Manifesto

Most therapists see a therapist.

The Seattle Seahawks have almost as many coaches as players.

And even the most seasoned climber doesn’t summit Everest without a Sherpa.

You know why?

Because having a guide helps.

If you don’t know the way, a guide is indispensable.

But even if you’re an expert or well on your way, a guide can offer assurance, show you a few shortcuts and make sure you don’t stray off course.

We are guides.

And we help people navigate something far more compelling than a trail or path or investment opportunities and the market.

We don’t start a relationship by offering hot stock tips and patent-pending investment strategies.

We sit down and get to know our clients.

Where are they in their lives?

What makes them happy and fulfilled?

What do they want from their future?

Once we know where they are and where they want to go, we can set out on a journey to get there together.

And hey, if we decide we want to change where we’re going or take a different route, that’s okay too.

We’re expert guides, so we can help even the most sophisticated investor, but we pride ourselves on making the complicated easy to understand for everyone.

So we don’t put our arms around a client’s portfolio and drag it over to our side of the table and tell them we’ll take it from here.

We work with our clients to make sure they understand and are invested in the decisions we make.

We don’t sell our clients products; we help them make choices.

About the kind of life they want to live.

About when and how they want to retire.

And what kind of legacy they want to leave behind for their families, their communities, and the world.

We are Summit.

And we know it’s a bit cheesy, but darn it, we believe this to be true.

We guide our clients towards their dreams.

 

Year-End Financial Planning Checklist

Presented by Edward W. Grogan, IV

As 2017 draws to a close, it’s time to begin organizing your finances for the new year. To help you get started, we’ve put together a list of key planning topics to consider.

 

Savings and investments

Revisit your retirement contributions. Review how much you’re contributing to your workplace retirement account. If you’re not taking full advantage of your employer’s match, it’s a great time to consider increasing your contribution. If you’ve already maxed out your match or your employer doesn’t offer one, boosting your contribution could still offer tax advantages. Now is also a good time to ensure that your portfolio allocation remains in line with your objectives.

 

Anticipate Roth recharacterizations. If you converted a traditional IRA to a Roth IRA during 2017 and paid tax on the conversion, mark your calendar now to allow plenty of time to recharacterize (i.e., undo) the conversion if you need to. The deadline is your tax-filing deadline plus any extensions.

 

Take stock of your goals. Did you set savings goals for 2017? Realistically evaluate how you did and think about your goals for next year. If you determine that you are off track, we’d be happy to help you develop and monitor a financial plan.

 

Health and wellness

Spend your FSA dollars. If you have a flexible spending account (FSA), those funds may be forfeited if you don’t use them by year-end. (Some FSAs offer a 2.5-month grace period or the ability to carry over up to $500 into the next year; check with your employer to see if those options are available.) It’s also a good time to calculate your FSA allotment for next year, based on your current account excess or deficit.

If you’re not using an FSA, evaluate your qualifying health care costs to see if setting one up for 2018 would make sense.

 

Taxes, taxes, taxes

Manage your marginal tax rate. If you’re on the threshold of a tax bracket, deferring income or accelerating deductions may help you reduce your tax exposure. It might make sense to defer some of your income to 2018 if doing so will put you in a lower tax bracket. Accelerating deductions, such as medical expenses or charitable contributions, into the current tax year (rather than paying for deductible items in 2018) may have the same effect. In addition, reviewing your capital gains and losses may reveal tax planning opportunities—for instance, harvesting losses to offset capital gains.

Here are a few key 2018 tax thresholds to keep in mind:

  • The 39.6-percent marginal tax rate affects those with taxable incomes in excess of $426,701 (individual), $480,051 (married filing jointly), $453,351 (head of household),
    and $240,026 (married filing separately).
  • The 20-percent capital gains tax rate applies to those in the 39.6-percent tax bracket.
  • Itemized deductions and personal exemption phaseouts affect those with adjusted gross incomes above $266,700 (individual) and $320,000 (married filing jointly).
  • The 3.8-percent surtax on investment income applies to the lesser of net investment income or the excess of modified adjusted gross income over $200,000 (individual) and $250,000 (married filing jointly).

 

Consider the benefits of charitable giving. Donating to charity is another good strategy for reducing taxable income. If you’d like to help a worthy cause while trimming your taxes, it’s worth exploring your charitable goals and various gifting alternatives.

 

Make a strategy for stock options. If you hold stock options, now is a good time to make a strategy for managing current and future income. Consider the timing of a nonqualified stock option exercise. Would it make sense to avoid accelerating income into the current tax year, or defer income to future years, in light of your estimated tax picture? And don’t forget about the alternative minimum tax (AMT). If you’re considering exercising incentive stock options before year-end, have your tax advisor prepare an AMT projection to see if there’s any tax benefit to waiting until January of the following year.

 

Plan for estimated taxes and RMDs. When considering your taxes for 2017, be sure to take any potentially large bonuses or a prosperous business year into account. You may have to file estimated taxes or increase the upcoming January payment. If you’re turning 70½, you’ll need a strategy for taking required minimum distributions (RMDs) from your traditional IRA and 401(k) plans.

 

Adjust your withholding. If you think you may be subject to an estimated tax penalty, consider asking your employer (via Form W-4) to increase your withholding for the remainder of the year to cover the shortfall. The biggest advantage of this is that withholding is considered as having been paid evenly throughout the year instead of when the dollars are actually taken from your paycheck. You can also use this strategy to make up for low or missing quarterly estimated tax payments.

 

Proactive planning

Review your estate documents. To help ensure that your estate plan stays in tune with your goals and needs, you should review and update it on an ongoing basis to account for any life changes or other circumstances. If you haven’t done so during 2017, take time to:

  • Check trust funding
  • Update beneficiary designations
  • Review trustee and agent appointments
  • Review provisions of powers of attorney and health care directives
  • Ensure that you fully understand all of your documents

 

Check your credit report. It’s important to monitor your credit report regularly for suspicious activity that could indicate identity theft. Federal law requires that each of the nationwide credit reporting companies (Equifax, Experian, and TransUnion) provide you with a free copy of your report every 12 months, at your request.

 

Get professional advice. Of course, this list is far from exhaustive, and you may have unique planning concerns not covered here. As you prepare for the coming year, please feel free to reach out to us to discuss the financial issues and deadlines that are most relevant to you.

Whatever your planning may entail, we wish you a happy, healthy, and prosperous 2018!

 

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.