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Another Great Retirement Savings Vehicle

When we speak to clients about retirement there are two common themes, will I have enough saved and what impact would medical expenses play on my results.  In an effort to increase savings for retirement and mitigate some portion of future medical expenses we are encouraging clients to look into the Health Savings Accounts (HSA).


The HSA provides four benefits:

1. Contributions to the account are tax-deductible

2. It allows you to save money completely tax-free

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Planning Through Your Employee Benefits

Free gourmet food and snacks that never-end, complimentary on-site gym memberships, and free on-site daycares are just a few perks that employees at Google get to enjoy. Now not all of us have these types of perks offered to us, but many employers do offer other benefits packages to attract and retain top talent. The problem is that many employees don’t take full advantage or understand their options. This makes understanding your benefits and their effect on your personal finances especially important.


The benefits listed above are all considered fringe benefits under IRS regulation and may be considered taxable to you. On the other side of the coin there are particular benefits that are tax qualified or tax exempt. The following list covers a few important benefits that your employer may offer and provides some info on how each perk can affect you:


Group Medical Insurance

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Tax-Free Retirement Savings with a Roth IRA

One of the best retirement tools available today is the Roth IRA. The Roth IRA allows you to make contributions in after-tax dollars with no income tax on growth or distributions in the future. However, like most qualified retirement vehicles, there are income limits that prohibit high income earners from contributing. The income limits on contributions range from $116,000 to $131,000 for single filers and $183,000 to $193,000 for people who are married filing jointly (for 2015). If you are above these amounts you are not eligible to make a contribution.

In 2014 the IRS provided an opportunity for individuals who would otherwise be ineligible for a Roth IRA contribution, to utilize after-tax contributions to their 401(k) plans as a way to contribute to a Roth IRA. The IRS clarified how pre-tax and after-tax balances in an employer’s 401(k) or other retirement plan can be allocated to traditional and Roth IRAs. The benefit, is that a taxpayer can roll just his or her after-tax plan assets to a Roth IRA tax free, and roll the pre-tax assets, including the earnings on the after-tax monies to a traditional IRA. This became effective on January 1, 2015.

Each 401(k) plan is different and must allow for after-tax contributions. For 2015, the maximum contribution to a 401(k) plan is $53,000 plus the $6,000 catch up. This includes all contributions from the employee, matching contributions from your employer and any after-tax contributions. Assuming an employee contributes the maximum on a pre-tax or Roth basis of $18,000 and then receives an employer match of $7,200, there is an additional $27,800 that can be contributed to the plan on an after-tax basis. You can immediately rollover this amount to a Roth IRA using an in service distribution.

We reached out to our 401(k) plan administrator and although plan sponsors have called about this option not many have implemented it. At Heller Wealth, we have revised our 401(k) plan to allow for after-tax contributions because we see this as a significant opportunity. We recommend that you reach out to your HR department or 401(k) provider to see if this option is available. If the option is part of your plan, we recommend you consider utilizing this strategy to boost your retirement savings. 

Don Hertling is the Vice President of Financial Planning for Heller Wealth Advisors. If you would like to discuss Roth IRA opportunities, please contact Don at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Cyber Security and How to Protect Your Personal Finances

In today’s modern world, we are constantly experiencing a rapidly changing technological environment. While technology has definitely made our lives easier, it’s important for an individual to be acquainted with the ways in which technology can harm as well. Without the proper know-how to ensure your digital self is secured, you could be exposing yourself to a costly threat and not know it. As 2014 and 2015 have shown us, large-scale, widespread security breaches are taking place, and more personal data is being compromised. With more American’s losing privacy every day, here are just a few ways to keep you more secure when navigating the digital landscape.


1. Password Security: Keep sensitive files, such as those with account numbers and balances password protected. When sending sensitive files over email, make sure that all files are encrypted so in the event your email account is compromised, your statements will contain an added security feature. Keep separate passwords for every account you have, and keep a list in a safe and secure place that is completely away from your computer.

2. Double Check Before Opening Suspicious Files or Emails: If you receive an email from a financial professional who is requesting personal information, it’s best to delay answering the email right away if you don’t recognize them. Try to avoid opening any file that comes off as suspicious as well. All too often there are people that fall prey to phishing scams. A simple phone call to the financial professional you typically work with to verify the message could save you a substantial problem.

3. Keep an updated machine: Make sure you have the latest security software, update your web browser regularly, and ensure your operating systems are all up to date. Keeping them current is one of the best defenses against viruses, malware, and other online threats.

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Strategies For Maximizing Your Lifetime Social Security Benefits

Anticipating Claiming Social Security: One Strategy Could Help Maximize Your Lifetime Benefits

If you’re age 62 or older, and you’re not already claiming Social Security benefits, chances are that you’ve contemplated filing at one time or another. Many people count on Social Security to supplement their income stream in their retirement. Filing early or late can adjust this income source for the remainder of your lifetime. This makes the strategy you choose that much more important if you’re at all worried about the possibility of outliving your assets.

People have various reasons for filing in different ways. Some individuals believe that filing early is best because they believe the system, in its current unsustainable condition, couldn’t possibly support future benefit payments. Others who file early could have a lack of liquidity and may need extra cash flow. Conversely, there are others who file after FRA to take advantage of earning delayed retirement credits (DRC). This is done by deferring your benefit past Full Retirement Age (FRA), which adds 8% annually from the government for leaving it in the system. The trade-off is that if you would need to supplement that income using assets from your portfolio. There are also people who file at FRA and receive their primary insurance amount (PIA), which is the monthly benefit that is due to you at FRA.

One strategy that has proven itself to many filers is to file and suspend. This is typically done with a married couple where one PIA is higher. The spouse with the larger PIA files for benefits at their FRA and then immediately suspends payment. This allows the other spouse to claim spousal benefits (up to 50%) on the larger PIA while earning DRC’s. This provides the couple a small cash flow early on, but also allows them both to secure the 8% annual increase when benefits are deferred past FRA. It’s important to note that is the spouse with the smaller PIA must be of FRA age to receive the full 50% benefit he or she would claim on their spouse. If the spousal benefits are started before FRA they will be reduced by 25/36 of one percent for every month before FRA up to 36 months. If they start more than 36 months before FRA, they are reduced 5/12 of one percent per month.

It’s important to note the Social Security Administration has submitted legislative proposals for the 2016 fiscal year, which amend the rules allowing the file and suspend strategy. Whether these proposed changes go in to effect or not, it is important to weigh your decision heavily. You are only allowed one withdrawal per lifetime if you decide you do not want to claim benefits if they’ve already started. In addition to only having one chance to re-file, the Social Security Administration requires that you pay back all benefits received once the withdrawal is affirmed.

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Last Minute Tax Tips

As we are getting close to the initial deadline of April 15th, we are sending this note to you about items that may be overlooked when preparing your taxes.


1. Retirement Account Funding. If you qualify, make sure your contributions are funded by April 15th. If you have children with earned income you might consider funding a Roth IRA on their behalf.

2. Tax Credits. Make sure that you are claiming all the credits available to you including the Child Tax Credit, the American Opportunity Credit, etc.

3. 529 Contributions. Some states provide a deduction for contributions made to their state-run 529 plans. An example of this is New York and Pennsylvania. Make sure you claim this deduction on your state returns, if available.

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Are ROTH IRAs Next?

Our President has made it clear that a redistribution of wealth from the top 1% is his main priority. In his recent State of the Union address, he outlined a number of ways he felt would achieve this goal, one of which dealt with 529 plans. The President's plan was to remove all the tax advantages related to 529 plans (as discussed in Pete’s previous blog). Criticism from the media, financial advisors, concerned parents and members of the House and Senate was swift and harsh. The President stepped back from the 529 proposal and decided that taxing 529 plan growth and withdrawals was not the way to go.


Our thought (and one that is popping up more and more in the investment media) is that if the President would go after 529 plans, could Roth IRAs be next. Millions of people use the Roth IRA as a way of shielding future taxes on investments. Millions have converted portions of their IRA accounts into Roth IRAs under the guise of tax-deferred growth, no required minimum distributions and no tax on withdrawals when you do take the money out.


The government established the Roth IRA because they wanted tax money now. They were willing to forgo future tax revenue to do this. Now they are seeing the impact of this decision as the value of Roth IRAs increases significantly over time. Could the government decide that this was a mistake and rollback the tax advantages of the Roth? Who knows, but I am sure that any attempt to roll back the Roth IRA benefits would incur the same backlash as the 529 plan proposal.

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