J.K. Financial, Inc
Financial Planner, Founder
John A. Kvale CFA, CFP, is the founder of J.K. Financial, Inc., and with 22 years of industry experience, is currently the president of J.K.Financial, a fee only financial planning and wealth management firm.
J.K. Financial specializes in wealth management, adhering to unique approaches to investing in the capital markets. The company has a global presence, serving individual and institutional clients across the United States, as well as several foreign countries.
John is a co-author of a Quarterly Wealth Management and Financial Planning Newsletter, which is distributed to clients and investors across the country. He actively analyzes and updates ideas and investing on $treet-¢ents.com, a community blog site. John appeared on Good Morning America as the winning planner for ABC's Frugal Family Challenge, co-sponsored by USA Today. He recently concluded a term as president for the CFADFW Society, the local society in Dallas representing the CFA Institute. John began his financial planning career 24 years ago in Dallas, and resides there with his wife, Pamela, and children, Sophia and Pierce.
BBA, Finance, Stephen F. Austin State University
Assets Under Management:
Percentage of Assets
Your Life on 1 Page - John Kvale
3 questions Clients Ask - John Kvale
- See all videos on Guidevine »
Assuming your life insurance policy has a cash value, in most cases it is possible to borrow or receive funds from your life insurance cash account. Here are a couple steps you should review; Determine how much you would like to receive and call your insurance company to find out if that is available; Next, while talking to your insurance company find out the most tax efficient way to receive these funds. There are generally two possibilities, a return of premium or borrowing. Depending on your situation and your insurance policy, one may have more favorable tax consequences. Do not be afraid to ask your insurance company for the tax consequences of each. One last item, if you borrow or draw from your insurance policy, you may need to continue your regular premiums in order to keep your policy in force. If you draw a sizable amount from your cash value, and do no pay premiums, it is highly likely your policy will lapse, thereby nullifying your death benefit.
For simplicity let’s break this down into two components.
Your unrealized capital gains on your mutual fund will not be taxable in 2015. Said another way, if you purchased or owned a mutual fund at $10 per share and it increased to $20 per share by the end of the year, unless you sold it, the taxable gains on that appreciation are deferred until the year you sell, assuming the value remains the same.
Moving on to dividends: dividends paid by your mutual fund to you in 2015 will be taxable on your income taxes, assuming you own the fund in a taxable account, even if you re-invested the dividends back into the Mutual fund.
One other item, some mutual funds may also pay out a capital gain that will be taxable to you. As an example, if your mutual fund bought and sold stocks inside the fund in the year of 2015, and a gain was realized, that gain may have been paid to you, and would be taxable to you on your income taxes.
A possible strategy for you would be to attempt to roll your second distribution over into the same or another IRA. Here are a couple key factors, you must do it within 60 days, and you want to make sure your receiving institution gets it coded as a rollover. Your January distribution will not be able to be rolled over as it is clearly beyond the 60 day window. My suggestion would be to work carefully with your December distributing IRA company and make sure that wherever you roll your funds over, you attempt to get it coded correctly as a rollover. Your December distribution most likely will be coded a distribution, you are looking to have an offsetting rollover coding to flatten or equalize the tax effect of the December distribution. Working careful with your distributing and new rollover companies is very important, keep good records for tax purposes of everything you’re doing.
If your goal is to reduce taxes for this most recent tax year, an IRA would be the direction you would want to go. A Roth IRA does not allow you an immediate deduction on your current Federal tax return, only tax-free deferral and tax-free withdrawal. You must check to make sure that you are eligible for a deductible IRA, if so, the deduction would help your taxes. One additional feature would be that you can contribute to a deductible IRA up to your filing date or April 18 of this year, again as long as you are eligible, offsetting last year’s income taxes.
Generally, from an investment standpoint as interest rates rise it is better to have shorter term bonds (also known as duration) in your portfolio. Longer-term bonds, assuming interest rates rise equally across maturity dates, will lose more face/principle value as interest rates rise, all other things being equal. From a consumer standpoint as interest rates rise, you want to have fixed rate loans thereby locking in your loan at the current lower rate. One additional item, it is true that if you hold the bond to maturity it will eventually mature at par (face value return the $100), however extremely long term bonds may still dramatically decrease in face value in the interim, forcing an investor to hold them for an extended maturity to regain full value, possibly much longer than they had originally intended.