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Energy-Efficient Home Improvements

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Kay M. Anderson CFP® and Judith G. Alexander-Wasley MBA, CFP®

During this unprecedented time of social distancing, we are spending more time in the home with our family. Working from home, teaching our children, and focusing on home improvement projects from our deferred to-do lists, have consumed us. This time has allowed us to re-evaluate our home and create a wish list of updates to address when we feel comfortable welcoming contractors. 

While a wish list may include many items, it may be beneficial to prioritize the list and establish a feasible budget for the planned updates. In some instances, projects may take longer and cost more than the estimate. Initially, determine your goal for the upgrades and ask yourself the following:

  • Are the improvements designed to benefit your family’s needs and lifestyle? 
  • Can you repurpose your living space rather than perform an overhaul? 
  • What is the value of updating the style of the space? 

Additionally, beyond the desire to make improvements to maximize space and aesthetics, are energy-efficient options appropriate. Advancements in technology provide a vast variety of energy-efficient options: 

  • Replacement of high-energy heating systems and appliances:  Homes over 15 years old may benefit from a new air conditioner, furnace, or boiler as heating systems more than 15 to 20 years old are considered inefficient by today’s standards. 
  • On average, home appliances, including clothes washers, dryers, dishwashers, refrigerators, freezers, air purifiers, and humidifiers, account for nearly 20 percent of your home’s total electric bill. By replacing the appliances in your home with ENERGY STAR certified appliances, you are making an investment that will reduce your energy bill for years to come, which is especially important when you recognize that electricity rates are increasing every year. 
  • Installation of energy-efficient windows and doors:  Newer window models do a much better job at keeping the interior temperature regulated by not allowing much hot or cold air to escape. Additionally, windows with wood frames or wood-clad frames offer the best value when it comes to insulation.
  • Install programmable smart thermostats: A minimal cost option that enhances heating and cooling efficiency by allowing homeowners to set climate control for when no one is at home or when everyone is in bed.
  • Install Solar Panels:  Before considering powering your home with solar energy, homeowners should investigate their energy use and consider potential efficiency upgrades. Knowing total electricity usage, and considering low-cost, and easy-to-implement efficiency measures should be considered before choosing solar. 
  • Upgrade Home insulation:  How much insulation does a house truly need? The U.S. Department of Energy has created a fact sheet to help homeowners decide if their insulation is sufficient for their given climate. https://www1.eere.energy.gov/library/pdfs/insulation_fact_sheet.pdf. Newer homes are often well insulated, while houses several decades old, or older, can often benefit from an upgrade.
  • Use of energy-efficient lighting: Saving money on lighting could be as easy as switching to LED or CFL bulbs. New light fixtures can reduce lighting costs, which may account for up to one-third of a home’s overall electricity bill.
  • Maximize the use of natural light: Natural light is another option for reducing reliance on electricity. Aside from adding value to a home, skylights or larger windows can be a great option for cooler climates because they let more direct sunlight into the home’s interior. This increases passive solar gain, adding free natural warmth during the winter.
  • Installation of energy-efficient water heater: Tankless water heaters produce hot water on demand rather than keeping it hot around the clock, thereby using much less energy. Standard water heaters have improved over the past decade in terms of efficiency, so any upgrade will likely result in water and energy savings.

In summary, all of these improvements lead to energy savings, and most will also add value to the home. Homeowners who want to be certain they are not missing any obvious improvements can enlist the help of an efficiency inspector through the preparation of an energy audit.

Incentives for Making Improvements: Residential Renewable Energy Tax Credit

If your home improvements take you down an energy-efficient path, it’s important to know that some equipment qualifies for the Residential Renewable Energy Tax Credit. These include solar, wind, geothermal, and fuel-cell technology.

According to the U.S. Department of Energy, you can claim the Residential Energy Efficiency Property Credit for solar, wind, and geothermal equipment in both your principal residence and a second home. But fuel-cell equipment qualifies only if installed in your principal residence.

Taxpayers who upgrade their homes to make use of renewable energy may be eligible for a tax credit to offset some of the costs. Renewable energy tax credits are available through the end of 2021. Claim the credits by filing Form 5695 with your tax return.

If you have questions on improvements you may be considering, we invite you to contact our office to speak with your financial advisor. 


TurboTax. (n.d.). Energy Tax Credit: Which Home Improvements Qualify? Retrieved from https://turbotax.intuit.com/tax-tips/home-ownership/energy-tax-credit-which-home-improvements-qualify/L5rZH56ex

Federal Income Tax Credits and Other Incentives for Energy Efficiency. (n.d.). Retrieved from https://www.energystar.gov/about/federal_tax_credits

Federal Income Tax Credits and Other Incentives for Energy Efficiency. (n.d.). Retrieved from https://www.energystar.gov/about/federal_tax_credits

Federal Income Tax Credits and Other Incentives for Energy Efficiency. (n.d.). Retrieved from https://www.energystar.gov/about/federal_tax_credits

Federal Income Tax Credits and Other Incentives for Energy Efficiency. (n.d.). Retrieved from https://www.energystar.gov/about/federal_tax_credits

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Oil Supply & Demand: What is Happening?

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By Steven T. Merkel CFP®, CHFC® and Samantha R. Webster CFP®

Due to the current economic conditions caused by the COVID-19 virus, air travel is down, personal and business driving is down, and the price of fuel is at the lowest levels seen in quite some time.

Low Price Levels

On April 20, U.S. crude oil sharpest decline in over 30 years, due to a slump in demand. That day, West Texas Intermediate (WTI) crude for May delivery fell below zero for the first time in history. (1)

During December 2019, WTI crude oil traded at over $60 per barrel. On April 23, 2020, the price had dropped down to $16.50 per barrel – an over 70 percent drop in price.

Meeting of the Giants

In March, Saudi Arabia and Russia had a big disagreement. The Saudis wanted to cut oil output to help slow or stop the price erosion that had happened due to the drop in demand. The Russians wanted the output cut too but didn’t want to be the ones doing the cutting.

In April, OPEC (23 nations) and the other oil-producing countries agreed to cut 9.7 million barrels a day starting on May 1st, which is about 23 percent of their production levels. While this agreement will reduce the oil supply levels, many experts believe that this still won’t have much effect to counter the fall-off in demand.

Price Drop and Recovery

When the prices of one sector of the market drop so quickly, the move often is felt by other markets. Over time, continued low oil prices could lead to lower capital spending, higher unemployment figures, and credit market trouble as companies struggle to pay their bills.

The bright side is that lower oil prices mean cheaper gasoline for consumers, and relief for companies with high energy use (e.g., airlines, cruise ships, chemical firms, etc…). However, cheaper oil may pose a risk to the American energy industry, especially with the recent slowdown in transportation.

Ciccarelli Advisory Services is keeping a close eye on the oil markets to monitor whether this historic move may ripple through other areas or create opportunities for investors. 

We invite you to contact our office to speak with your financial advisor if you have any questions.

1. FoxBusiness.com, April 20, 2020

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Tax and IRA Contribution Deadlines Extended

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By Lynn A. Ferraina, Advisor

Excellence is never an accident, it is a result of high intention, sincere effort, intelligent direction, skillful execution, and the vision to see obstacles and opportunities. Today we may see obstacles but as history has shown us there will be plenty of opportunities in and after this stressful time we are experiencing.

By keeping a positive attitude we will find opportunities. President Lincoln said so many years ago “this too shall pass”. And it will. The Treasury Department and the Internal Revenue Service have already begun taking steps to provide payment relief to taxpayers. Some of the relief efforts include:

Tax Day Postponement 

  • Tax filing and payment deadlines are no longer due on April 15th. In response to the COVID-19 pandemic, the IRS has extended the income tax deadline to July 15th. All taxpayers do not have to file their tax returns or pay any owed income taxes until July 15th.
  • The relief applies to individuals, regular corporations (C corps) with a calendar-year end, and others who were originally required to file an income tax return by April 15.
  • The July 15th deadline is an automatic extension, taxpayers do not need to file any additional forms in order to qualify.
  • Self-employment taxes are also deferred to July 15 and there is no limit on the amount of tax payment that is postponed.
  • The relief also applies to estimated first-quarter tax payments for the tax year 2020 that were due on April 15, 2020, but, as of now, second-quarter payment is still due June 15.
  • Gift tax returns filed on Form 709 and generation-skipping transfer taxes, however, estate tax returns are not extended.
  • IRS will not be charging interest or penalties from April 16th through July 15th. Interest and penalties will start accruing on July 16 on overdue taxes or late returns.
  • You can still file for an extension which will extend the payment deadline to October 15th, but this extension only applies to tax filing. You will still need to pay any owed taxes by July 15th to avoid penalties.
  • If you already filed and owe taxes, but have not paid yet, you still do not have to pay until July 15th.

If you filed and have scheduled payment for April 15th, the IRS will not automatically reschedule the payment, you will have to do it. If you authorized electronic funds to withdraw as part of filing your return, you will have to revoke the payment by calling the U.S. Treasury Financial Agent at (888)353-4537. If you scheduled the payment by debit or credit card, you will need to contact the card processor to suspend payments.

More Time to Contribute to Your IRA

  • Individuals have more time to make IRA contributions for 2019. Your payment is not due until July 15th. 
  • Be sure to tell your IRA custodian to apply the contribution to the 2019 tax year. 
  • The most that can be contributed for 2019 is $6,000, plus an additional $1,000 for people who were 50 or older last year. 

IRA Mandatory Distributions Suspended

  • Those individuals who withdraw a mandatory required minimum distribution (RMD) on their IRAs will be able to forgo taking the distribution for 2020.
  • The RMD delay also applies to beneficiaries of inherited IRAs
  • If someone deferred their 2019 RMD to 2020 and would have two RMDs due this year, both are waived.
  • 2020 distributions taken within the last 60 days can be put back into IRA via an indirect rollover, provided you have not made any other indirect rollovers in the past 12 months.

The coming weeks and months will test the resolve of many, but that is why our team is here, to guide you through the triumphs and the turmoil. If you have questions about the new deadlines or if you want to suspend your IRA distribution, please do not hesitate to reach out to your CAS advisory team.

We send our best wishes to you and your family this Easter and Passover!

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. Federal tax laws are complex and subject to change. This information is not intended to be a substitute for specific individualized tax or legal advice. FSC Securities Corp. does not offer tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Understanding the Details and Benefits of the CARES Act

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By Paul F Ciccarelli CFP®, CHFC®, CLU®

On Friday, March 27th, 2020, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The approximately $2.2 trillion economic stimulus package was introduced in response to the recent COVID-19 epidemic and is an attempt on a federal level to address the issues and economic fallout of the pandemic. This is the largest emergency aid package in US history and includes a series of provisions aimed at assisting individuals, families, businesses, and economic sectors affected by the virus (nearly everyone). Highlights of the act include immediate tax rebates of up to $1,200 per taxpayer; forgivable, subsidized loans to small businesses; direct loans to the hardest-hit industries; the relaxation of income tax rules and deadlines; ongoing financial aid to students, schools, and colleges; and direct stabilization of money market mutual funds.

The Small Business Administration (SBA) and the Department of Treasury have begun releasing details that will guide the programs created through the CARES Act, but with such vast legislation, much of the provisions may be overlooked and therefore underutilized by those who might benefit the most. In an effort to provide you with as much advantageous information as possible, we have assembled some resources that may help guide you and your family as you navigate your future financial decisions.

The basic provisions of the bill provide assistance to individuals and families. These resources detail highlights of the legislation:

Forbes highlights the CARES Act

10 Things You Should Know About the CARES Act

Analyzing the CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (PPP), the initiative provides 100% federally guaranteed loans to small businesses. These resources provide details pertaining to these loans and answers questions you may have:

Small Business Association Loan Funding Options

The US Chamber of Commerce Coronavirus Emergency Loans Small Business Guide and Checklist

Live Oak Bank Loan COVID-19 Small Business Loan Options

Paycheck Protection Program FAQs for Small Businesses

Our team will continue to update the above-listed resources as more information is released. If you have questions about how the Stimulus CARE ACT may affect you directly please call your CAS advisor for further information.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

How Anxiety Changes Our Financial Decision Making

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Paul F. Ciccarelli CFP®, CHFC®, CLU® and Steven T. Merkel CFP®, CHFC®

Across the world, a whirlwind of events brought many people’s lives to a halt. The outbreak of the COVID-19 virus has caused a global pandemic and forced massive country-wide quarantines to lessen the spread of the disease. Amid this health crisis, an oil price-war between Saudi Arabia and Russia has triggered a fall in the price of oil. Both of these events have subjected the economy and individuals to a great deal of stress and anxiety.

People may be experiencing and coping with emotions in a variety of ways including modifications to judgment and decision making processes. While this is essential in life-or-death situations, it could be unintentionally problematic regarding long-term decision-making. 

Anxiety and stress are the manifestations of thoughts and fears about the ability to manage circumstances. [1]

Anxiety developed from our natural fight or flight response which early humans relied upon to tell when a situation was too dangerous. Humans still need this process to avoid potentially fatal outcomes, but the brain can have a difficult time differentiating between actual life-threatening situations and those which we perceive as being life-threatening due to certain circumstances remaining out of our control. [2]

Most know that long-term exposure to stress is not healthy and can lead to multiple serious conditions.

One of the lesser-known effects of stress is that it changes the way we think. Through attention bias, stress and anxiety alter what we are conscious of, and how we perceive the world around us. Think of it this way, if all you think about are yellow cars, suddenly all you see are yellow cars. In reality, the roads haven’t been overtaken by golden-hued vehicles, that’s just what your mind is focusing on. [3]

Stress and anxiety will change the way your brain functions, and in turn, disrupt your long-term decision making, problem-solving, and risk calculating abilities.

By disrupting the proper functioning of neurons in specific regions of the brain, stress could prevent you from making the types of decisions you would typically make. [4] If not careful, those panicked decisions could have a lasting impact on your long-term goals and full financial picture. 

Stress even changes the way men and women think about risk.

A study from the University of Southern California found that under stress, men are often more willing to take risk while women tend to take a more conservative approach, despite previous ideas or plans. [5]

As short-term survival takes over, long-term considerations are either pushed aside or are influenced by widespread panic.

The prevalence of sensationalized news, which often relies upon fear, makes it easier to focus on certain messages and topics. This may not provide all the necessary facts needed to make informed choices. Now, more than ever, you may need to rely upon those who have an outside perspective and experience guiding during times of turmoil.

When we look at the big picture of market performance over the long haul, we find that – in many cases – the most prudent course of action is to (1) stay the course and (2) capitalize on any untapped opportunities that may arise as a result of recent events.

One of the recent updates that may be beneficial to many is the postponement of the due date for filing Federal income tax returns and making Federal income tax payments. Any person (the term “person” includes an individual, a trust, estate, partnership, association, company, or corporation) will be able to hold off on filing and paying without accruing interest or penalties till July 15, 2020. Also, H.R. 6201, the Family First Coronavirus Response Act outlines certain requirements for paid sick leave and expanding the Family and Medical Leave Act. We will continue to keep you informed if there is further COVID-19 financial relief legislation.    

Psychologist Henrie Weisinger, the author of “The Genius of Instinct,” writes that people who learn to change the way they think about their problems rather than try to overcome their anxious feelings are more likely to live stress-free lives. [1] As the situation with COVID-19 and the economy continues to evolve, we want you to remember that your CAS advisor is always available to help you look past the fear and anxiety and bring the big picture into focus as we weather the turbulent tides. Today, tomorrow, and for generations to come.


  1. https://healthfully.com/193037-what-are-the-causes-of-anxiety-from-a-behavioral-perspective.html
  2. https://www.healthcentral.com/article/what-is-fight-or-flight-and-how-does-it-relate-to-anxiety
  3. https://www.bbc.com/future/article/20160928-how-anxiety-warps-your-perception
  4. https://www.psychologytoday.com/us/blog/the-athletes-way/201603/how-does-anxiety-short-circuit-the-decision-making-process
  5. https://www.psychologicalscience.org/news/releases/stress-changes-how-people-make-decisions.html

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Will the Coronavirus Be a Catalyst for a Market Correction?

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By Carol L. Girvin, Advisor and Patrick Ryan, CFP®, AWMA®

On February 24th and 25th, U.S. stock markets declined over 6% on fears that the virus known as COVID-19 or Coronavirus, would reach pandemic levels [1]. The news media is adept at catching our attention with sensationalized headlines. Remember, it’s historically the percent, not the points, which count. There are many unanswered questions regarding the long-term effects the spread of the virus will have in the U.S and across the globe, and it may take some time to reveal the overall economic impact. We’ve seen China’s response to include closing schools and factories and cutting off the city of Wuhan, believed to be the epicenter of the outbreak. 

Investors in the U.S. are left wondering if we have seen the worst of the downturn. February 26th began with modest gains in the U.S. markets before turning negative for the day as we digested news of case counts outside China’s borders exceeding China’s new cases [2]. Contributing to fears, it was reported that the CDC was developing a plan for when, not if, the virus reaches pandemic levels [3]. This should not contribute to our fears of an unknown virus but rather assure us that the authorities understand the gravity of the situation and will have plans ready to implement should the time come. 

Much like financial planners, it is the CDC’s job to plan for all contingencies.

Fear of the unknown can often be the most difficult to overcome. Providing context goes a long way to understanding the potential threat caused by COVID-19. As of February 26th, there have been over 80,000 confirmed cases of COVID-19 in 37 countries, leading to over 2,700 deaths. At least 14 of those cases are in the U.S., 12 of those are directly linked to travel in impacted areas of China [4]. Compare those numbers to the seasonal flu in the U.S. and we begin to see that fear of the unknown is causing more disruption than known threats. In the 2019-2020 flu season, CDC estimates that there have been at least 29 million flu illnesses in the U.S. leading to 16,000 flu deaths, including over 100 children [5]. While the total number of cases is slightly higher than average and dependent on numerous factors such as vaccine effectiveness and self-reporting, the mortality rate is no higher than a typical flu season. Looking at data and having perspective is always important.

So, what are we supposed to do? The media leads us to believe this is an unstoppable force that will disrupt every aspect of our daily lives. Healthcare professionals urge caution against panic and remind us that the best practices that we should follow to protect against the Coronavirus are the ones we (should) follow every day: wash hands thoroughly, cover your mouth when you cough, wear surgical masks to minimize risk of infection, stay home if you feel sick, etc. We, the public, are left to determine where reality will fall between the extremes. 

Should we avoid dining at our local restaurant? Probably not. Should we reassess our springtime vacation overseas? Maybe. Fear of the unknown causes irrational behavior. We have seen this time and time again throughout history. We should prepare for the possibility that there will be outbreaks in the U.S. This does not mean that we need to isolate ourselves and stop living our lives.

Humans are extremely adaptable, we are already seeing companies in China finding ways to get people back to work, including businesses and schools using technology to work remotely [6]. Certain sectors, such as technology, were hit particularly hard in this week’s rout. 

Other areas will benefit from panic and fear caused by an exotic virus. U.S. biotech firm Novavax (NVAX) said in a press release that it has made progress in its efforts to develop a vaccine to protect against Coronavirus. 

Shares of Novavax increased by 20 percent Wednesday [7]. Moderna (MRNA), another U.S. biotech, has already shipped an experimental vaccine for testing. Shares of MRNA are up 30 percent this week [8]. While we still do not know how this will play out, the world will continue to produce, evolve and improve.  

With U.S. markets at all-time highs, investors have been waiting for the ‘other’ shoe to drop. Will the Coronavirus be the catalyst for a market correction? Will the disease continue to spread beyond the traditional flu season? These are questions that will be impossible to answer without hindsight. If we take the ‘unknown’ part out of this fear, is this any different than other emotional swings in the market? Only time will tell.  Recent history with stocks and viruses is that markets overact leading to significant buying opportunity along the way.  Over a 38-day trading period during the height of the SARS virus back in 2003, the S&P 500 index fell by 12.8 percent.  During the Zika virus, which occurred at the end of 2015 and into 2016, the market fell by 12.9 percent.  There are other examples, but they all passed, and the market recovered and hit new highs [9].

The extent to which markets are affected will ultimately depend on the length, depth, and breadth of the impact caused by the outbreak to the global economy.  Though it’s too early to assess the virus’s full implications, travel restrictions, temporarily shuttered factories, and supply chain disruptions appear to be having a significant effect on the Chinese economy, and to a lesser degree, US corporations with business interests in China, as well as global trade more broadly [10].

It is during these uncertain times that we look to professionals for guidance. 

Investors are understandably nervous about what will happen. The prudent thing to do is reassess your financial goals to determine if they have been impacted by the recent turmoil. If your goals are still on track, making changes based on emotion could be detrimental. If the recent news and impact on your retirement, however, are keeping you up at night, this might be a good time to talk to your advisor.  We are here to assist you and guide you through the fundamentals of your financial decisions.  Never hesitate to call on us. 

 [1] https://www.cnbc.com/2020/02/26/trump-may-be-angry-about-the-sell-off-but-the-dow-is-up-strong-since-his-election.html?recirc=taboolainternal

[2] https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200226-sitrep-37-covid-19.pdf?sfvrsn=6126c0a4_2

[3] https://www.cdc.gov/coronavirus/2019-ncov/specific-groups/guidance-business-response.html

[4] https://www.cdc.gov/coronavirus/2019-nCoV/summary.html

[5] https://www.cdc.gov/flu/weekly/fluactivitysurv.htm

[6] https://www.weforum.org/agenda/2020/02/coronavirus-chinese-companies-response/

[7] https://www.cnn.com/2020/02/26/investing/novavax-coronavirus-vaccine/index.html

[8] https://markets.businessinsider.com/news/stocks/coronavirus-vaccine-moderna-stock-price-jump-profits-investors-millions-biggest-2020-2-1028942739

[9] https://www.ftportfolios.com/Commentary/EconomicResearch/2020/2/25/time-to-fear-the-coronavirus

[10] https://documentcloud.adobe.com/link/review?uri=urn%3Aaaid%3Ascds%3AUS%3A910a7247-4131-4806-a395-51b0e519ee94

The SECURE Act: The Good, the Bad, and the Ugly

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By Paul F. Ciccarelli CFP®, CHFC®, CLU®

In the final weeks of 2019, Congress passed its second major tax and retirement law in the past 24 months. The SECURE Act (Setting Every Community Up for Retirement Enhancement Act) affects many areas of retirement and income tax planning. The most notable change resulting from the SECURE Act is the elimination of the “stretch” provision for most, but not all, non-spouse beneficiaries of an inherited IRA and other retirement accounts. Under previous law, non-spouse beneficiaries could exercise more control over their taxes by taking distributions from an inherited IRA or retirement account over their life expectancy. This served to preserve wealth by deferring the tax bite for the next generation and managing these portfolios within a non-tax reportable IRA umbrella. The modus operandi for most attorneys, CPAs and financial planners was to position their client’s beneficiary arrangements to provide this “stretch” option to their children and grandchildren, either directly or from within their revocable trusts.

Under the new law, with few exceptions, non-spouse beneficiaries must withdraw all of the retirement accounts inherited within 10 years of the death of the IRA owner. There is no required minimum distribution until the 10th year when all must be distributed. Each year the beneficiary would have to add withdrawals on top of their normal taxable income. In the case of a large retirement account inheritance, this is likely to push them into a higher tax bracket.

It could be even more significant if you have named a trust as beneficiary of your IRAs and retirement accounts. In some cases, perfectly drafted trusts that were designed to inherit IRA and retirement accounts under the old law may create a tax disaster. Under commonly used trust language, the beneficiary may not be able to take a distribution until the 10th year. They would have to take the full value and pay taxes on the entire amount all at once.

If you have significant IRA and retirement assets, you will want to meet with your financial planner, attorney and CPA to review all of your beneficiary arrangements. Trusts can still be used, and in some cases may be the best plan given your and your family’s circumstances.  However, you may need to make certain that the language is correct.

Make no mistake, the new law is designed to generate revenue by collecting taxes from the next generation of beneficiaries. This law has very little effect when planning for leaving IRA and retirement assets to your spouse. There are some exceptions, which we will discuss at our Symposium on February 5th at Grey Oaks. In general, however, taxes will no longer be deferrable over the life expectancy of a child or grandchild.

Several “new” planning opportunities rise up to help protect family wealth under the new law. These may include:

Converting to a Roth IRA

A Roth IRA, unlike the traditional IRA, is funded by after-tax dollars and remains tax-free for account holders and their beneficiaries. The inherited Roth IRA must be fully withdrawn by the end of the tenth year after the decedent’s death, but unlike the inherited traditional IRA beneficiaries will not pay income taxes on the withdrawals.

Naming a Charitable Trust as Beneficiary  

For individuals and families that are charitably inclined, this planning might make sense and could provide a very similar “stretch” experience for future generations. By naming a Charitable Remainder Unit Trust (CRUT) as the beneficiary of your retirement plans, and naming children and/or grandchildren as income beneficiaries of the trust for a 20 year term or their lifetime, you eliminate the effect of the 10 year rule. At the owner’s death, the Traditional IRA and retirement assets pass to the CRUT income tax free. The CRUT then pays income to the family annually or more frequently.

Purchasing Life Insurance with Required Minimum Distributions

For individuals that have large IRA and retirement assets and are forced to take required minimum distributions (RMDs) each year, whether they need the income or not, this idea may be beneficial. If RMDs are not needed for current cash flow, life insurance may be purchased within an irrevocable life insurance trust. If both husband and wife are alive, a survivorship life policy could be most efficient. At the surviving spouse’s death the insurance policy pays out an income and estate tax free death benefit, replacing what could be a 40% income tax hit on the retirement assets. 

Each of these planning ideas have been simplified, but they can be used as a starting point for you and your advisor to discuss in more detail.

To learn more, please plan on joining our February 5th program for a more in-depth look at the good, the bad and the ugly of the SECURE Act and how it may affect you and your family.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Financial Escape Velocity

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By Jasen M. Gilbert, CFP®

The year 2019 marked the 50th anniversary of the Apollo 11 mission and landing on the moon – one of the greatest accomplishments for the US in space history. This was a successful culmination of many years of research, testing, and many earlier missions that laid the groundwork for Neil Armstrong and Buzz Aldrin to make the “giant leap for mankind.” In order to accomplish space exploration, we had to achieve Escape Velocity of the Earth which is approximately 33 times the speed of sound­­. In other words, a tremendous amount of energy is needed to overcome the Earth’s gravitational force. 

How does this relate to retirement planning? You may have saved and worked all of your life to put away enough money and get to a point where you are financially independent. This may have included raising a family, putting kids through college, developing or building a business, or possibly a long career climbing the executive ladder. Along the way you have developed a significant nest egg – maybe through disciplined savings, maxing out your retirement plans each year, saving additional funds into non-retirement accounts. Whatever path you took, you finally reached financial escape velocity, a point where you are now financially independent and confident to take the plunge into the next chapter.

You finally get to retirement or the next chapter and you are faced with a multitude of challenges – issues or situations that you have not been faced with during your working years, some very difficult to plan for, which challenge your financial escape velocity. Situations may include:

Financially Assisting Adult Children 

Through childhood and adolescence, it’s a parent’s duty to provide support for children by helping them mature and grown into adults who will, in turn, support themselves. However, some children may struggle more than others to find their footing. The instinct to shelter and protect your children is one that really never leaves a parent, even once they have reached the age of adulthood. Many parents may continue to attempt to protect them from financial hardship. An occasional helping hand may be ok, but continually shouldering expenses could cause detriment to your retirement plans. 

Parents who find themselves in a difficult spot where they are spending significant funds might be unwilling to confront their children in fear of damaging the relationship. This may be a good point to bring in your financial advisor to help mediate and facilitate discussions with your children to advance them toward a place of their own financial independence.

Unforeseen Medical Needs

High medical costs are a concern for most retirees, and it’s a reasonable concern. According to the Employee Benefit Research Institute (EBRI), a 65-year-old couple with median prescription-drug expenses who retire this year will need $295,000 to enjoy a 75 percent chance of being able to pay all their remaining lifetime medical bills, and $360,000 to have a 90 percent chance. Those figures factor in the premiums for Medigap and Medicare Part D outpatient drug benefits to supplement basic Medicare but do not include the cost of long-term care facilities or additional insurance plans. 

A sudden illness, accident, or the need to move into a long-term care facility earlier than expected could quickly dwindle down savings. Even a simple surgery could cost tens of thousands of dollars. Pre-retirees may want to look at their own family health history to gauge an idea of conditions they may want to financially prepare for. For those who qualify, a Health Savings Account (HSA) could help future retirees build a nice healthcare nest egg. 


People are living increasingly longer lives. Babies born today are likely to live longer than ever before. Living longer may have many advantages: more time to spend with loved ones, to travel, achieve your hopes and dreams. However, additional years may require you to rethink your retirement considerations and expectations. 

One major hurdle may be the cost. The percentage of people in defined benefits plans or pensions has declined, leaving a population with less longevity protection. The low-interest-rate environment also means that “safer” (lower-risk) investments may not offer high enough returns for investors. Individuals may want to have allocations for various retirement goals such as basic living expenses, healthcare/long-term planning, enjoyment, charitable giving, and bequests. Retirees may also need to consider “rebalancing” their life verses their portfolios. How will you spend the extra time? Will you stay where you are, or move closer to your family? How will you and your spouse adjust to the additional time spent together? 

Market Volatility 

Unless you have a good crystal ball lying around, there is really no way to perfectly predict every dip or change in the market. There is typically some level of risk in every investment, whether monetary or otherwise. However, once you have surpassed your working years, and begin pulling from your nest egg instead of contributing to it, market corrections may seem to hold a greater risk to financial stability. 

Retirement planning should ideally be about the long journey, including market fluctuations. A diversified portfolio may help to minimize the impact of a market downturn. A proper tax preparation strategy could also help you reduce the tax hit that could accompany future interest rate changes. 

As we start out the New Year and new decade there is never a better time to take a look at your financial plan and ensure that it is up to date and provides you and your Family with “Escape Velocity” to get you where you want to be.

Please join us for our CAS Wealth Symposium on February 5th where we will be talking about some key topics relating to maintaining financial wellness. 

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Year-End Tax Planning Ideas to Generate Potential Tax Savings

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By Lynn A. Ferraina

Maximizing Your Retirement Savings for This Year 

You can contribute up to $19,000 to your employer 401(k), 403(b), or Federal Thrift Savings Plan for 2019 plus $6000 in catch up contributions if you are age 50 or older. Pre-tax contributions will lower your take-home pay and could reduce your tax bill. If your employer offers a Roth 401(k), you can make contributions that won’t lower your taxable income but can be withdrawn in retirement tax-free. If you are self-employed or have freelance income, consider a Solo 401k plan. It must be opened by 12/31, but it can be funded up to April 15, 2020. You can contribute up to $19,000 ($25,000 if you are 50 or older) minus any contributions you’ve made to a 9-5 employer’s 401(k) plan for the year. As a self-employed individual, you can make employee and employer contributions up to 20 percent. You can contribute up to 20 percent of your net self-employment income to the plan. Contributions to the Solo 401(k) can total $56,000 in 2019 (or $62,000 if 50 or older), but they cannot exceed your self-employment income for the year.

Another option is to open a Simplified Employee Pension (SEP account). However, if you have a small amount of freelance income, you can contribute more to a solo 401(k). SEP contributions are limited to 20 percent of net self-employment income, up to $56,000.

Transfer IRA Funds to Charity 

Taxpayers who are 70 ½ or older can transfer up to $100,000 from a Traditional IRA tax-free to charity as long as the funds transfer directly to the charity. This is called a “qualified charitable distribution”. The distribution can count as your required minimum distribution without being added to your adjusted gross income. This could be advantageous if you are taking the standard deduction instead of itemizing. The transfer to charity could also help keep your income below the threshold at which you are subject to Medicare high-income surcharges as well as limit the percentage of your social security benefits subject to tax. Make your QCD well in advance of year-end because the money has to be out of your IRA and the check cashed through the charity by 12/31.

Offset Capital Gains 

Reviewing capital gains to losses is a standard practice to help reduce taxes but with 2019 being an exceptional stock market growth year it may be harder to find losses to offset gains. If you are in the 22 percent or higher tax bracket, tax-loss harvesting may make sense. You can harvest losses in excess of gains. Losses not used in 2019 can be carried forward indefinitely for federal tax purposes.

There is a long term capital gains tax rate of 0 percent in the two lowest (10 and 12 percent) marginal tax brackets. If your projected taxable income is less than $39,475 for single filers and $78,950 for married filing jointly you may want to recognize long term gains, which could be taxed at a 0 percent Federal tax rate. Check with your tax accountant for your specific tax planning situation.  

Consider Your Tax Deduction Options

Review your itemized deductions, as results for the 2018 tax filing season indicated the number of taxpayers itemizing was greatly decreased because the state and local taxes (SALT) had been limited to $10,000 for married and single filers. To itemize, you have to exceed the standard deduction, which is $12,200 for a single filer and $24,400 for married filing jointly. Given this significant change, the key to itemizing could be charitable contributions. Consider gifting appreciated securities instead of cash to charity. An example could be gifting a stock with a current value of $5,000 that you paid $1,000 to purchase. This could save $952 in tax ($4,000 x 23.8 percent). Plus, you still receive a charitable contribution deduction. The top marginal tax bracket’s federal long term capital gains rate is 23.8 percent.

As with all financial planning decisions, contact your CAS Advisor to help you work through your choices. 

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

The Potential Consequences of High Student Loan Debt

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By Kay Anderson, CFP®

As we head into summer, a new class of students is throwing on a cap and gown and leaving high school for the last time.  It is an exciting time as many of these graduates embark on their next adventures as college undergraduates.  Aside from the financial benefits, a college degree can provide highly valuable skills with a lifetime of benefits and is often critical to success in today’s workforce.

The obstacle many students face is the high-cost of education. According to the Federal Reserve, the national student loan debt reached $1.5 trillion, doubling in the last decade. In 2018, 69 percent of students took out loans, graduating with an average debt of $26,800 with interest rates between 5.00 – 7.4%. 

Student loan debt can create many long term difficulties for both students and their families.  At one point, a college degree allowed graduates to earn gainful employment, an income of their own, and living arrangements independent of their family. Today, many students graduate with a 30 year loan with payments above the cost of their rent. Many graduates have to rely on their families for housing and support even after finding employment. In certain areas of the country, such as New York City and Miami, as many as 45 percent of post-graduates have to move back in with their parents.

On the other side of the spectrum, the debt could prevent many individuals from being able to care for aging family members. Baby Boomers and older Generation X make up the largest portion of today’s potential care recipients. They are also the parents and grandparents of one of the most indebted generations. Over the next 10-15 years, the rate of potential care recipients is expected to rise to 84 percent. The rate of available caregivers is only expected to be 13 percent. For many, there comes a point where children may need to provide more care for their parents. However, the pressure of paying off staggering student loan interest and fees could create an obstacle when trying to provide care. 

No one enjoys paying a large bill, but at least there is no physical harm, right? It turns out there could be. A study by Northwestern University linked high student debt to high blood pressure and metabolic problems as well as poor overall mental and physical health. The stress and financial strain from trying to keep up with payments could lead many to develop poor sleep patterns, dietary choices, and self-care habits. These factors combined could lead to serious health problems such as Type II Diabetes, heart disease, some cancers, and depression.

Money often becomes a point of contention at some point in many relationships. Starting out a marriage with substantial debt, whether it is one or both partners with the debt, can make planning for the future difficult. A lack of disposable income could prevent couples from saving for a home or retirement.  A recent survey conducted by Student Loan Hero discovered that 13 percent of divorcees blame student loans specifically for ending their relationship. With the rate of student loan debt continuing to climb, it is possible more relationships will be affected.

Despite its high cost, a college degree has been shown to be one of the most effective ways to increase wage earning potential.  The Chronicle of Higher Education estimates an earnings gap of more than $32,000 per year between peers who earn a bachelor’s degree and those with only a high school diploma. This could result in a lifetime total income of nearly $1.4 million more than a non-degreed individual.

Parents and grandparents may consider alleviating some of the financial burden by establishing a 529 college savings plan when children are young. These tax-advantaged savings accounts grow tax free when used for any qualified education expenses including tuition, room & board, books, computer and supplies.   The plan can be created with a minimal investment of $250 and once established, any family member or friend can contribute. An individual may gift up to $15,000/year ($30,000 annually for married couples) without gift tax consequences.  

A special exception applies to 529 plans. The “five-year rule” allows for a one-time, lump-sum contribution of five years’ worth of annual exclusions. As of 2019, an individual may contribute up to $75,000 ($150,000 for married couples).  A gift tax return is required to be filed for informational purposes.

Personal time, attention, and love are the greatest gifts that you can give any child, grandchild, or family member. However, should you be in a position to generously help to reduce the financial impact on the future goals of a loved one, there can be no greater gift than the opportunity for them to achieve a great education….it is a gift that keeps on giving!

Consider your options, plan well in advance of the need, and contact your advisor to provide details on how you may begin funding a 529 plan.


Student Loan Averages


College Degree Statistics


College Students Moving in With Parents


Rate of Caregivers


Student Loans and Health


Student Loans and Divorce Rate


Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

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