Live Better by Centric CU
Monthly Podcast featuring financial tips from Centric Credit Union
Live Better by Centric CU
Finish the Year Out Strong
This month we sat down with Toni Crawford from Summit Financial to talk about end of year plans and how to prepare for the new year. She shares dates to keep in mind, how to plan for retirement starting now, and how Summit Financial helps Centric's members Live Better.
Welcome back to another episode of the Live Better podcast by Centric FCU. I'm your host and Centric's Community Partner Coordinator, Carmen Gonzalez. I'm so excited that you're here. Every month we post a new episode where I'm joined by a guest to chat about finances and all things living better. Subscribe today so that you never miss an episode. Today we are joined by Tony Crawford, who works at Summit Financial. Summit Financial is one of Centric's, we partnered with them. You've heard her before if you're a regular listener with us. We partner with them to provide their expertise on retirement planning, estate planning, and so many other things that our employees are not experts in. So thank you so much for joining us again today, Tony. Thank you for having me back. So last time we had you here, we did get to know you a little bit, so I won't ask you to tell us about yourself, but what about your favorite things to do or about the holiday season?
SPEAKER_02:Sure. Well, change of topic. So explore some other areas. I would say for the holiday season, I mean, being a born again believer, one of my favorite things is the Advent season, the Advent scriptures, the lighting of the Advent candle. I just really feel like that emphasizes and focuses the reality And so that is something that is very important to me and dear to me each Christmas season to do. But as far as a tradition, we do kind of a fun thing. My family does when we're decorating the tree. Everywhere that we go on our trips, we try to pick up an ornament. So, you know, if it's a senior trip or a anniversary trip, or maybe it's somewhere we have a been before we pick up an ornament and so it's just a lot of fun to pull those ornaments out while we're decorating the tree and reliving some of those trips and you know my children are grown now and so it's interesting to hear um what they remember yeah about those trips so it's just a fun way to kind of relive the memories that you know we have as a family so that's that's one of my favorite things to do in fact we did that this past saturday day and you know of course we had to turn the air way down because I think it was you know 80 degrees outside but we drank hot chocolate anyway so those are probably the I could go on for you know a lot longer but those are probably two of my favorites
SPEAKER_00:yes I know the holiday season so fun just because I mean I personally love Christmas lights and then just that extra bit of magical cheerfulness and you know it's just fun hanging out with family and friends and I know it's me and my siblings have gotten older we've definitely um started appreciating how much more we you know want to actually be around each other or we have you know a little extra time because things are canceled um and so it's definitely a fabulous season yes
SPEAKER_02:absolutely good family time
SPEAKER_00:yes so well thank you for sharing with us your tradition i love that that's super uh fun but changing uh directions a little bit um so like we kind of talked about is the holiday season and that means the year is about to end um so what things should we be completing at work to start the new year off right?
SPEAKER_02:Right. So there's several things that you really need to check on that pertain to work or employment. Most of these deadlines will be December 31st. So I'll try to repeat that as we go through each one. And there may be a few different deadlines. But one of the most important things and one of probably the most overlooked things is to update your personal information. So if you've moved, maybe you've canceled your landline and you're just using cell phones now, you need to make sure, number one, that your employer has your most updated information. But really that applies to anywhere that you have a banking relationship, investment accounts, because you think about tax documents. If you don't have the correct address, then there's going to be a delay getting your tax documents to you and And you might be ready to file your taxes and you don't have everything. So that would be something that's very important to make sure that everything is correct as far as your personal contact information. And I would say also, if you are maxing out your retirement plan at work, and there are many people that do, you may need to just double check and make sure that you are on track to do that. If you're not, then you would need to coordinate with your HR person and get with them. And honestly, the contribution would need to go in by December 31st, but you would need to give a little bit more lead time in order for your HR person to make any changes to your payroll information. So, you know, yes, that deadline would be December 31st, but you would need to give probably I would say ASAP on getting that done. Another one would be to look at your flexible savings account. Sometimes it's called a flexible spending account. If you have one of those at work, usually they are a use it or lose it type account, which means that if there's any dollars left by December 31st, then they go away. They do not roll over into January 1. So you want to make sure that you've submitted any receipts in order to be reimbursed If you have submitted everything, maybe check and see if there's an FSA store. A lot of these flexible savings accounts have an online website where you can shop at their FSA store. And you can stock up on things like aspirin, ibuprofen, allergy medicine. And because of COVID, a lot of the hand sanitizer, antibacterial wipes, and things like that are now also available. qualified products to purchase so instead of losing that money make sure that you have spent it all and get the full benefit from that and so that would also be a December 31st deadline and then also your paid time off status that would also be December 31st there are some companies that do not allow you to roll over paid time off or they have a cap on the paid time off so you want to make sure that you have taken all of your days and not throwing them away, so to speak. So that would be something that if you do have additional days that you need to take, make sure you take those by December 31st. One thing that really is more of a as soon as possible would be just to double check and make sure that you have signed up for all of your benefits. Your health insurance, your dental insurance, vision insurance, supplemental life insurance, any of those things that you need to take. And then the last thing is a health savings account, which is different from the previous account that I talked about, a flexible savings account. A health savings account is you can carry that over. The things to be concerned about here would be if you're trying to maximize the contributions. And those are set by the IRS. The contribution limits are. And they change usually every year. So make sure if you're wanting to maximize your health savings account that you are doing it up to the current level. And you do have until April the 15th to count towards the 2021 tax year
SPEAKER_00:okay
SPEAKER_02:so those would be you know kind of employer related yeah um deadlines and really things to check on and make sure that you've done
SPEAKER_00:yeah i think it's a good tip too to share that um you know maybe you're uncertain as to what things or what stuff might um you know maybe that's something tony mentioned um pertains to you just reach out to your hr department whoever that may be and just be like hey i just want to verify that there's nothing i need to do before the year ends just so that there's nothing hanging over you or you miss out on some opportunity or benefit as the new year starts.
SPEAKER_02:Yes, absolutely. And I have heard stories even, you know, last year of people missing their open enrollment window to sign up and then realized in the middle of January that they didn't have any dental insurance.
SPEAKER_00:So,
SPEAKER_02:you know, those are things that, you know, set it on your calendar. Just double check every year and make sure.
SPEAKER_00:I know we just had our open enrollment and I have currently still been on my parents but i turned 26 in april um and so that means i have to start paying for my own insurance health insurance all the things right um so anyone who's listening who's 25 who'll be turning 26 prepare for that right time to be an official adult yes um but so i called our hr person i was like hey like do i need to sign up now or whatever she explained to me you know the whole process of what i needed to do and but just definitely making sure and checking um with them they you know they look at this stuff all the time they are the people who have the searched for you so definitely reach out to them that's exactly right And so we kind of talked about some stuff to do with employment. But beyond that, what are some things that we should be accomplishing or doing or have on our end of year to do list?
SPEAKER_02:Right. So personally, it really depends on, you know, what assets you have. And, you know, I may mention some things that that you may not have, but there are people out there that do. So I did want to include them as far as December 31st deadlines. Any 529 contributions need to be done by December 31st to count towards that tax year. And then any what we call tax loss harvesting needs to be done by December 31st. And I'll kind of define that for those that aren't sure what that is. It basically is a strategy where an investor will sell a particular position, so a stock or a mutual fund or a bond. intentionally at a loss in order to offset any gains that they may have had earlier in the year. So, you know, I would say work with your investment advisor to see if that's something that you need to do. And that is a little bit more complicated. So that would be something, get some help on if you feel that you need to. And you honestly can talk with your CPA as well. And so that would That has to be done by December 31st. Another thing that I would say would be as soon as possible would be any charitable distributions that you want to do. Charitable distributions meaning charitable donations. So distributions from your accounts out to a charity. A lot of people, you know, maybe you got a bonus. Maybe you had more taxable income this year than you did last year. So you can reduce your taxable income by giving to charity. Now, there are other ways too, but if you want to use that strategy, it's going to take the charity a little bit of time to process your donation, especially if you are gifting appreciated securities. And by that, I mean, if you, for example, if you have a stock, you know, maybe it's, you know, XYZ company stock that you paid$10 for, and now it's worth hundred dollars per share so you can give that to the charity take the deduction at the hundred dollars a share and not pay tax on that gain on that ninety dollars because you know a hundred minus ten is ninety so that will take a little bit longer to do and a lot of the custodians some of the deadlines where they guarantee it'll happen have passed but sometimes it can still be done. So that would definitely be something to check on if you want to gift that way. And of course, you can always write a check. But just I would always give it some lead time and don't wait until the last minute. So that's another one. The last one that I'll talk about is a lot of people are interested in Roth IRAs. And they're interested in converting, moving their traditional IRA to a Roth IRA and And what that means is you're changing the type of investment vehicle and you will owe tax on that money. So the conversion deadline is December 31st, which is different from the contribution deadline, which is April 15th. So a lot of people get those mixed up. So I just wanted to bring that out because if you're interested in converting from a traditional IRA to a Roth IRA, you do have to have that done by December 31st. 31st to fall in this tax year. But if you already have a Roth IRA and you want to do a contribution, you have until April 15th
SPEAKER_00:to
SPEAKER_02:fund it. So difference there between the conversion and the contribution.
SPEAKER_00:Okay. Yeah, no, that's very good information. I know some people, they'll mention IRAs or 401ks or all that stuff, and they're like, oh, I don't have to worry about that right now. But I always like to mention, you know, the earlier you start, the better off you're going to be. Yes. Set your future yourself up for success is That's what I always tell people. So definitely considering those things. And this is kind of off of, you know, that, but also if your company has a 401k program, especially if you have the type of company that matches a percentage of what you match, take advantage of that. That's free money sitting on the table.
SPEAKER_02:Yes. Don't let it go to waste. Exactly. That's what we tell everyone that we counsel. You know, one of the first things that we ask is, are you contributing and how much and what is the match?
SPEAKER_01:Yeah.
SPEAKER_02:So you always want to, and I know this is a little bit off topic, but one of the things that we recommend is to go up at least 1% each year. And before you know it, you've, you know, you're at 10 or you're at 15. Yeah. But we always want to start where the match is because that is money that you're leaving on the table that the employer will put into your
SPEAKER_00:account. Yeah, definitely. So such good information. So since we kind of are talking about, you know, IRAs 401ks and like I said you know start as early as possible for sure um you know investing in that future for yourself but um I've learned this term at the end of last year actually and I was like what in the mess because it's never been on my radar um so for anyone who's listening and might not know um there are these things called RMDs and I'm going to let you explain what those are and why do they matter to us yes
SPEAKER_02:yes uh it's a very large topic and and something that we talk a lot about to clients, to people we run into. So let me just kind of define what a required minimum distribution is. So if you are 72 years old and you have qualified retirement money, and what that means is if you have an IRA, if you have a 401k, a 403b, then you have to take, starting at age 72, a required minimum minimum distribution from your account. And the way that's calculated is we'll take the market value from the last day of the year, so 1231, and then we multiply it by a factor, which is the IRS life expectancy tables. So that's the calculation.
SPEAKER_01:So
SPEAKER_02:you're not going, normally, you are not going to have the same same amount every single year. And it's not something where we can say, oh, it'll be 3.5% or it'll be 4.2%. It's going to be based on your market value at the end of the year and then what the life expectancy tables are. And, you know, unfortunately, we turn a year older or maybe fortunately, you know, every year. So the purpose of the required minimum distributions is to start making you liquidate that account and pay taxes on it. Now, you know, I'm not going to get into political stuff, you know, but that's what it's designed to do. And so the older that you get, obviously your life expectancy gets shorter and shorter. And so you have to take out more each year. There's several ways that you can do it. I mean, one of the easiest ways is you can, you know, once you find out what your amount is that you have to take out, you can just take a, you get them to send you a check and you cash and put in your checking account okay and then the distributions are taxable so they are added to your taxable income but if you have an individual investment account a joint investment account you can actually transfer securities
SPEAKER_00:okay
SPEAKER_02:so you know you don't have to take cash and especially if you feel I really don't Mm-hmm. But it at least stays invested. Yeah. Mm-hmm. As long as it does not come to you,
SPEAKER_00:then
SPEAKER_02:it's a non-taxable distribution
SPEAKER_00:to
SPEAKER_02:you. So you do not have to add that to your taxable income. And for people who take the standard deduction with their tax returns, this can be a great strategy. So I know a lot of my clients, they write their tithe checks. And so it allows them to send it directly from their investment account it's non-taxable instead of us sending it to them it being taxable and then they write a check
SPEAKER_00:yeah
SPEAKER_02:you know to to the charity so it works very well and that would be an option if that would work for you and I do want to say you know I am giving all this information as a financial planner obviously I am not a CPA I am not an attorney I'm not an HR professional so I The information I'm giving is pretty general. So anyone that is interested in this, please give me a call to talk more specifics or check with your professionals, your CPA, your attorney, or your HR professional to check on your specific situation. Because obviously I'm giving general information. I'm not going over every single little caveat. So just wanted to put that little disclosure in there that sometimes we have to look at things like income levels or other things like that in order to make sure that you do qualify and can do some of these strategies. But for the most part, for the average people, this qualified charitable distribution works well.
SPEAKER_00:Yeah, definitely. And since you mentioned give you a call if we're needing any of that, I just wanted to remind everyone that is listening, if they do want to connect with Tony or Summit Financial in general, you can go to our website or stop by any of our locations and we can get you connected with them if you decide to do it online you can go to mycentric.org slash summit dash financial and it pops up a little form you put in all your information and we get it to them so they can contact you I know they're pretty good about getting back with everyone so it's definitely a super easy thing for you to take advantage of and be able to connect
SPEAKER_02:right absolutely and you know so we're kind of going into a new year I know a lot of people have maybe some extra time during the and discuss any of those things
SPEAKER_00:yes um so you kind of mentioned I mean I feel like we've you know gone over this we've talked about how they can connect with you um and like you said y'all are more than happy to talk with them and I mean just as part of the reason this is such a great partnership between Centric and Summit Financial is because we really are just both trying to help the people in our community live better um and so what are some ways how Summit Financial can help Centric's members um with preparing for the new year and living better. Right. So, you
SPEAKER_02:know, some of the strategies that I mentioned, you know, the tax loss harvesting, Roth IRA conversions, your charitable planning, you know, we can help with any of those, setting up qualified charitable distributions, analyzing to see if that would work well for you. We can do all of that. If you are going to be retiring anytime within the next five years, we'd love to get started with you. There's a lot of things that we like to kind of do pre-retirement to set you up for just the best transition possible into the retired world. So we would absolutely be interested in talking with you, running a financial plan. So many people, do you know how much money you need
SPEAKER_01:to
SPEAKER_02:retire? And if you've got questions about any of that, we'd be glad to go through it and help you answer those questions another thing that I know a lot of people I don't want to say struggle with but you know we we don't stay at one job for you know 40 to 50 years like our grandparents did or you know things like that and so a lot of us have kind of old 401ks just hanging out at our old employers you know plan so if that's something where you know you have sex several, you know, consolidation is always a great thing to kind of not have things that you've forgotten about, not have things straggling out where you're not sure what it's doing. And so we can help you analyze that and look, you know, maybe the best thing is to roll them all into your current 401k. Or if you have something else in mind, maybe we set up an IRA for you. But we'll go through all of those things and determine what is best for you. And I think, again, going back to our philosophy and Centric's philosophy is we want to serve our clients, serve our members, and do what's best for them. And that is always the overarching priority for us.
SPEAKER_00:Definitely. Again, like you said, and we both said, it's part of why we partner with Summit Financial. And for those listening, again, visit mycentric.org to get connected with them or come to any of our locations. This is one of those benefits out there for you. And, you know, you don't know what you don't know. And if you're not looking at this every day, then you probably still don't know. And so taking advantage of the fact that there are people out there who this is their expertise, you know, get advice where you can. Absolutely.
SPEAKER_02:That's what we're here for.
SPEAKER_00:Definitely. We just want to help our members live better. So take advantage of that. You know, if you have moved past the phase, Centric has our certified financial counselors that can help you with budgeting and credit building and all that stuff. But if you moved past that if you've built your credit up if you've reached your financial goals if you've gotten yourself on a good budget and so your next step is thinking about your future please please connect with Summit Financial and trust that we trust them the way that you trust us and so take advantage of that but thank you so much for spending this time with us again Tony yes kind of a
SPEAKER_02:you know dry topics but it's something that's important and needs to be covered
SPEAKER_00:definitely
SPEAKER_02:definitely
SPEAKER_00:well thank you so much and I hope everyone listening um you know got to take some notes and will you know really take advantage of this
SPEAKER_02:right hopefully we made it a little interesting
SPEAKER_00:yes
SPEAKER_02:thank you for having me
SPEAKER_00:thank you thank you for listening to our podcast and tune back in next month for another episode of the live better podcast by centric fcu don't forget to subscribe on your favorite podcast platform and to ensure you never miss out on helpful tips like us on facebook at centric federal credit union and find us at my centric on You can find information about today's topic, our monthly blog, and more at mycentric.org. Centric is federally insured by the NCUA.