STA Wealth Management, LLC
Partner and Executive VP of Financial Planning
Scott Bishop is a Partner and is Exec. Vice President of Financial Planning at STA Wealth, a Houston based RIA Firm. In this role, Scott guides clients through the process of identifying and realizing their personal financial planning goals while working with them to help develop, implement and monitor strategies to help assure the long-term coordination of their overall financial, retirement, business planning.
Scott is also the host of STA's radio show, "Financial Planning Fridays" on The STA Money Hour, on 950AM KPRC Radio in Houston at 12pm Central where he frequently discusses tax and financial planning topics and hosts interviews of industry experts.
Scott graduated from the University of Texas at Austin with a Bachelor of Business Administration in Accounting and received his Master of Business Administration from the University of St. Thomas.
Currently, Scott is a CFP® and a CPA and also holds a PFS® designation. Scott has been active as a member of the American Institute of Certified Public Accountants (AICPA), the Texas Society of Certified Public Accountants (TSCPA) and its Houston CPA Society as a member of its Board of Directors. He has also been recognized for excellence by being named the Young CPA of the Year for 2002-2003 by the Houston CPA Society, one of the largest and most prominent CPA chapters in the United States.
In addition, Scott has both authored and has been interviewed for numerous articles in financial related publications and websites such as the Wall Street Journal, MarketWatch, CNBC, USA Today, Washington Post, The New York Times, Investopedia, Houston Chronicle, Investment News, Kiplinger, The AICPA Tax Section, BankRate.com, the Houston Business Journal and the CPA Forum. Scott is also a member of the Houston Business and Estate Planning Council.
BBA - Accounting, University of Texas at Austin
MBA - Finance, University of St. Thomas
Assets Under Management:
AUM information provide is for the firm STA Wealth Management, LLC of which Scott Bishop is a partner/shareholder. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by STA Wealth Management, LLC (“STA”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from STA. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. STA is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the STA’s current written disclosure Brochure discussing our advisory services and fees is available upon request.
IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
STA Wealth Planning Process - Scott Bishop
Per the Social Security Administration website, The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2017, your maximum benefit would be $2,687. However, if you retire at age 62 in 2017, your maximum benefit would be $2,153. If you retire at age 70 in 2017, your maximum benefit would be $3,538.
When you’re ready to apply for retirement benefits, use our online retirement application, the quickest, easiest, and most convenient way to apply.
In terms of fully maximizing your benefit, here are exertpts from a piece I wrote on my website:
I participated in a recent webinar presented by Laurence Kotlikoff, an economics profession at Boston University, in which he offered several pointers to the audience on Tips to consider when filing for Social Security.
At STA Wealth, we have been talking for years about how best to maximize your Social Security Benefits – see:
- Claiming Social Security Early
- Social Security – When to Start Them
- Social Security Claiming Strategies for Couples
- Planning for Social Security
- Why it Pays to Delay Taking Social Security
- A recent interview on the STA Money Hour with Andrew Hardwick
As financial planners, our advisors at STA Wealth have a broad understanding of how to advise our clients on maximizing their Social Security benefits – and the answer varies depending on each of our clients own personal circumstances.
Per Mr. Kotlikoff, this had become even more difficult due to recent changes to the file-and-suspend benefit rules of Social Security, which take effect this year and restrict that benefit to a limited number of couples. (The spouse who files and suspends must be 66 years old as of May 1, 2016, and submit his or her request to file and suspend by April 29. The other spouse, who will receive that spouse’s benefit, must be 62 years old as of Jan. 1 of this year.) It’s also because Social Security is complicated, and even the workers at the Social Security Administration may not fully understand it.
With that in Mind, Mr. Kotlikoff has these five pointers to consider before you file for your Social Security Benefits:
1. Social Security Workers Can Get it Wrong (although most are well intentioned):
Therefore, you need to know the rules yourself. “People in Social Security offices don’t seem to understand the new law,” said Kotlikoff, who’s also author of “Get What’s Yours — the Secrets to Maxing Out Your Social Security Benefits.” He then recounted stories of several retirees who were given erroneous information by their Social Security office. We have seen the same issues with our clients here at STA Wealth. So before you apply for benefits have your game plan on how best to maximize your Social Security given your needs and situation:
- Age (of you and your spouse if married),
- Tax and Work/Employment situation,
- Longevity (how long do you think you will live), and
- Cash Flow Needs.
At STA Wealth, we have software to help you maximize your benefits and there are also online tools at www.ssa.gov.
2. Retirees Should Tell Social Security What They Want to Do – Don’t Just Ask
As discussed above, Retirees need to have the right information about their benefits — which we can provide at STA Wealth — and then tell Social Security what they want to do, preferably in writing. They should not ask Social Security workers questions about their benefits and expect to get the right answer, says Kotlikoff.
Mr. Kotlikoff recommends that retirees specify in writing in the remarks section of their application what they want to do, such as claim spousal benefits, and be definitive and clear. “The application form can be misleading,” said Kotlikoff. It says on top that you’re filing for all available benefits even when you’re not always doing that. You can’t undo that statement. The only place to specify … [what you want to do] is in the remarks section.
If someone wants a spousal benefit and the spouse has already applied to file and suspend and won’t take benefits sooner than his or her 70th birthday, “that has to be in writing … definitive and clear,” said Kotlikoff.
3. File Social Security Applications Online Rather Than by Phone or in Person
For most of my career, I have recommended that clients should schedule an appointment in their local Social Security Office – I have had few problems with that. Perhaps that is because my clients have a plan.
However, Mr. Kotlikoff believes thatit may be safer to file for retirement benefits and spousal benefits online. In that case, he believes that retirees can state exactly what they want to do, and specify in the remarks section of the application form. “You can’t write what you want by phone,” said Kotlikoff. Filing online can also avoid the problem of a worker at a Social Security office writing down the wrong information. Widow and child benefits, however, cannot be applied for online, said Kotlikoff.
4. Specify When You Want to Take Social Security Benefits
If you are beginning your Social Security benefits at Full Retirement Age, for those currently filing, it would be age 66, you will need to specify the exact date they want to begin taking benefits in the remarks section of their social Security application. Otherwise Social Security will provide six months’ worth of retroactive benefits in a lump sum, which will have the effect of slightly reducing future monthly Social Security payments.
5. Keep Track of Ex-Spouses if You’re Collecting Their Spousal Benefits
During the webinar, Mr. Kotlikoff recounted the example of an ex-wife who’s 63 and made the grandfather cutoff to collect under file and suspend. She can file for full spousal benefits of an ex-spouse when she reaches full retirement age at 66, then collect those for four years until the larger retirement benefit kicks in at age 70. At that point, if the ex has passed away she can take the larger of two benefits – the divorced widow or the divorced spouse. Per Mr. Kotlikoff, you should keep track whether your ex spouse is still alive.
That is a great question as the 5 year rule is only related to Roth IRA itself and not the underlying holdings in the account. So if you leave the gains inside the Roth IRA...and feel free to reinvest in another opportunity...then there is no 5 year rule or issue. If you actually withdraw funds from the Roth IRA (and are under age 59 1/2), then there could be penalties. The only time distributions are 100% penalty fee from the 10% early distribution penalty is after you have had a Roth IRA for over 5 years and you are older than 59 1/2.
Important - the 5 year clock starts from the first time any individual opens an IRA and makeas a deposit (slightly different if it was opened with a conversion...see #2 below). So open and fund an IRA account as soon as you can! It is NOT related to any specific account, but rather when you open and funded your first account.
By the way, here are the "ordering rules" in terms of penalties - listed in the "ordering rules" of distiribtuions - your contributions are deemed to come out first:
- Contributions: you NEVER pay a penalty or taxes on the countribtuions.
- Conversions: Once all your contributions are taken out, then they look at a your conversions. There is NO tax on any converted amounts distributed. If held more than 5 years or if you are over age 59 1/2, there is NO TAX and No 10% Penalty.
- Earnings: There is not tax or penalty if distributed after BOTH having an IRA for 5 years AND if you are over age 59 1/2.
So it is the earnings that are the most sensitive and they are only taxed or penalized if you "fail" the third rule above.
So leave the gains on the real estate in the Roth, reinvest them and pat yourself on the back for a good investment!
Here are some good articles for reference:
I am an Elite IRA Advisor with Ed Slott & Co (Ed is a CPA and is known nationally as an IRA expert). Here is one of the pieces I found on Ed’s website (that I have updated for 2017) on this topic.
There’s a common belief that if you have a 401(k) plan where you work and you contribute to it, you’re not allowed to also contribute to your IRA for the same year. But that’s not true; you’re allowed to contribute to both.
As far as IRA or Roth IRA contributions go, for 2017, the maximum that you can contribute is $5,500 if you’re under age 50 or $6,500 if you’re age 50 or older this year. In fact, you can contribute to both an IRA and a Roth IRA for the year, but the total limit is $5,550 (or $6,500). For example, let’s assume you’re age 60, working this year, and eligible to contribute the full $6,500 to a Roth IRA. If you decide to only contribute $4,000 to your Roth IRA, you could choose to contribute the remaining $2,500 to your IRA, bringing the total to $6,500.
Let’s also assume you have a 401(k) plan where you work. The maximum 401(k) contributions (also known as salary deferrals) you can make for 2017 are $18,000. If you are age 50 or older and your plan allows, you can also make catch-up contributions of an additional $6,000, making your total 401(k) contributions $24,000. Oftentimes, 401(k) plans have some plan-based restrictions on salary deferrals that might reduce the maximum dollar amount you can actually save. For example, your plan might need to limit your salary deferrals to pass certain IRS nondiscrimination tests.
Contributing to a 401(k) in no way limits your ability to make contributions to an IRA or Roth IRA. Roth IRA eligibility is only limited by your modified adjusted gross income and there are no income limits for contributing to a traditional IRA. The biggest limit really is how much money you can afford to contribute. If you can afford to contribute the maximum to both your 401(k) and IRA for 2017, then you can contribute a total of $23,500 ($5,500 + 18,000) if you’re under age 50 or $30,500 ($6,500 + $24,000) if your age 50 or older.
Transactions totally within a Roth or Traditional IRA will not incur gains or losses...or any taxable event (other than UBTI issues) until money is withdrawn. As withdrawals from Roth IRAs are TAX FREE, wash Sales are not relevent for transactions entirely within a Roth IRA (or 401k).
A wash sale occurs when an individual sells or trades a security at a loss (in a taxable account), and within 30 days before or after this sale, buys a “substantially identical” stock or security, or acquires a contract or option to do so.
A wash sale also results if an individual sells a security and a loss and it is repurchased in any other account that is owned by the taxpayer, their spouse or even a company/entity by the individual buys a substantially equivalent security. So if you sold a security at a loss in a taxable brokerage account and then re-purchased a "substantial identical" security in another account (even a Roth IRA), you will be subject to wash sale rules.
When you have a wash sale, the loss is then disallowed (via Schedule D on your tax return) and the basis on that sold stock reverts to what it was before the sale.
The tax issues that come up with Unrelated Business Taxable Income (see UBTI discussed above) typically happen when your Investemnets are in a self-directed IRA and you hold non-traditional/non-publically traded securities or securities that utilize vehicles like futures contracts.
The only time you owe RMDs on your 401(k) after you are age 70.5 is after you stop working. If you do not own more than 5% of the compnay, you never have to take RMD’s from your 401(k), whether Roth or Traditional.
You do NOT have to take RMDs out of Roth IRAs (ever) during your lifetime.
Therefore, if you have retired and/or left your employer, you can roll your Roth 401(k) into your Roth IRA and then you will NOT need to take any RMDs...after Retirement, Roth 401(k)’s require RMDs, but not Roth IRAs.
Hope this helps!