Prominence Capital GP, LLC
James Liotta, CFP®, CPWA®, AIF®, NSSA®, MBA is President and Founder of Prominence Capital GP, LLC.
James M. Liotta helps his clients with a broad array of investment management, financial planning and wealth management issues. He has amassed a rare combination of professional credentials and educational achievements.
Raised in New York by hardworking parents, James graduated college in Boston and then moved to Los Angeles where he began his career in 2002 with UBS PaineWebber as a Financial Advisor.
In 2005 he was recruited by Merrill Lynch and later again recruited by Wells Fargo Investments where he specialized in risk management, provided detailed financial plans, and managed the portfolios of High Net Worth Individuals and Corporations.
Committed to helping his clients achieve their financial goals, he was driven to found his own advisory firm, Prominence Capital, where he could provide unbiased advice, free of conflicts that come with corporate initiative and commission-driven models inherent at large firms.
He brings a passion to his work with clients that are in transitions in life, small business owners, entrepreneurs, executives, and pre- and post-retirees.
James earned an MBA in Finance from the University of Southern California Marshall School of Business and has a Bachelor of Science from Northeastern University.
At the Marshall School of Business, he also attained the Graduate Certificate in Financial Analysis and Valuation.
James Liotta is a CERTIFIED FINANCIAL PLANNER™ professional and a Certified Private Wealth Advisor® designee. He has insatiable curiosity and continuously furthers his financial education.
He has also achieved the Accredited Investment Fiduciary designation and National Social Security Advisor Certification.
He's a member of the Board of Governors of Cedars-Sinai Hospital as Co-Chair of the membership committee and lives in Los Angeles with his wife Alicia and children Gemma, Hannah, and James Jr.
BS, Sports Medicine, Northeastern University
MBA, Finance, University of Southern California
Graduate Certificate in Financial Analysis and Valuation, University of Southern California
CFP Certification Professional Education Program, College for Financial Planning
Percentage of Assets Under Management
Prominence Capital GP, LLC. ("Firm") is a registered investment adviser located in Beverly Hills, California. Firm may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.
Certifications and Education
Here is a synopsis for your consideration:
- Net Unrealized Appreciation (NUA) is a strategy for retirement asset distribution under Internal Revenue Code 402(e)(4).
- Applies to employer securities held in a qualified retirement plan (ESOP, 401k, Profit Sharing, etc.)
- Must elect lump sum, in-kind distribution from plan (total distribution of all assets in single calendar year)
- Premature distribution penalty rules for qualified plans still apply (but only to original basis)
- No step-up in basis on NUA portion at death. Subject to Income in Respect of Decedent (IRD)
- Assume $100/share at distribution-$20 Tax Basis immediately taxed at Ordinary Income tax. Remaining $80 of NUA taxed at long term capital gains tax rate is available immediately. No 3.8% medicare tax applied.
- Assume future sale at $150/share-$50 a share of growth after distribution taxed at either long term capital gains or short term capital gains depending on how long it is held after distribution.
NUA strategy must be implemented prior to the onset of Required Minimum Distributions (RMD). Must be taken by April 1st of the year following year you turn 70 1/2.
Other areas of consideration are AMT issues and Estate Planning Strategies such as gifting
Here are some initial thoughts on a large topic: Many investors can take advantage of Tax Free Bonds as they not only provide tax free income but as part of a good asset allocation strategy they can diversify holdings and reduce portfolio risk and volatility. Investors should look at potentially using them in taxable investment accounts. Another important aspect of investment planning to look into is asset location strategies. Placing assets that are taxed at the higher ordinary income tax rates in tax deferred or tax free accounts such as taxable bonds that generate interest income may be beneficial. Your current income levels suggest you are likely taxed at the highest federal level for married filing jointly. It is now 37%. California income tax rates are probably around 11.3%. You are also likely going to have to pay two different Medicare taxes. First is an extra 3.8% on Net Investment Income because you are making more that $250,000 jointly. The second one is and additional 0.9%. The tax applies to the amount of wages, self-employment income and railroad retirement (RRTA) compensation that is more than a threshold amount. Again, the threshold for married filing jointly is $250,000. Another issue is that the SALT deductions are now limited to $10,000. In California for many people their State and Local Taxes are significantly higher than this threshold amount. Another issue is that new indebtedness on a home purchase has an interest deductibility maximum. It allows you to deduct interest on up to $750,000 of mortgage debt incurred to buy or improve a first or second residence (so-called home acquisition debt). The ability to deduct interest on up to $100,000 on home equity debt has also been eliminated. Real Estate can be an attractive place to invest in the right structure becasue you can defer taxes on investment properties through like kind exchange rules called 1031 exchanges. Keep in mind these are more complex transactions then a typical sale of real estate. Also, depreciation is a big benefit as well. Tax loss harvesting will not reduce you earned income more than up to the $3,000 maximum allowable should you have loss after netting out gains. However, losses are going to be important to keep track of on your schedule D. A loss taken in this tax year that is more than gains taken in this tax year and that is north of the $3,000 deductibility maximum after netting against gains can be carried forward to future years to offset future gains which can certainly impact you overall tax liability. There are many other strategies that you may consider if your specific situation warrants them. Ownership structures should be explored as much as the investments themselves to determine what tax advantages are gained. This is part of a larger conversation but hopefully this is a helpful start.
Spousal benefits are benefits that a workers' spouse may be eligible for based on the workers' record. In order to qualify for spousal benefits the spouse must be at least age 62 or have a qualifying child and has been married to the worker for at least one year prior to filing for benefits. Under these circumstances the spouse can receive as much as half of the workers primary insurance amount depending on the age in which they file for benefits or if they have a qualified child in their care. The spouse is not eligible for spousal benefits if they are entitled to a retirement benefit that meets or exceeds one-half of the primary insurance amount of the worker. What this means is that if you have a primary insurance amount of $500 and your spouse has a primary insurance amount of $2000, you are entitled to $1000 worth of benefits. You will receive the $500 under your own benefit and $500 under your spouse's benefit which is equal one half of your spouse's benefit. Social Security benefits are reduced by a certain percentage for every month they are elected early. Spousal benefit reductions work the same way--though the factor by which the benefits are reduced is different.
The key here is to remember that even if your spouse is eligible for a higher benefit based on your record and receives it, your benefits amount does not change. You will continue to receive your benefit with out a reduction.
As long as you are not participating in a company sponsored retirement plan you can look into setting up a Traditional IRA. This will allow you to invest $5,500 if you are under 50 years old. If you are 50 or older you can add an additional $1,000 for a total of $6,500. The $1,000 is called a catch-up contribution. The Traditional IRA allows you to make a tax-deductible contribution. The assets in the account grow tax deferred. Once you take a distribution you will have to pay income tax on those amounts you take. Generally, you can start taking distributions at age 59 1/2 without a 10% early withdrawal penalty and you must start taking Required Minimum Distributions (RMD) after you reach age 70 1/2. Another attractive option may be a Roth IRA. The contribution limits are the same as the Traditional IRA. However, there are income limitations on your ability to contribute to one. The 2018 limits are as follows: For single tax filers the Phase-out starts at $120,000; ineligible at $135,000 and for Joint tax filers the Phase-out starts at $189,000; ineligible at $199,000. The Roth IRA does not provide for a tax-deductible contribution, however as long as the Roth is 5 years or older since the first contribution made you will not pay taxes on distributions. The account will grow tax free as well. One thing to remember is that unlike many company sponsored plans IRA's do not allow investors to borrow funds. There are some exceptions that allow early withdrawals with out penalty, such as qualifiying education expenses for yourself, a spouse, a child or grandchild. Other exceptions are:
· The distributed assets are used toward the purchase, or to build or rebuild a first home for the IRA owner or a qualified family member. Qualified family members include the IRA owner's spouse, a child of the IRA owner and/or of the IRA owner's spouse, a grandchild of the IRA owner and/or of his or her spouse, a parent or other ancestor of the IRA owner and/or of his or her spouse. This is limited to $10,000 per lifetime.
· The distribution occurs while the IRA owner is disabled.
· The assets are distributed to the beneficiary of the IRA owner after the IRA owner's death.
These IRA’s can be opened at many financial institutions or through and advisor who can help you navigate the rules that apply to you and help you make planning and investment decisions appropriate to your specific situation.
This is a complex issue and there are a few rules that apply that may help you make your decision. You typically want to make sure your distribution is qualified. These distributions are tax and penalty free. First one of the following conditions must be met:
- The Roth IRA owner is age 59½ when the distribution occurs.
- The distributed assets are used toward the purchase, or to build or rebuild a first home for the Roth IRA owner or a qualified family member. Qualified family members include the IRA owner's spouse, a child of the IRA owner and/or of the IRA owner's spouse, a grandchild of the IRA owner and/or of his or her spouse, a parent or other ancestor of the IRA owner and/or of his or her spouse. This is limited to $10,000 per lifetime.
- The distribution occurs while the Roth IRA owner is disabled.
- The assets are distributed to the beneficiary of the Roth IRA owner after the Roth IRA owner's death.
Then there are the 5-year rules. This is often a forgotten set of rules when it comes to Roth IRA distributions. The first 5-year rule states that earnings on Roth contributions will be tax-free and the second rule applies to conversion principal being penalty-free. The rule states that five tax years must pass from when the very first contribution is made to a Roth IRA. The first-time money comes into the Roth IRA the 5-year clock starts. For money coming from a Roth 401(k) into a Roth IRA the time the money spent in the Roth 401(k) does not count or is not added to the years for the Roth IRA. There is no credit towards the 5-year rule for having your money initially in a Roth 401(k). The 5-year requirement is aggregated across Roth IRAs so if you have one that satisfies the 5-year rule all other Roth IRAs are considered to have met the requirement. The second rule applies to Roth conversions from pre-tax accounts. In this case the conversion principal will be penalty-free if it meets the 5-year rule. Different from the contribution rule the conversion rule states that each conversion will have its own 5-year rule applied to it. This means there could be multiple time frames occurring at once. The next set of rules for withdrawals from a Roth IRA are the ordering rules. A withdrawal is considered after-tax contributions first, then conversions, and lastly earnings. Qualified distributions are penalty free and tax free regardless of source of order. Non-qualified distributions are different. Regular contributions are tax free and penalty free if distributed. However, there can be taxation owed on growth and penalties on conversion amounts if distributed.