Congrats, Grad! Now About Those Loans…

By Mary Grace Musuneggi

It’s the time of year when some students are ready to graduate from college, while other students are preparing to graduate from high school and begin their college experience. It is the time of year to look back at the accumulation of college debt…or forward to the loans yet to come. In either case the cost of education can be the largest output of cash for parents (and their children) aside from the purchase of their home.

So for the bad news. The graduating college students who will be venturing out into the world with large college debt may struggle to be gainfully employed in a high-paying job and pay their loans. They will need to put on hold, or should put on hold, purchasing a home or car and starting a family of their own. If not, their debt amasses with mortgages, car loans, and saving to educate their own children. Somewhere in there is also the need to save for their own retirement. And if it is the parents who put their retirement planning on hold to pay for college, catching up may be hard or even impossible.

And then there is the issue of being a co-signer for the college loans. If the student does not pay, the parent has to pay. If the student becomes disabled, the parent has to pay. If the student dies, the parent will still have to pay. And with some college loans, if the co-signer dies the loan may be due in full immediately, or the lender could go after the co-signer’s estate.

Now for the good news! Saving early and often can help. Preparing a thorough financial plan can address many of these needs. Taking advantage of various educational options and financing arrangements can go a long way to addressing the costs. Life insurance on the child could handle the co-signer issue that may arise. Understanding the loan agreements before signing is also important. Considering refinancing options with existing loans may make the payments lower. Researching federal college payment plans to see if loan payments can be adjusted based on the amount of income earned can allow money for other financial needs. Checking with your financial institution to release the co-signed as soon as possible is a definite must.

Planning. Planning. Planning. It all comes down to planning. Start planning when the kids are born. Continue planning as they grow. Don’t put retirement planning on hold. Plan to read and understand everything you sign. Discuss career planning early with the student. Plan to have a plan. Plan to ask for help. We are here when you need us, but remember that we are here sooner, too: consider the benefits of letting us help you put a plan in place before you need us.

Don’t Forget This IRA Tip!

Remember that if you have not done your IRA or Roth contribution for 2015, you still have until April 18th to do so.

Remind your accountant to determine what tax savings you may get if you make a traditional IRA contribution for yourself or a spousal for a spouse who is not currently working outside the home.

The tax savings can be substantial, and we would rather you keep that extra money in your pocket than “donate” it to Uncle Sam. We suspect you would prefer that, too.

Please contact our offices if we can help: 412-341-2888 x0.

This information should not be considered as tax/legal advice. You should consult your tax/legal advisor regarding your own tax/legal situation. Securities & Investment Advisory Services Offered Through H. Beck, Inc. Member FINRA, SIPC.
H Beck, Inc. and The Musuneggi Financial Group, LLC, are not affiliated.

Important Tax Info!

Happy New Year! As we come to the end of one year and the beginning of another, we are reminded that tax time is just around the corner. We are hopeful that the following information will be helpful in your preparation. We highly recommend that you keep this with your tax information and share it with your accountant. If you are doing your taxes on your own or with a person who is not a professional accountant, we will do our best to help, but we are limited by liability from giving tax advice. If you are not proficient in doing your taxes with software or online, we highly recommend that you work with a professional.

1099’s – In the past, we normally expected that 1099’s should arrive to you by mid-February. However, in the last few years, this has not been the case. Our hope is that you receive all of these by the end of February, but we have no control over this, nor can we control that some companies may issue 1099’s and then send corrected 1099’s weeks later. If you have taken withdrawals from your IRA’s or similar tax-deferred accounts, you will receive 1099R’s. If no withdrawals have been made, you will not receive 1099’s on these accounts. Be sure that you are in possession of all of your 1099’s before you meet with your accountant. Many issues that arise from your taxes are tax issues and not investment issues. It is also helpful to have your accountant compare your 1099’s to those from previous years to be sure nothing is missing. This is particularly important if you are working with someone new. Use your last year’s return as a guideline. Expect your accountant to do the same. If there is a missing 1099, they should ask where it is or if the account has been replaced. We have no way to know what you have provided to your accountant, but this way they will know what you should provide.

Cost Basis – If you have sold securities during the year, you will see these reflected on a 1099B. You will need to provide cost basis information to your accountant for these trades. This means that you will need to know what you paid for the shares and the dollar amounts of the capital gains and reinvested dividends, if there are any. Without this information, you could be paying too much in taxes on these trades. We also know that many of you will need financial statements for college and other government programs at this time of year. We will be happy to help you with advance notice.

Please do not call us from your accountant’s office assuming that we can provide this information while you are there. It is important that you do not wait until the last minute to file your return. If you need us to provide you with account information, it may take up to 10 business days.

Data Collection – Please see that your accountant provides you with a data collection list or questionnaire to be sure you have provided everything, as well as to be sure that you have not missed any possible deductions. Many mistakes on tax returns are ones that cause you to pay higher taxes.

Our Services – We can only provide you with information for accounts that are currently under our management. A fee will be charged for us to do research on accounts that we do not manage or control. As we are not accountants, we cannot answer specific accounting questions for your tax return. We do have accountants on our team that we would be more than happy to introduce to you. If you would like us to review your return after it is completed, or to work along with your accountants, we would be glad to do this on a fee basis.

Electronic Filing – If your return is filed electronically, we highly recommend that you review it before it is transmitted. We have had clients in past years who received their returns, wanted to make IRA contributions to reduce their taxes, or had additional information for their returns, but discovered that the tax preparer had already transmitted their return electronically before they received their copy to review. To avoid this, simply ask the tax preparer to wait for you to review the return before it is filed.

Retirement Plans, IRA’s and possible other deductions – Before you submit your return, be sure that you have taken advantage of all IRA tax laws. There are higher limits today than in past years and additional potential tax savings. Ask your accountant to calculate what this could mean for you, as you can make 2015 contributions up until April 15th of 2016. If you are making an IRA contribution for 2015, we recommend that you mail your contribution by April 10th. However, contributions mailed directly to the investment can be made if they are postmarked by midnight on April 15th. If you do not take advantage of these for this tax year, the opportunity will pass and you cannot go back. There are also very good reasons to add to Roth’s and non-deductible IRA’s, including doing them for supplemental education planning. If you made contributions to a 529 plan for education, these may be state tax deductible. Please let your accountant know your contribution amount.

Deducting Investment Fees – Some investment and management fees are tax deductible. Please mention this to your accountant to see if you qualify.

As always, we are here to assist, so please feel free to call or email us for additional information. You may also have your accountant contact us directly. We often speak the same “language,” and this can simplify many issues.

One final word of advice: we highly recommend that you do not spend your refund until you receive it; nor do we think it is wise planning to request a cash advance of your refund amount.

May 2016 bring you happiness and prosperity as we look forward to working with you throughout the New Year.

Sincerely,

The Musuneggi Financial Group

The information contained in this letter is not intended to constitute legal, accounting, investment, consulting, or other professional advice or services. For specific information that applies to your circumstances you should consult a qualified tax advisor. In accordance with IRS circular 230 disclosure, and to ensure compliance with requirements imposed by the U.S. internal revenue service, we inform that any tax advice contained in this article was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. internal revenue code or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein.

Congratulations to our NAIFA Quality Award Winners!

Congratulations to Christopher S. Musuneggi and Christine Pikutis-Musuneggi, recipients of the 2015 National Association of Insurance and Financial Advisors (NAIFA) Quality Award.

This award is considered a mark of distinction for financial advisors, and it recognizes Christopher and Christine’s professionalism, quality service provided to clients, adherence to the NAIFA code of ethics, and service to the industry association.

This is Christopher’s third consecutive NAIFA Quality Award. Christine is currently President of NAIFA-PA.

New Year’s Resolutions: Stop Smoking, Lose Weight, Do Estate Planning?

The best way to get started is to quit talking and begin doing.”
~ Walt Disney

Estate Planning may not be found on a typical list of New Year’s resolutions, but if you have not competed your planning, then it should be. It doesn’t require willpower, it won’t take months to accomplish, and unlike some resolutions, once done, it will not pop up on your list again next year.

Now if you are thinking, I don’t need to do that because I am married and everything I have goes to my spouse; or everything I have is in a joint name; or, I don’t really own anything, so there isn’t anything to plan for…well, if these were valid reasons not to do a will (and in reality they are not!), they are still not reasons to go without a Power of Attorney or Living Will, which are essential parts of Estate Planning.

These are not reasons to have not updated your beneficiaries, or not prepared your Family Letter, or not done your Pre-Planning, or not reviewed the way your assets are titled. There is a whole lot more to Estate Planning than just having a will. And trying to save a few hundred dollars by not planning can often end up costing you or your heirs thousands of dollars.

Although having these documents was always important, in today’s world they are critical. Over the years, our firm has too often had to be a party to situations where the lack of correct documents has cost our clients time and money, put strains on their businesses, and even caused rifts in their relationships with family members.

And even if you do have these documents, you need to be sure they are not outdated. When you update your documents, be sure to contact us so that we can help to coordinate your beneficiaries with your updated wills.

If you have assets in your own name, you need a Power of Attorney. Your Power of Attorney is the person who can handle your assets if you are unable to. Appointing a Power of Attorney is not the same as adding someone else’s name to the account, which could cause a gifting issue or other serious problems. Many married couples believe that because all of their accounts are held jointly, they do not need a Power of Attorney. But IRA’s are owned individually, and if you are disabled your spouse cannot automatically act on your behalf for these accounts. And if you are the person who normally handles an account for another, such as a parent or even a spouse, there may be times that you need to act on their behalf when they are not here to sign or give consent. A Power of Attorney can help to resolve this issue, too. Remember that in accord with privacy laws, our firm is not permitted to give a child, a sibling, or even a spouse information on another individual’s account without written permission.

Once your planning is done, it will provide you with such peace of mind. But to finalize the process, you have to take one more step: introduce your Power of Attorney and your Executor to your Financial Advisor. If you are a client of our firm, we will ask you for a copy of your Power of Attorney. We will want to be sure that we can help if the time comes when you need our help the most. And we want to meet these important people before that time arises. That way they will be comfortable with us, and we will not need to get to know each other during a crisis.

So now as you are writing that list of resolutions, just remember…Stop smoking. Great! Lose weight. Good! Do your Estate Planning. Absolutely!