Executive Wealth Planning Partners
John spent 28 years as a financial adviser at a major wire house before leaving to start his own advisory firm, Executive Wealth Planning Partners (affiliated with First Financial Equity Corp.) specializes in providing consulting and asset management services to public companies, their employees and qualified retirement plans. Through a series of strategic partnerships John's team offers stock plan administration, corporate cash management, 401(k) plan administration services and individual asset management.
John is also the founder of the National Association of Stock Plan Professionals (NASPP) Rocky Mountain Chapter. He currently serves as Chapter President. This organization is devoted to the promotion of professionalism in the design, administration of and advice to equity compensation plans and their participants at the nation’s publicly traded companies. He is a member of the Global Equity Organization (GEO), the National Center for Employee Ownership (NCEO) and the Financial Planning Association (FPA).
John is an advisory board member and contributing editor at the financial advice web site myStockOptions.com. His popular “Stockbroker Secrets” articles found there are a common-sense guide to managing employee stock options wisely.
John has also assisted in the development of employee stock option analysis software published by Net Worth Strategies in Bend, Oregon which financial and tax advisors nationwide use to model employee stock ownership and stock option exercise strategies.
BA, Economics, University of Colorado-Boulder
Assets Under Management:
Executive Wealth Planning Partners and Work Wealthy are marketing entities that operate under First Financial Equity Corporation for the purposes of providing brokerage securities and investment advisory services. Additionally, advisory services are offered through Vista Private Wealth Partners LLC, a separate SEC registered investment advisory firm. Brokerage Securities and Insurance products are offered through First Financial Equity Corporation. Executive Wealth Planning Partners, First Financial Equity Corporation, Work Wealthy, Vista Private Wealth Partners LLC, and it’s advisors do not give tax or legal advice. This material was not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Please consult your tax advisor or attorney for tax and legal advice. The opinions expressed and materials provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. First Financial Equity Corporation is Member FINRA/SIPC.
Introduction and Investment Approach - John Barringer
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The answer to your question is...maybe. You don't say which target date fund(s) you're using. They are not all the same although they all purport to have the same objective; maintain an evolving asset allocation to provide growth and protect principal with the goal of having a mostly liquid portfolio at the target date. There are numerous ways to attempt this investment objective. Some of these funds showed their vulnerabilities during the last market downturn, others did a remarkably good job of weathering the storm.
You should be cautious about adjusting or abandoning your own investment objective. You don't say WHY you have chosen to use this type of fund for your retirement investment strategy. Target date funds are a disciplined (somewhat expensive) use of a portfolio strategy that many investors use as a "set it and forget it" approach to long term planning. If the fund is part of a 401(k) into which an investor is making monthly payroll deduction contributions, the ups and downs of the market tend to get smoothed out while the fund keeps its sights set on the target.
Timing the market is, more often than not, a trick that fails. 2025 is not that far away, perhaps as little as a single market cycle, if history is any guide. Shortening your fund target will make the character of your portfolio shorter-term in nature. You should expect to get a lower return from a less risky portfolio. What happens if your (and many others) fears about the next several years don't play out as you imagine?
While there is circumstantial evidence that Presidential administration changes have an effect on the market (and they all try to take credit for anything good that happens while they are in office), even a big electoral change like this is just one of a long list of things going on in the world at any moment in time that could potentially impact markets. More often than not, big moves are a surprise, not the result of something everyone knows.
It all depends on your taxable income. The difference between the ROTH contributions you and your wife have been making and contributions to a traditional IRA are in the latter’s potential tax deductibility. Because you participate in an employer-sponsored 403(b) retirement plan, any contribution to an IRA for the purposes of receiving a tax deduction must be income tested. If you and your wife have taxable income less than $98,000 and file jointly, you can make a fully deductible contribution to a Traditional IRA. Your deductibility phases out above $118,000. The maximum individual contribution for people under age 50 is $5,500 for 2016.
If your spouse is not covered by a plan at work, her deductible contribution is subject to a different test. She can make a deductible contribution even if your joint income is up to $184,000 (It phases out above $194,000). If your income falls in between the $98,000 limit for you and the $184,000 limit for her, you can make a ROTH contribution and she can make a deductible contribution. Above the $194,000 limit, you become ineligible for both ROTHs and deductible IRAs.
The ROTH contributions you've been making are made with after tax dollars and will be tax free when you withdraw from them. They don't offer any tax deductibility, though. It's admirable that you have been saving with these and your work retirement plan. Without any deductions (other than the standard deduction and personal exemption), an IRA contribution, by one or both of you, could make sense for your tax planning going forward.
Yes, you can do this. Because you are over age 59 1/2, you may withdraw any amount, at any time from your IRA without incurring the 10% penalty. You will, of course, be subject to ordinary income tax on the withdrawal. The first Required Minimum Distribution (RMD) from an IRA is required to be made by the end of the first quarter of the year after one turns 70 1/2. If you turned 70 1/2 in June of this year, your first RMD is necessary by the end of March, next year. You can take all or a portion of it at any time between now and then. Next year, you will also be required to take an RMD by year-end.
The answer is, yes, if you received a cash payment that was for more than what you paid for the shares when you bought them, and your income is high enough to require that you pay capital gains tax.
Taking cash in a corporate reorganization is the same as selling your shares. You will receive a Form 1099 from the broker where the shares were held at the time of the liquidation. Your tax obligation will get reported on Schedule D (Capital Gains & Losses) attached to your 1040 tax return. Capital gains get preferential tax treatment. The maximum rate on them is 20% for 2016. But there is also a zero bracket for gains that applies to single taxpayers whose taxable income is below $37,450 ($74,900 for joint filers).
The tax deductibility of personal residence mortgage debt makes it attractive for financing other purchases by using a Home Equity Line of Credit (HELOC). If you are considering paying off a car loan with your HELOC, here's how to figure out the breakeven:
First of all, tax deductible financing only makes sense if you file a Form 1040 and Schedule A on which you itemize your deductions. If you file a 1040 EZ or 1040-A, you can't get the benefit of deductible home mortgage interest.
Assuming you itemize your deductions...let's say your car loan is 3% and your HELOC rate is 4% and let's assume you are in the 25% marginal tax bracket (AGI = $75,300 - $151,900 for a joint filer, $50,400 - $130,150 for single filer). This means that every dollar you deduct above the standard deduction ($12,600 for joint filers, $6,300 for single filers) gives you a 25 cent deduction. Here's the math:
HELOC rate = 4%
Deduction = 0.25 X 4% = 1.0%
4.0% - 1.0% = 3%
In this example, there is no difference between the car loan at 3% and the after tax rate of the HELOC loan at 4%. Any HELOC rate below 4% would be a better deal, assuming you're in a position to deduct it as an itemized expense. Also, if you are in a higher marginal tax bracket, the break-even is higher because the value of the deduction is greater. For instance, in the 35% tax bracket where every dollar of deduction is worth 33 cents, the breakeven is 4.477% so any HELOC rate below that is a better deal than the car loan at 3%.