Quiver Financial News

What is the number one question you get asked by business owners.
WHAT IS THE BEST ENTITY TO OPERATE IN AND HOW CAN YOU SAVE ME TAXES WITHOUT TOO MUCH COST HAVING TO INCLUDE EMPLOYEES IN A PLAN.
Let’s shift gears a little and talk about some of the Major changes that 2023 is bringing for Business owners.  Those of you watching please keep in mind that the items we cover in this video are not all inclusive and you should consult your tax professional to make sure you cover all changes that might affect you.  
Secure Act and 2.0 changes for 2023 
In another video Justin and I talked about the free 401k tax credits that the government is offering.  If you missed that we will post a link in the description.  I highly recommend watching that one. 
For those that have heard of these changes, we wanted to bring in Ms. Stern to talk about how she sees the credits playing out and what key features you should look out for. (ie: Paperwork, forms, documentation.)
 
Bonus Depreciation is going away. 2023 instead of 100%, drops to 80% then 2024 60%
           Then 2025 40%, 2026 20%, 2027 gone, unless government writes new law which they
           do when economy slows down.
 
Claiming a net operating loss.Post 2020 no carryback anymore, carryforward indefinite
            80% limitation
 
Excess Business loss limits For noncorporate taxpayers. Extended trhu 2028. Limitation       
            $270,000 or $578,000 filing jt
 
Interest expense limitation
Part time employees now available to participate in 401K
Credit available with 50 or fewer employees, credit for setting up plan
Meals and entertainment were 100% deductible during covid, 2023 back to 50%
SEP IRA can now have as a Roth
Long term care insurance premium can be deducted like self-employed health insurance
           But it has a cap based on age and only long term care part, not life ins part of premium.
 
We also want to cover a few unique tax strategies that most people don’t know are at their disposal and could drastically change their tax liabilities.
Business rents your home for up to 14 days a year
 
Employing your children - benefit you can exclude social security on them if you like. 
            I would pay it so they start racking up their credits in case social security still exists then.
 
MERP - Medical Expense Reimbursement plan.Need formal document. You can use
            for C corp for you and employees or sole proprietor for employees only. 
 
Donna you brought up SDI  can you explain what you mean by that?
Cap on SDI disappearing so recommend to stop SDI withholding for owners
Using form DE459 because no more cap on wage amount
There are also the employee retention credits but there are plenty of firms pushing that.  One of the topics we wanted to get into today was Cost Segregation Studies but because there is so much to unpack here we don’t have time, so if you would like to learn about how you can implement these topics into your tax savings please reach out to us. 949-492-6900.
 
To go along with that, Donna has a great website you can subscribe to to be able to ask a multitude of questions.  It’s like having a CPA in your back pocket you can bounce ideas and questions off of.  Check that out at Prepaidtaxadvice.net
I think we will leave it here for this session.  Thank you for everyone tuning in.  Don't forget to subscribe and check out all of our other videos on Business education.  Thank you Donna for Joining us  and we will see you all again soon.

One of our passions is guiding clients into a comfortable and secure retirement. We have seen firsthand how crucial the five years leading up to retirement (aka the “red zone”) can be in shaping a person’s retirement future.
Planning for retirement may seem overwhelming, especially if you aim to retire in the next five years.
But there’s good news: it’s not too late to take action!
Whether you’re working with a financial advisor or navigating your retirement path independently, taking that first step is crucial. To help, I’ve put together this guide to help you learn how to navigate the crucial five-year period without jeopardizing your retirement goal.
The Two R’s of Retirement
As you approach retirement age, your “long term” is no longer synonymous with Wall Street’s “long term.” At this point, it becomes even more important to remember the two R’s of retirement: Review and Risk.
Review
In the years leading up to retirement, it’s crucial that you review everything that could impact your income or budget. This includes reviewing your net worth, comparing your assets to your debts, understanding your income needs pre- and post-retirement, and considering how your health may affect your future income.
This might seem obvious to some. But many people, busy with life, often overlook this fundamental step. It can help to pause and review your current financial situation with a financial advisor. This simple step can help provide the clarity you need to move forward.
Risk
As you review your long-term financial situation, assessing the risk management within your retirement savings is essential.
Any investment mistakes made during the Retirement Red Zone can significantly impact your retirement security, income during retirement, and ability to retire on time. Assessing and mitigating your risk levels can help you avoid the pitfalls I’ve seen in 1999, 2007, and 2022, where a lack of risk aversion caused many 401(k)s to drop in value. This led many people to delay their retirement as they waited for their retirement investment accounts to recover.
Estimating Your Retirement Needs
How much money do you need to retire? The answer to this question is tricky because it’s different for everybody. I’ve previously provided a more in-depth overview of how to calculate your retirement needs. But here’s an additional, helpful piece of advice:
Don’t assume you can predict everything you need. Build a buffer into your retirement plan. Treat your retirement budget like a home remodel project. Expect it to take longer and potentially cost more than initially planned. Anticipate that your retirement expenses could fluctuate by as much as 20% in any given direction. 
To maintain a tight budget after you retire, it helps to eliminate potential variables that could spike your expenses in retirement. For instance, if you have an adjustable-rate mortgage that may reset after retirement, consider refinancing to a fixed rate before retiring.
Diversifying Retirement Income Streams
In retirement, your income will likely come from various sources, such as 401(k) plans, 403(b) plans, SIMPLE IRA, Roth 401(k), Social Security benefits, pensions, brokerage accounts, and personal savings. Market cycles can influence these income sources’ performance, making regular reviews essential. Spreading your investments across several of these options can help you reduce the risk of watching your entire retirement savings drop at once.
Simplify your strategy
As a rule of thumb, seek income sources backed by real assets, like real estate or quality companies that produce a product or service you understand and that also pay a dividend. Keeping it simple is critical. The KISS (Keep It Simple, Stupid!) method has worked for hundreds of years and will continue to serve you well in retirement.
Kick up the income!
Prepare for future withdrawals by repositioning your investable assets into higher income-producing investments at least a year before retirement. This allows income to accumulate before you start withdrawals, helping you manage risk and providing an emergency fund for unexpected expenses that can often crop up in the first year of retirement.
Dealing with Retirement Shortfalls
If you aren’t on track for your retirement goal, it’s crucial not to panic. You can often improve the situation by reducing expenses and increasing your savings rate. Reviewing your retirement savings and possibly adjusting to a more growth-focused approach can also help bridge the gap.
If you are still working, consider maximizing your retirement benefit contribution limits, taking advantage of employer contributions, and utilizing the tax-deferred or tax-free growth offered by retirement accounts like 401(k) plans and Roth 401(k)s.
Utilizing Tax Advantages
Strategic use of tax-advantaged retirement accounts is an integral part of retirement planning. In 401(k) plans, contributions are made pre-tax. This results in tax-deferred growth over time. Similarly, a Roth 401(k) offers tax-free growth and tax-free withdrawals in retirement, providing a significant source of retirement income.
If you’re self-employed or own a small business, versions of these retirement plans are available to you. So, you can still use tax-advantaged accounts as you prepare for retirement.
A financial advisor can help you navigate the complexities of these tax rules and ensure you are optimizing your retirement plan to help build your nest egg.
Setting Your Retirement Age
The age you retire can drastically impact your Social Security benefits. Your full retirement age can vary depending on the year you were born. For most people, it’s around 66-67 years of age. While you can begin claiming Social Security at 62, waiting for full retirement age can help you receive bigger Social Security checks.
 
 

401(k) plans can be a set-it-and-forget-it retirement account. In some ways, this is great—once you set them up, they continue to grow without any further input from you.
Once you check your balance several years later, you might realize how much money you have in your account. And having access to that much money can be quite alluring!
But these funds are intended to become your retirement income. With that in mind, you might wonder at what age you should start making withdrawals from your account.
When it comes to figuring out the right age to withdraw funds from your 401(k), there are several factors to consider, such as age, taxes, and retirement goals. So, let’s go over those factors to help you better understand what age is the right age to start making 401(k) withdrawals.
How Taxes and Age Impact 401(k) Withdrawals
When it comes to 401(k) withdrawals, there are two key factors to consider: taxes and your age.
Taxes
401(k) plans, just like Traditional IRAs, are pre-tax retirement accounts. This means that you won’t need to pay taxes on the income you contribute. However, you’ll need to pay taxes when you withdraw that money from your 401(k).
The amount you’ll pay in income taxes depends on your tax bracket at the time of withdrawal. You’ll owe these taxes on top of any withdrawal penalty you might incur. For larger withdrawals, it’s best to consult with a tax expert before acting to avoid unexpected tax implications.
Age
On the age side, the magic 401(k) withdrawal ages are 59 1/2 and 72. Age 59 1/2 is the threshold to avoid the 10% early withdrawal penalty on top of ordinary income taxes. While there are some exceptions to this penalty for reasons like disability or certain health expenses, the standard rule is that withdrawing funds before this age will incur the penalty.
At age 72, the IRS requires that you start taking Required Minimum Distributions (RMDs) from your traditional 401(k) or Traditional IRA. If you fail to withdraw the required amount, the penalty can be as much as 50% of the amount you were supposed to withdraw. Consulting with a financial advisor or tax professional as you approach this age can be crucial for ensuring compliance with RMD rules.
Other Considerations
Withdrawing money from your 401(k) before the minimum withdrawal age can have significant financial implications. If you withdraw before 59 1/2 and don’t qualify for any of the few exceptions, be prepared to pay both ordinary income tax and an additional 10% early withdrawal penalty on the amount withdrawn.
Keep in mind that a 401(k) offers tax-deferred growth. So, if you can afford your lifestyle until age 72 without making withdrawals, your investments can continue growing even during retirement. This can help you maximize your retirement income after taking RMDs at age 72.
You should also consider your retirement goals. Accessing your 401(k) funds early could prevent you from having enough money for retirement. Generally, taking early withdrawals from your retirement plans should always be your last resort.
401(k) vs. IRA
When it comes to withdrawals, the rules for a traditional 401(k) and a traditional IRA are essentially the same. Both are pre-tax retirement accounts that require you to pay income taxes upon withdrawal. They also abide by the same age-based withdrawal rules and early withdrawal penalties. So, choosing between a traditional 401(k) and IRA can come down to their one primary difference: who manages the account.
Typically, employers offer a 401(k). The plan administrator is often either the employer themself or a financial institution they’ve chosen.
An IRA is an individual plan you shop for and buy yourself. So, you have greater control over the management and investment options, such as mutual funds, stocks, or bonds.
Converting Your 401(k) to an IRA
If you’ve left your employer or are considering more investment options, you might consider converting your 401(k) to an IRA. The process of converting a 401(k) into an IRA is called an IRA conversion. It might also get referred to as a 401(k) rollover, though this more often means rolling over funds from one 401(k) to another.
First, you’ll need to pick a custodian—the company from whom you’re buying the IRA. Many custodians are out there, so choose one that offers extensive education and support to manage your IRA effectively. If you’re planning a conversion, make sure they can accept qualified funds from a 401(k). Once you’ve selected a custodian and opened an IRA with them, you can then request a rollover from your 401(k) provider.
This process typically involves providing the name and account number of your new IRA, so it’s best to have this ready before initiating the rollover. Sometimes, your 401(k) provider might send you a physical check payable to your new IRA custodian. If this happens, you have a 60-day window to deposit these funds into your new IRA. If you fail to deposit the funds within 60 days, they’re considered taxable income, and you’ll be required to pay taxes on them. 
Roth 401(k) and Roth IRA
Another option to consider in your retirement plan is the Roth 401(k) or the Roth IRA. Unlike traditional 401(k) plans and IRAs, these accounts are funded with after-tax dollars. This means that when you withdraw funds from a Roth 401(k) or Roth IRA, the withdrawals are typically tax-free, provided certain conditions are met.
In the case of Roth 401(k) plans, the same age rules apply as traditional 401(k)s. You can withdraw your contributions and earnings tax-free if you’re at least 59 1/2 and the account has been open for at least five years. For Roth IRAs, you can always withdraw your contributions tax-free and penalty-free at any age. However, to withdraw earnings tax-free, you must be at least 59 1/2, and the account must be at least five years old.
The Importance of a Strategic Retirement Plan
Creating a strategic retirement plan is more than just saving money in your 401(k) account. It involves understanding how and when to withdraw funds, managing your tax bracket, and potentially diversifying with other retirement accounts (like a Roth IRA).
A well-rounded retirement plan considers your current financial situation, your retirement goals, and the best ways to utilize your retirement accounts to achieve those goals. This includes understanding the benefits and drawbacks of early withdrawals, the implications of your tax bracket on your retirement savings, and the potential advantages of a Roth IRA.
It’s also important to remember that every individual’s circumstances are different. What works best for one person may not be the best solution for another. This is where the expertise of a financial advisor comes in. By considering your personal financial circumstances and goals, you can create a retirement plan tailored to your needs.

It’s no secret that healthcare services can cost what might be described as “too much money.” When a patient suffers from a disability, injury, or illness that requires long-term care, those costs can compound quickly.
Enter long-term care insurance. Policies are available for purchase as either a standalone policy or as a rider on a life insurance policy. Whichever option you choose, the insurance helps cover some of the costs associated with long-term care.
When you shop for long-term care insurance, you have a lot of options to choose from. As with most insurance policies, they often come with restrictions, regulations, and varying factors that can affect the cost of premiums. Understanding these nuances can help you find a policy that meets your needs and budget.
Today, we’re offering five helpful long-term care insurance facts and tips so you can better understand what to look for when shopping for a policy that suits your needs.
1. Coverage
Long-term care insurance covers various services associated with extended care needs that are not typically covered by regular health insurance or Medicare. This includes:
Help with activities of daily living, like bathing and dressing
Skilled nursing care (at home)
Physical and occupational therapy
Hospice care
Home modifications, like grab bars and wheelchair ramps
This insurance may also cover the cost of care in different settings, such as in-home care, adult day care, nursing homes, and assisted living facilities.
2. Elimination period (EP)
The elimination period of long-term care insurance refers to the period between triggering an insurance payout and receiving the benefits. During this time, the policyholder must pay out-of-pocket for any care they receive. This waiting period is similar to a deductible in other types of insurance, except that it is measured in time rather than in dollars.
The length can vary depending on the policy and the insurer and can last as long as a year. With a typical policy, you’ll receive between a 30 day EP and a 90-day elimination period.
Choosing a more extended elimination period can help lower the cost of premiums. Still, it also means that the policyholder will have to cover more of their care expenses before the insurance benefits kick in.
It’s important to consider the length of the elimination period when selecting a long-term care insurance policy to ensure it fits your financial situation and care needs.
Elimination periods usually count time in one of four ways:
Calendar days: the number of benefit eligibility days following the insurance provider approving the claim
Service days: The number of days a patient receives (and pays for) qualified care services
Service days with credit: Similar to service days, with one change: patients who pay for one day of service in a week can receive a whole week’s (7 days) credit toward their elimination period
Waiver of EP for Home Care: If receiving care at home, the patient might qualify for an elimination period of zero days. With this, the patient can immediately receive benefits for care received at home.
3. Tax benefits
Here, there’s good news and better news.
The good news: the benefit payments you receive are not considered income. Because of this, they’re non-taxable and don’t increase your tax burden.
The better news: Like long-term care expenses, your insurance premiums might be tax-deductible! However, there are two catches:
To earn the deduction, you must itemize your taxes.
Your premiums must exceed 7.5% of your Adjusted Gross Income.
Additionally, a qualified family member who pays for the premiums can deduct the payments from their taxes. To qualify, they usually need to be a close family member and be the only person claiming the deduction on that policy. Again, the premiums must exceed 7.5% of their AGI.
4. Disqualifications
Several factors may disqualify a person from obtaining long-term care insurance. Some of these factors include:
Age: Some insurers may have an age limit for coverage eligibility. Usually, patients considered elderly (age 85 and older) can no longer apply for insurance.
Pre-existing medical conditions
History of drug or alcohol abuse
A criminal record
History of mental illness
It’s important to note that each insurance company has its own underwriting guidelines, so an individual may be denied coverage by one insurer but be eligible for coverage with another.
5. Costs
One of the first things to consider when shopping for long-term care insurance is the cost of premiums. Premiums vary widely depending on various factors, making them hard to predict. The primary factors that can affect the costs of your long-term care insurance premiums include:
Age
Health
Amount and duration of coverage
Marital status
Gender
The insurer’s policies
The American Association for Long-Term Care Insurance (AALTCI) releases extensive cost studies every year.
Because age is a factor, it can help determine the best time to purchase an insurance policy. It’s generally recommended that individuals purchase a policy by age 65, as premiums tend to increase as they get older. This is partially because we’re more likely to suffer from increased health problems as we age.
Waiting too long to purchase coverage can also increase the risk of being denied coverage due to pre-existing conditions or other factors. However, it’s important to note that everyone’s situation is different, and it’s never too early or too late to start planning for your future care needs.
Consider consulting a financial advisor to help guide you through the process.

What is State Disability Insurance (“SDI”)?
State Disability Insurance (“SDI”) is a California state program administered by the Employment Development Department (“EDD”).  SDI provides partial wage replacement when workers are unable to perform their regular or customary work due to physical and mental injuries, illnesses, and other health conditions.
Who is covered by the SDI program?
Almost all workers in California are covered by the program, and may receive benefits if they meet the eligibility requirements.  However, workers in certain jobs cannot get SDI, such as certain domestic workers, independent contractors, election campaign workers, and student workers working for their school. A few employers are permitted to opt out of SDI and to offer comparable benefits through a private plan.  If you are unsure if your employer participates in the SDI program, ask your HR department or manager for information.
What are the requirements for receiving SDI benefits?
To receive SDI benefits, you must have a “disability,” as defined below, and be under the ongoing care of a licensed health care provider or authorized religious practitioner. You must apply promptly, have been working or looking for work when the disability began, and have sufficient past earnings in your “base period.”
What is a “disability” for purposes of SDI??
A “disability” is any mental or physical condition that stops you from performing your usual work (or, if you are unemployed, a condition that stops you from being able to look for work) for more than one week. Almost any health condition may be an SDI disability, including physical illness, mental illness, injuries, surgery, pregnancy, childbirth, and being in treatment for drug or alcohol abuse.  A licensed health care professional (or an authorized religious practitioner) must sign a form stating that your disability is preventing you from working.
What if I am out of work when I become disabled?
A person who is unemployed may become “disabled” and entitled to SDI.  As long as you were actively looking for work when your disability began, and you have earnings in your base period, you can seek benefits.
How do I apply for SDI?
The fastest and easiest way to file a claim is online through the EDD’s website, http://www.edd.ca.gov/. You can also file your SDI claim by mail. You will have to request that a copy of the application be mailed to you via the EDD website or by calling the EDD at 1-800-480-3287 [Eng.] or 1-866-658-8846 [Spanish]. Once you complete the application, you should mail it to the EDD office closest to your residence.
What is the time limit for applying?
You must apply for SDI within 49 days of the date your disability stopped you from working or looking for work.  However, if you miss the deadline, you might still be eligible for SDI if you have a good reason for being late. For example, if you misunderstood something that the EDD told you on the phone and didn’t realize you were eligible for SDI until after the deadline had passed, your application will probably be accepted.
What is a “base period”?
The “base period” is the one-year period that began about 15 to 17 months before the date of your application for SDI benefits.  To find the base period for your SDI claim, use the following table:
If you filed your claim in …
Your base period is the 12-month period ending the previous …
January, February, March
September 30
April, May, June
December 31
July, August, September
March 31
October, November, December
June 30
Each base period is divided into three-month time periods called “quarters.”  To be eligible for SDI benefits, you must have earned at least $300 in one of the quarters of your base period.
What if I don’t have money in my base period because I was unemployed before I became disabled?
There are two rules that may help you if you do not have earnings in your base period due to unemployment:
First, if you have an unexpired claim for unemployment insurance benefits when you are seeking SDI, then you may use the base period you used for your unemployment insurance claim.
Second, if you were unemployed during any quarter of your base period – meaning out of work for 60 or more days and looking for work – you may disregard that quarter and begin your base period three months earlier than the period set forth in the above chart.  For each quarter you were unemployed, you may go back another quarter.
How much will I receive from SDI?
Your benefit amount is calculated based on the amount of earnings you had in the highest-earning quarter of your base period, and is about 60-70 percent (depending on income) of your regular earnings.  In 2018, the maximum amount of SDI you can receive is $1,216 per week.   SDI payments are processed every two weeks.
The entire amount you receive in SDI benefits from a single claim may not exceed the total amount of wages you earned during your base period.
When will I receive my first SDI check?
Every claim for SDI has a seven-day, unpaid waiting period.  Most benefits are issued within two weeks after a properly completed claim is received.
May I use my vacation or sick pay to cover the seven-day waiting period?
Yes.
May I collect unemployment insurance benefits (“UI”) at the same time I’m collecting SDI?
No. If you are ready and able to work but can’t find a job, then UI is the right program for you. If you cannot work at your regular job due to a disability or illness, then SDI is the right program for you.
If I’m injured on the job, am I eligible to collect SDI?
In general, no.  If you’re injured on the job and cannot work, you should qualify for temporary income replacement through Workers’ Compensation.
There are two exceptions.  First, if the amount of money paid to you from your Workers’ Compensation benefits is less than what SDI benefits would pay, then you may make a claim for SDI to cover the difference.  Second, if there is a delay in your Workers’ Compensation application (for instance, if your employer disputes your eligibility, or if you are denied and appeal) you may apply for SDI benefits until the dispute is settled.
If your Workers’ Compensation claim is later approved, you will have to pay back the SDI you received so that you don’t get “double” benefits for the same period of time. If you receive both Workers’ Compensation and SDI benefits for the same injury, be sure that you keep the EDD updated on your Workers’ Compensation claim and the Workers’ Compensation carrier updated on your SDI claim, so that you can avoid an “overpayment.”
My employer offers private, short-term disability insurance (“STD”) covering part of my pay. May I also make a claim for SDI?
Typically, yes.  If the benefits are “integrated,” the EDD will pay you an amount for SDI, and your employer or its insurance carrier will pay you an additional amount to cover some or all of the difference between SDI and your full wages.
If you don’t know whether your employer “integrates” benefits with the EDD, ask your HR department or manager for information.
I have some vacation and sick days. May I use my vacation or sick days at the same time I receive SDI?
You may receive vacation pay and SDI at the same time.
You may not receive full sick pay and SDI at the same time.  You may receive partial sick pay to cover some or all of the difference between SDI and your full wages.  If you are uncertain, you should report to EDD any pay you receive from your employer.
Because of my disability, I must work reduced hours for reduced pay. May I make a claim for SDI?
Yes.  If you have lost wages due to your disability, but are still working, you may make a claim for benefits based on the income you are losing due to your reduced schedule.  You must meet all other requirements.
I am self-employed. Am I covered by SDI?
Self-employed individuals are only covered by the SDI program if they have enrolled in “Disability Insurance Elective Coverage” with EDD and paid the premiums.  Usually you become eligible for benefits after six months of elective coverage.  However, if you worked as an employee prior to your elective coverage, you may have a base period from that employment.
Am I eligible for SDI benefits if I am undocumented, or was undocumented during my base period?
Yes. If you are otherwise qualified, you cannot be denied benefits because you are or were undocumented. You paid into the program and have a right to collect your benefits.
How long will I receive SDI?
You will receive SDI benefits for as long as you remain disabled, as defined, up to a maximum of 52 weeks. However, in some cases a person who is otherwise qualified might not receive a full year of SDI because they do not have enough money in their “account” for a full year of benefits. You will receive a statement from the EDD when you apply telling you how much money is in your reserve account.
What if I attempt to return to work, but I end up needing to go out on disability again?
If you return to work and are able to perform your regular or customary job for more than 60 days, then your disability benefit period is considered ended.  If you stop working again due to disability, you must file a new claim for SDI, and re-establish your eligibility for benefits as of the date of the new claim. If you are eligible for SDI as of the date of your new claim, you are entitled to a new benefit period of up to 52 weeks.
If you return to work for more than 60 days, but do not perform your regular or customary work due to your disability – for example, you work only light duty or only part-time – you may be able to continue your prior disability claim. You will need to show EDD that you did not perform your regular or customary work when you attempted to return to work.
If you return to work for fewer than 60 days, and stop working due to the same disability, you are considered to be within the same disability benefits period. You may continue receiving benefits under your original claim and the 7-day waiting period required by these claims will be waived.
22. What if my disability lasts longer than 52 weeks?
If your disability is expected to or does continue past one year, you may be eligible for Social Security Disability Insurance (“SSDI”) or Supplemental Security Income (“SSI”), depending on the type of disability and how severe it is. See our fact sheet “Short-Term and Long-Term Disability Benefit Programs” for more information on SSDI and SSI.
In addition, some employers provide private insurance, called Long Term Disability Insurance (“LTD”) to their employees with long-term disabilities. If you believe you may be covered by LTD, you should contact your employer to find out about benefits and eligibility and to request a copy of the “Summary Plan Description.”

“Can money buy happiness?” This question has existed for thousands of years. Psychologists, economists, and philosophers have hotly debated the answer.
Even we laymen consider the question often. “If only we had more money,” we tell ourselves, “we could achieve our goals and finally relax!”
While many argue that money can’t buy happiness, others believe that money can buy happiness to some extent. Unhappy with mere debates, many experts have set out to conduct studies that can settle the argument once and for all.
“What did they find in those studies,” you ask?
Today, we’re looking at the relationship between money and happiness, what the studies say on that topic, and what we can learn from them.
Answer: Money Doesn’t Buy Happiness
Many studies have shown that money doesn’t buy happiness beyond a certain point. For instance, economist and psychologist Daniel Kahneman helped conduct a 2010 study for Princeton University.
The study found that as income increases, so does happiness—to a point. Once an individual’s annual income reaches around $75,000, their happiness plateaus. Any additional income beyond that has diminishing returns on happiness.
Kahneman noted that while people with higher incomes reported greater life satisfaction, they did not necessarily report greater happiness on a day-to-day basis.
This creates an important distinction. While money could help someone create a satisfactory living situation, accruing wealth might not help them feel any happier.
Answer: Money Can Buy Happiness
On the other hand, several studies suggest that money can buy happiness.
Matthew Killingsworth, a happiness researcher at the University of Pennsylvania, conducted a study contradicting the idea of a happiness plateau. His research found that life satisfaction increases as individuals earn more money, with no plateau at $75,000.
But do these two contradictory studies cancel each other out? Or can we combine the two to find a deeper truth about humans and their money?
Answer: It’s Complicated
Clearly, the relationship between money and happiness is complex. Various factors are at play, with separate studies coming to different conclusions.
And the reason is simple: humans are complicated!
For example, a study from the University of British Columbia found that happy people tend to prioritize time over money. This means they’re less likely to focus on making more money. Instead, they’re more likely to spend time with family and friends, partaking in their favorite hobbies or other activities they enjoy.
A study from the Wharton School found that people who prioritize experiences over material possessions reported greater happiness. For instance, you might experience greater happiness by spending your money on vacations, concerts or plays, or going out to eat rather than on a TV, clothes, or jewelry.
This seems to be backed up by a joint study conducted by Kahneman and Killingsworth. They aimed to reconcile their conflicting findings on the relationship between income and happiness. They developed a mobile app that prompted participants to rate their happiness at random moments throughout the day, ranging from “very bad” to “very good.” Their study included over 33,000 participants across a broad range of incomes.
Their results revealed that the impact of rising income on happiness depends on a person’s baseline happiness, irrespective of their earnings. Generally happier individuals experienced increased happiness as their income grew, even up to and beyond $200,000. In contrast, those facing daily “miseries” such as heartbreak or grief saw their happiness plateau at around $75,000.
These findings suggest that a mix of factors influences happiness, including income, personal circumstances, and individual outlook. For those struggling with unresolved miseries, money can only alleviate stress up to a point. Once basic needs are met, further income does not increase happiness. On the other hand, for naturally happier individuals, a higher income can continue to boost happiness by providing more opportunities to engage in activities they enjoy.
In simple terms, the more a person prioritizes their own happiness, the more likely they are to use an increased income on things that make them happy.
What does this mean?
While money can buy happiness, it can only do so up to a point. It’s our responsibility as individuals to find the people, things, and activities that make us happy. We also must make an effort to include those things in our lives.
Building strong relationships, pursuing personal passions, and spending money on experiences that foster happiness may be more important for achieving a fulfilling and happy life.
Despite the limits income has on our happiness, it can contribute to greater happiness when used wisely and intentionally. So, the question might not be, “Can money make me happy?” Instead, it seems to be, “If money weren’t an issue, how would I like to spend my time?”
 
 

When it comes to retirement planning, many people never look beyond their employer-sponsored 401(k) plan. And why not? Signing up is simple, there are very few decisions to make, and contributions are automatic.
But, while a 401(k) is a good, well-rounded plan, some retirement savers might want a different option or a secondary plan.
Roth IRAs offer tax advantages that help make them desirable to some retirement savers. But because employers do not typically offer them, they require shopping around on your own for a provider you trust. They also come with eligibility requirements that prevent some people from making contributions.
Because of the additional limits and required effort, learning more about Roth IRAs might be helpful before beginning to shop for a plan. To help, I’ve put together this guide to help you better understand how Roth IRAs work, their eligibility requirements, and how to tell if a Roth IRA is the right choice for you!
Types of IRAs
Several types of IRAs are available to individuals, each with its own rules and benefits. The most common are Traditional IRAs, Roth IRAs, and SIMPLE IRAs. Traditional IRAs offer tax-deductible contributions and tax-deferred growth, but withdrawals in retirement are taxed as ordinary income. SIMPLE IRAs are employer-sponsored retirement plans that allow employer and employee contributions, with the employee’s contributions being tax-deductible.
What is a Roth IRA and How Do They Work?
A Roth IRA is a popular Individual Retirement Account (IRA) type. Roth IRAs offer a few desirable benefits.
First, they offer tax-deferred growth. This means you won’t need to pay taxes on your account’s earnings, even when taking out qualified distributions. Qualified distributions must meet certain qualifications, such as the account holder being 59 1/2 or older or suffering an injury or illness resulting in a permanent disability.
Second, Roth IRA contributions are made with after-tax dollars. This means that, unlike a 401(k), Roth IRA contributions are not tax-deductible. However, because you’ve already paid income tax on these contributions, distributions made during retirement are not considered taxable income. As a result, you can take tax-free distributions.
Third, Roth IRAs are not subject to Required Minimum Distributions (RMDs). This differentiates them from other retirement benefit accounts, which require the account holder to withdraw a minimum amount once they reach a certain age.
Finally, Roth IRAs allow for catch-up contributions. Catch-up contributions offer a higher annual contribution limit for those nearing retirement age (ages 50 and up). For 2023, the contribution limit is $6,500 for those under 50. Those 50 and older can contribute an additional $1,000 for a total of $7,500. The contribution limits (including catch-up contributions) go up regularly, so staying current with the latest limits is important.
Eligibility for Roth IRAs
Roth IRAs have maximum income limits. Those who earn below these limits are eligible to make Roth IRA contributions. The limits are based on your filing status and modified adjusted gross income (MAGI). However, Roth IRAs don’t have a hard, singular earned income limit. Instead, they have “phase-out” ranges. This means that the more you earn, the less you can contribute to a Roth IRA. In other words, Roth IRA contribution limits “phase out” the closer your income gets to the top of the range.
For example, in 2023, the phase-out range for a single tax filer is $138,000 to $153,000. If a single tax filer earns less than $138,000, they can make the maximum contribution of $6,500. If they earn more than $138,000 but less than $153,000, they can still contribute to a Roth IRA. However, their contribution limit lowers (phases out) the closer their income gets to $153,000. If they earn more than $153,000, they can no longer contribute.
The Roth IRA phase-out limits for 2023 are:
$138,000 to $153,000 (Single tax filers)
$218,000 to $228,000 (Married, filing jointly)
$0 to $10,000 (Married, filing separately, living together at any time in the tax year)
How can I tell if a Roth IRA is right for me?
Despite their tax advantages, Roth IRAs aren’t for everyone. Several factors can help determine whether a Roth IRA is the right choice for your retirement. A financial advisor can help you figure out if a Roth IRA can help you save enough for retirement.
Here are a few things to consider when contemplating whether a Roth IRA is right for you:
Tax Bracket
If you expect to be in a higher tax bracket when you retire than you are now, a Roth IRA might be a good choice for you. That’s because higher brackets come with higher tax rates. By paying the taxes now, while you’re in a lower bracket, you’ll pay less in taxes. Over decades, this can save you a lot of tax money and significantly reduce your lifetime tax burden.
Income
As stated above, maximum income limits exist for making Roth IRA contributions. If you earn more than the limit, you might prefer a traditional IRA or an employer-sponsored plan, such as a 401(k) or 403(b).
Time Horizon
One of the most appealing benefits of a Roth IRA is the tax-deferred growth. This can be a huge advantage if you have decades left before retirement. The longer your time horizon, the more lucrative that growth can be. If you’re closer to retirement, you might choose an option with higher contribution limits. That way, you can stash away larger amounts of money right before you retire.
Estate Planning
A Roth IRA is a good option to leave behind as an inheritance for your loved ones. This helps them avoid paying income tax on the distributions they receive, and naming them as retirement plan beneficiaries can also help them avoid estate taxes on their inheritance. This can be a significant advantage compared to other retirement accounts, which may result in a tax burden for your heirs.
Access to Funds
Roth IRAs offer more flexibility in accessing your funds before retirement than traditional IRAs. You can withdraw your contributions (but not earnings) from a Roth IRA at any time without taxes or penalties. While we don’t recommend making withdrawals before retirement, this can be useful in emergencies or for specific financial goals like buying a house or funding education expenses.
Continued Growth in Retirement
Roth IRAs are a good option if you plan on having multiple sources of retirement income. This is especially true if you can afford to live off those other sources of income. Because Roth IRAs don’t have RMDs, leaving them untouched means they can continue to grow throughout your retirement. Additionally, Roth IRAs let you continue to contribute after you reach age 70 1/2, should you choose to do so.
Converting a Traditional IRA to a Roth IRA
If you decide you’d like to convert your Traditional IRA into a Roth IRA, you can do so. It’s called a “Roth conversion” and is a relatively simple process. Once you’ve found a Roth IRA provider, let them know you’d like to convert your Traditional IRA to a Roth account. If both accounts are from the same provider, they should be able to do it fairly easily. If the accounts are with two separate providers, they’ll each ask you to provide some basic information, such as account numbers and amounts.
When you perform a Roth conversion, you’ll need to pay taxes on the amount you convert since your Traditional IRA contributions were made pre-tax.
Roth IRA vs. Workplace Retirement Plans
While Roth IRAs offer many advantages, they don’t work for everyone. If you’d prefer a plan with higher contribution limits, you might consider a plan offered by your workplace. Most employers offer 401(k) plans. However, some might offer a 403(b) or a SIMPLE IRA.
An employer match program is one of the primary benefits of a workplace retirement plan. Through such a program, your employer agrees to contribute to your plan. This is in addition to your own contributions and doesn’t typically count toward your contribution limit. This is essentially free money, and it can go a long way in helping you reach your retirement goals.

May 2023 Stock Market Update - https://youtu.be/xbn9kTVbkcE
In this Stock Market update, Quiver Financial discusses whether the stock market is headed to new all-time highs or getting ready to turn and crash in a ball of flames as we answer some of the more popular investor questions like:
 
1. Is the Bear Market over?
 
2.  If the Stock Market were to fall, how low could it go?
 
3. What you may consider doing NOW if you are retiring in a couple of years or in a couple of decades.
 
4. How you may want to allocate your 401k and retirement investments if the stock market were to decline as a result of the debt ceiling crisis.
 
If you enjoy the video please give it a like and subscribe to our channel.
 
Not intended to be investment advice. Quiver Financial offers Advisory services through Quiver Financial Holdings, LLC and ir registered with the state of CA. Please visit www.quiverfinancial.com for more info. 949-492-6900
00:00 Introduction
00:42 What is going on with the stock market?
07:02 If the market crashes, how low could it go?
09:15 What you may consider doing with retirement savings and 401k allocations
21:07 Close - Get a FREE Portfolio Review

Welcome back to Quiver Financial’s business education, where we educate you the business owner on strategies you should be implementing into your practice to grow and protect your business.
I’m Justin Singletary and I’m joined again with Patrick Morehead.  Today we wanted to share with you an interesting provision in the Secure act 2.0.
If you started or are looking to start a 401k in 2023 listen up.  These Tax credits are huge and a potential game changer for your business.
Tax Credit Covers 100% of New Plan Costs for the First Three Years: This credit can be applied to 100% of your qualified business 401(k) costs such as plan setup and administration. That's up to $15,000 in tax credits over the first three years to offset setup and administration charges for the maintenance of your plan. Most small business wouldn’t incur half of that to start and cover the plan administration costs. 
Here's How It Works: Your business must have at least one employee, besides you as the owner, who earns less than $150,000 a year (a Non-Highly Compensated or NHC employee) to qualify for a tax credit. The tax credit received is the greater of $500 or $250 per NHC employee with a cap of $5,000 applied to 100% of the costs you incurred. So, if your ShareBuilder 401k business cost is $1,200 annually and you have 10 or fewer eligible employees, your tax credit is $1,200 in year one or $3,600 in total over the first three years fully offsetting these costs.
Providing an Employer Match Provides Tax Credits of $1,000 per Employee Employer contributions are typically 100% deductible already. But now businesses with 1-100 employees can receive tax credits too! If you have less than 100 employees, you can qualify for tax credits of up to $1,000 per employee for your first 50 employees for your employer contributions. This applies for those employees earning less than $100,000 per year. The applicable percentage is 100% in the first (year plan begins) and second tax years up to $1,000 per employee, 75% in the third year, 50% in the fourth year, and 25% in the fifth year, and none for subsequent years. Note, there are some added tax credits for employees 51-100 as well, but a lesser percentage. There is no qualification for the credit if you have more than 100 employees. Lastly, for those contributions you receive a tax credit, those likely don't qualify for tax deductions. However, the amount not covered by the credit should be deductible. You'll want to review with your tax accountant.
Here's How It Works: In year one, let’s say your business contributes $15,000 to the plan and you have 10 employees who earn less than $100,000 and all received over $1,000 in employer contributions. You just qualified for $10,000 in tax credits in year one. Let’s keep things constant for this example, so your number of employees and contributions are the same throughout the next five years. You’d receive tax credits of $10,000 in year two, $7,500 in year three, $5,000 in year two, and $2,500 in year three for a total of $35,000 over the five years. That’s powerful stuff! 401(k) plans are truly more affordable than ever for businesses with 1-50 employees.
Auto Enrollment Credit: Auto-enrollment tax credit An eligible employer that adds an auto-enrollment feature to their plan can claim a tax credit of $500 per year for a 3-year taxable period beginning with the first taxable year the employer includes the auto-enrollment feature.

As you approach retirement, you might find yourself with a nice nest egg in your 401k or traditional IRA. However, the looming issue of taxes on distributions you take during retirement might make you reconsider your choices.
The good news: converting to a Roth IRA can provide significant benefits, including tax-free withdrawals and growth. When performing a Roth conversion, it’s important to understand how to do so strategically to maximize tax efficiency.
Today, we’re breaking down how to perform a Roth conversion, its benefits, and how to optimize your retirement planning when doing so.
Why perform a Roth conversion?
The simple version is that Roth accounts remove the tax burden associated with any distributions you take during retirement. This includes required minimum distributions (RMDs). This is because Roth accounts are funded with after-tax dollars. Every time you contribute to a Roth account, you must first pay income tax on the money you contribute. Therefore, RMDs are not considered taxable income. This also allows your Roth account to grow tax-free.
Compare this to a traditional IRA or 401k, which are funded with pre-tax dollars. With these accounts, your contributions can actually lower your tax burden in the year you make them. However, you’ll need to pay income tax on any distributions you take during retirement.
Will you retire in a lower tax bracket? Probably not!
Many people believe they will enter a lower tax bracket after retiring, reducing their overall tax burden. This assumption comes from expecting a decreased income as they move from full-time employment to living off their retirement savings.
The idea of entering a lower tax bracket in retirement is appealing because it could lower your overall tax burden. This would let you keep more of their hard-earned money for personal expenses, leisure activities, and other pursuits.
However, not all retirees move to a lower tax bracket after transitioning away from full-time work. Many will remain in their current tax bracket, while others could actually move up a bracket.
Reasons for not entering a lower tax bracket in retirement include:
No more 401k contributions: 401k contributions are tax-deductible. Once you stop contributing to your plan, you no longer receive this particular tax benefit. This could potentially raise your tax burden.
Erasing your debt: While paying off your debts can offer you more cash on hand during retirement, it can also raise your taxes. This is because many forms of debt (such as student loans and mortgages) are tax-deductible.
Rising taxes: Tax rates are never set in stone. The government recalculates and reconfigures them more regularly than we’d like. A scheduled increase to tax brackets is already coming in 2026, with no way to predict what might happen beyond that date.
Taken together, this reveals an unfortunate truth: much of the advice you’ve received about preparing for retirement could be wrong.
But if these issues actually cause a tax problem after you’ve retired, what can you do?
How do I fix my retirement tax problem?
Now that we know the problem retiring can cause to our tax burden, we can discuss strategies for resolving it. One of the primary strategies for reducing our retirement tax problem is by performing a Roth conversion. Typically, this means converting a traditional IRA to a Roth IRA. However, you could also convert a 401k or other eligible retirement plans into a Roth IRA.
The basic steps required to perform a Roth conversion look like this:
Check eligibility
Decide how much to convert
Open a Roth IRA account with a plan administrator or financial institution
Fill out the conversion paperwork
Pay the tax
Enjoy tax-free growth and income
Does this look too simple? Of course, this is just the bullet-point version of the process. Your financial or tax advisor can walk you through it in more detail. But ultimately, it really is as simple as it looks.
However, you can use a few strategies to maximize your tax savings and create your ideal retirement.
How can I make my Roth conversion more tax efficient?
When considering a Roth conversion, it’s essential to strategize for maximum tax efficiency. This is because the conversion process involves transferring funds from a traditional IRA or 401(k) to a Roth IRA. Doing so could generate a tax bill. However, with careful planning, you can optimize your conversion to minimize taxes and maximize the benefits of your Roth IRA.
In the steps to performing a conversion listed above, the first four are pretty straightforward. It’s step five that gives most people pause. What if I don’t want to pay the tax? It’s this step that kills more Roth conversions than anything else.
Step five is the big one. This step kills more Roth conversions than anything else. What If I don’t want to pay the tax? Most people don’t have the funds available to pay the tax. Or, they would have to take so much out of their 401k that it wouldn’t make sense.
When performing a Roth conversion, consider these strategies for maximizing tax efficiency:
Convert during a low-income year: If you expect to be in a lower tax bracket this year than in future years, you may consider converting to a Roth IRA now. This way, you could potentially pay less in taxes on the conversion.
Spread the conversion over several years: Instead of converting all of your traditional IRA assets to a Roth IRA at once, spread them out over several years. This can help you avoid jumping into a higher tax bracket and reduce the amount of taxes you owe.
Time your conversion with losses: If you have investment losses in your traditional IRA, consider converting those assets to a Roth IRA. This can help offset the gains and reduce the tax bill.
Pay taxes from outside funds: To maximize the growth potential of your Roth IRA, consider using outside funds to pay the taxes on the conversion rather than dipping into your traditional IRA funds.
Of course, these steps merely spread your tax burden around. What if you want to reduce your tax burden?
More good news: we’ve got strategies for that, too!
Offsetting the Income from Roth Conversion
In addition to the strategies mentioned above, consider the following tools to reduce your overall tax burden. These strategies help to offset the income from your Roth conversion. In other words, performing a Roth conversion necessarily increases your taxable income. The strategies below use the tax code to find ways of reducing your end-of-year tax burden.
With the right combination of strategies, the right financial advisor, and a little luck, you could potentially offset your increased tax burden entirely.
To offset the increased tax burden from your Roth conversion, consider the following:
Discounted Asset Valuations: This strategy utilizes illiquid assets. Using the IRS tax code, this analysis takes multiple factors into account to show a paper loss on your assets. Showing a 30% to 50% reduction in your assets at the time of conversion could save you large sums in taxes.
Use Energy IDCs and Solar tax credits: Oil & gas Intangible Drilling Costs (IDCs) allow investors to deduct a significant portion of their investment from their taxable income. Solar tax credits provide a percentage-based credit on the cost of installing a solar energy system. While tax deductions and credits differ, knowing the difference and using both can be an essential tool.
Accelerated Charitable Contributions (DAF) or Conservation Easements: Establishing a Donor-Advised Fund (DAF) allows you to make a sizeable charitable contribution and receive an immediate tax deduction. You can then recommend grants to your favorite charities over time, helping to offset the income tax from your Roth conversion. A conservation easement helps preserve land for environmental or historical purposes. Contributing to one is considered charitable and provides a tax deduction.
Offset the bill with your primary residence: This strategy is specific to the individual using it. In essence, you could finance the tax bill of your Roth conversion over 30 years and tack on another tax deduction.
Please consult an advisor and tax consultant to learn more before implementing these strategies. Everyone is different, and some or all of these strategies may not fit your needs.
How to view your 401k and IRA balance going forward
You might have noticed a trend in the advice above that can provide a helpful way to view your retirement accounts: they are, in essence, future debt. Some accounts can delay the inevitable. However, it’s income, so you’ll eventually need to pay income tax. You’ll always owe the IRS something.
And the longer you let your accounts grow, the bigger this debt becomes. For instance, imagine your account balance currently stands at $500,000. If you’re in the 30% tax bracket, you’d owe the IRS roughly $150,000. If that same account grows to $1M over the next ten years, you now owe roughly $300,000 in taxes.
Key Points to Remember
As you consider converting to a Roth IRA, keep the following key points in mind:
No 10% penalty if younger than age 59 1/2: Those under age 59 1/2 incur a 10% penalty for any early distributions they might take—even when converting to a Roth IRA. You can legally take distributions without penalty if you’re 59 1/2 or older. However, you may face a penalty if you use some of the funds to pay the tax bill.
Insurance products as an alternative: You can also consider rolling the funds into an insurance product that offers similar benefits to a Roth IRA, such as tax-free growth and income, along with a life insurance benefit.
Roth conversions require a strategic approach: Most advisors and CPAs view Roth conversions as a simple process of moving funds and paying the tax. However, a strategic approach is crucial to maximize your tax efficiency and retirement savings.
Consider future tax rates: Consider where taxes might go in the next 5, 10, or 20 years. If you expect tax rates to increase, a Roth conversion might be even more beneficial for you.