Featured
Gale Klappa (Executive Chairman & Office of the Chair – WEC Energy Group, Director – Associated Banc-Corp and Badger Meter Inc.) sits down with Annex Wealth Management’s President & CEO, Dave Spano CFP® for a four-part interview exclusive.
1 | Week In Review
Earnings reports were a mixed bag, and some experts believe that today’s financial bad news was “baked in” to the markets already. Will the bottom be a “u” or a “v” – and is it near? Annex Wealth Management’s Dave Spano and Derek Felske discuss.
2 | Poll
Required Minimum Distributions: Common Questions: What if I don’t take any distributions, or if the distributions I take don’t meet the RMD amount?
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3 | Client Exclusive
Who’s On Your Team?
This week we talk to Tom Parks, AIF®, CRPS™, our Director of Retirement Plan Services. He explains his role at Annex, what he likes to do for fun, and also what he wanted to be when he grew up!
Describe what you do at Annex.
My primary responsibility is leading the 401(k) team at Annex. We help employers construct and maintain awesome retirement plans for their employees. Then we help their people make the most of that benefit. A big part of fulfilling those duties involves the creation and distribution of educational content so I also spend a lot of time writing scripts for videos and working with Deanne Phillips, our Director of Client learning to deliver informational webinars.
Is this the career path you thought you’d take when you first got into the professional world?
Not even close! I was certain from the time I was in grade school that I would someday be an attorney. Anyone who has spent time with me knows how much I love to advocate and argue for the things for which I am passionate. I majored in philosophy in college with a minor in economics with the goal of attending law school. Upon my return from two years of volunteering in Ecuador after undergrad, I was hopelessly broke and in urgent need of income. My ability to speak Spanish and present in front of large groups led to a job teaching workers why they should save in their company 401(k). I quickly fell in love with getting up every day to help people understand something I myself didn’t grasp when I started in this industry. I never looked back.
When you’re not at work, what do you like to do? Do you have any hobbies?
I like reading, arguing with people, listening to podcasts on my daily walks with the dogs, hiking with my family, and shooting at the gun range. Public policy is a passion of mine, so I enjoy attending candidate debates & forums, etc. and am engaged with a couple public policy advocacy groups.
What is one thing you’d like people to know about you? (fun fact, etc.)
I love listening to music. Depending on the mood I’m in, my coworkers will hear heavy metal, classic rock, rap, Latino, or whatever else blaring from my office. I once suggested moving from my office into a cube and I was told I make too much noise with my music so I had to stay in an office so the door could be closed.
How do you take things you learn and practice in your everyday life and apply it at Annex?
When I see statistics indicating that approximately 8 in 10 Americans live paycheck-to-paycheck, my heart breaks. The challenges we all face with finances have a ripple effect on so many aspects of our lives. Whether it’s our relationships, careers or even our emotional and physical health, money anxiety exacerbates stress in other areas. You don’t have to look very hard to see it all around you. I try to keep that in mind every day when I come to the office because I am blessed to work for a mission-driven organization that allows me to be myself and approach my job in ways that are often unconventional.
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4 | MoneyDo
Review Account Titles & Beneficiary Designations
Reviewing how your accounts are titled and who you have named as beneficiaries are important steps in making sure your finances are organized and up to date. It becomes even more important if you’ve recently completed or updated your estate plan because account titles and beneficiaries could undo, counteract, or override your estate plan.
This week’s MoneyDo: Review the ownership structure of your accounts and make sure it aligns with, rather than alters, your estate planning goals.
If you’ve experienced a significant life change like divorce, remarriage, or a tragedy like death of a spouse or child, your account titling and beneficiaries need to be updated. Unfortunately, we’ve seen too many instances where nothing was updated, which resulted in calamity. We’ve seen an ex-spouse still named the beneficiary of a retirement plan; or, after the death of the primary beneficiary, the disheartening discovery that there are no contingent beneficiaries, forcing the account through probate before being distributed.
As mentioned before, titling refers to who is listed as an owner of an asset. There are a variety of ways to own an asset.
- Individual Account: one person owns the account. Assuming there is no beneficiary appointed, the account will be subject to probate without additional estate planning.
- Joint Account with Right of Survivorship (JTWROS): ownership between two or more individuals that automatically transfers or continues ownership of the asset in the surviving owners name after one of them dies. Each joint owner has access to 100% of the account. Ownership will override the provisions of an owner’s Will or Trust. The last surviving owner will have 100% ownership and control, at which time it becomes an individual account of the last owner.
Beware of adding a child to an account as a joint owner, as you are giving that joint owner control and access to the account. So your child could use the funds as their own, to your detriment. If your child has creditor problems, those creditors may go after your account.
- Tenants in Common (TIC): unlike a joint account with right of survivorship, TIC is based on the proportional amount contributed by each owner. Ownership does not automatically pass to the other owners upon death and would be subject to probate and pass according to an individual’s Will.
- Trust: a Trust account is governed by the Trust document during life and at death. The Trust eliminates the need for probate when funded properly, but there are many types of trust that can have varying tax consequences that the owner should be aware of.
Make sure to note which types of account titling pass according to title or by Will, via Probate. If you have a Trust, it is important to properly title accounts to utilize the trust.
Another alternative to be used in conjunction with account titles is the proper handling of beneficiary designations.
Beneficiary designations, also known as a Payable on Death or Transfer on Death, can be listed on a variety of accounts and direct who will receive the accounts upon your death. When used correctly as part of a comprehensive estate plan, beneficiary designations can help avoid probate. In addition to naming primary beneficiaries, it is important to name contingent beneficiaries.
Consult with your estate planning attorney or financial advisor to ensure your estate plan is properly developed in a tax-efficient manner prior to naming Trusts as beneficiaries on retirement plans and IRAs. Naming a Trust as a beneficiary without a proper estate plan can have detrimental income tax consequences to your beneficiaries.
It is important to review accounts and beneficiaries every few years. The more accounts you have, the more cumbersome reviewing and updating account titles and beneficiaries can be. Consolidation and simplification remain important components of financial and estate planning, making updates easier as your estate plan evolves. Doing so also ensures that all your financial accounts are properly aligned with your estate plan to make the transition to your heirs a smooth process.
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5 | Ask Annex
Ask Us A Question!
6 | Quote of the Week
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7 | Annex Radio
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Events & Webinars
Annex Wealth Management has always been committed to client growth and education. Planning and saving can be demanding. We’ve found that when our clients master key concepts, it often enhances working together to reach their goals. Because these are not sales presentations, our clients benefit from a truly informative experience.
UPCOMING EVENTS →
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