How To Prep Your Finances For 2021 Pt.3

In continuation of last weeks series recap, below are steps 11-15:

Lesson 11 of the Senior Exec Money Series: Stop Guessing and Make a Plan

You might have a number of guesses as to how the results of today’s election will play out.

You may also have guesses on the impact it will have on your money. While the truth is nobody knows for sure – being prepared definitely won’t hurt.

To prevent you from playing the guessing game, I’ve developed this guide to help you craft your own financial plan.

Get it here.

Lesson 12 of the Senior Exec Money Series: Align Your Values and Investments

For a while, innovations were only synonymous with tech and gadgets. It’s largely defined “what” we invest in – smartphones, robotics, digital media, etc.

As time goes on, innovations also define “how” we invest. While it’s not everyone’s taste, your values and your investments no longer have to run parallel lines.

As outlined in this article from Vanguard, product developments have allowed investors to partake in companies with low emissions, community impact, and diversity – to name a few.

If you’re passionate about your values, ESG investing may be for you.

Lesson 13 of the Senior Exec Money Series: Create Your Estate Plan

You don’t have to be worth nine figures to make use of an estate plan.

At its core, the process of estate planning sees to it that your wishes are carried out with little to no interpretation by the court system.

Important side note: these wishes don’t just pertain to financial assets, but should also encompass your health directives.

While some plans are more complex than others, they all require attention. As stated by CNBC, the potential sunset of the TCJA could subject more folks to the hefty 40% estate tax.

Reach out to your legal professional and get a head start.

Lesson 14 of the Senior Exec Money Series: Take Your Distributions in Stock

Investing can be a double edged sword. We love to see our investments grow but in the back of our minds we know Uncle Sam is waiting for his cut.

If you’ve recently inherited a retirement account (or are of the age where you have to take mandatory distributions), consider taking the withdrawal in stock.

While the usual custom is to sell shares and take your distribution in cash, the rule also allows folks to also take the distribution in shares.

A few benefits as outlined by Kiplinger :

  1. You’re not forced to sell if the value of the position is down.
  2. You reset your cost basis to the date of the transfer.

There’s a few more nuances but it’s definitely worth considering as part of your overall plan.

Lesson 15 of the Senior Exec Money Series: Don’t Pay 2x the Tax

Always pay what you owe in taxes, but don’t pay twice.

Most Traditional IRA Contributions look something like:

Money in (tax deductible) → Money grows (tax deferred) → Money out (taxes paid)

-or –

Money in (not deductible) → Money grows (tax deferred) → Money out (partial tax)

If you and your family are above certain income limits, you may not be able to deduct that IRA contribution, but it doesn’t mean you can’t contribute altogether.

It’s important to work with your tax preparer to keep track of these contributions so you’re not taxed on the entire amount. The below article from InvestmentNews breaks it down well: