• Your Financial Reset Checklist: Moves to Make as We Approach Mid-Year

    Strategic Adjustments for Enhanced Financial Health: A Mid-Year Review Guide

    As we approach the midpoint of the year, it’s an ideal time to review and potentially reset your financial strategies. This period allows you to assess your progress towards your annual goals, adjust your budgets, and fine-tune your investment strategies, too. Here’s a practical mid-year financial reset checklist to guide you through your mid-year financial review.

    1. Review Your Budget

    Start with a thorough review of your current budget:

    • Examine Spending Habits: Compare your planned expenses against actual spending. Look for areas where you’ve overspent and identify categories where you can cut back.
    • Adjust Budgets: Based on your spending review, make the necessary adjustments to your budgets for the rest of the year. Consider any changes in your income or expenses since the beginning of the year.

    2. Evaluate Your Emergency Fund

    An emergency fund is crucial for financial security, providing a buffer against unexpected expenses:

    • Assess Fund Adequacy: If you don’t have one already, work toward an emergency fund that covers at least three to six months of living expenses. If you aren’t near your goal yet, plan how you can bolster this fund in the second half of the year.
    • Replenish If Needed: If you’ve had to dip into your emergency fund, it’s alright! That’s why you have it. However, now you need to make a plan to replenish it. Prioritize this to avoid potential financial strain going forward.

    3. Reassess Your Financial Goals

    Mid-year is a perfect time to reassess and refine your financial goals:

    • Goal Progress: Evaluate how close you are to achieving the goals you set at the beginning of the year. This could be saving for a down payment, paying off debt, building a plan to pay for healthcare in retirement, or investing more of your retirement savings.
    • Adjust Goals as Necessary: Life circumstances change, and so may your financial goals. Adjust your strategies to better align with your current situation and future aspirations.

    If you neglected to set goals at the start of the year, it’s not too late! There is nothing magical about January 1, so get started setting your goals now with the S.M.A.R.T. goals framework.


    Related: New Year, New Goals: Planning Your Money Moves for 2024


    4. Check Credit Reports

    Regular checks on your credit report can help you catch and rectify any inaccuracies that might affect your financial health, not to mention helping you spot identity theft:

    • Request Credit Reports: You can obtain a free credit report from each of the three major credit bureaus once per year at AnnualCreditReport.com.
    • Review for Accuracy: Look for any discrepancies or fraudulent activities. Promptly report any errors to the credit bureau for correction.

    5. Review Insurance Coverages

    Insurance needs can evolve, so it’s important to periodically review your policies:

    • Assess Coverage Needs: Consider changes in your life that might affect your insurance needs, such as buying a new home, changing marital status, or adding a family member.
    • Shop for Better Rates: Compare your current policies with what’s available on the market to see if you can find better rates or more comprehensive coverage for the same price.

    6. Optimize Your Investments

    Market conditions change, and so should your investment strategies:

    • Portfolio Review: Assess the performance of your investments and consider rebalancing if your asset allocation has drifted from your target, which happens to many investors over time.
    • Tax-Saving Strategies: Consider tax implications of any buy or sell actions in your portfolio and explore opportunities like tax-loss harvesting to offset gains.

    7. Plan for Tax Liabilities

    You may be breathing a sigh of relief with tax season behind you, but working all year round to understand your potential tax liabilities can help you manage your finances more effectively:

    • Estimate Taxes: Use your current earnings and expenses to estimate your tax liability for the year.
    • Adjust Withholdings: If you anticipate a major tax bill or a significant refund, adjust your tax withholdings accordingly to better manage your cash flow.

    8. Reflect on Your Financial Well-Being

    This step is a subjective addition to your mid-year financial reset checklist because financial well-being means different things to different people. So, decide what it means to you and take a moment to reflect on how you’re feeling about your finances:

    • Financial Stress Test: Consider how you would handle a financial emergency. Do you feel confident about your financial situation?
    • Educational Opportunities: Look for ways to improve your financial literacy. Engaging with financial news, books, or seminars can provide valuable insights and enhance your financial decision-making skills.

    Concluding Thoughts on Using a Mid-Year Financial Review Checklist

    A mid-year financial review checklist is a practical tool that can help you take proactive steps to stay on track with your financial objectives. This checklist serves as a guide to help you assess various aspects of your finances, from budgeting and savings to investments and taxes. By taking the time to review and adjust your financial plan now, you can improve your financial health and approach the rest of the year with a solid strategy in place.


    Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.

  • National Retirement Planning Week

    Three Questions to Help You Clarify Your Lifestyle Goals

    There’s No Better Time Than Right Now to Strengthen Your Financial Future

    National Retirement Planning Week, observed from April 13-17, serves as a timely reminder of the importance of thoughtful retirement planning. This week emphasizes the need to reflect on our retirement goals and the steps necessary to achieve them. In light of National Retirement Planning Week, let’s explore three critical questions designed to help you clarify your lifestyle goals for retirement. By pondering these questions, you can gain insights into your desires and priorities, helping you navigate the path toward a fulfilling retirement.

    1. What Does Your Ideal Retirement Look Like?

    The first step in honoring National Retirement Planning Week is to envision your ideal retirement. This vision goes beyond financial figures; it’s about picturing the day-to-day life you wish to lead. Do you see yourself traveling the world, spending more time with family, or perhaps pursuing hobbies you’ve always been passionate about? Or maybe your dream retirement involves volunteering and giving back to the community.

    Envisioning your ideal retirement requires a deep dive into your personal aspirations and values. It’s about understanding what truly matters to you and how you want to spend your time. Reflecting on these preferences during National Retirement Planning Week can help you set more targeted goals and create a roadmap to achieve them.

    2. Where Do You Want to Live in Retirement?

    The second question to consider during National Retirement Planning Week focuses on your preferred retirement location. Your choice of residence in retirement can significantly impact your lifestyle, finances, and overall well-being. Some may dream of retiring to a beachfront property, while others might prefer the comfort of their current community or the adventure of living abroad.

    Consider factors such as the cost of living, proximity to loved ones, climate, and access to healthcare and recreational activities. Thinking about where you want to live can help you align your savings and investment strategies with the costs associated with your desired location.


    Related Article: Bridging the Retirement Gap with FIAs


    3. What Kind of Lifestyle Do You Wish to Maintain?

    The third question encourages you to reflect on the lifestyle you wish to maintain during retirement. This inquiry is crucial as it directly influences your financial planning. Understanding the lifestyle that you aspire to can help you estimate the funds needed to support your retirement dreams. Whether it’s a simple, modest lifestyle or one filled with luxury and adventure, being honest about your expectations is key.

    Consider your current lifestyle and which aspects you want to carry into retirement. Also, think about potential changes or additions you’d like to make. During National Retirement Planning Week, take the time to detail the aspects of your desired lifestyle, including hobbies, travel plans, and daily activities. This clarity can guide your financial decisions and help ensure your retirement planning is aligned with your lifestyle goals.

    Get Motivated During National Retirement Planning Week

    National Retirement Planning Week is an opportune time to engage in deep reflection about your future. By asking yourself these three questions, you can gain a clearer understanding of your retirement aspirations and the steps needed to achieve them. Remember, retirement planning is not solely about accumulating wealth; it’s about creating a future that aligns with your personal vision of happiness and fulfillment.

    As National Retirement Planning Week encourages us to think about the future, it’s important to approach retirement planning as an ongoing process. Regularly revisiting your goals, adjusting your plans as necessary, and staying informed about financial strategies can help you navigate the path to a rewarding retirement. While the journey may require patience and discipline, the reward of achieving your desired retirement lifestyle is immeasurable.

    In observance of National Retirement Planning Week, consider setting aside time to ponder these questions seriously. Reflect on your aspirations, discuss your goals with loved ones or a financial advisor, and take proactive steps towards making your retirement dreams a reality. Remember, it’s never too early or too late to start planning for retirement, and National Retirement Planning Week is the perfect time to begin.


    Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.

  • Maximizing Charitable Giving: Strategies for Making an Impact

    Tips to Help You Practice Meaningful and Strategic Philanthropy

    Many people find that being philanthropic with their money brings them joy. After all, being charitable can be a meaningful experience and is a way to put your core values into practice. Recent data confirms this, as the 2023 Giving USA Foundation report has shown that 64% of Americans donated to charity in the previous year. If being philanthropic fits with your personal and financial values, here are six strategies to help you maximize your charitable giving impact.

    Charitable Giving Impact Tip #1: Identify the Causes You Care About

    With finite resources, it’s important to be intentional about where to donate your money. Making a list of non-profit organizations that you have given to in the past, and perhaps adding some new organizations whose work you care about, is a good start. Looking over your list, consider what your current priorities in life are, and choose those that are in alignment with your values. This exercise can help you to ensure that your charitable dollars are supporting not just the causes that are appealing to you for help, but the causes that are currently important to you.

    Charitable Giving Impact Tip #2: Consider Streamlining Your Giving

    Speaking of those charitable appeals, it’s likely that you receive a multitude of donation requests from worthy nonprofits throughout the year. However, philanthropy isn’t like investing, where diversification is a recommended strategy. To maximize the impact of your philanthropy, you may consider streamlining your donations to charities that are akin and most closely align with your core values. For example, if animal welfare is important to you, you may want to focus your giving on shelters or animal and wildlife protection organizations. In this way, your giving achieves a greater impact across the spectrum of the cause you care most about.


    New Year, New Goals: Planning Your Money Moves for 2024


    Charitable Giving Impact Tip #3: Involve Your Family

    Philanthropy is about more than money. It can also involve sharing your values with future generations and teaching them about meaningful ways that they can make a difference in the lives of others. Gathering your family together to actively participate in charitable giving decisions can also create a new shared tradition. While together, you’re helping to instill the spirit of giving, while offering each family member the opportunity to share with everyone the causes that are most important to them. There are a variety of ways to maximize your family’s charitable giving, including pooling money together toward a selected cause, establishing a fund that allows family members to choose how to direct their donations, or annually rotating the selection of charitable causes. When you instill the habit of giving, you are also building a values-based tradition that will positively impact both your family members and the lives of others.

    Charitable Giving Impact Tip #4: Research the Charities Carefully

    Take the time to determine the best charities that will accomplish your family’s charitable goals. Knowing the mission of each organization is the best place to start. Be sure the mission and values of your chosen nonprofits align with your giving intentions. Also ensure that the finances and management of the organization are sound. Look into what percentage of charitable donations directly support the cause or programs, as opposed to administration and overhead. There are reputable tools to help you gain this knowledge such as Charity Navigator, GuideStar, Charity Watch, and Charities Review Council.

    Charitable Giving Impact Tip #5: Maximize Your Gift

    Having determined where you want to focus your philanthropy, there are some steps you can take to maximize your giving:

    • Give directly to avoid the middleman. Some nonprofits utilize the services of professional fundraisers, paying them anywhere from 40 to 80 percent of the proceeds received. Often these solicitations are via phone, so avoid this and give directly to the charitable organization.
    • Avoid using credit cards. Nonprofits usually have to pay a credit card fee of 3 to 5 percent, which reduces the amount of your donation and thus the level of your charitable giving impact.
    • Look into employer matching gift programs. Many employers offer the opportunity to match your gift, thus increasing your charitable contribution and your impact.
    • Gifting appreciated assets that you have held for more than one year as a direct gift can provide you with tax benefits while helping the charity of your choice. You may also consider establishing a donor-advised fund (DAF) which can also provide you with tax savings.

    Note: A donor-advised fund (DAF) is a charitable investment account that you establish at a public charitable foundation for the sole purpose of supporting nonprofit organizations that you care about. They provide a flexible way to donate with either cash or securities, and they can provide many tax advantages. A DAF can prove to be a strategically beneficial tool to consider in your philanthropic efforts, though it won’t be right for every family.

    Charitable Giving Impact Tip #6: Giving Beyond Money

    Donating money isn’t the only way to practice philanthropy. Time and talent can be just as valuable to a charitable organization, and many organizations need the skills of volunteers. Whether you’re giving at the financial level that you would like to or not, volunteering can help you feel more connected to the causes you care about.

    Concluding Thoughts on Maximizing Your Charitable Gifting Impact

    Practicing philanthropy through the giving of your time, talent, or money to make an impact on the charities and causes you care about can be very meaningful for both you and the organizations of your choice. Often, it doesn’t take a lot to make a difference. Be comfortable with the level of your giving and consider some of the strategies offered here to maximize your impact and instill the value of philanthropy in your family, as well.


    Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.

  • The Excise Tax Waiver Has Expired for 10-Year IRA Beneficiaries with Annual RMDs

    By: Denise Appleby, MJ, CISP, CRC, CRPS, CRSP, APA

    Beneficiaries subject to SECURE Act’s 10-year rule and required to take annual RMDs were granted an automatic waiver of the excise tax that would otherwise apply if they failed to take required minimum distributions (RMDs). These automatic waivers applied to 2021, 2022, and 2023. But, failing further extension by the IRS, these beneficiaries must take RMDs for 2024 to avoid the 25% excise tax.

    Who qualified for this automatic excise tax waiver?

    This automatic waiver applies only to beneficiaries who meet the following two requirements:

    1. They are subject to the 10-year rule, under which their inherited IRA must be fully distributed no later than the 10th year after they inherited the IRA. And
    2. They are required to take annual RMDs.

    These beneficiaries are:

    A. Any designated beneficiary who inherited a traditional, SEP, or SIMPLE IRA, where the IRA owner died on or after their required beginning date (RBD).

    • The RBD is the date an account owner must take their first RMD.
    • Roth IRAs are not included because Roth IRA owners do not have RMDs.

    Example 1

    50-year-old Tom inherited his 75-year-old father’s traditional IRA in 2020. Tom is more than ten years younger than his father, not disabled or chronically ill, and, therefore, not an eligible designated beneficiary. Since Tom is a plain designated beneficiary, he is subject to the 10-year rule and, therefore, must ensure that the inherited IRA is fully distributed by the end of 2030. In addition, because Tom’s father died after his RBD, Tom must take annual RMDs over his life expectancy beginning in 2021.

    While the excise tax applies to an RMD that is not taken for a year, it is automatically waived for Tom for 2021, 2022, and 2023.

    B. A successor beneficiary, where the primary beneficiary was taking life expectancy distributions.

    This provision applies to traditional, SEP, SIMPLE, and Roth IRAs.

    Example 2

    75-year-old Sally inherited a traditional IRA from her 77-year-old sister Carla in 2020. Sally is an eligible designated beneficiary because she is ‘not more than ten years younger’ than Carla.

    Sally must take annual distributions over her life expectancy, beginning in 2021. The 10-year rule does not apply to Sally because she is an eligible designated beneficiary.

    The automatic waiver does not apply to Sally because she is not subject to the 10-year rule.

    Sally died in 2022, and her IRA was inherited by her son, Tim.

    Tim, the successor beneficiary of Carla’s IRA, must continue taking distributions over Sally’s life expectancy beginning in 2023. Tim must also ensure that the IRA is fully distributed no later than 2032, which is the 10th year after Sally’s death.

    While the excise tax applies to an RMD that is not taken for a year, it is automatically waived for 2023 for Tim.

    While other beneficiaries could qualify for waivers under other circumstances, these are the only two types that qualify for the automatic waiver discussed in this article.

    Are ‘catch-up RMDs’ required?

    A catch-up distribution is optional for those qualifying beneficiaries who did not take their RMDs for any or all three years (2021, 2022, and 2023). However, they must still meet the 10-year deadline. For instance, in the case of Tom in Example 1, he must still ensure that his inherited IRA is fully distributed by the end of 2030 despite the waiver of the excise tax.

    No special tax forms or tax reporting required

    Generally, IRS Form 5329 must be filed for an RMD not taken by the deadline, and any excise tax included as ‘additional taxes’ on the individual’s tax return. But an exception applies where there is an automatic waiver. Resultantly, beneficiaries who qualified for the automatic waiver discussed herein need not file IRS Form 5329 for any RMDs not taken for those years.

    Should these beneficiaries wait and see for 2024?

    One of the common questions about this automatic waiver is whether it will be extended for 2024. There is yet to be an indication from the IRS that it will. There is still time for those who prefer to wait, as the deadline for taking the 2024 RMDs is December 31, 2024.

    The IRS’s first notification of the excise tax waiver was published in July of 2022, explaining the excise tax was waived for 2021 and 2022.

    The second notice, extending the waiver to 2023, was issued in July 2023. It would be reasonable to assume that any notification of an extension of the waiver could be issued later in the year.

    To take or not to take a 2024 RMD

    Beneficiaries should consider the impact of not taking RMDs for 2024, even if the excise tax is waived. Not taking an RMD for 2024 means bunching up the distributions over a period that is one year shorter, causing larger RMD amounts for the remainder of the ten years. However, a waiver might be a welcome solution for a beneficiary who needs to shift the income from 2024 to a later year for tax and other financial planning reasons.

    The consequences of missing the 2024 deadline

    Failing any further extension of the automatic waiver provision, a beneficiary who misses the deadline for taking their 2024 RMD will owe the IRS an excise tax of 25%. This excise tax is reduced to 10% if the shortfall is corrected in a timely manner.

    If a taxpayer misses the RMD deadline due to reasonable error, their tax preparer may request a waiver of the excise tax when filing IRS Form 5329.

    Reminder: RMD rules, including the ones discussed in this article, also apply to employer plans. However, plan administrators administer RMDs. Employees and beneficiaries with assets under employer plans should contact the plan administrator for assistance with their RMDs.


    Copyright ©2024 Horsesmouth, LLC. All Rights Reserved. Horsesmouth, LLC is not affiliated with Lane Hipple Wealth Management Group or any of its affiliates. Information contained above is accurate as of 2/2/24. It is subject to legislative changes and is not intended to be legal or tax advice. Consult qualified tax advisors regarding specific circumstances. This material is furnished “as is” without warranty of any kind. Its accuracy and completeness are not guaranteed, and all warranties expressed or implied are hereby excluded. Seek legal, tax, and investment advice from qualified professionals.

  • Employee Stock Ownership Plans for Executives

    Tips to navigate ESOP suitability within the context of financial planning strategies

    Employee Stock Ownership Plans (ESOPs) have emerged as a popular mechanism for companies to foster employee ownership and align the interests of employees with those of shareholders. For seasoned executives, considering participation in an ESOP entails a careful evaluation of the potential benefits and risks involved.

    Benefits of ESOPs for Seasoned Executives

    Ownership and Alignment of Interests: ESOPs grant employees, including seasoned executives, a direct stake in the company’s performance and financial success. By owning shares of the company, executives are motivated to work towards enhancing shareholder value, fostering a sense of ownership, commitment, and alignment of interests across all levels of the organization.

    Wealth Accumulation and Retirement Planning: Participation in an ESOP provides seasoned executives with an opportunity to accumulate wealth over time, leveraging the potential appreciation in the value of company stock. ESOPs can serve as a valuable component of executives’ retirement planning strategies, allowing them to build a diversified portfolio of assets while benefiting from potential tax advantages associated with qualified retirement plans.

    Tax Deferral and Liquidity Options: ESOP contributions are typically made with pre-tax dollars, allowing participants to defer taxes on the value of the contributed shares until distribution.

    Additionally, ESOP participants may have access to various liquidity options, including the ability to sell shares back to the company or on the open market, providing flexibility in managing their investment portfolio and liquidity needs.

    Retention and Incentive Alignment: ESOPs can serve as effective retention tools for seasoned executives, incentivizing long-term commitment and loyalty to the company. By offering a stake in the company’s ownership, ESOPs reinforce the executive’s connection to the organization’s mission, values, and long-term success, fostering a culture of employee engagement and dedication.


    RELATED: Understanding Stock Options: ISOs, NQSOs, & Restricted Stock


    Risks and Considerations for Executives

    Concentration of Risk: Participation in an ESOP exposes seasoned executives to concentration risk, as their investment portfolio becomes heavily weighted towards company stock. In the event of adverse developments or underperformance of the company, executives may experience significant declines in the value of their ESOP holdings, potentially jeopardizing their financial security and retirement goals.

    Lack of Diversification: ESOP participants may face limited diversification options, particularly if the company’s stock represents a substantial portion of their investment portfolio. Without adequate diversification, seasoned executives may be vulnerable to market volatility and sector-specific risks, underscoring the importance of implementing sound diversification strategies to mitigate downside risk.

    Liquidity Constraints: Unlike publicly traded stocks, shares held in an ESOP may have limited liquidity, making it challenging for seasoned executives to convert their holdings into cash when needed. Illiquid ESOP shares may pose liquidity constraints and inhibit executives’ ability to access funds for personal financial goals, necessitating careful planning and consideration of alternative liquidity options.

    Regulatory and Fiduciary Compliance: ESOPs are subject to a complex regulatory framework governed by ERISA (Employee Retirement Income Security Act) and other federal and state laws. Seasoned executives serving on the board of directors or as trustees of the ESOP bear fiduciary responsibilities and must adhere to strict compliance requirements, including the duty to act prudently and in the best interests of ESOP participants.

    Navigating the Decision Process with Care

    For seasoned executives contemplating participation in an ESOP, the decision entails a nuanced assessment of the potential benefits and risks in light of their financial objectives, risk tolerance, and long-term outlook.

    Consultation with financial advisors, legal experts, and other professionals can provide valuable insights and guidance in navigating the complexities of ESOPs and evaluating their suitability within the broader context of executives’ financial planning strategies.


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