• 5 investment ideas for small-business owners struggling to keep their finances liquid

    Three local financial experts share their advice.

    Andrew Hipple has advice on how small business owners (and individuals) can take advantage of the rise in interest rates.
    Andrew Hipple has advice on how small business owners (and individuals) can take advantage of the rish in interest rates. (photo credit: Steven M. Falk / Inquirer Staff Photographer)

    Written by Gene Marks

    Even as commercial lending rates have more than doubled in the last year, interest rates earned on checking, money market and savings accounts remain stubbornly low as banks seek to maintain their profitability.

    That’s not helpful for business owners, who need to earn money on their cash reserves while keeping enough liquidity to meet faily working capital needs. Options remain limited, but the environment is slowly changing, and a number of investment choices with minimal risks are emerging.

    Click here to read full article from the Philadelphia Inquirer, featuring Andrew Hipple CFP®, Partner at Lane Hipple Wealth Management Group.

  • Financial Tips for Doctors with Student Loan Debt

    How to Get Strategic About Tackling Your Medical School Costs

    Medical school can certainly be viewed as an investment – but it’s a costly one. Statistics show that the average student loan debt for college students is $28,950, while the average medical school debt is around $200,000. Even for doctors who are earning high salaries, it can be challenging to pay down such a hefty amount of educational debt.

    Feeling burdened by debt can seriously impact your finances, but it can wreak havoc on your emotional and physical well-being, too. If you’re a medical student or doctor looking to protect your net worth and quality of life, it’s imperative that you establish a savvy plan for paying off your student loans. Below are five tips to help you get started.

    First: A Word on Federal Student Loan Forgiveness for Doctors

    At this article’s writing, President Biden’s student loan forgiveness program is tied up in the courts and it remains unclear when borrowers may get final answers on whether they qualify for any form of federal loan forgiveness. However, it should be noted that some doctors could eventually qualify for medical school loan forgiveness. Get updates here as they come.

    Now, onto helpful tips that doctors can use to pay off student loan debt.

    Tip #1: Don’t Throw All Your Money at Your Loans

    It’s tempting to want to discharge your debt as quickly as possible, but it’s important to budget out your paycheck to fund other priorities, too. This means putting some money into a savings account to establish an emergency fund so that you’re protected from the unexpected, and thinking about other financial goals you’re working towards, too.

    Should you amass huge savings? No, not while you have significant debt. However, you should save at least three to six months’ worth of expenses so that you have a solid amount to fall back on should life throw you a curveball – which it’s bound to do at some point. The last thing you want to do is increase your overall debt because you didn’t have the funds to cover an unforeseen expense.

    Tip #2: Investigate Income-Driven Repayment Options

    You may be able to ease your student loan debt through the federal income-driven repayment program. They set your monthly student loan payment to an amount that is deemed to be affordable based on your income and family size. Often, your payments can be adjusted to around 10% of your discretionary income amount. Discretionary income is determined by taking the difference between your Adjusted Gross Income and 150% of the federal poverty guideline.

    Income-based repayment plans can be quite advantageous from a cash-flow point of view. However, when taking on any new payment plan, be sure to also consider any anticipated medical school loan debt forgiveness, any risk of capitalizing interest, and potential tax consequences.

    Tip #3: Refinance Cautiously

    Oftentimes, you’ll come across options to refinance your loans at a lower rate through private lenders. This can be a smart move if the loans are equal, though that isn’t always the case. You may end up taking on more risk through a refinance than originally intended, so proceed with care.

    Though it might not be obvious at first glance, federal student loans come with several benefits that refinanced loans don’t have. For example, with federal student loans, you can qualify for income-driven repayment programs, public service loan forgiveness opportunities, and more forgiving ways of dealing with financial setbacks such as long-term disability. So, before refinancing medical school debt, doctors should consider all factors and carefully weigh the pros and cons of a refi.

    Tip #4: Avoid ‘Lifestyle Creep’

    This is a concept that can be detrimental in any profession, but high earners such as doctors can be particularly susceptible. As you get more established in your medical career and begin to see your hard work reflected in your paycheck, it can be tempting to begin introducing more luxury into your lifestyle or to increase your spending. While you don’t have to deny yourself material rewards like a big house or fancy car, be sure that you’re budgeting appropriately and not getting carried away. For example, a pay increase should never always go to new lifestyle expenses. Be sure to increase your savings and investments, too.

    Prioritize building an emergency fund, think about your mid-term savings goals, always work to max out your retirement accounts, and pay extra on your student loan debt, too. After your financial responsibilities are satisfied, then you can indulge in more lifestyle spending with the knowledge that you’re on firm financial footing.

    Tip #5: Tackle High-Interest Loans with Gusto

    Some people tackle large amounts of debt by paying off smaller loans first, which is called the snowball method. However, note that the benefit of paying off your debts this way is purely psychological. The idea is that each small debt you pay off will motivate you to continue on to larger ones. Financially speaking, there’s no real benefit to paying off smaller loans before others. For doctors with significant student loan debt, paying off your loans with the highest interest rates first allows you to pay less in interest over time and more towards the loan principal – a savvier strategy for your financial outlook.

    Are You a Doctor Chipping Away at Student Loan Debt?

    To achieve your dream of entering the medical profession, you’ve likely invested time and money and made countless personal sacrifices, too. And while your career may be rewarding, it’s also normal to feel the heavy burden of medical school loan debt. If you think you would benefit from a conversation about your debt repayment strategy or your overall financial plan, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-638-1855, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.

    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.

  • Quarterly Tax Ideas

    Market Exit

    GETTING OUT OF THE MARKET BECAUSE OF TAXES?

    Are you thinking about bailing out of stocks because you are worried that the capital gains tax structure might change? Before you hit the sell button, think it over carefully and make sure you truly understand the tax implications – especially the differences between short- and long-term capital gains.

    Capital gains taxes are essentially separated into one of two categories: short-term and long-term. And as you might surmise, the category that applies to you depends on how long you’ve held the assets.

    • Short-term capital gains taxes are applied to profits from selling an asset you’ve held for less than a year. Short-term capital gains taxes are aligned with where your income places you in federal tax brackets – in other words, you pay the same rate as you would on ordinary income taxes.
    • Long-term capital gains taxes are applied to assets held for more than a year. The long-term capital gains tax rates are 0%, 15% and 20%, depending on your income. Generally speaking, these rates are lower than the ordinary income tax rates.

    Long-Term Capital Gains Tax Rates

    The tax rate on most net capital gain is no higher than 15% for most individuals, but if you are a high-earner, you might fall into the 20% long-term cap gain bracket.

    FILING STATUS0% RATE15% RATE20% RATE
    SingleUp to $41,675$41,676 $459,750Over $459,750
    Married filing jointlyUp to $83,350$83,351 $517,200Over $517,200
    Married filing separatelyUp to $41,675$41,676 $459,750Over $459,750
    Head of householdUp to $55,800$55,801 $488,500Over $488,500
    SOURCE: IRS

    There are a few other exceptions where capital gains may be taxed at rates greater than 20%:

    1. The taxable part of a gain from selling section 1202 qualified small business stock is taxed at a maximum 28% rate.
    2. Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate.
    3. The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate.

    2023 Mileage Rates Announced

    The Internal Revenue Service issued the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

    Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

    • 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
    • 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
    • 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

    In addition, the IRS announced that:

    • These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.
    • The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
    • It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.
    • Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
    • Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

    Remember, the IRS Will Never…

    Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.

    • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
    • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
    • Ask for credit or debit card numbers over the phone.

    Your Financial Advisor

    Although Congress continues to pass large economic bills (the CARES Act and the Inflation Reduction Act were each about 800 pages long), no single bill can account for every unique situation. Worse, the federal tax code is crazily long. At over 2,500 pages, it is 5x the length of the Grapes of Wrath, written by John Steinbeck.

    So, before you go down a path that might not be in your best interest long-term, make sure you consult with your financial advisor to determine how any new tax changes and any proposed tax changes might impact you and your family.

    Nothing contained herein shall constitute an offer to sell or solicitation of an offer to buy any security. Material in this publication is original or from published sources and is believed to be accurate. However, we do not guarantee the accuracy or timeliness of such information and assume no liability for any resulting damages. Readers are cautioned to consult their own tax and investment professionals with regard to their specific situations.

  • Passing an Inheritance to Your Children: 8 Important Considerations

    Choosing to Leave an Inheritance Can Impact Many Other Financial Planning Decisions

    If you have worked hard and planned properly, you may be well situated to leave an inheritance to your children. It can feel very meaningful to be able to provide a financial legacy for your loved ones, but it’s important to be practical, too, and to go about your estate planning in the right way. This single decision can impact all of your financial decisions, such as how much you put into savings, the types of retirement accounts you utilize, and your strategy for taking distributions.

    Make sure you’ve covered all your estate planning bases by reading through these eight considerations for passing an inheritance to your children.

    1.      Your Personal Income Needs

    Generosity feels good, but it must be wise, too. Don’t make the mistake of giving away more of your retirement savings than you’re truly able to. While the decision to provide for your children can be a very emotional one, it’s important to be financially savvy about it. Determine your own monthly or annual income needs, then use a retirement calculator like this one to help you develop a savings and withdrawal plan.

    2.      Rising Healthcare Costs

    It’s important to remain vigilant about planning to pay for an unexpected illness or injury – and the medical bills that come with them. These costs pose a risk to your retirement and to your heirs’ inheritance, and there’s no good way to predict how much you could need. It’s also risky to rely on government programs like Medicare and Medicaid because they don’t cover everything. One potential option to explore is long-term care insurance. It offers protection for your assets in the event of catastrophic illness. However, policies can be quite expensive and aren’t wise investments for everyone.

    3.      Outliving Your Nest Egg

    One of the most common retiree fears is running out of money in retirement. Make sure you have a plan to manage your savings and withdrawals appropriately so you can avoid depleting your assets while you’re still alive. If your goal in estate planning is to leave an inheritance for your children, the last thing you want is to saddle them with paying your bills as you age.

    4.      Tax Liability

    When you leave an inheritance to your children, consider how best to protect them from significant tax liability. The choices you can make now can help them to enjoy more favorable tax treatment when you’re gone. For example, inherited stocks and mutual funds are eligible for a step-up in basis that could lead to significant savings.

    Be mindful, too, about the rules for inheriting IRAs, such as the requirement that non-spousal beneficiaries take full distribution of the amount inherited within ten years. Formerly, heirs could take advantage of a “stretch IRA” that allowed them to stretch distributions over their entire lives. However, the stretch IRA was eliminated by the Setting Every Community Up for Retirement Enhancement (SECURE) Act in 2019. Some exceptions to this remain for a child who is not yet 18, for those who are disabled or chronically ill, and for heirs who are less than ten years younger than the owner of the IRA


    SECURE Act 2.0: What It Means For Your Retirement


    5.      The Advantages of a Trust

    Some estate planning tools can allow you more control when you want to leave an inheritance. A trust, for instance, will control distributions on behalf of your estate. This can help you ensure that specific assets pass to the children you designate them to. For this reason, a trust can be particularly useful for blended families where one or both spouses have children from previous relationships.

    6.      Wise Investment Decisions

    You should always choose your investments wisely, whether you hope to leave an inheritance or not. However, if it is your goal to pass inherited assets to your children, then you need to design a portfolio that will last for several generations. You want your investment portfolio to continue to grow, preserve capital, and generate income. You should also do everything you can to avoid dipping into the principal for withdrawals. When you’re estimating the amount that you’ll be able to use to leave an inheritance to your children, don’t neglect to consider both compound interest and inflation.

    7.      Options for Carrying Out Your Legacy

    Estate planning isn’t one-size-fits-all, and there are several options to choose from to leave an inheritance:

    Gifts

    If you choose to, you can gift assets to your children and allow to make use of your money before you die. If they qualify as annual exclusion gifts, they won’t be subject to the gift tax. This makes them completely tax-free and not subject to IRS filing. This strategy is also advantageous in that you can use a separate annual exclusion for each person to whom you make a gift. While your recipients won’t receive the step-up in cost basis, any capital gains will be taxed at their rate (rather than yours) which may be higher.

    Trusts

    Trusts are advantageous when you choose to leave an inheritance because they avoid probate, maintain privacy, and protect your heirs’ interests. You can select an individual or a company to act as your trustee to manage distributions according to your wishes. A revocable trust allows you to maintain control of the assets during your lifetime, while an irrevocable trust is treated as a gift that you cannot control or take back into your possession. Examine which type might benefit your estate planning goals.

    Deferred Income

    Certain retirement accounts, including IRAs and 401(k) plans, defer taxes on capital gains, interest, and dividends until the funds are withdrawn. When they are, they’re taxed as ordinary income. If you believe you will be in a higher tax bracket in retirement than you are in currently, you might look into using a non-deductible IRA. It’s a tool that allows earnings to grow tax-free, and there won’t be any taxes upon withdrawal either.

    Life Insurance

    Life insurance offers several estate planning benefits if your goal is to leave an inheritance to your children. If you have a policy, your beneficiaries receive the money tax-free. They won’t be required to go through probate, and there are no concerns about market fluctuations impacting the dollar amount. If life insurance is an attractive option for you, you might also consider fixed or variable annuities. They allow you to invest in the stock market through mutual funds, but they also have a life insurance component. Many times, they also carry hidden fees, so be cautious before taking this route. It’s usually best to discuss your options with a trusted financial advisor before you purchase an annuity product.

    8.      Estate Planning Legal Details

    After you determine the mechanics of your estate plan, work with an estate attorney or a financial planner who specialized in estate planning to ensure you have everything in writing. This also gives you a chance to ask questions about beneficiary changes, probate laws in your state, and whether you’ve included all necessary items in your will. You should feel comfortable and confident in the estate plan you’ve created to leave an inheritance to your children, so be diligent and intentional in getting all the information you need from the professional you’re working with.

    If you think you would benefit from a conversation about estate planning and how best to leave an inheritance to your children, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-406-5120, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.

    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.

  • Clients of Lane Hipple Make Christmas Possible for Local Families

    From left: Heather Hackl (SVE Principal), Melissa Rush (Lane Hipple Director of Client Services), and Maureen Ioannucci (SVE School Counselor)


    As we do each year, Lane Hipple sought out a giving opportunity that would help improve Christmas for local families in need. After reaching out to schools throughout Burlington County, our team – led by Director of Client Services Melissa Rush – was compelled to partner with South Valley Elementary School and Upper Elementary School, both located in Moorestown, NJ. We learned of families that are going through tough times, some that are homeless, and others being helped regularly by the school with lunches, snacks, and coats.

    When informed of this opportunity to come together and help these neighborhood families, our clients quickly took action and began showing up at our office on 155 E. 3rd Street to drop off gift cards, toys, clothes, books, and more. We provided general guidelines to make sure the gifts would be put to good use. There was a family of four boys in need of winters coats, gloves, and food; another family seeking pretend play toys for their special needs daughter and trucks for her older brother; and a mother of a 6- and 10-year old in desperate need of clothes who, when she discovered the school could help, replied with a text saying, “I wasn’t going to pull off Christmas this year. I’m crying now!!”

    After only ten days, Lane Hipple collected $2,400 in gift cards and a substantial number of gifts to drop-off to both schools. Now, as a result of the amazing generosity of our clients, team members, and owners – and with the help of the South Valley Elementary School and Upper Elementary School – these local Moorestown families will be able to have the Christmas they had hoped for.  

    It is extremely important to our team to give back to the local community and help those who are less fortunate. In 2021, Lane Hipple partnered with social services organization, Family Promise of Burlington County, and collected an abundance of daily life supplies, over $3,000 in cash and gift cards, and even provided two families with Christmas trees and gifts for their children.

    To our clients:

    Thank you for being a huge part of this mission. Your thoughtfulness and kindness means as much to us as it does to the families you have helped. We wish you all a very happy holiday season, Merry Christmas, and Happy New Year!