 ½ and still working, the maximum age limit on Traditional IRA contributions has now been removed. Previously the limit was age 70 ½ for making Traditional IRA contributions.

We’re happy to evaluate whether any of these changes might impact your plan as part of your next Annual Review meeting.

SECURE Act Commentary – January 29, 20202020-04-14T23:15:53+00:00

Market Commentary – December 2018

Greetings! We hope this email finds you well and looking forward to the holidays. For many of us in the Pacific Northwest, autumn can be a favorite time of year as we transition from the hot, dry end of summer to shorter days, cooler nights, and plenty of color in the trees. Hiking trails tend to be a little less busy (although this is still the Northwest, so that’s relative!) and the fall harvest brings the fruit of the summer season. It’s also a time when daily routines change for those with children, as the structured schedule of the school year replaces the fun chaos of summer.

While autumn can bring back many happy memories, it can be the most unpredictable season in the Northwest. Heavy rain, windstorms, and power outages are all common. A hike can turn into a miserable experience for the unprepared.  That structured routine with children can be a headache for parents trying to juggle soccer practices, ballet lessons, and numerous other activities.

We believe the key to managing this unpredictable season, similar to the investment markets, is with proper planning and coordination. October brought turbulent global markets along with our changing weather. No matter what your personal risk tolerance (which is not a static thing, by the way), most people don’t enjoy watching their hard-earned savings gyrate like a yo-yo.

During periods like this, here are some important things to remember:

  • We continue to believe in the phrase “time in the market” rather than “timing the market”.
  • Volatility in the stock and bond markets is normal. Don’t let recent years with low-volatility lull you into thinking otherwise.
  • Long-term returns in the stock market are “earned” by clients not being swayed into poor decisions during volatile periods like this.
  • Our financial plans do NOT assume that your investments will increase in a nice, orderly fashion. Volatility is an inevitable part of the market cycle, which is why we use Monte Carlo analysis to stress-test your retirement model.

For clients with a decade or more to go before retirement, a market decline provides an opportunity to build wealth as you make regular purchases at lower prices. Think of a market downturn as a giant sale on good quality assets.

For our clients who have reached financial independence (or are very close), periods like this can be a good reminder of why we recommend a 2-3 year cash reserve as you transition into retirement. Having cash on hand to weather market storms has helped many of our retired clients “sleep at night” during past downturns.

Regardless of your stage in life, our recommendation is to STAY THE COURSE and don’t let short-term gyrations derail your long-term financial plan.

Everyone’s situation is unique, so if the recent market performance has you on edge, we’re happy to set up a time to review your plan and your investments with you. If our unbiased advice is needed, please let us know.

Market Commentary – December 20182019-01-21T18:32:39+00:00

October 2017 – Recommendations for Identity and Credit Protection

Greetings,

In light of the recent data breach at Equifax, we would like to share with you some of the information we have gathered to help protect yourself and your family from credit and identity theft. The decision of which lines of defense to take in preventing identity theft is a personal one, and will depend on your individual situation. There is no one right action to take. We’ve divided the lines of defense into two categories – preventive and detective. Preventive measures are designed to prevent credit and identity theft from occurring, whereas detective measures will inform you after the theft/fraud has happened. The lines of defense listed below are not an exhaustive list of precautions you can take. Visit www.usa.gov/identity-theft for other helpful tips and information on preventing various types of identity theft.

Preventive Measures

  • Credit Freeze: This is considered the most extreme, but likely the most effective, measure to prevent identity thieves from opening a new credit card or other line of credit on your credit file. Note that a credit freeze does not protect your existing accounts from fraudulent activity. A credit freeze restricts access to your credit history, without which most creditors won’t open a new account. A credit freeze does not impact your credit score. The downsides to a credit freeze are primarily cost and inconvenience. It may cost up to $20 to both “freeze” and “unfreeze” your credit, depending on the state and the credit bureau. You must freeze your credit with each of the credit bureaus individually. In addition, unfreezing your credit when you need it is not instantaneous, and could take up to a few days. It also requires that you remember or have access to the pin that was established when you originally froze your credit.
  • 90 Day Fraud Alert: This free service warns lenders that you may have been a victim of fraud, and asks them to take extra precautions, such as contacting you, before granting a new line of credit in your name. This initial alert lasts for only 90 days. If you sign up for this free service with any of the 3 primary credit bureaus, they will automatically notify the other credit bureaus. Should you become a victim of fraud, with evidence such as a police report, you can request a seven year fraud alert be placed on your credit file. A fraud alert does not impact your credit score.
  • Opt-out of Pre-approved Credit Card offers: One way to reduce the chances of an identity thief from opening a new credit card in your name (and to reduce the amount of junk mail you receive), is to “opt-out” of the list that credit bureaus provide to credit card and insurance businesses. Visit optoutprescreen.com and follow the instructions if you would like to take this preventive measure and be permanently removed from these mailing lists. This precaution does not impact your credit score.
  • Protect your Passwords: Another preventive measure you can take is to protect your passwords to all accounts in order to prevent thieves from making fraudulent transactions on your existing accounts. Use a secure password manager app on your mobile phone or your desktop/laptop computer, or save your passwords in a password-protected Excel spreadsheet. A few popular password manager apps that use cloud technology include LastPass, Dashlane and 1Password. Other apps such as KeePass, RoboForm and Password Safe use your harddrive for securely storing your password data.

Detective Measures

  • Monitor your Credit Reports: On an annual basis, request your free credit report from each of the four credit bureaus to review for any unexpected activity such as new credit cards or other lines of credit opened in your name that were not authorized by you. This detective measure will make you aware of fraud after it has occurred, although not necessarily in a timely manner, depending on the timing of your report monitoring.
  • Subscribe to a Credit Monitoring Service: The credit bureaus offer monitoring services that will notify you as soon as any changes have occurred on your credit file. Credit monitoring will not prevent you from being targeted by identity thieves, but it can help mitigate the damage by being notified of the fraud in a timely manner.
    • Experian CreditWorks: $24.99 per month (checks your Experian, TransUnion and Equifax credit reports each day, and notifies you when key changes are detected).
    • TransUnion: $19.99 per month
    • Equifax TrustedID Premier: Free for the first year of service.
  • Monitor your credit card/bank statements: An easy detective measure is to get in the habit of regularly monitoring transactions on your credit and bank statements, such as your debit and credit cards, and checking and savings, for unexpected or suspicious activity. This exercise could be two-fold, as you can also track your level of personal spending, an exercise that we recommend most clients do as part of their financial planning.

If you would like to contact us regarding this topic, or set up a meeting with your financial planner, please email: info@goddardfinancialplanning.com

All the best,

Your Team at Goddard Financial Planning

603 Financial, Inc. dba Goddard Financial Planning
1200 Westlake Avenue North / Suite #603
Seattle, WA 98109
(206) 217 – 2583

October 2017 – Recommendations for Identity and Credit Protection2018-03-28T18:06:26+00:00

Aspiring School Counselor Struggles with Debt

“Like many young adults, Tacoma graduate student Taylor Reyes is pursuing her dreams of a career and a home while college debt piles up around her.

She’s worried whether she can earn enough money as a school counselor to buy a house and pay off student loans that could hit $50,000 by the time she graduates in May. “I had felt so weighed down by these things,” the 25-year-old Fircrest resident said.

But two volunteer financial planners showed Reyes that her ambitions can become reality. They also gave Reyes a plan for starting her career, managing her student loans and owning a home. Reyes could achieve all of those things by the time she’s 30.

Her story is also a case study of how young people can navigate the treacherous path from school to career and homeownership without getting swamped by debt.

The Puget Sound Chapter of the Financial Planning Association voluntarily connected Reyes with two pro bono advisers at Blue Canoe Financial Planning in Seattle. They were reassuring about Reyes’ financial condition. “It’s generally good, given that she knows where she wants to go,” said Nancy Dienes, a registered financial adviser and Blue Canoe’s CEO. “She’s taken some risks, but it’s reasonable.”

Dienes and her colleague, financial planner Holly Davis, developed a road map for Reyes that has tips for other young adults in similar circumstances…..”

[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

Aspiring School Counselor Struggles with Debt2017-06-23T22:11:01+00:00

Powerball windfall: Strategies for the suddenly wealthy (Komo News)

By Connie Thompson

Komo News

The mere thought of sudden wealth triggers lofty visions. Virtually everyone has a plan.

But whether it’s 1.5 Billion, or several hundred thousand- money experts say the first thing to do- is nothing.

“Don’t quit your job right away.” , said Certified Financial Planner Ted White. “Don’t go out and make a big purchase right away. Don’t alter your lifestyle right away.”

White and his colleagues at Blue Canoe Financial Planning in Seattle are used to helping clients people who come in to big money. They say the key to coming out ahead in any big money game is to think like a coach- and assemble a strong team to that has your back….

 

Read entire story at Komo News

Powerball windfall: Strategies for the suddenly wealthy (Komo News)2017-06-23T22:11:01+00:00