Tuesday, October 21, 2014

Five Marketing Problems Advisors Face Today

I’ve been in this business a very long time and I can tell you first hand that, today, advisors face more challenges than they ever have before. Here are five of the top challenges advisors face in today’s constantly changing financial world.

Friday, October 3, 2014

Multi-Generational IRAs… What Are Those?

The term Multi-Generational IRA (MGIRA) is not an official term, but is used in the retirement planning industry to refer to the ability of
beneficiaries to stretch IRA distributions over their individual life
expectancies. For your beneficiaries to continue enjoying the benefit of
tax-deferred growth on IRA assets they inherit from you, they must be
allowed to “stretch” distributions over their individual life expectancies.
This option is available only if the IRA plan document or custodial agreement allows it and specific steps are taken. 

After an IRA owner’s death, his or her designated beneficiaries can use the separate account rule and continue to receive annual distributions
from the inherited IRA based on their individual life expectancies. The
individual beneficiaries will pay income tax only on the required minimum
distributions as they are received each year. Under an MGIRA strategy,
only RMDs (required minimum distributions) are withdrawn each year.

Who will get the money in your IRA if something happens to you? How can you be sure? You might be surprised to learn that Uncle Sam, in his tax man guise, could take 35% to 80% of your IRA assets, depending on the state you live in.

Unless you make sure your retirement plan is set up correctly, the U.S. government may be the primary beneficiary of your IRA when you die. The good news is, it doesn't have to be that way. An MGIRA strategy is designed for those who want to ensure that any money left in their IRA at death will go to their heirs and not the tax man. An MGIRA strategy can greatly benefit you and your family and the best part is it costs nothing to set up.

Tuesday, September 30, 2014

FIA Fact or Fiction?

An FIA is a Fixed Indexed Annuity. Many people shudder when they hear the word “annuity” but the reality is that many people are confused as to what an FIA is and what it actually does. An FIA is a tax deferred opportunity to enjoy all of the upsides of the market without the risks associated with market volatility.

Wednesday, September 24, 2014

Don’t Underestimate the Value of a CPA

Over the last several years, many taxpayers have been going the do-it-yourself route when it comes to
tax preparation. While that may be a great option for many people, if you have an IRA or other retirement assets, you may want to consider sticking to your trusty CPA who can provide accounting services beyond the do-it-yourself computer programs. In Tax Court case, Bernard v. C.I.R. (T.C. 2012) 104 T.C.M. (CCH) 136, a married couple failed to correctly report their IRA distributions on their tax return. They used a popular tax preparation software program but, unfortunately, such programs cannot always determine whether or not the user is properly inputting data.

Monday, September 15, 2014

2014 American Graphic Design Awards!

We are pleased to announce that we have been selected as a winner in the 2014 American Graphic Design Awards! More than 8,000 entries were submitted and Table Bay’s corporate brochure ranked in the top 15%, earning a Certificate of Excellence!

Monday, September 8, 2014

Social Security: When Should You Apply?

The truth is, there is no catchall “best” age to apply for Social Security benefits because your “optimal time” will vary based on your individual circumstances. Even though there is no one size fits all answer to this question, some factors every Baby Boomer should consider are:

• Individual health status

• Life expectancy based on that health status

• Estimated need for income during your retirement

• Whether you plan (or expect you’ll need ) to work during your retirement years

• Whether or not there are (or you anticipate) any survivor needs

The most obvious perk of delaying your benefit is that you will have an opportunity to collect more money. If you apply early, your benefit not only starts lower but it will stay lower for the rest of your life, it does not increase when you turn 66. Remember, COLAs will increase your benefit and the longer you expect to live, the more beneficial it is for you to delay your Social Security benefits. Also keep in mind that your decision will impact survivor benefits so it is an important consideration in planning your strategy, as a delay will increase survivor benefits as well. According to the Social Security Administration, the chart below illustrates an example of how delaying your Social Security may impact the amount of benefits you ultimately receive. This chart is intended for illustration purposes only and assumes a benefit of $1,000 at a full retirement age of 66:

Monday, August 25, 2014

Bankruptcy and IRAs

The federal bankruptcy exemption for IRAs was originally set at $1 million through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Every three years, that amount is adjusted for consumer price index changes. The federal IRA bankruptcy exemption limit is currently just over $1.2 million.

IRAs created under an employer sponsored section 408(k) simplified employee pension (a “SEP IRA”) or a section 408(p) simple retirement account (a “SIMPLE IRA”), as well as pension, profit-sharing, or section 401(k) wealth transferred to a rollover IRA, enjoy an unlimited exemption from the bankruptcy estate.

Monday, August 18, 2014

Latest 60-Day Rollover Private Letter Ruling

If you have an IRA and choose to do a rollover, you have 60 days to complete the transaction. Occasionally, for one reason or another, IRA owners miss the 60-day rollover deadline, rendering the failed rollover a fully taxable distribution. However, under certain circumstances, the IRA owner may be granted a waiver by the IRS. Recently, a Private Letter Ruling (PLR) was issued to an IRA

Monday, August 11, 2014

The Importance of Beneficiary Reviews

Simple mistakes can cost your beneficiaries everything. Beneficiary designation forms are often overlooked when people are reviewing their estate plans. This simple oversight, however, can have dire consequences. For example, divorce is already an unpleasant event but imagine that your ex-spouse gets the proceeds of your life insurance policy plan assets and/or retirement accounts because you forgot to update your beneficiary designation forms.

Monday, August 4, 2014

Section 1035 Exchanges

Does your current insurance policy need to be updated to reflect changes in your personal situation and financial planning goals? Insurance needs change as your family, financial, and business needs change. Just as technology created new means of communication and streamlined old methods, new types of insurance programs sold by ethical
agents will match the most current features and updates to your changing needs. If a new product provides a more cost effective solution than your old product, then you may consider exchanging the old policy for a new one.

Federal income tax law facilitates certain exchanges by providing that in some instances they may be made without the immediate recognition of gain. Although such transactions are sometimes referred to as “Section 1035 tax-free exchanges” the gain at the time of the transaction is not forgiven but is deferred rather than recognized as an immediate taxable event. If you decide that a 1035 exchange is a right strategy for you, be careful - you don’t want to trigger unwanted consequences so make sure that you understand all of the rules before you engage in such a transaction. An insurance licensed advisor, retirement distribution specialist or tax professional can help you determine whether a Section 1035 exchange may be appropriate for you.

Thursday, July 31, 2014

Protect, Preserve and Defend Your Health

We protect ourselves from costs associated with car accidents, flood and fire damage to our homes, and we have individual healthcare coverage to help prevent serious illness. Many of us have life insurance to plan for the future and to provide tax-free benefits to our families when we are gone. However, sometimes traditional coverage is just not enough. As we evolve as a society, so do our financial, retirement and health planning tools. There is a new solution now available so individuals can combine the best of both worlds – it's a hybrid solution to help ensure that long-term care needs will be satisfied while providing a legacy for heirs.

Tuesday, July 1, 2014


Even though an IRA is frequently the largest asset people have, except perhaps their home, many IRA owners surprisingly fail to conduct a BOSS review on an annual basis to ensure that their money will flow the way they want it to. Many people are unaware that unless their IRAs and other retirement plans are set up correctly, they will be leaving their heirs a tax bill and not a legacy. Nobody is immune to IRA mistakes.

Plenty of well educated, intelligent, wealthy individuals die without proper planning because they just didn’t know they had a serious problem…a problem that, sadly, could have been easily corrected.

It’s important to understand what happens to your IRA when you pass away. Many people think that their IRA passes through their will, it does not. The IRA beneficiary designation form determines what happens to IRA assets. IRAs are not inherently probate assets, meaning, they do not need to go through the probate system which requires that a probate court declare how and to whom the assets shall be distributed. IRA assets COULD, however, end up going through the probate court system if there is no valid designated beneficiary and, as a default, the IRA ends up going into the deceased’s estate.

You may ask yourself, why does it matter if my IRA or 401(k) goes to my estate, my children are the beneficiaries of my estate anyway, so what’s the big deal? The big deal is that if the estate is the beneficiary of an IRA, the opportunity for heirs to stretch the IRA RMDs over their individual life expectancies is effectively destroyed. The opportunity for heirs to enjoy continued tax deferred growth on those IRA funds will be destroyed. The opportunity for heirs to maximize the benefit of the IRA by turning the tax infested IRA into a tax efficient legacy from you is destroyed!

Tuesday, June 24, 2014


Who's the BOSS?

BOSS is an acronym that we use to refer to the four key people everyone must consider with respect to retirement planning, i.e., developing an income exit strategy and ensuring all IRAs,

Wednesday, June 11, 2014

Is a big stock market correction coming? Notice any patterns?

The stock market has recently reached an all-time high, and many people are looking at their brokerage accounts and celebrating. However, I wouldn’t pop the corks on those champagne bottles just yet. There’s a chance that this bubble is about to burst with a big stock market correction on the horizon.
A look back at the S&P 500 might shed a little light on why many financial professionals believe a BIG correction is coming.

Tuesday, June 3, 2014

Key Points to Keep in Mind When it Comes to Social Security

When you are deciding when you should begin your Social Security benefit based on your personal circumstance, there are some important things to keep in mind.

Friday, May 30, 2014

What You Need To Know About Maximizing Your Retirement Income

What You Need To Know About
Maximizing Your Retirement Income

Baby Boomers in particular want to know whether Social Security will be there for them and how much they
can expect to receive. Most Baby Boomers do not know when they should apply for their Social Security benefits and how to maximize that benefit. Most importantly, many Baby Boomers are concerned that their Social Security benefit will not be enough for them to live on during their retirement. Before strategies can be discussed, it is crucial to understand the value of Social Security and what it can mean for you. Social Security basically offers a stream of income that you cannot outlive and it includes inflation adjustments, familiarly known as COLAs. For example, if your monthly Social Security income today is $2,000 and the annual COLAs are 2.8%, in 20

Monday, May 19, 2014

Prohibited Transaction Disqualifies IRA

Disqualifies IRA

We often discuss the pitfalls of self-directed IRAs and the increased risk of prohibited transactions. In a recent Tax Court case, Ellis v. C.I.R. (T.C. 2013) 106 T.C.M. (CCH) 468, Mr. Terry Ellis’ entire IRA was disqualified, subjecting him to not only accuracy related penalties imposed by the IRS but also a 10% early distribution tax on the entire IRA.

Monday, May 5, 2014

What is the "Still Working Exception?"

What is the "Still
Working Exception?"

There is no still working exception for IRAs, Simple IRAs or SEP IRAs. This exception only applies to certain qualified employer retirement plans. If you have a qualified employer retirement plan,

Monday, April 28, 2014

The NUA Advantage

Many corporations offer their employees different kinds of incentives and/or bonuses. One of these is company stock held in a 401(k) or other qualified pension plan. If you hold stock from a previous employer in a qualified plan, you are eligible, under the IRS code, for special tax treatment on those assets based upon a concept called Net Unrealized Appreciation (NUA).

Monday, April 21, 2014

Estate and Inheritance Tax Facts

Estate Taxes and inheritance taxes are two entirely different assessments. Estate taxes are calculated based on the value of a deceased’s taxable estate. Inheritance taxes are imposed upon the individual receiving assets from a deceased’s estate. 

Thursday, April 17, 2014

Naming a Trust as Your IRA Beneficiary

Q: If I name my trust as my IRA beneficiary, can each of my trust beneficiaries stretch RMDs?

A: Yes and no. Yes, they can stretch RMDs but the stretch is severely limited, especially if you have trust beneficiaries with a huge age gap. Assuming the trust qualifies as “see-through,” at best, RMDs may be calculated based on the oldest trust beneficiary’s life expectancy.

Individual beneficiaries of a qualified trust cannot stretch RMDs over their individual life expectancies. Even though a “stretch” may be available, a multi-generational distribution opportunity is eliminated.

Q: Will the IRA distributions be taxed at trust rates or individual income tax rates?

A: That depends on the trust. Generally, a trust pays income tax on income held inside the trust. When RMDs are required to be paid immediately “through” the trust to individual beneficiaries, individual income tax rates usually apply. Trust taxation can be very complicated and trust terms vary so it’s important to consult with your personal advisors concerning any trust taxation questions you may have.

Q: My wife passed away and our trust is the beneficiary. The IRA custodian said the “5 Year Rule” applies, what does that mean?

A: The “5 Year Rule” means that the entire IRA must be fully distributed no later than December 31st of the fifth year following the year the IRA owner passes away. Basically, there are no RMDs since distributions are optional until the fifth year. Of course, any amount can be distributed anytime as long as the IRA is fully distributed by the 5 year deadline.

Q: I named my trust as my IRA beneficiary last year but I want my kids to have a multi-generational distribution opportunity. I paid a lot of money for my trust and I don’t want to pay more to have it amended, am I stuck?
A: No, you are not stuck and you don’t need to have your trust amended because you changed your mind on that issue. In this case, you can simply update your IRA beneficiary designation form by removing the trust as your IRA beneficiary and directly name your individual beneficiaries. A trust can be a great planning tool, especially for non-retirement assets, but always consult with your personal advisers to make sure your trust and your beneficiary designation forms are set up correctly to achieve your goals.

Monday, April 14, 2014

Correcting Retirement Plan Mistakes

Correcting Retirement

Plan Mistakes by the


Do you have an IRA, 401(k) or other retirement plan? If so, you know how easy it can be to overlook things like taking your first RMD or contributing too much to your retirement plan. The good news is it’s early in the year and there is plenty of time to mark your calendar and plan for 2014. In addition, there is still time to correct a few 2013 errors before the applicable deadlines.

The Deadline is approaching
Taking Your First RMD

Do you have a traditional IRA and turned 70½ last year? If you didn’t take a required minimum distribution (RMD) in 2013, you have until April 1st to take your very first RMD. The

IRS allows you extra time for your first RMD only, the standard December 31st deadline applies to all of your subsequent RMDs. If you delayed your first RMD and plan to take it by April 1st, keep in mind that you still must take your regular RMD for 2014 by December 31st.

Monday, April 7, 2014

7 Tax Facts From the IRS About Dependents and Exemptions

7 Tax Facts
From the IRS About
Dependents and

1. Exemptions cut income. There are two types of exemptions: personal exemptions and exemptions for dependents. You can usually deduct $3,900 for each

Monday, March 31, 2014

Will your Self-Directed IRA Self-Destruct?

Self-directed IRAs can be very complicated and are the most common type of IRAs where prohibited transactions occur. You must be extraordinarily careful if you have or plan to have a self-directed IRA.

Monday, March 24, 2014

Where Did It Go?

Bond Funds Bleed $61.7 Billion

Battered by rising interest rates and falling prices, investors have yanked out a record $61.7 billion from bond funds in June, according to TrimTabs.com.

Wednesday, March 19, 2014

Investors flee U.S. stocks at fastest pace since 2008

Tapering talk, disbelief in rally leads big move out of equities

Domestic stock funds last week suffered their worst week since before the financial crisis as investors' fears over the Federal Reserve's plan to cut its asset- purchasing program spread to stocks.

Monday, March 17, 2014

Bank Sales of FIAs Reach Record Highs

Advisors Are Being Outflanked by Bankers

Indexed annuity sales through banks and credit unions reached a record high of over $1.06 billion in 2013. For the first time, indexed annuities
accounted for one-third of bank sold fixed annuities.

Thursday, March 13, 2014

70 is the New 65!!

Social Security Update

When Social Security was first instituted in 1935, the retirement age was set a65. Some cynics have argued that 65 was chosen as the age at which benefits would begin because life expectancy in 1935 was only 61.7.
But life expectancy at birth took into account the high rate of infant mortality in the early 20th century.

In 1935, men who made it to age 65 could look forward to another 13 years, women another 15 years, on average.

The German retirement system, which preceded ours, initially set 70 as the retirement age; later it was lowered to 65. By 1935, the Committee on Economic Security (CES) proposed age 65 as the retirement age under Social Security, partly because many public and private pension systems were using it, and partly because it would produce an actuarially sound system that would require only modest levels of payroll taxation.

In the 1950s and 1960s, first women, and then men, were allowed to start benefits at 62. An adjustment was made in the benefit amount to account for the fact that early claimers would receive benefits over a longer period of time.