Category: General

There are a lot of questions about President Biden’s Build Back Better plan and potential tax law changes, including an adjustment to capital gains taxes.

One of the proposals Congress is considering sets the top rate for taxing capital gains at 25%, up from 20% under current law. Another would raise the capital gains tax rate to 39.6% for taxpayers earning $1 million or more. Still another would make the change to capital gains tax retroactive, with a start date of April 2021.^1,2

At this point, many ideas are being considered as legislators look for ways to raise revenue to help pay for the Build Back Better plan. Corporate tax rates, individual tax rates, estate tax rules also are on the negotiating table.

As difficult as it may be, the best approach is to wait and see. It would be hasty to make any portfolio changes based on current discussions. An ambitious investor would have to guess what policies will be in the final bill, estimate the financial impact, and determine any needed portfolio changes. That’s a tall order.

This article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and financial professionals before modifying your capital gains tax strategy.

1. https://www.bloomberg.com/news/articles/2021-09-13/house-democrats-pitch-capital-gains-tax-of-25-for-high-earners
2. https://www.bloomberg.com/news/articles/2021-06-16/yellen-argues-capital-gains-hike-from-april-2021-not-retroactive

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

On October 13, 2021, the Social Security Administration (SSA) officially announced that Social Security recipients will receive a 5.9 percent cost-of-living adjustment (COLA) for 2022, the largest increase in four decades. This adjustment will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022. Additionally, increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries will begin on December 31, 2021.¹ 

Biggest COLA Increase in Decades?

While many predicted a bump of as much as 6.1% given recent movement in the Consumer Price Index (CPI), the announced 5.9% increase is still substantial. Some fear that rising consumer prices may dilute the impact of the increase with inflation currently running at more than 5 percent. While this remains to be seen, Social Security beneficiaries will no doubt welcome the largest adjustment in many years.¹

How You Will Be Notified

According to the Social Security Administration, Social Security and SSI beneficiaries are usually notified about their new benefit amount by mail starting in early December. However, if you’ve set up your SSA online account, you will also be able to view your COLA notice online through your “My Social Security” account.¹ 

Next Steps?

If this increase surprises or concerns you, it’s always a good idea to seek guidance from your financial professional about changes to any of your sources of retirement income.

1. https://www.ssa.gov/news/press/releases/2021/#10-2021-2

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Your child is getting ready to head to college. Between making sure they have their textbooks and everything needed to furnish their dorm, there are some legal documents that you should have in place. Many of these documents will be handy to have should a medical or other emergency occur and you need to make decisions on behalf of your college student.

Family Education Rights and Privacy Act (FERPA) Waiver

Because your child is now a legal adult, you don’t have automatic access to information about them regarding their education. This includes access to information about their grades, academic records or disciplinary actions. Even if you’re paying your child’s tuition, the FERPA Waiver is needed to have access to any of their school records. Ask your child’s university to see if they have the forms on hand. If not, you can easily find a copy of this waiver online.

There are a few notable exceptions where a FERPA Waiver is not needed:¹

• Underage drinking: If the student is under 21 years of age and is in violation of any federal, state or local laws or college rules concerning the use or possession of alcohol or a controlled substance.
• Medical emergency: If information needs to be communicated regarding an emergency health or safety situation, to protect either your student or other individuals.
• Dependents: If you list your child as a dependent student on your Federal income tax return. There are some notable conditions, however; your child must be under 23 years of age, be unmarried, live with you for more than half of the tax year, and your child must not be supporting their own life by more than half.

Regardless of these exemptions, you may want to get a FERPA Waiver signed just to make sure your bases are covered.

Medical Documents and Authorizations

Medical documents and authorizations are easy to overlook when it comes to your child. They may still be your baby, but once they reach the age of 18 they’re considered an adult. Should your child have a medical emergency, having the necessary documents on hand will make sure you can focus on their care and recovery. 

HIPAA Authorization Form

This is one of the most important medical forms to have for your college student. A HIPAA authorization allows doctors and medical facilities to keep you updated regarding your child’s medical condition and health in the event of an emergency.

Medical Power of Attorney

A Medical Power of Attorney allows your child to designate someone (typically a parent or legal guardian) to make medical decisions for them should they become incapacitated. It’s recommended that your child choose a primary and secondary agent, just in case one of them isn’t available.

Durable Power of Attorney

A Durable Power of Attorney allows your child to designate someone (typically their parents or legal guardians) to handle their financial affairs should they become unable to. College students can also use this document to designate someone to handle their tax returns and other financial matters while they’re away at school.

Living Will

A living will allows your child to designate end-of-life care should they wind up in a persistent, vegetative state, unable to make their own medical decisions. It’s also vital for them to communicate these wishes to their family members so that everyone is on the same page.

Health Insurance

Most students are on their parents’ health insurance, but it’s important to confirm before they leave for college, especially if they’re attending school out-of-state or in another country.

Medical and Dental Appointments

It’s a good idea to make sure your child has any medical and dental appointments taken care of at least a month before they leave for college. Get copies of their prescriptions so they can fill them while they’re away, and make sure they have a copy of their medical records, especially if they have a chronic medical condition.

Coverage For Your Child’s Belongings

No one wants to think about dorms being vandalized or property being stolen, but it does happen. You’ll want to check your homeowners insurance policy to determine if your child’s belongings are covered while they are away at school. It’s especially important to make sure that their laptop or tablet is covered so they’re still able to do their schoolwork. If your child is living off-campus, they may need to obtain renter’s insurance.

It’s an adjustment to think of your college student as a legal adult. As your student heads off to college, having these important legal and medical documents on hand gives you peace of mind and allows you to focus on the school year ahead.

1. https://www2.ed.gov/policy/gen/guid/fpco/ferpa/students.html

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Divorce can be less common among doctors than other professionals.¹ With that being said, the process of divorce can be complicated for anyone – maybe even more so for medical professionals with complex financial standings.

Divorce can be hard for healthcare workers to manage for a few reasons. Doctors may be less eager to take such a major step simply because the process of a divorce, which is difficult for anyone, can be an especially troubling distraction for an individual with so many responsibilities. A kind of grief follows a divorce, one that may be difficult to shake. And there is, of course, the financial aspect of divorce. If you have children, both you and your former partner will need to make decisions about their care.

In this article, we will examine some things to consider as you dissolve your marriage. We will also provide some suggestions that will be helpful to doctors navigating their post-divorce financial life.

First, Build Your Team

As a first step, find a financial professional who is experienced in helping individuals navigate divorce. Better yet, you may benefit from someone who has worked with medical professionals and understands the complex nature of their financial life.

This person should have the skills to assess a divorcing couple’s finances comprehensively and forecast the potential short-term and long-term financial outcomes of a settlement. In addition, that professional can help spouses develop spending and cash management strategies and consider the tax implications of a split.

A professional can help keep your financial situation – your income, your expenses, the needs of your children – at the forefront of your mind both before and during the divorce process.

A Checklist for Doctors Going Through Divorce

Here is a checklist you can use to prepare yourself for a meeting with a financial professional to discuss matters related to your divorce.

Retirement Income & Savings

You must review your retirement income sources such as projected Social Security benefits, any future pensions, potential inflows from your retirement assets and the way you invest; if you own your own practice, you may have your own retirement plan, as well. In doing so, you can make clearer decisions about how you want to divide your retirement accounts and still realize the kind of lifestyle you would like to have in retirement. 

Beneficiary Designations

People often forget to change beneficiary designations on their life insurance policy and accounts including bank, investment and retirement accounts after a divorce. If these go unchanged, your former spouse may stand to inherit a large portion of your assets.

Estate Planning

Estate tax laws give certain breaks to married couples that are unavailable to individual filers. A trust may give you an avenue to pass along more of your assets to your heirs rather than the IRS and may prove critical if you have children or dependents with special needs.

If you have a will or living trust, your spouse may be the executor/trustee and may also be the sole or primary beneficiary of your estate. This is something to check on. Incidentally, many states abide by an elective share statute, meaning that a spouse (whether estranged or married) is automatically entitled to a percentage of your estate.

Joint Accounts & Property

Some things to consider: Do you own your practice, partly or in full? This will be of primary concern, as it will need to be either dissolved and assets divided between both parties or will constitute part of the assets you are keeping after the marriage. See that titles and deeds are appropriately transferred (Cars, boats, campers, motorcycles, and other vehicles; Homes, rental property, vacation cabins, other real property types). Don’t forget bank accounts and credit cards. Change joint accounts to individual accounts. Remove your name from your spouse’s accounts.

Student Loans & Debt

Up to 89 percent of medical school graduates have taken on educational debt.² Not only are the majority of medical professionals in debt, but the amount of debt accrued can be substantial. On average, doctors and physicians face $241,600 in student loan debt.²

As a medical professional, you may have student loans and other debt to consider amidst a divorce. Your spouse may have their own loans to pay off as well. Make sure that your payment services are aware of your new marital status. After all, responsibility for these loans depends on whether or not you took the loans before or during the marriage, or whether you accepted a joint consolidation loan.

Credit

Pull your credit report and check all accounts to assure their validity. Contact your creditors to cancel or close accounts, change contact information or remove your spouse’s name.

Power of Attorney

Does your spouse have a Durable Power of Attorney? Think about revoking it so that it cannot be misused. There have been instances where a DPA has been used to take out loans in the name of a spouse or to transfer a spouse’s assets to the other party.

Insurance

Do you have life insurance policies? Change the primary beneficiary to a financial trust or another individual. You may want to purchase more coverage if it is needed. 

Taxes

If you are divorcing after April, should you and your spouse file one more joint return? This calls for a chat with your tax professional. Filing jointly could of course save you money compared to filing singly, but it also means you are jointly responsible for everything on that 1040 form. Working with a tax professional may help you answer the many questions you will have, as well as those you have not yet considered.

Long-Term Financial Concerns

An “equal” settlement is not always an equitable one, as one spouse may be left with much greater potential to build and retain wealth than the other. The reason for this is that, in many cases, physicians earn more income than their spouses, assuming the spouse works at all. This is still applicable in cases where the spouse who isn’t a doctor earns more or comparable income. That is the most important long-term issue to address, so carefully weigh that potential well before a divorce is finalized.

There’s a great deal for you to think about. Some of it will be painful, some of it may come as a relief. Whatever emotions this time of your life brings to mind, don’t let frustration become a major part; a good start comes from engaging financial and legal professionals who can help you through the process.

1. https://www.bmj.com/content/350/bmj.h706
2. https://educationdata.org/average-medical-school-debt

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Small businesses serve as the backbone of our economy. And if you run a family business, you understand the importance of preparing and communicating openly with those who are slated to take the reigns one day.

Family businesses actually account for 64 percent of the U.S. Gross Domestic Product (GDP), yet 43 percent of family businesses have no formal succession plan.¹ With the day-to-day demand business owners experience, it’s no surprise that succession planning tends to get put on the back burner. Nevertheless, neglecting to focus on succession planning can put business owners and their family members at risk.

Why Is Business Succession Planning Important?

There are a number of reasons for business owners to consider a business succession structure sooner rather than later. Let’s take a look at two of them.

The first reason is taxes. Upon the owner’s death, estate taxes may be due, and a proactive strategy may help to better manage them. Failure to properly prepare can also lead to a loss of control over the final disposition of the company.

Second, the absence of a succession structure may result in a decline in the value of the business in the event of the owner’s death or an unexpected disability.

The Business Succession Process

The process of business succession is comprised of three basic steps:

1. Identify your goals
2. Determine steps to pursue your objectives
3. Implement the strategy

Identify Your Goals

When you know your objectives, it becomes easier to develop a plan to pursue them. For instance, do you want future income from the business for you and your spouse? What level of involvement do you want in the business? Do you want to create a legacy for your family or a charity? What are the values that you want to ensure, perhaps as they relate to your employees or community?

Determine Steps to Pursue Your Objectives

There are a number of tools to help you follow the goals you’ve identified. They may include buy/sell agreements, gifting shares, establishing a variety of trusts, or even creating an employee stock ownership plan if your desire is that employees have an ownership stake in the future.

Implement the Strategy

The execution step converts ideas into action. Once it’s implemented, you should revisit the strategy regularly to make sure it remains relevant in the face of changing circumstances, such as divorce, changes in business profitability, or the death of a stakeholder.

Keep in mind that a fundamental prerequisite to business succession is valuing your business.

As you might imagine, business succession is a complicated exercise that involves a complex set of tax rules and regulations. Before moving forward with a succession, consider working with legal and tax professionals who are familiar with the process.

1. https://www.familybusinesscenter.com/resources/family-business-facts/

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Until recently, the idea of getting your investment advice from social media, let alone from a forum like Reddit, probably seemed ridiculous. Trusting strangers to help you get “in” on the latest stock market fad is the antithesis of a sound investing strategy. But anyone watching the markets closely at the beginning of this year saw that certain stock prices soared overnight, and it wasn’t because these businesses had suddenly revamped their strategies and business models. All of a sudden “meme stocks” could be found across every news outlet.

What Are Meme Stocks?

A meme stock is a stock that has gone viral online and has attracted the attention of retail investors. These stocks are typically based more on hype than they are on the company’s actual valuation or performance. Instead, the value of these stocks increases because of forums on sites like Reddit.

You’ll likely remember some of the meme stocks that trended and increased in value this year. These included Blackberry, AMC Theatres and GameStop. Even Tesla has achieved meme stock status based on the attention it received in the Reddit retail investor message boards.¹

Meme Stocks vs. Traditional Investing

The CFA Institute specifically defines a meme stock as a stock that has gained prominence on Reddit’s WallstreetBets discussion board.¹ Once a stock crosses a certain threshold, the CFA Institute notes the date and begins to track information about the stock and how it performs on the market.¹

What makes meme stocks a questionable investment is their volatility. The average volatility of these stocks before they became memes (“pre-meme”) was 83 percent.¹ Depending on your risk tolerance and goals, these stocks may be too risky for the average investment portfolio. Once the stocks reached meme status (“post-meme”), their volatility jumped to an average of 106 percent.¹

The Meme Stock Cycle

Unlike long-term investment strategies, meme stocks operate on a more volatile cycle. Meme stocks tend to follow a similar pattern:

1. Early adopter
2. Middle phase
3. Late/FOMO phase
4. Profit-taking phase

Early Adoption

In this phase, a handful of investors have identified a stock that they believe is undervalued. These investors start buying this stock in large quantities. Early adopters tend to be the ones who benefit the most from investing in meme stocks.

Popularity Rises

As these investors begin buying stocks in large quantities, more individuals take notice and start to pay attention. Stock prices begin to increase.

FOMO Phase

The stock goes “viral” as word spreads across the Internet and social media. More retail investors join in the buying phase, driving the stock price up further. FOMO means “fear of missing out,” so many retail investors are jumping in when stock prices are already high.

Profit-Taking Phase

Buying peaks after a few days, and the retail investors who were early adopters start selling their stock and cashing out. This starts a chain reaction, driving stock prices back down.

Key Takeaways of Meme Stocks

One of the positives of recent meme stock sensations is that it brought investing to the mainstream conversation. Now more than ever, people are talking about the stock market and educating themselves about investing.

If you’re considering jumping on the next trending stock, tread lightly and talk to your investment advisor first. While it may be exciting to think about, studies show that even the most experienced day traders lose money when they invest. Novice investors who bought stocks on margin may have found themselves losing money, or worse, owing money, if they misjudged the right time to sell.

In most cases, it’s more beneficial to focus on your personal financial goals over the long-run than get caught up in short-lived investment trends. Instead of looking for the next hot stock tip, consider your risk tolerance, time horizon and goals. Work with your financial professional to determine if investing in a meme stock should be part of your portfolio, or if you’re better off sticking to a long-term investing strategy that will be able to weather normal market volatility. 

1. https://blogs.cfainstitute.org/investor/2021/08/09/meme-stocks-and-systematic-risk/

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

When it comes to saving for retirement, the power of compounding interest should never be underestimated. And as a responsible investor, it can be helpful to know how long it would take to double your investment at a fixed rate of return. The Rule of 72 can be used as a quick rule of thumb to help determine this answer.  

What Is the Rule of 72?

The Rule of 72 is a formula that estimates the amount of time it will take for an investment to double in value when earning a fixed annual rate of return.

72 / interest rate = years to double

Divide 72 by the annual rate of return. This should give you an idea of many years you can expect it to take for your investment to double in value. 

It’s important to note that this is not an exact science, and there are scenarios in which a different formula may provide a more accurate answer. 

How Does the Rule of 72 Work?

As an example, say someone invests $50,000 in a mutual fund with an estimated annual six percent rate of return.

If we used the Rule of 72, the formula would appear as:

72 / 6 = 12

Based on this formula, the investor may expect their original investment to be worth $100,000 in around 12 years.

Use this estimation method to better understand the effects of compound interest on your investment dollars.

Determine Compound Interest

The Rule of 72 can also be used to estimate how much compound interest your investment has already earned. For example, say you invested $25,000 and it took 10 years to grow to $50,000. You can rearrange the formula to determine your average rate of return throughout those 10 years. 

In this case, the formula would appear as:

72 / 10 = 7.2

In this example, your average rate of return was 7.2 percent.

Considerations for the Rule of 72

Before using this formula in the real world, there are a few important considerations to keep in mind.

It’s an Estimation Only

The Rule of 72 can help provide a general estimation, but it is not precise or perfect. Past performance of the market does not guarantee future returns. Therefore, while you can guess an average rate of return based on market performance or other benchmarks, there is no guarantee.

Precision Is Limited

Additionally, studies have found that the Rule of 72 tends to work best for average rates of return between six percent and 10 percent.¹ Outside of this window, a more precise formula may be required. 

Best for Long-Term Investors

If you’re nearing retirement, you’ll likely want a very precise picture of what your income and savings will look like. This is crucial to identifying potential income gaps and developing a tax-efficient withdrawal plan. Because of this, broad estimations like the Rule of 72 may not be suitable for your needs. Additionally, shorter periods of time before retirement include less space for market corrections should a downturn occur.  

The Rule of 72 is a simple, helpful tool that investors can use to estimate how long an investment with a fixed rate of return may take to double. Following this formula can allow you to quickly gauge the potential future value of your investment – although performance is never guaranteed. While you can quickly get an estimate using the Rule of 72, work with a trusted financial professional when making decisions that can affect your portfolio. 

1. https://web.stanford.edu/class/ee204/TheRuleof72.html

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

A Supplemental Executive Retirement Plan, or SERP, is a non-qualified deferred compensation plan offered to key executives. C-Suite executives are often offered SERPs as an additional benefit to incentivize long-term employment at a company.

SERPs possess unique restrictions, benefits and disadvantages when compared to other retirement plans. In this article, we will explore some of these features to better understand the function of SERPs.

How Do SERPs Work?

Employee retention is a key goal of most companies. Competitive compensation and enticing benefits are an important part of maintaining high-level employees long-term.

For executive roles, SERPs act as a form of retention, incentivizing long-term employment in return for deferred retirement compensation. Unlike other employer-sponsored retirement plans, SERPs are non-qualified and possess their own rules.

Some differences between SERPs and an employer-sponsored retirement plan include:¹

• SERPs may be offered to select employees.
• No IRS defined compensation limits.
• Age of distribution may often be selected, but not changed.
• No mandatory distributions are required by the Internal Revenue Service (IRS).
• No protection from job loss or company creditors.

This list of differences is not exhaustive, though it should be noted that additional restrictions and requirements may be established by the company. For example, the IRS does not require mandatory distributions from a SERP, though a specific company’s plan may state otherwise.¹

When offered a SERP, executives typically must agree to these additional requirements, alongside a vesting schedule in order to be deemed eligible.

The SERP is then funded by the company in a number of ways, including but not limited to: 

• Cash flow
• Investment funds
• Cash-value life insurance

The deferred benefits established by the plan are not taxable until the plan is paid, at which point payments are treated as taxable income for the executive and a tax deduction for the company.

Consult with your tax, legal and accounting professionals if you are included in your company’s SERP. 

The Benefits of a SERP

It’s common for companies to utilize a cash value life insurance policy to fund their SERP.² This provides benefits to both the company and the executive employee. 

Companies often use this form of SERP for a few benefits, including:²

• Greater control and ease of implementation.
• No IRS approval is required to establish the plan. 
• Cost recovery through the structure of the life insurance policy.

Executives also see benefits from this form of SERP, including:² 

• Tax benefits both before and after the plan is paid. 
• Adjustable plan structure. 

Disadvantages of a SERP

Companies and employees are attracted to SERPs for a number of reasons, but this does not mean that SERPs do not possess disadvantages. 

In most cases, these disadvantages come in the form of protection. As a non-qualified plan, SERPs are not protected from creditors or job loss.¹ Assets will not transfer to an IRA and may be used in the case of company insolvency.¹

The information in this article is designed to provide a general understanding of SERPs, providing both advantages and disadvantages to the plan. If you are offered a SERP, your financial advisor can provide some guidance or resource materials that can help you understand how the plans work.

1. https://www.thehartford.com/business-insurance/strategy/deferred-compensation-plans/qualified-nonqualified
2. https://www.thehartford.com/business-insurance/strategy/compensating-key-employees/serp

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

With Labor Day approaching, it’s time to start saying our goodbyes to summer. More than just an extra day off of work, it’s important to remember what Labor Day is really meant to celebrate. While we recognize the hard work of our labor force, we’ll also explore five ways that you can improve your work-life balance, because there is more in life to enjoy than just our careers.

Why Do We Celebrate Labor Day?

The first Labor Day holiday was celebrated on Sept. 5, 1882 in New York City, in accordance with the Central Labor Union to celebrate workers’ contributions to the well-being of our country and the economy. Many years later, on June 28, 1894, President Grover Cleveland signed a law to make Labor Day a national holiday.¹ Now, the first Monday in September is annually dedicated to the hard work and achievements of American workers.

Improving Your Work-Life Balance

We all know how it feels to be overwhelmed by work, and sometimes it can seem like it’s taking over your life. Especially if you own a small business or are still working from home due to COVID, it’s easy to feel pressured into making your job your everything. If you find yourself working overtime and constantly thinking about work, it’s time to evaluate how you can change your habits to have a more balanced life.

Plan for Personal Time

Set aside some time for you to do something for you. Whether that is going on a hike, reading a book or just unwinding by watching a movie, do something small that makes you happy every day. 

Let Yourself Unplug

Stop checking work emails during all hours of the day. Instead, communicate with your colleagues and customers so they can know when you’ll be working and when you won’t be available to respond. Creating, communicating and abiding by these boundaries is crucial when it comes to maintaining a work-life balance. Take a few hours each day to shut off your phone and enjoy the moment.

Prioritize Your Health

Keep yourself physically, emotionally and mentally healthy by taking steps to put your health first. Eat healthy meals, especially breakfast before work, sleep at least seven hours each night and schedule time into your day to exercise and move your body. These practices will help you to be more energized and productive while boosting your immune system and overall mood. Running yourself ragged will only push you closer to burning out, which can be hard to recover from.

Invest in Relationships 

Don’t let work keep you from your loved ones. Plan for quality time with your family and friends, even if you live with them. Make room in your schedule to see loved ones throughout the week when possible, not just on the weekends. 

Leave Work at Work

With some of us working remotely, this can be easier said than done. Wherever you spend your time working, make it a point to stick to your scheduled work hours and have a designated workspace. Making plans for shortly after your workday ends could help you to stop working for the day and get on with the next activity.

Creating a work-life balance doesn’t just happen overnight, you need to gradually integrate these healthy habits into your life. Let yourself have fun, relax and prioritize yourself and your personal relationships. You may even see your work and productivity benefiting from these changes. Enjoy your Labor Day weekend, and remember to prioritize your health and happiness this year.

1. https://www.dol.gov/general/laborday/history

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Parents and grandparents of high school students have a wistful feeling about the child they’ve watched grow up, as well as a concern for what lies in their future. It’s only natural to want to help that future scholar navigate the financial hurdles to a great education. That said, you have a few hurdles of your own. It would be good to know how to financially help the child in your life while avoiding any extra tax burdens. 

What School Expenses Qualify?

If you’re helping your child fund their education, the IRS offers education credits. These can be claimed for qualified expenses paid with cash, check, credit card, debit card or with loan money. However, if you are paying with money from a loan, your credit applies only to the year you make the payment.¹

These qualified expenses include:²

• Tuition
• Fees
• Related expenses required for enrollment or attendance
• Expenses covered by the American Opportunity Tax Credit (AOTC)

Bear in mind, the AOTC has phase-out limits for households with a modified adjusted gross income of over $160,000 for married couples filing jointly or $80,000 for single filers. You can still get a partial credit up to the total phase-out limit of $180,000 for couples or $90,000 for those filing as single.²

For those who qualify, the AOTC offers up to a $2,500 credit on items assigned for study, such as:2  

• Books
• Supplies
• Equipment

These items do not necessarily need to be purchased directly from the school or their bookstore to qualify for the credit, but they must be assigned to the student.

What Expenses Aren’t Qualified?

Expenses for sports, games, hobbies and courses without credit are not qualified. However, there is an exception for these expenses if they are necessary for the student’s degree.¹

The following items are not qualified, even in situations where you’re paying the school directly for them:¹  

• Room and board
• Insurance
• Medical expenses/student health fees
• Transportation
• Personal, living or family expenses (such as meals)

It’s also important to remember that if you’re taking money from a tax-advantaged account, a scholarship or a grant with no tax requirements, you’re disqualified for the amounts used. For instance, if the student in question had a $5,000 scholarship, you’d subtract that amount before taking any deductions.¹ 

Tax-Advantaged Accounts

As you consider how you’ll cover the costs of college, starting with tax-focused saving strategies can help. Here are several college savings vehicles with important tax considerations you may want to consider.

529 College Savings Plans

Offered by states and some educational institutions, these plans allow you to save up to $15,000 per year for your child’s college costs without having to file an IRS gift tax return. A married couple can contribute up to $30,000 per year. However, an individual or couple’s annual contribution to a 529 plan cannot exceed the yearly gift tax exclusion set by the IRS.³ You may be able to front-load a 529 plan with up to $75,000 in initial contributions per plan beneficiary – up to five years of gifts in one year – without triggering gift taxes.⁴ Unlike the tax deductions above, 529s can be used for books, supplies, equipment, room and board, and even computers or tablets and education software.

Remember, a 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. State tax treatment of 529 plans is only one factor to consider prior to committing to a savings plan. Also, consider the fees and expenses associated with the particular plan. Whether a state tax deduction is available will depend on your state of residence. State tax laws and treatment may vary. State tax laws may be different than federal tax laws. Earnings on non-qualified distributions will be subject to income tax and a 10 percent federal penalty tax.   

If your child doesn’t want to go to college, you can change the beneficiary to another child in your family. You can even roll over distributions from a 529 plan into another 529 plan established for the same beneficiary (or another family member) without tax consequences.^3,4

Grandparents can also start a 529 plan or other college savings vehicle. In fact, anyone can set up a 529 plan on behalf of anyone. You can even establish one for yourself.^3,4

Coverdell ESAs

Single filers with modified adjusted gross incomes (MAGIs) of $95,000 or less and joint filers with MAGIs of $190,000 or less can pour up to $2,000 into these accounts annually.⁵ If your income is higher than that, phaseouts apply above those MAGI levels. Money saved and invested in a Coverdell ESA can be used for college or K-12 education expenses. They cover the items mentioned above for 529s and can even be extended to tutoring and transportation related to education.⁵

Contributions to Coverdell ESAs aren’t tax-deductible, but the accounts enjoy tax-deferred growth and withdrawals are tax-free, so long as they are used for qualified education expenses. Contributions may be made until the account beneficiary turns 18. The money must be withdrawn when the beneficiary turns 30 or taxes and penalties may occur.^5,6

UGMA & UTMA accounts

These all-purpose savings and investment accounts are often used to save for college. They take the form of a trust. When you put money in the trust, you are making an irrevocable gift to your child. You manage the trust assets until your child reaches the age when the trust terminates (i.e., adulthood). At that point, your child can use the UGMA or UTMA funds to pay for college; however, once that age is reached, your child can also use the money to pay for anything else.⁷

Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

Imagine your child graduating from college, debt-free. With the right kind of college planning, that may happen. Talk to a financial professional today about these savings methods and others.

1. https://www.irs.gov/credits-deductions/individuals/qualified-ed-expenses
2. https://www.irs.gov/credits-deductions/individuals/aotc
3. https://www.irs.gov/taxtopics/tc313
4. https://www.finra.org/investors/learn-to-invest/types-investments/saving-for-education/529-savings-plans
5. https://www.irs.gov/taxtopics/tc310
6. https://www.thebalance.com/beginners-guide-to-coverdell-esas-4060459
7. https://finaid.org/savings/ugma/

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

As a parent, you know that time with your kids can go by in the blink of an eye. So whether you are preparing to send your child to kindergarten or are dealing with teenagers, it’s never too early (or too late) to start planning for their higher education. Not sure where to start? We’ve gathered some of the most common financial mistakes parents make when it comes to college planning.

Mistake #1: Procrastinating

Raising children is no easy task. You have so much to think about as they’re growing up that college might not always be at the forefront of your mind. But the reality is, the earlier you get started on planning how to fund your child’s education, the better off you will be. With the impact of compounding interest, even just a couple of years can make a difference in your savings. Take the first step by calculating the potential future cost and consider how many years you have left to save. This way, you’ll have a specific number in mind when it comes to putting money aside each month.

Mistake #2: Not Researching Account Types

While it’s good to have options when it comes to saving for your child’s education, choosing the right savings account can be overwhelming. Take the time to research the types of accounts that can be used to cover educational expenses.

Options could include: 

• 529 plans
• Coverdell ESAs
• Roth IRAs
• UTMAs
• UGMAs
• Trusts

Consider how they differ and what aspects are most valuable to you. You’ll also want to consider factors such as your risk tolerance and how much time you have left to save. 

Mistake #3: Buying Investments with High Annual Fees

You probably don’t want to have to think about additional fees when you’re trying to save for a huge expense such as college. However, excessive fees can make it much more difficult to reach your college planning goals. When choosing an investment vehicle or savings account for college planning, review any potential fees that could negate or diminish earnings.

Mistake #4: Relying on Your Retirement Funds to Pay for College

Depleting your retirement savings in order to send your child to school is a common mistake that parents make. It’s important to think ahead, because restarting your retirement savings in your 40s and 50s is going to make it difficult to actually retire when you want to. Instead of turning to your 401(k) or other retirement savings, look into student loans, scholarships, 529 plans and other college savings accounts.

Mistake #5: Failing to Consider Student Loans

Taking out student loans does not mean that you don’t make enough money. College is getting increasingly expensive every year, and there’s no shame in taking out a loan for a little help. In fact, when it comes to federal student loans there are about 42.9 million borrowers each year.¹ Research different federal student loan programs and understand the difference between subsidized and unsubsidized loans to determine if taking out a loan would work for your situation.

Even if you don’t plan on borrowing money, fill out the FAFSA before sending your child off to school. It’s a quick and easy way to potentially receive aid, and you don’t have to take it even if it’s offered. Additionally, research loan types, as federal loans may offer lower-interest rates than private lenders – but this may not always be the case.

Still stressed out by the thought of starting your college planning journey? Use these tips as a jumping off point as you work with your financial advisor to develop a college savings strategy for your future graduate.

1. https://studentaid.gov/data-center/student/portfolio

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Hurricanes are one of the most damaging natural disasters. In fact, from 1980 to 2020, the total approximate cost of damages from weather and climate disasters in the United States was $1.875 trillion. In 2020 alone, the United States experienced $22 billion dollars in disaster damage.¹

Hurricane season starts at the beginning of June and doesn’t end until November. With the thousands of miles of coastline in the United States, the chance of substantial damage occurring is high. According to the National Oceanic and Atmospheric Administration (NOAA), coastal shoreline counties create 40 percent of America’s jobs and are responsible for 46 percent of the nation’s gross domestic product.² When a hurricane hits, the effect can be felt on a greater economic level, not just within the impacted region.

You can never be too prepared for a natural disaster. The five tips below are meant to help you and your family feel more prepared in the event that a hurricane strikes. 

Tip #1: Make a Plan 

If you don’t already have one, you need to make a plan. What would you and your family do if there were to be a major hurricane in your area? How would you prepare your house for the worst-case scenario? Sit down with your family and discuss what you should do before hurricane season arrives. Make a plan for rain- and wind-proofing your home, evacuating quickly and/or supplying backup power to your home for several days.

Tip #2: Keep Accessible Supplies 

You should have accessible supplies in the event that you either have to evacuate quickly or shelter in place.

This emergency supply kit should at minimum include:

• Water (One gallon per person per day)
• Non-perishable food
• Batteries and a radio
• Flashlight
• Personal hygiene items
• First-aid kit 
• Copies of important documents (passport, birth certificate, insurance policies, etc.)
• Cash

FEMA recommends that your go-bag includes enough supplies for three days. If you want to prepare to shelter in place, an at-home emergency kit should be able to last your family for up to two weeks.

Tip #3: Have an Evacuation Scenario

Having an evacuation plan that all family members are familiar with beforehand can help increase your chances of safety and reduce panic. Run through an evacuation plan with everybody who lives in your household at least once a year.

Some things to go over include:

• Where you will go
• The route you will take 
• Necessary items each family member will need to bring

Tip #4: Take Inventory of Your Possessions

Conduct a home inventory that includes photographs, receipts, valuations and digital back-ups. Keeping a thorough record of your belongings will be helpful if you have to make an insurance claim regarding lost or damaged possessions. Keep a record of your home inventory with your emergency kit or to-go bag, so it’s easily accessible in case of emergency.

Tip #5: Check What Your Insurance Policy Covers 

Homeowner’s insurance will generally cover the damage made to your house’s structure in the event of a natural disaster. However, areas with higher hurricane risk may carry higher hurricane deductibles on homeowner’s insurance. Make sure you’re familiar with your insurance’s hurricane policy and prepare an emergency fund to cover costs for repairs and rebuilds. 

Something to keep in mind is flood insurance. Even if your insurance policy carries hurricane coverage, flood coverage is a separate, federally-backed option for homeowners. It is advisable to look into acquiring flood insurance in order to avoid extra damage costs. 

It is better to be prepared in the event that disaster strikes, as hurricanes can cause catastrophic damage. Take the proper measures to adequately insure and protect your home, possessions and loved ones so that you can enjoy the months ahead with less worry. 

1. https://coast.noaa.gov/states/fast-facts/hurricane-costs.html
2. https://coast.noaa.gov/data/digitalcoast/pdf/socioeconomic-data-summary.pdf

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.