Tag Archives: 401k

Confusing Tax Form 5498 Coming to Your Mailbox if any Qualified/IRA Activities

So we all trudged through the two decades of changed tax laws, and for the most part put them behind us … at least until extension filing deadline for some….

Just as we are forgetting about Forms, notifications, and tax documents, here comes one more!

Not to worry!

Form 5498 Reminder2019 Form 5498

The late arriving Tax Form 5498 can be confusing as it arrives seemingly late, but not to worry, its’ purpose is settlement …. Here at the Form 5498 IRS website it is noted as “An Info Copy Only” meaning this form is for our information only and no action is required.

So why does this form arrive so late?

Form 5498 captures movement into IRA/Qualified accounts and since we can contribute to IRA’s until the filing date of this year, they have chosen to have the form reported to them AFTER the regular April filing date to capture as many as possible this year contributions for last year….

Getting into the weeds for a moment as an example, if you roll over a 401k into your IRA Rollover… a Form 5498 will find its way to your mailbox …. not to worry, this seemingly late form settles up with the IRS in crazy accurate fashion one year later…showing them that you did NOT take the funds personally and absolving you of any tax burden.

Bottom line – This seemingly alarmingly late form needs to be tossed in your 2019 Tax File and kept for this years taxes, when we file in April of 2020!

Have a Great “No Alarming Tax Form” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Q 2 2019 Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 2 2019 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click Here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Let’s get going!

 Q 2 2019 Newsletter

And here is your review!

Capital Market Talk

Recession and the Inverted Yield Curve

Ask any long distant runner what happens when they start out too fast and they will tell you it is not good new – The saying goes for every minute you go out too fast, you come back two minutes slower than normal…

In our main capital market article we discuss the reasons why we may have a recession by definition, but why it may not be a big deal (hopefully).

The Inverted Yield Curve (Short term interest rates higher than long term rates) and infrequent event, did occur for five days – so far – just after our Newsletter went to the publisher. The Inversion has been a good signal of recession, EVENTUALLY – some times as long as two years in advance.

They Don’t Want Your old 401k

A recent Cerulli study finds that once you leave the company, most really do not want your funds anymore. We have long suspected this.

  1. Frequently a short wait time turns into a long wait time with a different and much more general help line.
  2. Forms may be much more difficult to acquire.
  3. Paper work received, saying take it or we will distribute it and you will have taxes and penalties.
  4. Rolling over into an account that is TERRIBLY hard to get out and has hurdles to jump through, high monthly service charges as well as limited investments, if any.
  5. A general feel of everything is hard to do, once again explaining the Cerulli study results.

Are a few items we have run into over the years!

Iron Clad Trustee

General order of Trustee or other important people to execute your wishes when you are incapacitated or deceased, generally go like this:

  • Spouse
  • Sibling
  • CLOSE friend
  • Similar Aged Relative
  • Grown Children

As we can all imagine, this list can easily be very short and insufficient.

In our deep dive of the Institutional Trustee Services, we discuss the handiness of having such a great service as well as the ability to offer these services ourselves.

Choose Your Beneficiaries Carefully

In this article that fit nicely with our Trustee article we mention different types of Beneficiaries and most importantly. Make sure you confirm that your beneficiaries are correct as this will over ride you other documents, including a Will or Trust.

We hope you enjoy … talk to you in the Summer!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

January 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our January 2019 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 as well as Video!

Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

January – 2019 Video

Financial Planning Tip (s) –

Get and Earlier than normal start on those Taxestaxes control-1027103_1280

Here in this post, we remind everyone that due to the new tax laws, it will be a good idea to get your tax information to your professional as soon as possible.

If your using tax software, be sure to do the recommended updates as we feel certain there will be necessary updates to the tables along the way.

Corrected 1099’s are the usual, with only a few last year, we will give everyone the green light once we get our first round of corrected tax forms – but again go ahead and get started with your taxes!

Stunning Findings about your old employer 401kabonded dawn-3358468__480

We had long suspected as much, but in this post we review a Cerulli study that interviewed over 800 401k providers, only to find out that less than 30% really want your funds once you leave.

We have experienced less than stellar service over the years with former employees 401k plans – leading to our long suspicion of these findings.

Make Pension Changes/Decisions Carefullythumbs-up-2056022__480

While our favorite commencement benefit for pensions (100% jt survivor) is fairly straight forward, the simplicity ends there.

In this post, we review recent trends in buy outs and what to watch for, as well as the many scenarios we have experienced that are not always in our best interest.

Capital Market Comments –

Good News – Recovery without a Re-test – So far

What a different a month makes – WOW! We literally have gone from the sky is falling to sunshine!

In our summary post in December, we mentioned that fast moving slumps, such as the one we had, frequently do not last long….

Here, earlier in the month we also mentioned that we fully expected some type of retest of those lows before we gained our footing.

We still do expect some type of re-test, but as of this date we have had the following positives that have added to the markets better mood:

  1. Federal Reserve (FOMC) have turned very cautious about raising rates further (We are happily surprised at their yielding, and even more surprised at market participants joy)
  2. Tariff talks are making progress – Interestingly, China has seen a slow down in their economy making for slightly more urgent talks – with a little compromise and statesmanship a resolve looks more likely – again a positive for capital markets.
  3. Earnings are still cranking along – For the prior 4-6 quarters, earnings were red hot and hitting on all cylinders, so hot, they were not sustainable. Companies are still reporting good earnings, just not the Red Hot, overheated earnings from prior quarters – this is good news as it avails the FOMC to not have to raise rates to slow the economy –

All in all a Win- Win!

Have a Great Day – Talk to you at the end of February!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Something we have long suspected, Cerulli Report Confirms: They Don’t Want your 401k Money Once You Leave the Company – WOW!

Over the years we have noticed once an Employee leaves a company, certainly their status goes down, but often times they seem to have trouble getting answers, controlling their old plans, and in particular, working with their old 401k provider.

From our perspective, as you may imagine a latest Cerulli report not only clarifies why these experiences occur, but also confirm our suspicions!

Cerulli Report Confirms “They don’t want your old 401k Money!”

As of this post, we have requested a copy of the report that will certainly make a full appearance again here at street-cents and likely in our Newsletter – (This report is only a week old and privy to professional media members AT THIS TIME)abonded dawn-3358468__480

This Financial Advisor Article  caught our attention as in disbelief we read the abbreviated story on the Cerulli Report:

This from the article:

Overall, plan sponsors don’t seem especially interested in keeping their retired workers’ assets, according to Cerulli. A recent survey by the firm of 800 plan sponsors found that 59 percent preferred that workers take their assets and leave. About 27 percent of respondents said they preferred keeping such assets in their plan

The problem with this is that workers forced (or feeling forced/neglected) to take their funds, without direction – frequently tend to cash out their plans, sacrificing their future!

We look forward to expanding on this story as we receive more details. We will also give you the real life experiences we have come across along with the limitations many providers have.

For now, if you have left your company and are not feeling the love, so to speak… you know why!

Have a Great “Understanding of the Lost love 401k” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.


Time of the year to check your retirement contributions!

As we enter the home stretch of the year, we wanted to remind all to confirm the desired contribution level is being met for your company retirement plan.

Retirement Contribution Levels

401k and similar corporate plans – $18k + $6k if over age 50

Now is a good time to confirm our desired level of contribution is actually occurring. If not, this is the perfect time to adjust.401k-illustration-1637162

  • Bonus offset
  • Pay Raise
  • Company ownership change
  • 401lk/similar plan Provider change
  • Investment options adjustments

All of the above and others, are reasons contribution levels may vary from our desired level.

Take a few minutes to check your latest paycheck and confirm your YTD deferrals …. Contact us with any questions, we are glad to help !

Have a great “Confirmed Retirement Contribution” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.


April 2017 Podcast Video, Financial Planning Tax Review and Earnings Update- By John Kvale

Whew, that was easy…. tax season is finally mostly over ….

We wanted to look back one last time on our personal taxes before we sunset those tax strategies for the high point of the season….

As a reminder,  we started with an Audio Podcast format for those that are unable to SEE the video or just prefer to listen to the audio… this makes the review slightly longer, but more descriptive.


April 2017 Video


Financial Planning Tip(s)-

AMT Tax Reminder

We ran across a lot of AMT or Alternative Minimum Taxes this season

Here are the key thoughts from our detailed post on AMT earlier this month-

  • Incomes between $170k and $313k joint and singles over $100k – you are in the cross hairs of AMT
  • Deferring income may be useful
  • Accelerate income

There is not a lot of planning changes with AMT, but in this case knowledge may be power!

Possible MAJOR tax reform

Late in the month an overview of major tax reform was released.

Here is a link from the White House

Here is a link from Barron’s that does a pretty good analysis

Here is our article on the possibilities earlier this month

What to do if you overfund your 401k/retirement plan

In our overfunding 401k post here, we discuss how your 401k/retirement plan can get overfunded….. here are the main points

  • Refund the extra amount ASAP
  • Apply the extra to the new year
  • If its a super small amount, its not the end of the world

Capital Market Comments

First Double Digit Earnings growth since 2011 expected

From our friends at Factset, who do a terrific job of outlining historic and future earnings.

Earnings are the ultimate driver of capital markets!

4-27-17 SP earnings estimates - Factset

What is nice about these estimates are that historically companies have been beating the street estimates … if this continues, the actual earnings may be even better double digit growth…. time will tell and we will be watching!

Hello May!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Taxes are Done… Finally … A Few Tips to Remember Before Sticking that Information Back into the Files

After each tax season we always feel relieved, as the pressure builds slowly but surely, much like the frog in the boiling water. This story has a better ending.

Taxes are done!

Here are a few tips that are hot of the presses and good reminders for NEXT years taxes!

HSA’s are Great, as is all pre-tax medical savings plansUncle Sam

If you can do an HSA, do one. If you are not sure, reach out to your employer and find out if you qualify, they will know in very short order. Don’t worry about using all of your HSA during the year, you will eventually need the funds for medical expenses.

We prefer HSA to the FSA’s or other plans that may expire annually. However, all pre-tax plans for medical expenses are great. When using the FSA or other “use it or lose it” type of plan, just make sure you do use it and do not let those hard earned dollars expire as the calendar turns to a new year.

Max that 401k

Now is a great time to make sure you are maxing your retirement plan. Do it evenly if possible! In a perfect scenario you likely want to run out of contributions in late November or early December. There are situations such as retirement, job change or other that may make it more appealing to fund early.

Do not overfund your 401k. This can be done via a job change or plan change. We have a more comprehensive article coming soon, but be reminded we do not want to over fund our 401k plans.

New plans can be aggressively invested. As the amount grows, the portfolio should be slowed down and be better diversified for the long term.

You Owed a bunch

If you owed a large amount of money and this is occurring repeatedly, it may be time to adjust your exemptions on for your employers W-4 records of your personal exemptions. Determine what your exemptions are currently and make an adjustment down in number. After your next paycheck, extrapolate the adjustment and see if that will cover your liability. Reach out to us if you need help!

Extension Filers

If you filed and extension, keep your feet moving, especially if you had large transactions or other items that may throw you into an “owed” mode. The longer you wait the more the penalties will be if you are caught by surprise.

Relax and enjoy the rest of the week and the full speed ahead into Summer !

You deserve it!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

When to contribute to a Roth, when not to contribute to a Roth, benefits and limitations

Recently we have received several questions about the Roth IRA. While many studies show only about 1 in 4 would benefit from a Roth, there are times when a Roth is the best choice. There are distinct differences in Roth’s versus other pre-tax plans which make appropiate tax planning very important when implementing a Roth contribution.

Roth Versus 401k or other Pre-tax Plans

The most important factor in determining to contribute to a Roth or not is understanding one key component:

A Roth is a bet your tax rate will be higher at retirement or in the future rather than currently!

Due to the tax benefits, all other items being equal, a Roth is most beneficial when one expects to be in a higher tax rate later or at retirement. Under normal circustances most families are in a LOWER tax bracket at retirement than during their working years, making a pre-tax plan more appropriate.

As a refresher, a Roth is an after tax contribution that grows tax deferred until used. No tax deduction up front makes for less immediate tax benefits but greater benefits during retirement or later in life when draws are taken on a tax free basis, under current tax laws.

Roth plans have less stringent RMD (Required Minimum Distribution) requirements than many other IRA/401k type plans. Pre-tax plans have mandatory distribution requirements due to their “never taxed” status. Since the contributions to funds and growth in pre-tax plans are without taxes, the IRS wants to get their taxes. 70.5 is the latest age one can defer the distributions of a pre-tax plan in most cases. Contrasting that to a Roth; Since taxes were originally paid on the contributions, distributions are not mandatory in most cases as the IRS receives no benefit under current law and thereby deems no mandatory distributions unless a Roth has been received as a beneficiary in which is it subject to similar mandatory distributions of pre-tax plans.

When a Roth is correct? 

Since a Roth is a bet taxes will be higher in retirement or later in an earning career, lower income periods of employment/careers tend to be the most beneficial for making contributions. Think early in a career or on off years of regular work for most tax beneficial Roth contribution times.

In a year of negative or low income the conversion of IRA to Roth may be an optimal strategy. Under certain situations a regular IRA may be converted to a Roth showing the income from the IRA. This would essentially pull forward the taxes from the IRA to the current year, which may be beneficial during very low or even better during a negative earning year. There are very few limitations on converting a IRA to a Roth as the IRS is benefiting early from the pull forward to taxes. These conversions, done correctly are without the normal early IRA 10% penalty.

Since a Roth is after tax and growth is tax deferred, the earlier the better for maximizing a Roth’s full potential. Tax deferred growth over longer periods of time will have greater benefits than short periods of time. In fact, VERY short periods of tax deferred growth in a Roth make it MUCH less appealing, if even appropriate at all!

Roth contribution limits

Single filers cannot make a Roth contribution once their income is greater than $133k in 2017 and married filing joint cannot make a contributions with incomes greater than $196k.

Roth contribution limits in total are $5500 regular plus $1000 catch up for those greater than age 50. Some employers offer Roth 401k plans which allow higher contribution amounts similar to the $18k and $6k catch up of regular 401k plans, however mandatory RMD distributions do come with these types of plans.

Conversion from IRA as mentioned above has no limits on income or earnings to qualify. Since the IRS is receiving tax dollar early, all other things considered, the rules are much more flexible for converting an IRA and creating a tax liability earlier than may otherwise have occurred (as mentioned above, carefully timed conversions may lead to very little tax liability if other outside factors have lowered the tax exposure.)

In closing, we agree with the studies that most do not need a Roth and many may never have the option for a Roth at all. This being the case, there are always certain circumstances that may make a Roth or a Roth conversion an ideal tax planning tool to offset unique income years as mentioned above.

Have a Great Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

New Retirement Limits – Same as before … well almost !

The IRS recently released the updates for the 2017 Limitations on retirement benefits.

It was pretty easy… THE SAME as 2016!

From the IRS Release:

Highlights of limitations that remain unchanged from 2016irs

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
  • The limit on annual contributions to an IRA remains unchanged at $5,500.  The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.


There were a few changes that were long on words, but short on substance… here they are.. again from the IRS release..  Print – Click this link to Print this page

Highlights of changes for 2017

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the saver’s credit all increased for 2017.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions.  If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)    Here are the phase-out ranges for 2017:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000 to $72,000, up from $61,000 to $71,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $99,000 to $119,000, up from $98,000 to $118,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000, up from $184,000 and $194,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is $118,000 to $133,000 for singles and heads of household, up from $117,000 to $132,000.  For married couples filing jointly, the income phase-out range is $186,000 to $196,000, up from $184,000 to $194,000.  The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the saver’s credit (also known as the retirement savings contributions credit) for low- and moderate-income workers is $62,000 for married couples filing jointly, up from $61,500; $46,500 for heads of household, up from $46,125; and $31,000 for singles and married individuals filing separately, up from $30,750.


Pat yourself on the back if you are still awake at this point… my apologies if you fell over… Bottom line, not a lot of changes!

Have a Great Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

November 2016 Video, Financial Planning Tip and Economic Review- By John Kvale

Here is our November 2016, Financial Planning Tip and Monthly Economic Review, along with a Video for your viewing and listening pleasure. Hope you enjoy!

November 2016 Video


Financial Planning Tip –

Check that 401k or other retirement plan for maximum contribution

  • $18k is the maximum deferral for most 401k and other similar plans, especially in the corporate arena
  • Those at age 50 or greater get another $6k- added to above is $24k total!
  • Without regard to the company match, max this total amount if possible
  • Taking a peek at your YTD paystub will confirm your deferral amount
  • If you are not there, turn the jets on and up your withholdings
  • When January comes, be sure to lower the deferral rate

Capital Market Movement

Stunning Move in Interest Rates

We have crowed for months (maybe longer) that too low of rates could be a hamper on the Economy, doing more harm than good. We are not changing our tune now!

This from our Mid-Year 2016 Newsletter and JPMorgan:


Initial headwinds, may occur but eventual greater fixed income returns may be around the corner.

When rates first go up, bond prices drop…the longer the term (i.e. 30 year) the more they drop. Eventually as bonds mature and re-invest at higher rates, the net result is bigger income …. ignore the top line for a while, just enjoy soon higher income may be advisable.

5 Year (Shorter) Rates Move



This is the 5 year treasury…. yea the 5 year, that is a short time frame. It was under 1% just a bit back in our rear view mirror. Today, near 1.8%, which is where the 10 year was recently.

Barring some type of crisis, a rate increase in the super short fed funds rate (think checking accounts) should be on the docket for December. 

Oh, did we mention there was election this month?

Have a Great Day!

See you in 2017 !

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
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