Thursday, January 2, 2020

Potomac Wealth Strategies regulatory info, and reminder of updated retirement plan contribution limits

Clients and Friends of PWS—

Happy New Year!  Here’s to us all enjoying a great year in 2020.  The markets were strong for us in 2019, and I’ll have portfolio model performance updates soon.  Meanwhile, linked here are regulatory items I am required to give you from time to time.

Also, the IRS changed retirement plan contribution limits for Year 2020, so please update your IRA and 401k/TSP/403b-type contributions.  For example:

  • IRA limit is now $6000, or $7000 if age 50+
    • Monthly contributions would be $500 or $583.33
  • 401k-type limit is now $19,500, or $26,000  if age 50+
    • Per paycheck (if paid every two weeks) would be $750 or $1000
    • Per paycheck (if paid twice-a-month) would be $812.50 or $1083.33
    • Or have Payroll deduct a % of your gross pay.  Let me help you figure it out.
  • Contribute to both IRA and 401k-type accounts if you can.  Example…  48 y/o with $150k salary aiming to save 20% for retirement
    • $30k total--$19.5k into 401k, $6k into IRA, and $4.5k into taxable brokerage acct earmarked for retirement

Contact me with any questions.  Thank you!


Garo Linck Partoyan
Potomac Wealth Strategies, LLC
1800 Diagonal Road, Suite 600
Alexandria, Virginia  22314

(703) 746-8195 phone
(855) 347-9483 fax

Friday, December 27, 2019

2019 Year-End Tips from Potomac Wealth Strategies

December 27, 2019

Year-End Tips on Taxes, Investments, and Planning

To:       Clients and friends of Potomac Wealth Strategies, LLC
From:   Gary Partoyan

Please consult a tax professional for advice on tax-related matters.  I am here to guide you but am not able to give formal tax advice.

·       Required Minimum Distributions "RMD" are due by 12/31/19 from IRAs and 401(k)s and some other retirement accounts.  ALL PWS clients are good to go on this now—THANK YOU for working with me in November and early-December to get it all done!
·       Ask your tax professional if you are subject to RMD (usually only if over age 70.5).
·       Pay your estimated taxes if applicable.
·       Set your 2020 tax withholding elections with your Payroll/HR team at work
·       Harvest gains/losses in taxable investment accounts, if applicable, by 12/31/19.  FEW clients need to do this; applicable only to taxable accounts.
·       Hire a tax pro to help with these and other decisions.  Contact me if you want referrals.

Retirement Savings/Contributions
·       401(k) and similar... contribution limits are $19,500 ($26,000 if age 50+) for 2020, increased from $19,000/$25,000 for 2019.
·       Make sure you’re on track to contribute maximum allowed, or maximum you can afford.
·       Make sure you contribute at least minimum necessary to get maximum “free money” (company matching or profit sharing) from your employer.
·       Contribution limits apply to all 401(k) plans combined.
o   If you changed jobs, you new 401(k) may not know how much you contributed to your old 401(k), so talk to HR/Payroll at new job to try to adjust if necessary.
·       IRA/Roth IRA... contribution limits are $6000 ($7000 if age 50+) for 2020, same s 2019.
o   Ask your tax pro or me about "Roth Conversion" as a way to reduce taxes in retirement.
·       SIMPLE IRA contribution limit increased to $13,500 (from $13,000 in 2019); for age 50+ it’s now $16,500 ($16,000)
·       Retirement savings target should be ~15% of your salary (gross pay), but please do an Investment Plan with me to be more clear about your specific situation.
·       If you are a business-owner, let's talk.  Great opportunities to save more than typical "employees" using SEP-IRA and/or Individual 401(k) plans.

529 college savings plans
·       Contributions for this year are due by 12/31 in most states, but there are some exceptions.
·       Contributions may be deductible, so check with the 529 Plan and your tax advisor.
o   If you have cash set aside already, try to put it into a 529 before 12/31 so you can get any possible state income tax deductions.
·       Anyone can contribute to a 529.  But do NOT make check payable to the child when giving a gift.  Best to contact the 529 plan for most efficient way to write the check.
·       Ask your tax pro or me, or click here, for more about 529 plans.

Employee Benefits
·       Most employers offering healthcare insurance and other benefits have a schedule for renewing or changing for next year, aka "open enrollment".
·       Please make sure your benefits are the way you want for the coming year.
·       Consider child care benefits offered.
·       Consider tax advantages of using a Healthcare Savings Account (HSA).
·       Contact HR/Benefits for help.

Review Investments
·       Know your risk tolerance profile and asset allocation targets.  I can help you determine this.
·       Is your portfolio Conservative, Moderate, Aggressive, or somewhere in-between?  Is that suitable for your risk tolerance?
·       Are the investments high-quality, or do you need to use better mutual funds or ETFs?
·       Change your portfolios accordingly.

·       Flexible Spending Accounts (FSA) and Healthcare Savings Accounts (HSA) can provide many advantages.  Find out if they are available through employer or otherwise.
·       Save your receipts/confirmations for charitable contributions, in case they are needed.
·       Beneficiary Designations on your IRAs, 401(k)s, insurance policies, annuities, and other retirement plans out-rank what you specify in your Will and/or Trust, so be sure to synchronize your accounts with your estate plan.
o   Consult your tax and estate planning advisors if you have complexities such as blended families and multiple marriages.  I can help you figure out what to ask those pros.

How To Be Financially Successful
·       My most "successful" clients are on track to meet their personal goals and prepared for emergencies, regardless of income or size of nest egg.
o   Saving enough, investing prudently, insured for disability and death.
·       Do an Investment Plan with me—it's worth the extra time/effort, and it's included in your fee.
·       Schedule a call or meeting for January.

Be well and enjoy the holiday season.  Thank you for your business!

Gary Partoyan
Financial Advisor

Tuesday, November 26, 2019

Market and Economic Insights from Prof. Jeremy Siegel, 2019-11

Lots of informative insight from one of the long-time trusted investment experts, Wharton professor Jeremy Siegel.  Quick take:

·        stocks are fairly valued, not overpriced

·        value stocks will soon take over performance leadership from growth stocks, largely because their dividends are higher than the interest rates of bonds and we have increasing population of retirees needing investment income instead of growth and they'll seek dividends over bond interest more than ever

·        interest rates are low more because of economic factors than the strategies of major central banks

·        inflation is low and should stay low

·        economic growth in USA is low-ish, but no recession any time soon

·        workforce participation #s are improving (the "unemployment rate" gets the most attention, but workforce participation rate is arguably just as important)

·        predicts Trump will be impeached by the House, but not removed from office by the Senate

·        predicts House stays Dem, Senate stays Republican

·        says "trade war" with China is biggest economic threat and having one would trigger big drop in stock markets, but that Trump will avoid trade war because it would ruin him politically

For my clients' investments, I continue to recommend diversified portfolios.  Whether to be aggressive or moderate or conservative, or in-between, in that diversification is something with which I can be especially helpful.

Contact me with any questions.