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Letter From the Heart

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Letter From the Heart
Too often, financial and especially estate planning focuses on the legal, tax and investment structure and forgets to address practical and personal issues.  Problems may then occur when a loved one passes away and in the midst of the heartache and grief, with little or no direction, the family is left to make difficult short term decisions about funeral arrangements, followed by the big issues of sorting out the longer term financial picture.  What would your family do in such an event?  Would they know the location of your most important documents?  Would they know who to call for help? A few years ago, as we worked through the planning process with a new client, the above thoughts really hit home and we were asked to develop a system that would organize and pass along valuable financial and personal information to her family.  The attached questionnaire became a guide for her and we believe it can prove to be equally as important to you.  We know t...
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The Benefits of Company Sponsored Retirement Plans
As a business owner, establishing a retirement plan at your company can serve many purposes.    Having a plan will provide your employees an opportunity to reduce their taxes and save for retirement.   It can be an important tool in retention of existing employees as well as attracting new employees.It also has quantifiable benefits for the business and the business owner.  In particular, salary deferrals can be shielded from tax and employer contributions can be utilized as expenses for the business.   A business with a small number of employees can take particular advantage of these breaks and often has a wider array of feasible plans to choose from.   The establishment of a retirement plan has become particularly attractive given the reduction in deductible items for many high-earners brought about by the most recent tax legislation.Plans range from the SIMPLE IRA, which allows $12,500 annually to be deferred from tax ($15,500 those over 50), a 3% match...
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529 Savings Plans

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529 Savings Plans
529 Savings plans were introduced in 1996 as a convenient way to save for future college education expenses.   They are used widely, but misunderstandings about their design and use also exist widely.The primary benefit of 529 plans are that they provide tax free growth of contributions as long as the funds are used for qualified college expenses.  More recently, laws changed allowing for 529 plans to be used for k-12 education as well, with the limit annually per student being $10,000 for grades prior to college.  Setting up a 529 plan can be especially valuable if funds are deposited early and have time to benefit from tax-free growth.  Some states also allow for a reduction in state income tax during the year the funds are contributed.Potential asset growth within a 529 plan comes from a set list of mutual fund investments inside the plan.   The fact that the assets are permanently segregated from your spendable assets allows for the growth to occu...
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Socially Responsible Investing (SRI)
Socially Responsible investing (SRI).   Sustainable investing.  Environmental, Social & Governance (ESG) investing.  Impact investing.  Whatever you call it – and however you define it – the desire to manage investments in a way that aligns with personal values continues to grow. According to a report from the Forum for Sustainable and Responsible Investment, the market size of sustainable, responsible and impact investing in the United States in 2016 was $8.72 trillion, or one-fifth of all investment under professional management. Since 1995, when the US SIF Foundation first measured the size of the US sustainable and responsible investing market, to 2016, the SRI universe has increased nearly 14-fold, a compound annual growth rate of 13.25 percent.SRI has been around since the 1970s but over the last 40+ years it has evolved.  Initially, the approach was to avoid investing in companies whose products or services were considered objec...
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Should You Consider a Roth Conversion?
Roth IRA Conversions are a source of interest and confusion for many investors.   A Roth IRA conversion involves moving assets already in a Traditional IRA or other retirement account* into a Roth IRA.   The growth of assets in a Roth IRA and the distributions from a Roth IRA after age 59 ½ are tax free.   Some investors who have assets in a Traditional IRA may benefit from transferring their assets to a Roth IRA in a conversion.   Upon completion of this conversion an individual will have a tax liability related to the amount converted.  That amount will be taxed at ordinary income rates up to 37%, like your salary.  The 10% penalty applicable to early (before age 59 1/2) IRA distributions does not apply to Roth conversions, so they can be completed at any age. Normally contributions to a Roth IRA may be limited if income levels are too high.   However, there are no salary restrictions that would prevent someone from completing a Roth conversi...
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Donor-Advised Funds

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Donor-Advised Funds
In conjunction with our tax advisors at DHG, we have helped many clients over the years fulfill their goals for charitable giving while enjoying a reduction in their tax obligation during the calendar year of the donation.  A Donor-Advised Fund is one way to accomplish that goal.  It works particularly well during a year of a significant positive change in circumstances; such as an unexpected bonus or a large deferred compensation payment.  For example, an individual may make a regular donation to a specific charity each year.  In the year of a significant bonus, they may choose to fund 5-10 years of charitable intent at once, by making a deposit to a Donor-Advised Fund.  It allows an individual to take a deduction for the whole amount contributed; but doesn’t require the donor to distribute the funds to charity right away.  Instead, they’ve created a “charitable checkbook” allowing for the funds to be paid out to qualifie...
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Tax Reform

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Tax Reform
Congress recently passed the Tax Cuts and Jobs Acts in late December with most provisions being effective for tax year 2018. Our DHG Tax Advisory professionals have been following the legislative process and have recently outlined the most relevant provisions for individual taxpayers in the attached document below. In addition to these changes primarily affecting deductible items and tax rates, the estate tax threshold has almost doubled to $11.2 million for individuals and $22.3 million for married couples.Tax law remains a complex set of rules that affects all of us differently, thus requiring attention to your individual situation. As a firm focused on providing comprehensive financial planning advice, we are uniquely qualified to assist in this evaluation, alongside our DHG Tax Advisory professionals.We welcome a conversation in 2018 regarding these changes and how they may affect you.DHG Tax Advisory: How You Could Be Affected by Tax Reform DHG Tax Advisory Website (Save...
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Stretch IRAs

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An IRA in and of itself provides for the significant benefit of tax-deferred growth during the owner's lifetime.  The funds in the IRA are only taxed when they are removed.   They can be removed and used without penalty beginning the year the owner turns 59½.  Later on, during the year that the owner turns 70½, the IRS requires withdrawal of a Required Minimum Distribution.  For most participants, this first distribution is equal to 3.65% of the IRA’s value, with the percentage distribution required to be distributed by the IRS rising as they age.What many individuals don’t realize is that the benefits of tax-deferred growth can extend to an individuals’ heirs through a Stretch IRA (more formally called an Inherited IRA).  The IRA can become a Stretch IRA without significant effort on your part; it’s part of the tax law.   Upon death, the  specifically named heirs will inherit the IRA as an Inhe...
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Letter From the Chairman

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As a client or professional partner of DHG Wealth Advisors you’ve been part of a wealth management experience focused on your goals and objectives, not one focused on products.   As a part of implementing an appropriate solution for our clients based on their needs, risk tolerance, and feedback; our Investment Policy Committee seeks out investment solutions that have stood the test of time.   A long standing part of our client portfolios has been Dimensional Fund Advisors (DFA).   We’ve attached this year’s “Letter From The Chairman”, penned by DFA Chairman David Booth for your review.The article outlines how DFA’s long term investment success has been built on a philosophy which takes advantage of academically proven risks and remains committed to them during cycles that have not been favorable.   These are similar to the tenants of long-term individual investing success; selecting an investment strategy that ...
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The Employee Retirement Income Security Act, commonly referred to as ERISA, sets standards of conduct for those who manage an employee benefit plan and its assets. Such a person or entity performing many of the duties required in operating and managing a plan is known as a fiduciary.
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