STAFFORD WELLS | personal wealth management

November 2012

Dear Clients & Friends,

As we enter the fourth quarter, I am hoping you are doing some tax planning in consideration of the potential higher tax rates in 2013. If you believe the government will raise your tax rates , then you may want to consider some options that will accelerate taxes into this year as opposed to future higher rate years. These actions may include:

  • Accelerating and realizing long-term gains
  • Offsetting short-term gains
  • Selling concentrated single-stock positions
  • Exercising stock options
  • Converting a traditional IRA to a Roth IRA
  • Making a large lifetime gift

Be sure to talk with your advisor and plan accordingly. As always, your goal should be to maximize your after-tax returns.
Please meet the newest member of the Stafford Wells Advisor team: Chris Minasian. Chris’s responsibilities include client service and marketing. Chris offers a background in finance and marketing as well as once owning and operating her own business. Chris earned her undergraduate degree in marketing from Northern Illinois University and her MBA from Benedictine University. She resides in Park Ridge with her husband and two children.  Chris has a passion educating children about finance, and wrote the following article – Your Children and Their Personal Finance Skills.

One of the least known and best ways to put money away–tax deferred.
So many small to midsized companies’ owners are missing a great opportunity to defer taxes until retirement on potentially a substantial amount of income. This can be done through setting up a custom-designed retirement plan that allows the owner to put away a large amount of money on a tax-deferred basis. This is not the typical “off-the-shelf” 401(k) profit-sharing plan that most employers establish, which make it quite hard for the highly compensated to save very much at all.

You have probably heard the controversy about the defined benefit plans in place for many government and municipal workers and how those plans guarantee great amounts of income for life to employees when they retire. The drawbacks of these plans to society remain a bonus for owners of private companies that implement them on their behalf.

Here is an example of a midsized company and actual results of an IRS-approved designed plan. A company has two owners, and both are 54 years old. Each takes home $425,000 per year. The firm has five employees between ages 22 and 43 with incomes between $32,000 and $110,000. Currently the company offers a profit-sharing 401(k) plan with a match of 5 percent of annual pay. This plan costs the owners $14,000 per year to allocate funds to their employees. As the firm’s principals, they are each limited to a $35,000 contribution.

The two principals now investigate a custom-designed, cash-balance plan aggregated with a profit sharing-401(k) plan.  Under this scenario, the employer funds a salary deferral of $200,000 for each owner. The employee’s in this scenario receive an employer contribution of $21,000. As you can see, the employer contributes slightly more to the employee plan as compared with the “off-the-shelf” 401(k)-profit-sharing plan ($21,000 vs. $14,000), but is well worth it. The difference is that the two owners were able to put away $200,000 for themselves in this plan versus $35,000 in the old plan. The total tax savings for the two owners comes to $178,925. ... Read More

Your Children and their Personal Finance Skills
By Chris Minasian
It’s that time of year--kids are back in school and have much to learn!
We know this economy has greatly affected children and their beliefs about college, their future careers and how spending money affects them.
Do you know the majority of teenagers would rather learn about money management in the classroom or from their parents than going out in the real world? Unfortunately, less than 20 percent of teachers feel competent to teach personal finance. Only 22 states require students to take a high school economics course.
The PricewaterhouseCoopers accounting firm is spending millions of dollars on this topic for the classroom. You can read about the program at
We know children may face a number of money challenges. For example, credit card debt, wants versus needs, etc. Isn’t it parents’ job to teach them one of the most important lessons:
To live within their means…  Read More

As always, thank you for your continued support, and please contact me if I may be of any assistance.

My Best,

Read my blog; Notable American Economic Facts in Today's Chicago Woman Magazine

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