Make Sure You’re Ready

According to a recent survey, 80% of Americans say that saving for retirement is critically important. However, only 56% are actually putting money away for their golden years.

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In 2006 U.S. Senators Gordon Smith and Kent Conrad introduced a resolution that was passed by Congress, creating National Retirement Security Week in the third week of October (this year October 18-24.) On September 2, 2020, the National Association of Government Defined Contribution Administrators (NAGDCA) updated its legislative priority to advocate for October to become National Retirement Security Month.

The purpose of observing National Retirement Security Week/Month is to raise awareness and help individuals take concrete steps towards a secure retirement. Over and above elevating public knowledge on the subject, there is also an effort to encourage employees to speak to a retirement plan consultant or expert and participate in an employer-sponsored retirement plan if available.

At Note Advisors, we are here to help you build and increase your retirement funds. While it can seem like an overwhelming process, here are some basic ways that you can start to secure your retirement future.

Start saving money

Statistics show that 32% of Americans did not start saving for their retirement until they were in their 30s. Another 13% waited until their 40s. The longer you wait, the greater the amount you will need to save each month, but it’s never too late. Start saving now.

Automate Your Savings

Have your contributions automatically deducted from your paycheck to guarantee that you are saving.

Boost Contributions as You Age

If you are over 50 years old, you can save an extra $6,000 per year tax deferred.

Don’t Rely on Social Security

Social Security was never meant to serve as a total retirement income replacement source It was meant to supplement pension income. Further, nearly a quarter of public sector employees are ineligible. Social Security benefits replace roughly 40% of pre-retirement income among average earners. While this is a meaningful supplement to other income sources, it’s hardly enough to maintain a comfortable lifestyle on its own.”

If You’re Young, Invest More Aggressively

Choosing a more aggressive investment strategy early will quickly grow your nest egg and also give you time to recoup if the market takes a dip.

Meet Your Company Match

If your company offers to match your contribution up to a certain percentage do it. It’s free money and that match can be tax-deductible for your employer as well. Diversify Add a tax-advantaged retirement account like a Roth IRA to your retirement portfolio, so that some of your saving grows tax free. 

No Company Retirement Plan?

While 28% of Americans take full advantage of their company’s retirement saving options, 20% aren’t offered a plan by their employer, or are independent contractors. If you fall into that category, consider alternative solutions, like an Individual Retirement Account (IRA). 

Speak with a retirement plan consultant or expert

Nearly 60% of Americans say they have a workable knowledge of how retirement plans operate, but 30% say they don’t have a clear vision of their own plan. If you are unsure about planning your retirement, we at GCW Capital are here to help. Contact us today and let’s work together to develop a retirement strategy that meets your needs and will fund your future.

Your Finances and the Upcoming Election

Recently we published a blog about financial uncertainties across our nation as the countdown to the 2020 US election continues. Clearly, some of the most concerning of those are potential changes to federal tax laws. That is why we decided to follow up with specific financial information and strategies that we believe could be effective should such changes occur.

Let’s start with the bottom line. A lot can, and will, change between now and the election. The reality is that no matter the outcome, proposals take time to become legislation. Additionally, to make changes to the tax code, Congress must pass a bill by a majority vote (in both the House and the Senate), followed by the president signing it into law. With the current political makeup of Congress, that path will be difficult.

None the less, if changes to federal tax laws are on the horizon post November 3rd, below are some suggested scenarios and strategies we believe could be effective in protecting your investments and portfolios, if initiated by year’s end.

Most importantly, we suggest you take this pre-election time to GIVE US A CALL to review your financial concerns and plans, and help you stay focused on a diverse portfolio allocation and wealth management plan and avoid distraction-driven election proposals.

Parts of this blog were excerpted from a Charles Schwab investment advisory.

The top marginal tax rate is raised from 37% to 39.6% for income over $400,000.

  • If possible, defer losses and deductions to future tax years, when tax rates could be higher. 
  • Initiate Roth conversions which could potentially reduce future taxable distributions. 

Tax capital gains and qualified dividends are established for incomes over $1 million at the ordinary income tax rate of 39.6%.

  • Utilize tax gain harvesting to lock in capital gains at the current preferential rates.
  • Defer loss recognition and possibly deductions to future tax years when taxes could be higher, which could increase the tax benefits of the loss deduction. 

Basis on transfers of appreciated property at death are stepped up and the federal estate tax exemption is decreased by 50% or more.

  • Gift assets to lock in the estate tax exemption and avoid losing the higher limits, which could disappear if tax policy is changed. 

Itemized deductions are capped at 28% of income.

  • Consider accelerating deductions if the 28% limit could cause some deductions to be lost in the future. 

Tax credits for middle-to-low-income households are increased.

  • These tax credits would have income limitations, and there is little higher-income households can do to qualify for them. 

The corporate tax rate in increased from a flat 28% from 21%, and tax book income of companies at an increase of 15% if they do not report taxable income.

  • Clients should review their portfolios and ensure proper diversification to help mitigate the potential negative impact from reduced corporate profits due to increased taxes. 

Start collecting additional taxes for Social Security after $400,000 of income.

Owners of pass-through businesses (such as LLCs and partnerships) could consider a transition to an S-corporation to reduce Social Security taxes. 

The tax deduction for 401(k) contributions is changed to a tax credit (discussed but not a proposal.)

  • For this year continue to contribute to a 401(k) as you normally would. 
  • Start or increase contributions to a Roth 401(k). 
  • If passed into law, those who may not receive a tax credit for contributions should consider a Roth account or saving efficiently in a brokerage account.

Parts of this blog are based on a Charles Schwab advisory publication.

Self-employed and Deferred Payroll Taxes

If you are self-employed, you shouldn’t count on the payroll tax break the president has issued via executive order — at least not yet. 

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Payroll taxes are normally shared by employers and employees. Each covers a 6.2% tax to fund Social Security, as well as a 1.45% tax to fund Medicare.Self-employed people foot the entire bill for these levies themselves, at a cost of 15.3%, and pay for them as part of their quarterly estimated taxes

The president’s executive order would suspend the employee’s share of payroll taxes from September 1st through the end of the year. It would cover workers who make no more than $4,000 per biweekly pay period or $104,000 annually. 

It is currently unclear whether this relief would apply to the self-employed, which is raising a number of tax concerns including whether employers or employees could face surprise tax consequences and compliance issues related to the executive order.

Separately, business owners, including independent contractors and freelancers, are already eligible to defer the employer’s side of the Social Security tax via the CARES Act. Under this provision, employers may choose to defer the share of tax that would have been paid from March 27 through Dec. 31. They would then pay 50% of the amount owed next year and the remainder in 2022.

With so many unanswered questions, the best course of action if you are self-employed is to continue to set aside your self-employment taxes and pay them as usual. At the very least, you should wait until further guidance is issued by the Treasury Department to decern on whether you qualify to defer this slice of the tax.

If you have questions, or need to talk about this or any other financial issues, give us a call. We’re to help

Has Your Company Suspended 401K Contributions?

The pandemic has had a major economic impact on employers as well as individuals. According to a national survey by the Plan Sponsor Council of America, as of April more than 20 percent of large organizations had already suspended matching 401(k) contributions.

The beauty of a 401(k) is that it offers tax advantages and makes regular contributions seamless. Having a match on top of that is icing on the cake—but not having it doesn’t negate the other benefits.

When money is tight, you may have to rethink and reprioritize. You don’t want to jeopardize your future, but you also don’t want to make imprudent decisions like racking up a huge credit card bill or defaulting on other commitments in order to continue contributing. 

On the other hand, if your budget still allows you to make regular contributions, you definitely should. In fact, as counter-intuitive as it may seem, now could be the time to increase your contribution to make up for the lost match. 

It’s a balancing act. So, before you decide what to do, ask yourself these questions. 

How Stable is Your Job?

When the company you work for, whether large or small, is looking at its balance sheet to find ways to economize, you want to be realistic about the future of that company. Are there layoffs ahead? Cutback in hours? If you think your position could be impacted, now is the time to make sure you have enough cash on hand to be able to make it financially.

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Do You Have an Adequate Emergency Fund?

Today’s uncertainties have brought the importance of emergency funds front and center. The standard recommendation to have enough cash easily accessible to cover three-to-six months essential expenses may even be an understatement. If your emergency fund is less than adequate, building it up should be a primary focus. 

Look at your budget. Can you redirect some dollars to this important fund? If there’s no other way to do it, you could reassess how much you’re currently contributing to your 401(k) in order to balance present financial stability with future security.

Have Your savings to Date Been Adequate?

A common employer match is 50 cents on the dollar for the first six percent of your salary. This means that if you have only been contributing up to the match, you’ve been contributing nine percent between you and your employer. That’s good, but below the 10-15 percent recommended for someone in their 20’s (an older person just beginning to save may need to contribute even more). If you’re behind in your savings already, you’ll likely have to work harder in the future to catch up.

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How Close Are You to Retirement?

This is a crucial question. If you’re far from retirement, you may feel like you have plenty of time ahead to save. However, the reality is that the earlier you start saving—and the more aggressively you save—the more time you have to benefit from potential market appreciation and compound growth. Stop saving now and you will have lost the power of time. Conversely, if you’re close to retirement and still have a way to go to meet your savings goal, every dollar you save now is essential.

There’s More to Your 401k Than the Match

While getting an employer match is a definite plus—and an opportunity you never want to pass up—there’s more to it than that. Obviously stopping contributions, or temporarily reducing your percentage, would put more dollars in your pocket and potentially help ease your cash crunch. On the other hand, it’s a trade-off, not only in terms of your future security, but also your current tax situation.

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If you have a traditional 401(k), your contributions are tax-deductible, which lowers your taxable income. Decrease or completely stop those contributions and you potentially increase your tax liability. You also decrease your long-term, tax-deferred earnings potential. If you have a Roth 401(k), you don’t get an immediate tax benefit, but the ability to take tax-free withdrawals in the future is huge.

It Doesn’t Have to be All or Nothing

If you need some extra money now for essential expenses or to boost your emergency fund, reducing your contribution (rather than stopping it completely) could make sense in the short term. Still it’s important to promise yourself that you will recommit to saving more as soon as things turn around. 

Match or no match, when it comes to long-term retirement saving, contributing as much as you can to a 401(k) is one of the best things you can do.

This blog was excerpted from an online article by Carrie Schwab-Pomerantz, CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

Mid-Year Tax Reviews Can Save You $$$

Every tax season, U.S. businesses owners and individual taxpayers undergo an amazing ritual. At the beginning of the year, we start collecting forms from various entities: banks, creditors, investment companies, our employers, etc.

After we have gotten all of our paperwork, we then figure out whether we’re going to waste a weekend slogging through all this paperwork, or if we’re going to outsource it to someone like a strip mall tax preparer or a CPA. Whatever we decide, our singular focus is to figure out one thing: “How big is my refund going to be?” 

If the answer is negative, meaning we owe the IRS money, that ruins the whole weekend. Whatever the result, all we know is that once we have finished—which is usually around March 15th for businesses and April 14 for most individuals— we don’t think about taxes for another year. 

Is that the right approach? Perhaps not.Here are 5 reasons why you might want to review your tax situation mid-year.

Tax Review Reason #1: Adjusting employer withholdings.

In early 2018, the IRS prescribed new withholdingtables for employers, based upon the changes in the Tax Cuts and Jobs Act of 2017. While most people will pay a lower tax bill, there are those who might pay more. However, the withholding tables are largely adjusted to withhold less in taxes which can result in a nasty double whammy for some taxpayers of paying more in taxes, but having less withholdings in their paycheck. 

You can avoid this situation by simply taking 10 minutes to check for yourself on the IRS’ withholding website. Here, you can walk through some pretty simple questions about your personal situation, income, and possible deductions. After answering these questions, the IRS will give you some suggestions on whether you need to adjust your employer withholdings. 

Tax Review Reason #2: Seeing the tax impact of specific life events.

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Sometimes, it seems that our taxes just stay the same, regardless of what we do. That is not necessarily true. Here are a few examples of specific life events that should encourage you to do a mid-year tax review.

  • If you have a child going to college, you may qualify you for a tax credit and deductions for tuition expenses. Check out the IRS Website for details.
  • If you have purchased a home for the first time and are starting to itemize deductions because of the mortgage interest and real estate taxes you are now paying.
  • If you have installed energy-efficient appliances that provide you eligibility for tax credits. Click here for more information.
  • If you are recently retired and need to figure out how your withholdings work now that your employer is no longer taking that money out of your paycheck.

Tax Review Reason #3: Sound tax advice.

If you ask a tax professional questions about your financial situation at this time of year, you are consulting them when they are not singularly focused and stressed over getting through tax season. 

You can have an enlightened conversation about this year’s tax return with the knowledge base of last year’s returns and the calm of an off-season consultation. 

Tax Review Reason #4: Learn more about your options and properly plan

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  • Planning to sell some stock? Depending on your situation, there’s probably more than one right way to do this. There are also there are many tax-inefficient ways. Talking with a financial professional before you make these decisions might help you save money on taxes.
  • Looking to increase your charitable contributions this year? Perhaps you can get more bang for your buck if you bunch itemized deductions every other year.
  • Just retired, but not ready to take money out of your IRA? Perhaps it is worth doing Roth conversions while you’re in a low tax bracket, so you won’t get a nasty surprise when you have to start taking required minimum distributions and find out you’re in a much higher tax bracket. Proper tax planning might help you figure out the best decisions for your situation.

There are so many different aspects of your life with some sort of tax impact. And it’s important to make sure you’re doing this while you still have time to make changes. For example:

  • If you need to adjust your withholdings, it’s best to do it mid-year, so you have more paychecks for those changes to take effect. **
  • If you’re looking to contribute to an IRA**, it’s probably best to spread out those contributions over the course of the year. When you do tax planning mid-year, you can always come back at year-end to see what else needs to be done, but the reverse isn’t necessarily true.

The point should be to enjoy your BEST life while remaining as tax efficient as possible. And that’s best done with proper tax planning. 


What’s next? Talk to your financial advisor. That’s us!! Note Advisors is a one-stop-shop for all of your tax review and planning needs. 

In fact, GCW Principal, Shawn Glogowski, is an Enrolled IRS Agent, which means he is licensed to practice before the IRS and, if needed, can legally advocate with them on your behalf. 

Why not get your mid-year tax review going now, before it’s too late.


Parts of this blog were excerpted from an online article by WestChase Financial Planning.

Retirement: To Do It or Not? And When?

Retirement. A time in life to which we all look forward. However, According to the Bureau of Labor Statistics, in 2016, 26.8% of those between the ages of 65-75 continued to work—a number that is expected to rise to 30.6% by 2026.

There are varying reasons Americans are postponing retirement, from economic stability to personal fulfillment. Whatever the reason, and however long you might plan to remain working, there are retirement-related financial concerns that should be addressed in your sixties to ease your eventual retirement transition and avoid potential snags down the road.

Wait to File for Social Security

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Just because you reach “full retirement age”(FRA)doesn’t mean you have to collect Social Security benefits, especially if you’re still working. The longer you wait, the more your benefits will increase—up to age 70.

Monthly benefits increase between six and seven percent for every year you delay from age 62 to your FRA, and then grow eight percent a year between your FRA and age 70. If you are healthy and longevity runs in your family, you stand a good chance of increasing your lifetime benefit by postponing your start date.

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Enroll in Medicare Part A

If you’ve already filed for Social Security, you’ll be automatically enrolled in Medicare Part A and Part B at age 65. But if you haven’t, you have a choice to make.

Most people will benefit by enrolling in Medicare Part A at age 65 whether or not they continue to work. There are no premiums, and enrolling now will help you avoid potential penalties or delays down the road.

If you’re covered by your employer’s plan and your company has 20 or more employees, that plan will remain your primary coverage. If you work for a company with fewer than 20 employees, Medicare will be your primary insurer.

*Another caveat: Once you enroll in any portion of Medicare, you can no longer c*ontribute to a Health Savings Account. So if you’re relying on your HSA to boost your savings, you’ll need to postpone Medicare.

Consider Postponing Medicare Parts B and D

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If you work for a company with fewer than 20 employees, you’re probably best off enrolling in Medicare Part B and Part D when you turn 65. But if you work for a larger company, you may well be better off sticking with your employer plan and enrolling in Medicare once you retire. This link to a website provides information on costs and coverage that may help you make a decision. 

Once you leave your job, you will generally have eight months to enroll in Part B or face a penalty. Part D also has a late enrollment penalty if you go more than 63 days without “creditable” prescription drug coverage. Creditable means that your existing insurance is expected to pay as much as the standard Medicare prescription drug coverage.

Continue to Save for Retirement

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No one should ever walk away from an employer’s 401(k) match, but it makes sense to try and save more. The good news is that as long as you are working, you can continue to contribute the legal maximum ($26,000 in 2020) to your 401(k) regardless of age. If you anticipate being in a high tax bracket come retirement, you might want to consider a Roth 401(k), if available.

You can also contribute up to $7,000 to either a traditional or Roth IRA as long as you have earned income, although in 2020 Roth IRAs are restricted to those who earn less than $206,000 (combined income for a married couple filing a joint return) or $139,000 (single). 

Note that the 2019 SECURE Act extended the age limit for contributing to a traditional IRA from age 70½ to 72.

Don’t Forget About Required Minimum Distributions


The CARES Act passed in March of 2020 has temporarily suspended all required minimum distributions (RMDs) for 2020, regardless of age. This includes 401(k)s and traditional IRAs.

Starting in 2021 when the CARES Act expires, we will revert back to the RMD rules established by the 2019 SECURE Act. If you did not turn 70 ½ by 2020, you can wait until the year in which you turn 72 to start taking your required distributions. 

Also note that earning a paycheck means you can delay taking a required minimum distribution (RMD) from your 401(k). As long as you are working (and you don’t own more than 5% of the company), that requirement is waived until April 1 of the year you retire. There are also no RMDs for Roth IRAs at any age.


Think About Your Mortgage

Conventional wisdom says we should pay off our mortgages before we retire, but it’s important to look at your mortgage in the context of your complete financial profile. Before you rush to pay off your mortgage, especially if that involves selling securities or will reduce your liquidity, you should consult with your financial advisor.

Plan How to Turn Your Portfolio into Your Paycheck

Switching from saving to spending and depleting what you’ve worked so hard to build can be a difficult transition. Before you stop working:

  • Review your net worth statement to understand exactly where your stand.
  • Make a retirement budget and stash away a minimum of a year’s worth of cash.
  • Review your portfolio to make sure you have the appropriate balance of risk and safety. 
  • Consult with your financial advisor to create a tax-efficient drawdown strategy.

It’s great to choose to work for as long as it’s financially and personally rewarding, but planning carefully for the eventual transition to retirement can make the next phase of life even more fulfilling.

This blog was excerpted from an online article by Carrie Schwab-Pomerantz, CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

401(k)? IRA? Both?

If you are fortunate enough to have a 401(k) or other employer-sponsored retirement plan, it can be the backbone of your retirement savings. Yet there is a good case for adding an IRA to your retirement funds as it not only provides the chance to save more, it can also offer more investment choices than in an employer-sponsored plan. 

The question is, which IRA is right for you?

There are two types of IRAs: a traditional tax-deductible IRA and a Roth IRA. For 2020, the annual contribution limit for both is $6,000 with a $1,000 catch-up if you’re age 50-plus. However each IRA does have an income ceiling that will determine whether one or the other is right for you.

  • Traditional tax-deductible IRA—–This is a good option for someone who does not have a 401(k) or similar plan, a traditional IRA is fully tax-deductible. Upfront tax deductibility plus tax-deferred growth of earnings are two of the pluses of this type of IRA. However, if you participate in an employer sponsored retirement plan such as a 401(k), tax deductibility is phased out at certain income levels based on your Modified Adjusted Gross Income (MAGI). For tax-year 2020, the levels are $65,000-$75,000 for single filers, $104,000-$124,000 for married filing jointly.
  • Roth IRA—With a Roth IRA, you don’t get any upfront tax deduction, but you do get tax-free growth plus tax-free withdrawals at age 59½ as long as you’ve held the account for five years. And there’s no restriction if you participate in an employer plan. However, there are income phase-out limits based on your MAGI that determine whether you’re eligible to open and how much you can contribute to a Roth. In 2020, the limits are $124,000-$139,000 for single filers, $196,000-$206,000 for married filing jointly.
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There are a couple of other things to considerwhen choosing between IRAs, the main one being whether you believe you will be in a higher or lower tax bracket when you retire. 

That’s because withdrawals from a traditional IRA are taxed at ordinary income tax rates at the time of withdrawal; qualified Roth withdrawals are tax-free. Also there’s no required minimum distribution (RMD) for a Roth, but with a traditional IRA, you’ll have to begin taking an RMD at age 70½, or 72 if you were born on or after July 1, 1949.

Whether or not you choose to open an IRA, if your employer offers a Roth 401(k), you might also consider adding this to your retirement savings strategy. There are no income limits to participate in a Roth 401(k), and you can have both types of 401(k) at the same time. 

Having both doesn’t mean you can contributemore than the total annual 401(k) contribution limit, but you can split your contributions between the two, giving you a combination of both taxable and tax-free withdrawals come retirement time. Making your 401(k) and IRA work together.

The goal of all this is to give you the greatest opportunity to save, with the greatest flexibility. Contribute enough to your 401(k) to capture the maximum company match, then, if you’re eligible contribute to a tax-advantaged Health Savings Account (HSA). If your 401(k) has limited investment options consider opening either a traditional or a Roth IRA and contribute the annual maximum. 

Next, if you can, put more money in your company plan until you max it out. And if you get to the point where you can save even more (kudos!), put that money in a taxable brokerage account. The bottom line is you can’t really save too much, only too little. 

Use all the savings and investing vehicles available to you, including both an IRA and your 401(k), to save as much as you can, as early as you can—and, at the same time, get the maximum tax break. You won’t regret it.

This blog was excerpted from an online article written by Carrie Schwab-Pomerantz, CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable.

Making the Most of Your Charitable Donations

As we make our way through the pandemic, not for profits and community organizations are facing increasing challenges not only in serving those in need, but in keeping their doors open. These circumstances have led to a significant increase in the number of groups asking for donations.

How do you decide which causes to support? Additionally, if you’re concerned about getting a tax deduction for your contribution, the higher standard deduction, established by the Tax Cuts and Jobs Act of 2017, can make it a little more difficult.

These days you have to be strategic about those to whom you donate and the amount you give. Whether your donations are large or small, here are some ways to give meaningfully, stay true to your budget and to yourself—and possibly get a tax break as well

Personal strategies for giving

Just because you cannot give to every worthy cause, there’s no reason you have to feel ungenerous. With a little strategic planning, you can choose both the best place and the best way to share your good fortune.

  • Start with what’s important to you—Do you have a particular passion such as the arts, the environment, education, or fighting poverty? Is there an organization that has made a difference in your life? Giving to a cause that has a personal meaning can be both effective and rewarding.
  • Look to your own community—Making a financial contribution that will not only benefit a cause you believe in but also have a local impact can give your donation extra meaning. Consider a local food bank, a scholarship fund for a neighborhood school or a struggling homeless shelter in your city.
  • Narrow down your list—Chances are you can’t give to every charity on your list, so next think about where your donations will make the most difference and choose the top three. Consider doing a little extra research by comparing charities at an independent online rating service such as or before you make your final choices.
  • Apportion your money accordingly—Decide on an overall dollar amount you can afford, and then decide how to distribute it. You don’t have to give the same amount to each charity nor do you have to give all the money at once. Many organizations welcome small regular contributions over time.

Getting a tax benefit for your contributions

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Charitable contributions are still tax-deductible; howe ver, you have to itemize to get the benefit. With the higher standard deduction ($12,400 for a single filer, $24,800 for married filing jointly for 2020)—plus the reduction or elimination of many other itemized deductions—it can be a bit more of a challenge to get total deductions above that limit. Consequently, a lot of people will choose the standard deduction rather than claim the charitable deduction.

One possible solution is to give a larger amount every two or three years to help push you over the standard deduction rather than a smaller amount every year. This potentially would increase your deductions in the year you make your charitable contributions.

Also, to encourage giving and make it easier during the pandemic, the CARES Act provides a new “above the line” charitable contribution deduction of up to $300 if you claim the standard deduction in 2020. 

For people who itemize deductions, it expands the limits on cash charitable contributions from 60 percent up to 100 percent of 2020 adjusted gross income. 

Tax-smart ways to give

If tax advantages are an important part of your charitable-giving strategy, here are a couple of other ways to go about it.

  1. A donor-advised fund (DAF) is one of the easiest, tax-advantaged means of giving to charity. It’s potentially more of an initial financial commitment but the ongoing benefits to you and the charities of your choice make it worth considering. It generally takes a minimum of $5,000 to open a donor-advised fund account; however, you may qualify to get an immediate tax deduction for the entire amount, if you itemize. 
  2. If you donate appreciated assets, you could not only get a tax deduction, but also potentially avoid having to pay capital gains taxes. You then use the funds to make grants to any public charity and any money not immediately distributed can be invested, potentially increasing the amount available to give. To me, if you have the means, it’s a great way to make an upfront contribution that you can then strategically manage over time. Plus, you can do most of it online—and have easy access to your giving history.
  3. A qualified charitable distribution (QCD) from an IRA is another option for retirees who are over the age of 70.5 to give up to $100,000 a year to certain qualified charities. With a QCD, the donation is made directly from an IRA to the charitable organization, which means you don’t have to include that distribution in your taxable income. 

Even though you don’t get a tax deduction from a QCD, it can be a tax efficient way to give—since the alternative of taking that distribution in to your income first and then making a donation could result in a higher tax on your Social Security benefits and Medicare premiums. In addition, a QCD can be used towards your required minimum distribution.

Whether you give a lot or a little, contribute money or time, by sharing what you have today you’re making a difference and investing in a better tomorrow for everyone.

This blog post was excerpted from an online article by Carrie Schwab-Pomerantz, CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

How Would You Rate Your Financial Know-How?

If someone asked you to rate your financial know-how on a scale of 1-7 (with 7 being the highest) where would you place yourself? 

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If you are like the Americans who participated in the 2018 Financial Investor Regulatory Authority (FINRA) National Financial Capability Study (NFCS), you would probably give yourself a pretty high score. 

In that study, 76% of respondents placed themselves in the 5-7 range. The reality is that only 34% of those who participated could correctly answer at least four of five basic financial literacy questions on topics such as mortgages, interest rates, inflation and risk.

Curious about your own answers? Here’s your chance.

Click on this link at the bottom of this post to take the Financial Literacy Quiz. It not only gives you an immediate score, it shows you how you compare to others in your state. 

Whether the quiz confirms your knowledge or serves as a personal wake-up call, the generally low results of the NFCS definitely demonstrate the need to improve financial literacy in our country. The good news is that there’s tangible proof that financial education works.

  • According to the 2018 NFCS, nearly half of Americans (49%) who have received more than ten hours of financial education report spending less than they earn, compared with 36% of people who received less than ten hours of financial education.
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  • Research from the 2020 Council of Economic Education Survey of the States shows that students who receive financial education borrow more sensibly, from student and personal loans to credit cards.
  • Results from the PISA assessment show that young people and adults in both developed and emerging economies who have been exposed to high quality financial education are more likely than others to plan ahead, save and engage in other responsible financial behaviors.

The good news is that whether you are a parent, a teacher, an employer or a concerned member of your community, there are things you can do to help promote financial education for everyone in your community.

  1. The Global Financial Literacy Center offers FastLane, with practical ideas and action plans for groups and individuals.
  2. On, you can find the schools in your area that offer financial education and the ways you can start/reinforce local financial literacy programs.
  3. DonorsChoose offers lesson plans and activities for educators that have been created by teachers in the field, for teachers. There are also opportunities to find school programs in your own community that you can support.

At the end of the day, there is a growing global awareness that financial literacy is an essential life skill that means not only greater prosperity, but better choices, increased confidence, and the ability to more successfully handle real-life financial challenges. 

Financial literacy isn’t just about math. It is about attaining the knowledge and skills to confidently manage our everyday financial lives and the need for financial education, which is greater than ever locally, nationally, and globally


Parts of this blog were excerpted from an onlne post by Carrie Schwab-Pomerantz,CFP®, Board Chair and President, Charles Schwab Foundation; Senior Vice President, Schwab Community Services, Charles Schwab & Co., Inc.; Board Chair, Schwab Charitable

CARES Act Updates and Your Retirement

Historically, 70½ is the age when individuals have been required to take required minimum distributions (RMDs) from their retirement accounts, having until April 1 of the following year to take the first distribution.

The SECURE Act of 2018 changed that rule, raising the age for RMDs from 70½ to 72 while the CARES Act 2020 has made further significant changes. Below are important updates you need to know.

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A retirement–related provision of the CARES Act 2020 allows the owners of certain retirement accounts — including inherited and beneficiary accounts — to skip otherwise mandatory RMDs for 2020. This provision applies only to defined contribution plans, including, 401(k) and 403(b) plans, IRAs, SIMPLE IRAs and SEP IRAs.

For those who want to take their RMDs, Cares Act Notice 2020-51 includes a sample plan amendment that provides participants and beneficiaries the option to receive their RMDs.

If you’ve already taken a now-waived RMD for 2020, you may be able to redeposit the funds. However there is a timing factor involved. Generally, such funds must be redeposited within 60 days of the distribution. Under the CARES Act 2020, the deadline for redepositing RMDs distributed in 2020 has been deferred to August 31.

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With respect to repayments, Cares Act Notice 2020-51 eliminates the once-per-year IRA rollover rule, which requires (and allows) only one rollover from an IRA in any 365 day period. It also removes this restriction for inherited IRAs.

The CARES Act 2020 further extends the rollover option to the IRA owner, a beneficiary spouse, and/or a non-spouse beneficiary, as long as the plan participant died in 2019 and the rollover occurs before the end of 2021.

Before the CARES Act 2020, money could not be withdrawn from a retirement account before the age of 59 ½ without incurring a 10% percent early-withdrawal penalty. Under the Act, individuals may be able to take one or more hardship withdrawals from their retirement accounts without penalty if they fall in to any of the following categories:

  • You, your spouse or your dependents are ill, having been diagnosed with COVID-19.
  • You’ve been hurt financially because you are out of work (quarantined, laid off, furloughed)or your hours are reduced.
  • You cannot work or get child care due to COVID-19. 
  • You fall under another COVID-19 category established by the US Treasury Secretary

It’s important to note that such hardship withdrawals are limited to a total of $100,000 without incurring a penalty, unless you are at least 59 ½ years of age. Also, employers can place limitations on withdrawals from their 401(k) and 403(b) plans and those withdrawals are included in your taxable income over a three year period. You can avoid paying the income tax if you repay the withdrawals within the three years.

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The same COVID-19 eligibility categories that govern hardshipwithdrawals also govern retirement account borrowing from current 401(k) and 403(b) plans. (Note: IRAs do not allow for this type of borrowing.)

Pre-Act, the maximum loan amount you could borrow was $50,000, or 50 percent of the vested balance in your account, if lower. Under the CARES Act 2020, you can borrow more. The maximum loan amount is the lesser of $100,000 or the vested balance in your account. Any loan repayments due between March 27, 2020 and December 31, 2020 are delayed for one year. However this one year delay is not factored in when accruing interest charges on the loan, which are based on the rules of your plan.