Hello and Welcome to our February 2018 Financial Planning and Capital Market Update!
If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast format.
Financial Planning Tip (s) –
Three Tax Savings Ideas you can do NOW for LAST Year’s (2017) Taxes
With the official kick off of Tax Season occurring some time in February … we are not sure what the “Official” start to Tax Season is, but we know it is sometime in February if not earlier .. haha
In an yet to be completed series – we still have two more parts, the first Three were let out of the box this month …. Let’s quickly review!
HSA or Health Savings Account
Our post here, speaks of the terrific opportunity to set aside Pre-Tax dollars to use now or later for medical expenses. In true Reach Back Tax Savings form, this contribution can be made now for last years taxes.
Be Careful though, you must make the contribution by the regular filing deadline i.e. No extensions to get the benefit applied to last year.
As mentioned above this account does not have to be used completely and can be delayed for highly likely future medical needs.
A handy trick we have used over the years when an employer makes some type of a contribution is to remind participants that in most cases you can make up the difference and get a tax savings.
Check with your Health Insurance Carrier to see if you qualify for an HSA contribution. If you do, we highly recommend you make the contribution.
SEP – Simplified Employee Pension
This beefed up IRA is another super Reach Back Tax Saver and the contribution can be made as late as your extended filing deadline.
The SEP offsets income that make come to you as non W-2. Think consulting, temporary work, as side business that generates income to you directly or any non W-2 regular pay.
As mentioned in our Post Here, there are very high limits of contribution, and the SEP can be done during mandated RMD’s, as well as in tangent with a 401k program, as long as the upper limits collectively of contribution are not violated.
Pre-Tax Deductible IRA
As the one of the original retirement vehicles and so vintage many forget (We Don’t!) we want to remind here in our post about the IRA – Individual Retirement Account.
Notice our careful heading of Pre-Tax Deductible IRA – We are not fans of the after tax IRA (contributing and not getting a write off) and in most case recommend you pass if you cannot deduct the contribution.
There are more limits to a Pre-Tax Deductible IRA under current tax laws, again be sure to see our post for limits and restrictions, but if you qualify, it is worth the savings as this is another “Reach Back Tax” saving idea.
Like the HSA, contributions must be made by the regular filing date- extensions do not help you. So do not wait until the last minute.
Capital Market Comments
Finding our Footing After Getting Ahead of Ourselves
In a coincidental oddity, we had been putting the finishing touches on a post prior to the ugly 10% FAST FAST correction that occurred in late January and February.
In our post here, we spoke on where we may get back on trend- No one knows, of course, but simple logic of an unsustainable path was our analysis.
We think patience is needed as this will take time to digest and again find our footing.
Patience will be needed!
Here is where we are now — Our Trend line is looking pretty good – So Far.
We will keep watch and keep you updated!
Have a Great Day! Talk to you at the end of March!
John A. Kvale CFA, CFP