by Jaclyn M. Cornelius, CFP^®, EA, Vice President

If you are not currently maxing out your 401k/403b, consider increasing your contribution.  One of the easiest ways to do this is when you get a raise.  Consider increasing your retirement plan contribution by half the amount of your raise;  you keep half and save the remainder.

FOR EXAMPLE

If you are currently making $60,000 and contributing 3%, you would be contributing $1,800 annually to your 401k.

If you get a 2% raise, you now would make $61,200. If you do not make any change to your 401k contribution, that automatic amount would only increase by $36 annually out of the additional $1,200 you are making.

If you were to increase your 401k contribution percentage to 4% after your salary increase, your annual 401k contribution would be $2,448 (a $612 increase in your 401k savings over a year versus that $36).

The current IRS 401k contribution amount is $18,500 (plus the IRS allows you to add an additional $6,000 if you are age 50 and over).

Make sure you consult with a financial advisor before making decisions that could impact your long-term financial plans.

by Michael A. Ippoliti, MBA, CFP^®, Vice President

Strategies to Maximize Tax Deferral for Married Couples With one or Both Spouses Working
Required Minimum Distributions (RMDs) from retirement accounts begin when the owner reaches age 70-1/2. Naturally the younger spouse’s RMDs will begin later and therefore have the opportunity to remain tax-deferred longer.

Strategy 1 — Employer Retirement Plans: During working years, after taking advantage of employer matching funds, maximize subsequent contributions to the younger spouse’s retirement account first and then save any remainder to the older spouse’s account.

Strategy 2 — Contributions to Roth IRAs: Roth IRAs are not subject to RMDs for the original owner. If a couple desires to contribute a portion to Roth IRAs, the initial savings should go to the older spouse’s Roth IRA, then the younger spouse’s Roth IRA or Traditional IRA.

Strategy 3 — Roth Conversions: Logic is similar to Strategy 2. Converting a Traditional IRA to a Roth IRA results in the assets becoming tax deferred for life — no RMDs. For couples with an age gap, converting the older spouse’s IRA will reduce the older spouse’s future RMDs and retains the younger spouse’s RMDs.

by Roxie Muñoz, CLU^®, FLMI, Assistant Vice President, Insurance Services

What are Long Term Care Hybrid policies, and are they right for you?
Clients today have many more options to assist with covering a portion of a chronic illness. In the past, the only option was to purchase a traditional long term care policy and pay annual premiums for insurance coverage you may never use. And, the premiums are not guaranteed so could increase several times.

Newer generation policies are available that blend several types of insurance coverage into a single contract.  These Combination or “Hybrid LTC” policies combine the benefits of an annuity or life insurance with long term care protection. If you never need LTC services, these contracts can provide either an annuity cash value or a life insurance death benefit.

You may have mentally “set aside” some investment dollars which you plan to utilize should a long term care illness occur. By repositioning these monies into one of these policies, the amount will automatically increase for long term care needs.

In addition, the cost of the LTC benefits will not be includible in gross income; it will simply reduce your investment in the contract. You may even be able to exchange an existing annuity, life insurance policy or long term care contract tax-free to one of these policies.

Our office can provide more information, and design a personalized plan based on your financial situation.

by Jessica Goedtel, Senior Associate
If you are a Pennsylvania resident and are considering leasing a car, you should know that Pennsylvania imposes an additional 3% tax on the lease of motor vehicles, in addition to the state 6% sales tax. This special tax is collected and put into the Public Transportation Assistance (PTA) Fund, and is dedicated to funding mass transportation.

This tax is 3% of the total lease price, and applies to motor vehicles leased for 30 days or more. When deciding on whether to purchase or lease a new vehicle, make sure to factor in this additional cost.

Click here to read more about the PTA Fund and applicable fees and taxes on the PA Dept of Revenue website.

As an independent firm we focus on putting the best interests of our clients above all else. It is important that our industry maintain standards for transparency and ethics. The latest example of this is the SEC Action Looking for Individuals (SALI). The searchable database will help identify registered and unregistered individuals who have been parties to past SEC enforcement actions and against whom federal courts have entered judgments or the SEC has issued orders. Click here to read the SEC announcement.

by David Givler, Senior Associate
If you are employed full time by a government organization (federal, state, local, or tribal) or a not-for-profit organization tax-exempt under Section 501(c)(3) of the IRS Code you may eligible for student loan forgiveness. The Public Student Loan Forgiveness Program (PSLF) works to absolve student loans after certain criteria is met.

First, your loans must have been received under the William D. Ford Federal Direct Loan Program (Direct Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans). Loans under the older Federal Family Education Loan Program may be able to qualify through consolidation, but careful research and consideration should be made before doing this as there are specific rules to follow.

Second, you must make 120 months of qualifying monthly payments. Qualifying monthly payments are: (1) payments made after October 1^st, 2007, (2) paid under a qualifying repayment plan, (3) for the full amount due as shown on your bill, (4) paid no later than 15 days after due date, and (5) made while employed full-time by a qualifying employer. Payments made while your loans are in-school status, grace period, deferment, or forbearance do not count toward the required 120 payments.

To apply, you must first complete the Employment Certification for Public Service Loan Forgiveness form whenever you change employers. After making 120 months of qualified payments you must submit the PSLF application.

For further information regarding where to send the forms, how many qualified payments you might have made, your loan details, contact information, and other helpful resources please visit the Federal Student Aid website.

by Laurie A. Siebert, CPA, CFP^®, AEP^®, Senior Vice President
CLICK HERE TO GET TO KNOW LAURIE

Medicare is issuing new cards over the next 12 months in the hopes of protecting your identity and providing more security. Scammers have already found ways to take advantage of the confusion. Medicare will not contact you so beware of anyone who says they are Medicare or requesting sensitive information or payment of any kind. Understand that you will receive your new card in the mail so keep your address updated with Medicare. Other than that, there is nothing for you to do. Because the new cards will be issued over 12 months, you may receive your new card at a different time than your spouse, neighbor or friend. Know that it is coming and there is nothing you have to do but be patient and avoid scammers. Destroy your old card once the new card is received. Medicare has a notice on their website about the new cards – https://www.medicare.gov/Pubs/pdf/12002-New-Medicare-Card-flyer.pdf

However, the news media has puffed-up its usage. Have they made too much of the steel tariff announcement? Probably, if history is a guide. We will continue to evaluate how tariffs affect you the consumer, business profits, and FED actions; but, we do not see an impact where we need to change your portfolio at this time.

By the way, tariffs were once the chief source of income for the U.S. Government before the passage of the Federal Income Tax legislation in 1913.