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Own cryptocurrency? The IRS has some advice for you!

The U.S. Internal Revenue Service last Friday announced what may come as a surprise to thousands of taxpayers who own cryptocurrencies like Bitcoin but who failed to report transactions. If this is you, according to Uncle Sam, you may owe taxes.

Taxpayers who do not accurately report income specifics of virtual currency transactions might be liable for tax, penalties and interest. The IRS said it was planning on sending over 10,000 letters to taxpayers to make them aware of the issue. The notification effort began earlier in July and will continue through August.

In a statement, the agency said: “Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties.”

This announcement comes as part of a broader collection effort, announced by the IRS in July 2018. This series of compliance campaigns on U.S. taxpayers is aimed at collecting tax on worldwide income from all sources, not just transactions involving virtual currency.

The IRS has indicated it considers cryptocurrencies such as bitcoin property for federal tax purposes. This means that any profits or losses from cryptocurrency transactions should generally be reported as capital gains or losses.

To avoid any nasty IRS surprises, investors, including retirees and future retirees, should consult with both their investment advisors as well as their tax accountants or CPAs to make sure they are in compliance.

You can find a Forbes.com article on this topic here

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Common Retirement Planning Mistakes – Part 3: Assuming All Financial Advisors are the Same.

This is the Third in a Four-part Series on Common Retirement Planning Mistakes

As I continue to mention in each part of this series (part 1 here and part 2 here), every year thousands of people still retire or attempt to retire without seeking professional advice or having a well-developed game plan for their retirement. Effective retirement planning should include coordinating the five primary planning areas of tax, healthcare (insurance), estate (legacy), investment and income. This can help to ensure you’re on the right track to meet your goals.

High Level – The Question of Fiduciary Best-Interest

In our industry, this is the big debate right now. Should all financial professionals be held to the same standard of care with their clients? Additionally, and more specifically to you, the debate is whether a financial advisor should put their clients’ interest before their own.

Stop and think about that for a moment. Why would you work with anyone who is not required to put your interest before their own? Implied in this question is the fact all financial professionals don’t have the same standard of care with you and your money. Sadly, that is correct.

Investment advisor representatives of Registered Investment Advisory firms are held to what is known as a “fiduciary standard” while registered representatives of Broker/Dealers are held to a “best-interest standard.” In general, and without going into great detail for the sake of space here, let’s look at these standards and how they apply to the professionals that you may consider handling your investments and retirement planning.

Percentage of Investment Advisors by Type

There are three types of classifications used for financial professionals:

  1. Fiduciary (Registered as an Investment Advisor Representative of a Registered Investment Advisory Firm)
  2. Non-Fiduciary (Registered as a Registered Representative of a Broker/Dealer)
  3. Hybrid (A combination of one and two)

So, what’s the difference between these three and what does it mean to you? It’s important to understand the terms.


A fiduciary firm (Registered Investment Advisor) has a legal and ethical obligation to do what is in the best interest of the client. This means they put the client’s interest above those of the firm. Fiduciaries typically receive compensation in the form of fees regardless of the type of investments or activities they recommend for their clients. These fees are usually based on the number of assets they are managing or may be a flat fee negotiated in advance.

A fiduciary is required to put your interests first in building a financial plan and/or managing financial assets under a duty of good faith, care and trust. This is better known as the “prudent person standard of care.” This can be confusing so here’s a brief example of this standard of care. It could include removing or disclosing any conflicts of interest the fiduciary may have (such as compensation on the sale of a financial product) and disclosing what fees and expenses are present and how they may affect you. Representatives working for a Registered Investment Advisor are commonly called investment advisor representatives.


As of June 2019, the Securities and Exchange Commission (“SEC”) issued rules that non-fiduciary, Broker-Dealer firms are to meet a best-interest standard of conduct but it falls short of the fiduciary standard Registered Investment Advisor firms must meet. Generally, this allows them to make recommendations consistent with the needs and preferences of the customer at the time of the recommendation without being held to the fiduciary investment advice standard.

The non-fiduciary must reasonably believe a recommendation is suitable to a client’s objectives, needs and circumstances at the time of the investment, which is basically the same standard they were held to previously. Non-fiduciary’s are typically compensated through commissions on securities transactions but may also charge fees to access some parts of their platforms. Some do financial planning while others don’t.

Brokers (although commonly called by many different titles) are the representatives for broker-dealers. Although the June 2019 best-interest rule for non-fiduciaries was passed by the SEC, two other similar rules before it have been vacated. Currently, these types of firms are vehemently fighting against being held to the same fiduciary standard as investment advisors. It doesn’t take a big stretch of the imagination for you to understand why they are against being held to the fiduciary standard.

 Hybrids or “dually-registered”

A hybrid structure normally has representatives who are registered both with a broker-dealer and an investment advisor. This means they have a fiduciary side and a non-fiduciary side regarding what they can offer clients. This approach can be fraught with danger and confusion for clients, who must determine if they are being given fiduciary advice or being sold a product.

Additionally, many financial industry regulators are asking these firms to explain how and why they chose to be a fiduciary for some clients (or transactions) and a non-fiduciary for others. It appears that even having to make that choice leaves a lot of room for questions as to intent. As a client, you should not have to wonder whether your adviser is a fiduciary or not. The critical questions to ask any potential financial advisor is this: What type of standards are they operating under when they are advising you? As a fiduciary, with your legal best interest in mind or not? It is a very fine line.

 Things to consider:

  1. All three firm types can provide a valuable service. Everyone’s needs and desires are different and there can be good and bad in any model. That is free-market competition and you get to decide what’s right for you.
  2. Request full disclosure of all information from your financial professional to make the decision that you believe is right for you. Anything less, walk away.
  3. Do your homework. Ask a lot of questions. Call your state regulator or check out the representative’s background on brokercheck.finra.org.  A professional should encourage and welcome this and be willing to answer whatever questions you may have.
  4. Look for someone with experience and professional credibility (designations), whom you connect with personally and who you believe you can trust to go the extra mile.
  5. Call or come visit us. As an independent, fee-based, fiduciary firm we are happy to answer whatever questions you may have and help further clarify what type of professional might be right for you and your retirement goals so you can make an informed choice.

If you don’t currently have a retirement advisor, we’d be delighted to schedule an introductory meeting with you to learn more about your current situation and your retirement goals. Contact us today to schedule an appointment!

Investment Advisory services offered through Game Plan Advisors, Inc., a registered investment advisor. Insurance services offered through Wootton Financial Group, Inc. Game Plan Advisors, Inc. and Wootton Financial Group, Inc. are affiliated through common ownership. Neither Game Plan Advisors, Inc nor Wootton Financial Group, Inc. offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.

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Retirement Planning Mistakes – Part 2

This is the second in a four-part series of articles on Common Retirement Planning Mistakes. 

In our previous post in this four-part series on retirement planning, we talked about the common misconception only wealthy individuals need to engage the services of a retirement planning professional and how not doing so could be a very costly mistake. As I will mention in every post in this series, every year thousands of people still retire or attempt to retire without seeking professional advice. In most cases, this happens without retirees having developed any type of strategy in their retirement planning! Even in some of the best cases, retiring individuals may need to make some adjustments in their plan.

Whether you’re putting a strategy in place for the first time or you’re reviewing an existing strategy, every retirement plan should include details regarding how to manage each of the five primary planning areas of taxes, healthcare (including insurance), estate planning (legacy), investments and income. Coordinating these areas together and monitoring progress regularly can help ensure you’re on the right track to meet your goals.

In this article, we move on to the second common retirement misconception. It is one that regularly keeps people from meeting with a professional. The misconception is – I’m saving on a consistent basis and that will be enough.

Now, let me give credit where credit is due. If you are saving regularly and especially if you started young, fantastic! You are doing the right thing. KEEP IT UP! However, we all tend to be overly optimistic in our assessment of our true state of affairs and we can end up thinking we’re more prepared for retirement than we truly are. Preparing for retirement today presents a number of challenges and complexities. The fact that you are saving regularly, although important, is just one of many important components to consider.

You should start with the end in mind…in other words, what target are you aiming for? What are your retirement goals? After all, retirement is not about arriving at a certain age as much as it is about being able to achieve a certain cash flow.

Some key retirement questions to answer are:

  • How do you know if you’re saving enough?
  • How long will it take to save what you need?
  • Do you know what your personal rate of return needs to be?
  • Are you funding the right types of accounts from a tax perspective?
  • What if you meet the goal, how will you receive income?
  • Will it last the duration of your retirement? What about the other planning areas mentioned above?
  • How will they affect your goals positively or negatively?

I know that’s a lot of questions (and there are many more that could be asked), but professional retirement planning is meant to help prepare you for two phases in life, the accumulation phase and the distribution phase.

In the accumulation phase, your goal is saving and growing assets and structuring your financial life around those activities. In the distribution phase, the focus shifts from asset accumulation to asset preservation, distribution and legacy planning. Each phase presents its own unique challenges to any aspiring retiree. And, while for most people these phases tend to be age-dependent, this is not always the case. The time-frame for these phases is different for everyone based on their unique goals.

Are you saving? Have you thought about your retirement goals? Perhaps you’ve already saved and you’re retired or getting ready to retire. No matter the phase you’re in, do you have a plan that gives you better confidence that your retirement will be what you’ve always thought it could be? I know nothing is guaranteed; however, what if you could start planning or make adjustments to an existing plan that could benefit you immeasurably down the road? Wouldn’t that be worth your time to discover? This is what retirement planning professionals like us seek to help you with.

We’ve helped countless families retire over the past 25 years and we’ve found the happiest retirees have typically done the following things:

  1. They have a written and defined plan that coordinates the various areas of their retirement.
  2. They have minimal to no debt to service, minimize their expenses or have saved in conjunction to their desired lifestyle needs.
  3. They have a balanced tax structure in their savings. (IE not all their money is in tax-deferred accounts)
  4. They have coordinated their investments with the overall plan needs.
  5. They have a plan for where their income will originate and for how long.
  6. They have mitigated their risks to the extent possible in their unique situation.
  7. They have simplified and refined how they will pass their estate to the next generation.

Success is found in your daily routine. Has your retirement routine today taken you one step closer to your goals? If not, the first step in that routine should be meeting with a professional to help you define your plan, stay accountable and then refine that plan over time as needed.

If you don’t currently have a retirement professional helping you, we’d be delighted to help. Call us to schedule an in-person appointment or call us to attend one of our live events.

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“The Secure Act” – Is Congress Coming for Your IRA?

An Opinion piece in the Wall Street Journal the other day detailed “The Secure Act”, a new law being considered in Congress, that has tremendous implications for any person’s retirement plans. We thought you all might find interesting and informative and you can find the original article here (paid Wall Street Journal account required to read the whole thing).

We’ve been tracking the progress of this and similar legislation that may impact your retirement strategy. Below, is our summary of how key aspects of this pending legislation might require changes to your retirement plans.

If this legislation is ultimately signed into law, it will create major shifts in the retirement planning landscape. You should be talking with your financial professional now regarding how you may be affected so you can get ahead of the changes.

Implications for your retirement plans are many:

  1. IRA Required Minimum Distribution start age is pushed from 70.5 to 72.
  2. The current Stretch IRA provision (IRA’s left to non-spousal beneficiaries) is eliminated and only gives heirs up to 10 years to liquidate the IRA’s entire value.
  3. The current spousal beneficiary provision remains unchanged.
  4. Without further Congressional action, current tax rates expire in 2025 and are going up.
  5. Trust planning with IRA’s for heirs will have significant implications to consider.
  6. Tax planning considerations for non-spousal inherited IRA’s will need to be revisited.
  7. College planning for those inheriting IRA’s with college age children will need to be revisited.

If you need help with your retirement strategy, give us a call or come visit with us. We’d love to help you understand how these potential legislative changes may affect you and your heirs now or in the future.

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Common Retirement Planning Mistakes – Part 1: Only the Wealthy Need a Plan

This is the first of a four-part series of articles on Common Retirement Planning Mistakes. 

Preparing for retirement these days presents a number of complex challenges. There are five primary factors that need to be taken into consideration when developing and managing your retirement strategy:

  1. Taxes
  2. Healthcare (insurance)
  3. Estate (legacy)
  4. Investment
  5. Income.

    The Pieces of the Retirement Puzzle

    The Retirement Puzzle

Each of these fit together to create a sound retirement plan. If you don’t have a clear picture of what the end result should look like, it’s like trying to assemble a complex puzzle without the picture on the front of the box.

Ever-changing laws and regulations, as well as market fluctuations, make it essential for most people to seek the help of retirement planning professionals to put all the pieces of their retirement puzzle together.  Yet, every year, thousands of people still attempt to retire without seeking professional advice. In most cases, this happens without having developed any type of strategy at all!

Over the years I have heard many reasons why people haven’t done a better job of developing a strategic retirement plan. This series of articles will cover four common retirement planning mistakes that could keep you from achieving your retirement goals.

Retirement Mistake One: Only Wealthy Individuals Need a Plan

The first misconception I hear a lot has to do with the idea of quantity over quality. Many retirees truly believe because they’re not “wealthy” (quantity) there’s no reason to have a quality retirement plan. The mistaken thought is “only the rich and wealthy need to do retirement planning”. This can be a huge mistake for retirees.

I don’t blame the average person for having this misguided notion. The financial industry spends a lot of money annually to market to higher net worth retirees. Why? Because in many respects, high net worth clients are more profitable to them. Many retirement planners aren’t interested in those they perceive to be the “little guy”.

However, this doesn’t mean it’s unimportant for those with less wealth (whatever that means) to do planning or that they should be ignored. In fact, in our firms’ 25 years of experience, I can tell you that the size of wealth is not the most important factor in a healthy and happy retirement nor is it a reason to avoid planning. How do you define “wealthy” or “rich” in the first place? How do you know where you fall on the spectrum between “little guy” and “rich guy” unless you’ve had help evaluating your unique situation?

This top retirement mistake can be so detrimental. While there may be lower net worth individuals who retire just fine without professional financial planning assistance,  the more important questions are: “Will they stay retired? Will their income last? Did they prepare for the transition to the next generation or their spouse? Are they prepared for risks that could put an otherwise great retirement in jeopardy and could they have seen it coming and prepared for it with a little bit of planning and guidance?”. These crucial questions show you the critical need for a plan.

If you boil it all down, it doesn’t matter what your income is or what your net worth statement shows. If you have a paycheck or have had a paycheck at some point in the past, you should have a strategy that is defined, written down and coordinates the five important areas of retirement. The point of having a retirement strategy is to help ensure you can continue living life to its fullest every day and do so with confidence.

Do you have a plan? Do you have confidence that your retirement will be what you’ve always thought it could be? Nothing is guaranteed and I understand that; however, what if you were able to make an adjustment that could benefit you immeasurably down the road, wouldn’t that be worth your time to find out how right now, while you can still make adjustments?

We’ve found the happiest retirees are not those with the most wealth but they do exhibit some common traits. Here are the factors that really have an impact on a successful retirement:

  1. They have a written and defined plan that coordinates the five puzzle pieces of their retirement.
  2. They have minimal to no debt to service, have minimized their expenses or have saved to be able to afford their desired lifestyle.
  3. They have a balanced tax structure in their savings (in other words, not all their money is in tax-deferred accounts).
  4. They have coordinated their investments with the needs dictated by each piece of the plan.
  5. They have a plan for the source from which their income will originate and for how long it will last.
  6. They have mitigated their risks to the extent possible given their unique situation.
  7. They have simplified and refined how they will pass their estate to the next generation.

As the old saying goes, “If you fail to plan, you plan to fail”. This is true no matter how small or large your income, assets and investments. So, what about you? Do you have a plan? If not, it’s never to late to start.

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The Next Step?

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