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.
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.
Common ways that assets from a QDRO are distributed, assuming it is from a defined contribution plan such as a 401(k), are transferring the assets to an IRA in the receiving ex-spouses name or a new account with the company that the current retirement plan is with. Once the assets are transferred over to the new account in the receiving ex-spouses name the normal tax consequences for distributions from the account apply. Any amounts taken from the account would be taxed at ordinary income tax rates in the year received. Assets distributed in accordance with a QRDO are exempt from the federal 10% early withdrawal penalty if under 59 1/2 years old. With this said, it is often best to have any needed distribution amount sent to you directly and not transferred to an IRA or account with the current plan provider. Typically, once assets are in the IRA or new account with the current company a distribution would then be taxable as income and can be subject to the 10% federal early withdrawal penalty.
There are two types of gift transfers to consider. Transfers during life and transfers upon death. It is common that a trust is set up to handle both types of transfers for the creators of the trust. The trust will have a trustee who is responsible for managing the wishes of the creators of the trust according to the written trust document. Howver, gifting during life does not require a trust but the creation of one often makes the administration of ones wishes easier. When leaving money to a grandchild that grandchild is considered a skip-person meaning they are 2 generations younger than the donor. This can be important if the donor's estate is more than the Estate Tax and Generation Skipping Transfer Tax exemption amount of $11,200,000 per donor.
It is common for assets to be given to heirs at pre-determined milestones such as certain ages or after certain life events such as graduation college or marriage. If subject to a trust the trustee has a fiduciary role with respect to management of the assets and to the beneficiaries of the trust. There are two types of beneficiaries the current beneficiaries and the remaindermen who are named to receive trust assets. Often there are spendthrift clauses or provisions included in these trusts to prevent a beneficiary from giving away their right (assignment) to a future gift they hope to receive to a third party. Trustee are typically given some discretion over whether a beneficiary will receive a benefit as well. This allows for a trustee to make sure that the beneficiary is not using the benefits of the trust in a manner that is harmful.
It is important to understand that there are some potential tax issues to consider. Most notably the Gift Tax for transfers during life and the potential for some of the Generation Skipping Transfer Tax. There are limits on the exemption amounts. Annual exclusion amounts for gifts is currently at $15,000 in 2018 and will be adjusted for inflation over time. There are additional exemptions from Gift and GST Tax for directly paying for medical and tuition expenses. The Generation Skipping Transfer Tax exclusion amount is now $11,200,000.
The disadvantages of annuities depend on the type of annuity. These products can provide benefits and advantages for people in the right situations. They all have some disadvantages.
Single Premium Immediate Annuities or SPIAs
This annuity will provide a guaranteed (by the issuer only) income for the life of the annuitant where payments typically start one month after purchase. General disadvantages are:
- Benefits (income stream) are fixed and do not increase with inflation.
- Principal is no longer available for emergencies. Buyers give up control of their money in return for an income stream guaranteed by the company who sold them the annuity. Financial soundness of the issuing company is also important to research and understand.
- Many of the added features of these annuities will reduce monthly income.
- Income per thousand dollars of principle will vary between the companies who sell these products. This makes shopping for an annuity very important as different issuers will provide different income rates per thousand.
These products come in two forms: Fixed and Variable. These contracts are based on the accumulation value of the investments made inside of the contract rather than immediate payments. Taxes on the growth of the investment is deferred until withdrawals are made. There are Single Premium (SPDA) and Flexible Premium (FPDA) deferred annuities.
Fixed Deferred Annuities Disadvantages:
- These contracts because of the fixed returns may not keep up with competition or as the purchaser's situation evolves may not provide the required rate of return to meet goals. If the owner then wants to move the investment in this contract they may be faced with surrender charges. Surrender charges may have a schedule that lasts many years and can be very expensive. It is not uncommon to see a 10 year surrender charge schedule starting at 10% and going down to 0% by the 11th year. It is extremely important to understand these types of charges before buying a deferred annuity.
- Early withdrawals generally come with a 10% IRS penalty if withdrawn before age 59 1/2.
Variable Deferred Annuities Disadvantages:
- Values of the sub-accounts in the annuities can fluctuate similar to mutual funds, index funds and ETFs. These contracts include insurance company expenses and it is important to understand them an understand the features of an annuity. If the features of the annuity are no longer desired or needed the purchaser may have been better off investing in funds without the insurance contract expenses that are involved with these types of annuities.
- The same 10% tax penalties on early withdrawals before age 59 1/2 apply.
- These contracts also come with surrender charge schedules.
- Variability of income stream due to the underlying performance of the subaccounts making income unpredictable may be undesirable.
Ultimately the buyer of an annuity must fully understand the features of the annuities they are buying. All annuities have disadvantages that must be understood. The individual selling the annuity should be upfront with the disadvantages and convey them.