Washington DC Financial Planner Kris Persinger, CFP®, Knows Financial Strategies To Help Clients With Even The Thorniest Financial Challenges
Bring Him Your Retirement-Planning, College-Savings, Home-Buying Or
Other Dilemmas and He Has Money Advice For You!
One thing that sets Kris Persinger apart is his determination to come up with creative solutions to address even the thorniest financial problems. Kris has decades worth of knowledge of all sorts of investment strategies and gets immense gratification when he is able to deploy one of those ideas to help people. Here are a few hypothetical examples to give you a feel for how Kris strategizes. They are not intended as investment advice.
The Taxable Investment Mistake
When a new client comes to Kris with a variety of investments already in place, Kris evaluates whether those investments are a good fit for the client. Kris has often seen clients with bond funds that paid the highest available interest rate in that fund family, but were taxable, which is not ideal for clients in high tax brackets. Let’s say the bond fund yields interest of 2.1%, but the client is taxed at 40%. That means their gain would really only be 1.3%. In cases like this, Kris might suggest that the client switch into a bond fund that only pays 1.8%, but is tax-free. That would be a net gain for the client. And if both funds were in the same family, they wouldn’t even have to pay a commission to make the switch! Kris sees simple errors like this all the time with both bond funds and money markets that are available in taxable and tax-free versions.
An Annuity Income Solution
Let’s say an older couple needed advice because they lived mostly off of the husband’s pension and he has just learned he has a life-threatening illness. The couple would be understandably concerned about how the wife would make ends meet if the husband passed away. Often the spouse only gets a small fraction of the pension after the pensioner’s death. Kris doesn’t work often with annuities, but in this case, an annuity product could be the ideal solution. Kris might recommend that the couple invest money in an annuity that guaranteed a certain income. If the husband lived, they could still access the principal they put into the annuity. But if he died, the wife could sign the principal over to the insurance company in exchange for a guaranteed monthly income for the rest of her life.
Little-Known Early Retirement Benefit
Sometimes clients ask Kris’s advice when their companies offer them an early retirement buyout. Many people worry that they don’t have enough money saved up to retire yet and that if they tap into their retirement accounts before they are old enough, they could lose a big chunk to government penalties. Kris is aware of a little-known IRS rule that allows people to take money out of an IRA before they reach age 59&1/2 as long as they take out the same amount each month. This solution could save somebody 10% in penalties and enable them to retire early.
Donating to Help Others –And Your Tax Situation
Suppose a fortunate client makes substantial gains in their portfolio one year. That’s great, but it also means they will owe taxes on those gains. Kris might ask that client if they are actively involved in giving to a favorite charity. If so, they could make a lump sum donation into something called a “Donor-Advised Fund.” The year somebody puts their money into the Donor-Advised Fund they get to deduct the entire amount from their taxes, because technically the money is no longer theirs. But they don’t actually have to give the entire chunk to the charity that year. The money is invested in the market and has the potential to grow. They can then disburse it to the charity over time as they see fit. They can also add more money to the fund whenever they like. This strategy could significantly reduce taxes, depending upon the circumstances.
Restoring the True Intent of a Trust
Sometimes people approach Kris for advice because they are the beneficiaries of a trust. Perhaps a family member died many years before and left them money. But instead of giving it to them in cash, the money was left in a trust. Often a parent sets it up this way so that the principal is kept secure in the trust and generates interest income for the child. But sometimes the parent’s intention can go awry because the bank administering the trust puts the money into investments that generate high fees for the bank but little income for the beneficiary. Kris might work with the beneficiary to hire a lawyer and go to court to try to wrestle the trust away from the bank. If the judge agrees, the trust could be placed with a more customer-friendly bank, and generate a helpful income for the beneficiary.
Persinger Planning does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.
Fixed Annuities are long term insurance contacts and there is a surrender charge imposed generally during the first 5 to 7 years that you own the annuity contract. Withdrawals prior to age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company. We can help you understand the benefits, costs and features of annuity contracts;
