Financial-planning | RKL LLP
Posted on: December 5th, 2017

4 Keys to Tax-Smart Year-End Charitable Giving

4 Keys to Tax-Smart Year-End Charitable Giving The combination of the holiday spirit and the approaching calendar year end make now a popular and busy time for charitable solicitations and donation requests. Individual taxpayers seeking to support a cause close to their hearts can not only make a positive philanthropic impact, but also receive tax benefits for their donations. Here are some helpful reminders as you look to take advantage of charitable tax benefits this year.

Research organizations before donating

Make sure the organization soliciting support is legitimate by conducting online research. A good place to start is the Internal Revenue Service’s Exempt Organizations Select Check, the Pennsylvania Bureau of Corporations and Charitable Organizations Online Database or similar sites in other states. These tools allow potential donors to verify tax-exempt status, deductibility of charitable contributions and proper registration status before giving. is another good resource that makes available copies of organizations’ tax returns and important information about the operations of the nonprofit and what percentage of donations are directed to its mission.

Properly document donations  

Different types and amounts of giving trigger different documentation requirements for tax purposes. For cash donations, most charities will send a letter to the donor confirming the donation amount and specifying whether all or part of it is considered a charitable contribution. Retain that letter with tax records to substantiate the donation. These types of letters are required for donations of $75 or more. For donations under that threshold not supported by a letter, a copy of a cancelled check will suffice.

Noncash donations under $250 (think food given to the local soup kitchen or clothes donated to Goodwill) are legitimate charitable donations, but for tax purposes a receipt or letter from the organization is required. The receipt or letter must state the date of the donation and describe the property contributed. The determination of the donation value is up to the donor, not the organization. To determine the value of donated clothing and household goods, the Goodwill Valuation Guide is a useful tool. For food and perishable goods, original purchase receipts combined with the donation confirmation letter from the charity can be used for tax substantiation purposes.

In the case of noncash donations over $250, good faith estimates are required for gifts between $250 and $5,000, and appraisals are required for gifts of $5,000 or more. The receiving charity will likely be familiar with the valuation and substantiation requirements, but it is always best to consult with a professional tax advisor before the donation is made, so correct documentation can be gained in real time instead of scrambling back to the organization later to obtain the required proof for tax filings.

Donations of stock allow taxpayers to support causes important to them without affecting personal cash flow. Generally speaking, the most tax-advantaged approach is to donate stock held for more than one year that has appreciated in value. This provides for a larger charitable contribution and avoids tax on the capital gain. For losing stock, sell it first and then donate the cash. This approach allows you to report the benefit of the capital loss and the cash value of the contribution.

Publicly traded stocks do not require a valuation at any dollar value; however, non-publicly traded stock requires a qualified appraisal if the fair market value is greater than $10,000. Stock donations are more involved than cash or tangible items, so be sure to consult a tax or financial advisor before making this type of donation.

Consider making a qualified charitable distribution from an IRA

Making a direct transfer from an IRA allows individuals age 70½ or over to avoid a tax hit on the annual required minimum distribution from their accounts and support a cause important to them. In this case, the charitable contribution must go directly to the recipient organization, not the taxpayer first. This option requires some advance planning, so individuals considering it should consult with their tax or financial advisor.

Pledge or giving commitment does not equal a charitable donation

Individual taxpayers are permitted to take a deduction only for the actual amounts paid out to charities during a calendar year. Keep in mind that commitments made in December 2017 to make a donation in January 2018 cannot be claimed on a 2017 tax return.

Year-end charitable giving can make a big difference to community benefit organizations. Through proper research and documentation, it can also provide tax benefits to the donor. Individuals seeking more information or assistance with the best practices outlined above should contact their RKL advisor or one of our local offices.

Stephanie E. Kane, CPAContributed by Stephanie E. Kane, CPA, Manager in RKL’s Tax Services Group. Her client responsibilities include serving clients in a wide variety of industries with a focus on not-for-profit entities.





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Working Capital blog disclaimer

Posted on: May 2nd, 2017

4 Money Musts for Recent College Grads

RKL Wealth Management offers four tips you can share with the recent college graduates in your life to help them start off on the right financial foot. It’s college graduation season, which means a new crop of young adults will transition from the dorm room to the conference room. This new phase of life offers many exciting opportunities, but it also brings new financial responsibilities like student loan repayment, taxes and more. As new grads navigate the uncharted waters of adulthood, here are some tips to start off on the right foot and pave the way for a successful financial future.

Build a budget and track expenses

As students, most young adults lived pretty frugally. As recent grads, keeping that frugal mindset is a huge advantage. This doesn’t mean sticking to the ramen noodle diet, but it does mean creating a budget and tracking expenses. Those new paychecks may be tempting to spend, but living within your means and spending money intentionally sets the financial foundation for young adults to tackle other financial challenges, like student debt. There are a number of budgeting and expense tracking apps that can help with this process.

Start saving for retirement

For recent grads who consider making weekend plans a long-term commitment, retirement can definitely seem like a remote and distant concept. Thanks to the power of compounding interest, however, saving early and often pays off exponentially down the line. Many employers auto-enroll their employees in a retirement plan, but if yours does not, make sure to sign up on your own. When setting a contribution amount, try to reach any employer match limits. Otherwise, you’re leaving free money on the table, so it is definitely worth skipping a few dinners with friends to find room in your budget. Most importantly, avoid taking this money out early and use caution if you are considering it, because it could have major tax implications and can hurt future investment potential.

Set up an emergency fund

Despite the best budgeting intentions, unexpected or emergency expenses do happen. Young adults can prepare to absorb these financial blows by setting up an emergency fund. This should be a dedicated item in your budget, and be sure to keep this money separate from other savings or checking accounts so it is not spent until absolutely necessary. The ideal emergency fund should be approximately six times your monthly income, but for now, starting small can save your bank account or credit card from the aftermath of car troubles or unexpectedly high medical bills.

 Manage debt wisely

Few students make it through higher education without student debt, and those bills come due not long after graduation. Income-based repayment, which links monthly loan payments to income, not total debt, is one way to manage debt payments. Young adults with numerous loans should explore consolidation for convenience and potentially lower payments. With student loan obligations hanging over them, recent grads should proceed with caution when it comes to taking on other consumer debt. It’s all too easy to rack up credit card debt furnishing a new apartment or adding to your debt load with a loan for a new car. Stick to your budget and develop a plan to set aside the funds for these purchases.

The transition from college to the working world can be daunting, but following these steps can help recent grads form good financial habits that will pay dividends throughout their lifetimes.

Visit to learn about all the ways the financial planning team at RKL Wealth Management helps individuals and families invest achieve their unique goals.


Thomas D. Reardon, CFP®, Wealth Advisor for RKL Wealth ManagementContributed by Thomas D. Reardon, CFP®, Wealth Advisor with RKL Wealth Management. Tom is responsible for creating and implementing customized financial plans for clients and their families. He specializes in helping clients identify and prioritize their goals for retirement, educational funding and estate planning.




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Posted on: April 4th, 2017

PA ABLE Savings Program Open for Business: What You Need to Know

PA ABLE Savings Program Open for Business: What You Need to KnowPennsylvanians now have a tax-free way to save for the future expenses of loved ones with disabilities or special needs, while preserving the government benefits upon which they rely.

The Pennsylvania Achieving a Better Life Experience (ABLE) Savings Program officially opened for business yesterday, one year after it was unanimously passed by the General Assembly and signed into law by Governor Wolf. Read on to learn how this program, modeled after the federal legislation that authorized states to create their own ABLE plans, allows individuals with disabilities and their families to save for qualified disability-related expenses.

Benefits of a PA ABLE account

The PA ABLE program, which allows families to open and contribute to savings accounts for loved ones who become disabled before age 26, is administered by the Pennsylvania Treasury. Modeled after 529 college savings accounts, the PA ABLE program provides the following tax and federal benefit eligibility advantages:

  • Contribute up to $14,000 each year.
  • Savings grow tax-free.
  • Withdrawals are exempt from federal and state income tax when used for qualified expenses.
  • Accounts are exempt from inheritance tax.
  • Funds in an ABLE account are not counted in eligibility determinations for Supplemental Security Income benefits (savings up to $100,000), Medical Assistance and other means-tested federal programs.

Save Without Jeopardizing Benefits

Previously, additional or supplemental savings would jeopardize or nullify eligibility for much-needed government benefits. This roadblock was a chief complaint of families wanting to help financially support a child with disabilities, and the ABLE savings program was developed at the federal level in response to these concerns.

Pennsylvania’s ABLE program opens a door to financial independence and security previously closed to individuals with disabilities or special needs. It also provides peace of mind for families who can now set aside funds to pay for current and future services including housing, transportation and education.

Other states are in the process of launching their own ABLE programs, some of which accept outside residents. The ABLE National Resource Center tracks the progress of ABLE legislation and programs across the country, and provides a state ABLE program comparison tool.

RKL Wealth Management can help clients set up a PA ABLE account through the state enrollment website. Contact us for assistance or more information.


Lauren R. McNeely, CRPC®, AIF®, of RKL Wealth Management. Contributed by Lauren R. McNeely, CRPC®, AIF®, Wealth Advisor for RKL Wealth Management. Lauren is responsible for managing client relationships in the area of qualified retirement plans. She also specializes in retirement planning, educating plan participants and helping them make informed decisions to strengthen their financial well-being in retirement.



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Posted on: November 15th, 2016

Qualified Charitable Distributions from IRAs Here to Stay

IRA strategy that allows eligible taxpayers to direct up to $100,000 per year to a qualified charity and avoid income tax on that amount is now permanent. Since 2006, taxpayers age 70½ or older have been able to make tax-free “qualified charitable distributions” (QCDs) from their IRAs. This provision survived through the years thanks to periodic, short-term extensions until it was made permanent under the Protecting Americans from Tax Hikes (PATH) Act of December 2015. With QCDs here to stay, let’s take a look at the tax benefits individuals can reap by making these contributions.

What QCDs mean for RMDs

To understand the benefit of QCDs, it is essential to first understand another tax component of IRAs: required minimum distributions (RMDs). RMD is the minimum annual amount the IRS requires individuals age 70½ or older to withdraw from their traditional IRA (not Roth IRA) or employer-sponsored retirement plan, such as a 401(k).

RMD amounts are added to taxable income and failure to take an RMD by the end of the year can result in a tax penalty of up to 50 percent of the RMD amount.

QCDs meet RMDs at the intersection of tax savings because unlike RMDs, QCDs are excluded from gross income. Therefore, eligible taxpayers can direct up to $100,000 per year to a qualified charity and avoid income tax on that amount.

How QCDs work

As mentioned above, only taxpayers 70½ or older are allowed to make QCDs. Another requirement is that the distribution must be otherwise taxable. Taxpayers filling jointly are each permitted to make a QCD of up to $100,000, for a total exclusion of $200,000 from gross income.

The IRS prohibits QCDs from going to private foundations, donor-advised funds or supporting organizations (as described in IRC Section 509(a)(3)). Furthermore, a QCD cannot be made in exchange for a charitable gift annuity or to a charitable remainder trust.

Here are some more important points to keep in mind regarding QCDs:

  • QCDs are only excluded from taxable income; they cannot also be taken as a charitable contribution deduction on an itemized federal income tax return.
  • Distributions taken from an IRA (including RMDs) and then subsequently donated to charitable causes do not qualify as QCDs.
  • For multiple IRAs, QCDs are aggregated for calculation purposes related to taxable and nontaxable portion of a distribution from any one IRA.

QCD tax benefits

Some may wonder what is the advantage of using a QCD instead of taking a charitable contribution deduction. The answer is that QCDs streamline the process and likely result in greater tax savings versus taking an RMD, donating those funds to charity and then writing it off as a charitable deduction. The impact of including the RMD in taxable income could be more than the tax deduction from the donation, due to IRS limits on charitable contribution deductions. For taxpayers who don’t itemize deductions on their tax returns, the exclusion from gross income for QCDs is a tax-effective way to make charitable contributions.

QCDs are a convenient, and now permanent, method to support a charitable cause, get a tax break and satisfy annual RMD requirements. Your RKL tax professional or RKL Wealth Management advisor can demonstrate the benefits of QCDs and assist you executing this tax strategy.


Laurie M. Peer, CPA, CFP®, partner in RKL’s Tax Services Group and Executive Vice President of RKL Wealth Management LLCContributed by Laurie M. Peer, CPA, CFP®, partner in RKL’s Tax Services Group. She also serves as Executive Vice President of RKL Wealth Management LLC, the registered investment advisory subsidiary of RKL LLP. With 25 years of experience in taxation and financial planning, Laurie focuses on helping her clients achieve financial and life goals through clearly defined and customized plans with ongoing monitoring.


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Posted on: July 26th, 2016

Computers Now Covered and Refunds Permitted: How the PATH Act Changed 529 Plans

Computers now covered and refunds permitted: get the latest on changes to use of 529 plansAs students head back to campus for a new semester, another expense can now be covered by their 529 college savings plans: a computer and related software and equipment. This is one of several changes to the use of 529 plans that was passed as part of the large, omnibus tax legislation, known as the PATH Act, that was signed into law in December 2015.

The PATH Act extended or made permanent a wide range of business and individual tax credits, deductions and incentives. The 529 changes may have received less attention than other components of the bill, but they are equally as important to students and families working hard to save and pay for college tuition and related costs.

Computers now considered qualified higher education expense

Distributions from a 529 plan are tax-free when used to pay for qualified higher education expenses, such as tuition, room and board, fees, books and special needs services. Computers were not considered part of this category, unless it was a requirement by the school. The PATH Act permanently categorized computers, related equipment, software and internet access as qualified higher education expenses.

Provided the computer and software is used primarily by a student currently enrolled in an eligible educational institution, it may be paid for with a distribution from a 529 plan. Computer games or software unrelated to education do not qualify.

Contributions of refunds permitted within 60 days

The PATH Act also made it easier for refunds to be added back into a 529 account without tax consequence. There are various reasons a college or university would refund tuition or other expenses, such as illness forcing a withdraw early in a semester. In these cases, the refunded amount may be recontributed to the 529 account within 60 days after the refund date. Otherwise, the original distribution may be retroactively considered a nonqualified withdrawal by the IRS that is subject to income taxes and a 10 percent penalty.

It is important to note that the amount recontributed must equal the amount of the refund. Another best practice is to retain documentation supporting the refund and the recontribution in case of scrutiny. Specific 529 plans may have slight differences in the application of this policy, so be sure to check with your plan provider and your tax advisor for guidance.

These changes are the latest enhancements to the popular 529 college savings vehicles. Contact your RKL tax professional or RKL Wealth Management financial advisor with any questions or for more information.

Amy L. Strouse, CPA, RKLContributed by Amy L. Strouse, CPA, a manager in RKL’s Tax Services Group. Her responsibilities include individual taxation and tax planning, as well as not-for-profit compliance.



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Posted on: July 12th, 2016

How to Save for College and Save on Taxes

How to Save for College and Save on Taxes The numbers don’t lie: Higher education is expensive, and the cost keeps rising. predicts that the price of college will increase around eight percent each year, which means that the cost of tuition doubles every nine years.

In the face of such daunting financial figures, it’s no surprise that families and students are going into debt to finance higher education. Our financial planning experts recently outlined several factors to consider before taking out student loans. There is one surefire way to minimize the amount of loans needed to fund higher education: save ahead of time for this considerable expense.

Not only does saving now help ease the cost of college down the road, it also allows savers to reap federal, and in some cases even state, tax benefits in the meantime. Of course, all savings vehicles are not created equal, so it’s important to find the one that best aligns with your unique financial situation. Below, we highlight several of the more popular college savings tools and examine how they help families achieve their savings goals.

529 College Savings Plans

With a name derived from the governing section of the IRS code, it is no surprise that 529 plans offer savers a wide range of tax benefits when funds are used for qualified higher education expenses. Typically sponsored by a state government or individual school, 529 plans come in two varieties: the college savings plan or prepaid tuition plans. In a 529 college savings plan, money is set aside for college in an individual investment account similar to a 401(k) plan for retirement. 529 prepaid tuition plans operate very differently, allowing savers to lock in today’s price for tuition credits for future use.

Both varieties of 529 plans offer significant tax benefits and easy-to-use features, such as:

  • State and federal tax-free growth and distributions when used for qualified higher education expenses, such as tuition, room and board, books, etc.
  • State tax deduction for contributions (availability may vary by jurisdiction).
  • High annual and lifetime contribution limits.
  • Flexibility to change beneficiaries or roll over account to another 529 plan.
  • Account owner retains control of funds indefinitely; funds are never transferred directly to beneficiary.
  • Gift and estate tax benefits up to $70,000 ($140,000 for married couples).
  • Wide use of funds at most colleges and trade schools.
  • Account is treated as parent/account owner’s asset with less impact on financial aid calculations.

Coverdell Education Savings Account (ESA)

The primary difference between a Coverdell account, formerly known as the Education IRA, and a 529 plan is that funds saved in a Coverdell account may be used for K-12 education expenses, in addition to post-secondary education. Coverdell ESAs are offered by financial institutions, not schools or state governments. Significant features of a Coverdell ESA include:

  • State and federal tax-free growth and distributions when used for qualified college or K-12 expenses.
  • Annual combined contribution limit of $2,000 a year per beneficiary.
  • Rollovers permitted into another qualified Coverdell ESA.
  • Unused funds must be distributed to the beneficiary by age 30 (except for beneficiary with special needs).
  • Eligibility to open account limited to individuals with adjusted gross income of $110,000 or less ($220,000 for married filing jointly).
  • Account is treated as parent/account owner’s asset with less impact on financial aid calculations.

Custodial account (UGMA/UTMA)

Custodial accounts are the original vehicle to set aside money for children under the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA). Unlike the more recent 529 plans or Coverdell ESAs, custodial accounts offer less tax benefits and less control over how the assets are used. Here is how custodial accounts work:

  • Contributions are not tax-deductible, earnings are subject to federal income or capital gains tax and account balance may trigger “kiddie tax” rules.
  • There may be fees associated with opening and funding an account.
  • No contribution limits, but federal gift tax will be incurred at current levels.
  • Assets may be used for any expense that benefits the child, education-related or not.
  • Once the beneficiary turns 18, he or she takes full control of the account assets.
  • Beneficiaries cannot be changed and accounts may not be rolled over.
  • Account is treated as the child’s asset and weighs heavily in financial aid calculations.

College Savings Vehicle Comparison offers a helpful tool that allows savers to compare and contrast different savings vehicles according to criteria important to them.

Every dollar saved today is one less that students may have to borrow down the road, so saving for college can be an important component of a family’s financial game plan. In order to maximize the tax benefits, however, it is important that students and families consider the implications of certain savings vehicles or accounts. Your RKL tax professional or RKL Wealth Management financial advisor can help you plot a tax-advantaged course to achieve your college savings goals.

Amy L. Strouse, CPA, RKLContributed by Amy L. Strouse, CPA, a manager in RKL’s Tax Services Group. Her responsibilities include individual taxation and tax planning, as well as not-for-profit compliance.




Working Capital blog disclaimer

Posted on: May 17th, 2016

Tax To-Do List After Saying “I Do”

tax tips for newlywedsThe popular spring and summer wedding season is upon us, and happy couples have a lot to tackle as they merge two lives into one. Beyond the financial basics like opening a joint bank account or setting a household budget, newlyweds also need to consider their tax situation. A change in marital status can impact tax status, so let’s take a look at some tasks couples will want to assess not long after the wedding day is over.

Name change

If you decide to take your spouse’s name, make sure the change is recorded with the Social Security Administration. To request a new Social Security Card, visit, call 1.800.772.1213, or visit your local SSA office. It is important that the name you use on your tax returns matches the one on file for you with the SSA. While you’re at it, make sure you also tell your employer about the name change and complete any necessary paperwork.

New address

Is a new house part of your post-nuptial plans? If so, this is important news to tell not just the U.S. Postal Service, but also your employer and the IRS. Most employers still mail W-2s, so in order to receive an accurate form in a timely fashion, let your employer know of any address changes as soon as possible. The IRS may pick up the change of address request you submit to the Post Office, but to err on the side of precaution you can also notify them directly. Your tax preparer can assist you with Form 8822 to change your address with IRS.

Withholding status

If you and your spouse both work, combining your incomes could move you into a higher tax bracket. Your tax advisor can examine your income, withholding status and exemptions to maximize your tax savings. That way you can make any needed alterations to the amount of federal income tax your employers withhold from your paychecks.


To itemize or not itemize, that is the question. At least it is for newly married couples filing taxes jointly. Take the time to consider all the deductions you might itemize on your tax return – think mortgage interest, property tax payments, charitable contributions. If the total amount adds up to more than $12,600, which is the standard deduction, it may benefit you to itemize.


These are some initial steps to ensure a change in marital status is properly reported. For a full assessment of how other, more in-depth financial issues could change after marriage, please contact your RKL tax advisor.

Chris A. Luppold, CPA, MBA, CGMAContributed by Chris A. Luppold, CPA, MBA, CGMA, a manager in RKL’s Tax Services Group. Chris has over 35 years experience in public accounting and provides services a wide range of areas including general business consulting, tax preparation, estate planning and tax planning for his clients.



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Posted on: March 8th, 2016

Plan Now to Avoid Future Student Loan Debt Pitfalls

Tips to avoid student loan debt pitfallsIt’s financial aid season, with college applicants and their families filling out the Free Application for Federal Student Aid (FAFSA) to find out how much federal student aid they’ll receive. For the majority of students, however, this aid will make up only a portion of the funding needed to cover higher education costs. Many will turn to student loans to cover the difference.

It is important that prospective borrowers and their families remain vigilant about borrowing for college in order to avoid the financial burden of large student loan debt down the road. Here are some key considerations to help manage student loan debt wisely.

Consider price of schools

There are a lot of factors that go into selecting an institution of higher education, but be sure to include price among them. Review all options with an eye for value, and consider an option that has worked out financially for many students: two years at a community college. Many credits can be obtained at a two-year school for a fraction of the cost, as long as they are transferrable. The price tag of a chosen school will impact the amount of loans that may need to be incurred.

Explore all financing options

There are ways to limit the amount borrowed, such as paying what is possible from existing savings or cash flow, applying for all possible scholarships, aid or grants, and using education tax credits when applicable. Students can help reduce the amount borrowed by earning or saving money while in school. For example, early graduation cuts down on tuition costs, work/study programs can help generate income during the semester, and room and board costs are eliminated if the student lives at home.

Recognize types of loans

For most students, loans are a necessary financial tool. There are important differences in the types of loans available, so make sure to consider federal loans first. These loans offer better terms than private student loans. Parents can also explore taking out a federal PLUS loan up to the full cost of the education. Keep in mind that PLUS loans typically carry a higher interest rate, and cannot be transferred from parent to child, which means the parent is solely responsible for repaying the loan. When exploring financing options, however, it is critically important that families avoid drawing down retirement funds. After all, students can take a loan out for school but parents cannot take out a loan for their retirement expenses.

Estimate monthly cost

Loans can seem like an abstraction when thought of as a whole, so to help students and families get a real-world sense of what loans will truly cost, break it down into monthly payments. Seeing how much will need to be paid back each month can help determine affordability. For instance, a $40,000 loan translates into a monthly payment for $410.52 at 4.29 percent over a 10-year fixed term.

Understand impact of student loan debt

Whether you are a recent college grad looking to purchase a first home or an empty nester looking to downsize, repayment of a student loan can have a negative impact on your credit worthiness. Lenders utilize a metric called debt-to-income ratio (DTI) to measure credit worthiness. DTI is calculated by dividing total monthly debt payments by gross monthly income, which include student loan, auto, and minimum credit card payments in addition to housing costs (mortgage and property taxes or rent). As a rule of thumb, a DTI of less than 36% is ideal, and a DTI of more than 43% can prevent you from being eligible to receive a qualified mortgage from certain lenders.


Thinking through the financial consequences of student loans before enrolling in college is a sensible way to reduce stress and cost after graduation. It is also important to revisit financing options if family financial circumstances change. The team of financial advisors at RKL Wealth Management can help students and their families plot a responsible course for student loan debt management. Contact us today. 

Judson S. Meinhart, MBAContributed by Judson S. Meinhart, MBA, of RKL Wealth Management LLC. Judd provides investment management and comprehensive financial planning services for his clients and their families.  




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Posted on: December 17th, 2015

What Social Security Claiming Changes Mean for You

Financial Advisor Talking To Senior Couple Congress unexpectedly eliminated two Social Security claiming strategies as part of the Bipartisan Budget Act of 2015. This action makes retirement planning a little more complicated for people who expected to use these strategies to boost retirement income.

The provision of the budget called “Closure of Unintended Loopholes” primarily addresses two Social Security claiming strategies that have become increasingly popular over the last several years. These strategies, known as “file and suspend” and “restricted application for a spousal benefit,” have often been used to increase cumulative Social Security for married couples.

File and Suspend

Under the old rules, individuals who had reached full retirement age could file for retired worker benefits in order to allow a spouse or dependent child to file for a spousal or dependent benefit. The individual could then suspend the retired worker benefit in order to accrue delayed retirement credits and further claim an increased benefit at a later date, up to age 70.

Under the new rules, effective for requests submitted on or after April 30, 2016, the worker can file and suspend and accrue those delayed retirement credits, but no one can collect benefits on the worker’s earnings record during the suspension period. This change effectively ends the “file and suspend” strategy for couples and families. The new rules also mean that a worker can no longer request a lump-sum payment in lieu of receiving delayed retirement credits.

Restricted Application for a Spousal Benefit

Under the old rules, a married individual who had reached full retirement age could file a “restricted application for a spousal benefit” after the other spouse had filed for retired worker benefits. This allowed the individual to collect spousal benefits while delaying filing for his or her own benefit, in order to accrue delayed retirement credits.

Under the new rules, an individual born in 1954 or later who files a benefit application will be deemed to have filed for both worker and spousal benefits, and will receive whichever benefit is higher.

Still Time Left to Use These Strategies

A limited window still exists to take advantage of these two claiming strategies. If you are currently at least age 66 or will be by April 30, 2016, you may be able to use the “file and suspend strategy” to allow your eligible spouse or dependent children to file for benefits, while also increasing your future benefit. To file a restricted application and claim only spousal benefits at age 66, you must be at least age 62 by the end of December 2015. At the time you file, your spouse must have already claimed Social Security retirement benefits.

Social Security Planning Opportunities

The age when you begin receiving Social Security benefits can significantly affect your retirement income and the income available to your survivors. Determining when to file for benefits is one of the biggest financial decisions you’ll need to make as you approach retirement. There’s no “one size fits all” answer – it is an individual decision that must be based on many factors, including other sources of retirement income, plans to continue working and your income tax situation. Married couples need to plan together, taking into account the benefits to which you are each entitled. Although some claiming options are being eliminated, plenty of planning opportunities remain. It’s important to take the time to consider all opportunities and make an informed decision about when to file for Social Security. Contact your financial planning professional to develop a Social Security plan that adheres with your long-term financial goals.

Thomas D. Reardon, CFP®Contributed by Thomas D. Reardon, CFP®, of RKL Wealth ManagementTom works with individual clients and their team of professionals to develop and monitor their investment and financial planning goals. He assists with research and analysis of investment options, financial plan development and design of diversified investment strategies.


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