Tax benefits that can help with the expense of higher education

With back-to-school season in full swing, the Internal Revenue Service reminds parents and students about tax benefits that can help with the expense of higher education.

Two college tax credits apply to students enrolled in an eligible college, university or vocational school. Eligible students include the taxpayer, their spouse and dependents.

American Opportunity Tax Credit

The American Opportunity Tax Credit, (AOTC) can be worth a maximum annual benefit of $2,500 per eligible student. The credit is only available for the first four years at an eligible college or vocational school for students pursuing a degree or another recognized education credential. Taxpayers can claim the AOTC for a student enrolled in the first three months of 2018 as long as they paid qualified expenses in 2017.

Lifetime Learning Credit

The Lifetime Learning Credit, (LLC) can have a maximum benefit of up to $2,000 per tax return for both graduate and undergraduate students. Unlike the AOTC, the limit on the LLC applies to each tax return rather than to each student. The course of study must be either part of a post-secondary degree program or taken by the student to maintain or improve job skills. The credit is available for an unlimited number of tax years.

To claim the AOTC or LLC, use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits). Additionally, if claiming the AOTC, the law requires taxpayers to include the school’s Employer Identification Number on this form.

Form 1098-T, Tuition Statement, is required to be eligible for an education benefit. Students receive this form from the school they attended. There are exceptions for some students.

Other education benefits

Other education-related tax benefits that may help parents and students are:

  • Student loan interest deduction of up to $2,500 per year.
  • Scholarship and fellowship grants. Generally, these are tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.
  • Savings bonds used to pay for college. Though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years of age.
  • Qualified tuition programs, also called 529 plans, are used by many families to prepay or save for a child’s college education. Contributions to a 529 plan are not deductible, but earnings are not subject to federal tax when used for the qualified education expenses.

To help determine eligibility for these benefits, taxpayers should use tools on the Education Credits Web page and IRS Interactive Tax Assistant tool on


Social Security and Medicare Trustees Report

Every year, the Trustees of the Social Security and Medicare Trust Funds release reports to Congress on the current financial condition and projected financial outlook of these programs. The newest reports, released on July 13, 2017, discuss the ongoing financial challenges that both programs face, and project a Social Security cost-of-living adjustment (COLA) for 2018.

What are the Social Security and Medicare Trust Funds?

Social Security: The Social Security program consists of two parts. Retired workers, their families, and survivors of workers receive monthly benefits under the Old-Age and Survivors Insurance (OASI) program; disabled workers and their families receive monthly benefits under the Disability Insurance (DI) program. The combined programs are referred to as OASDI. Each program has a financial account (a trust fund) that holds the Social Security payroll taxes that are collected to pay Social Security benefits. Other income (reimbursements from the General Fund of the U.S. Treasury and income tax revenue from benefit taxation) is also deposited in these accounts. Money that is not needed in the current year to pay benefits and administrative costs is invested (by law) in special Treasury bonds that are guaranteed by the U.S. government and earn interest. As a result, the Social Security Trust Funds have built up reserves that can be used to cover benefit obligations if payroll tax income is insufficient to pay full benefits.

Note that the Trustees provide certain projections based on the combined OASI and DI (OASDI) Trust Funds. However, these projections are theoretical, because the trusts are separate, and generally one program's taxes and reserves cannot be used to fund the other program.

Medicare: There are two Medicare trust funds. The Hospital Insurance (HI) Trust Fund pays for inpatient and hospital care (Medicare Part A costs). The Supplementary Medical Insurance (SMI) Trust Fund comprises two separate accounts, one covering Medicare Part B (which helps pay for physician and outpatient costs) and one covering Medicare Part D (which helps cover the prescription drug benefit).

Trustees Report highlights: Social Security

  • The combined trust fund reserves (OASDI) are still increasing, but are growing more slowly than costs. The U.S. Treasury will need to start withdrawing from reserves to help pay benefits in 2022, when annual program costs are projected to exceed total income. The Trustees project that the combined trust fund reserves will be depleted in 2034, the same year projected in last year's report, unless Congress acts.
  • Once the combined trust fund reserves are depleted, payroll tax revenue alone should still be sufficient to pay about 77% of scheduled benefits for 2034, with the percentage falling gradually to 73% by 2091.
  • The OASI Trust Fund, when considered separately, is projected to be depleted in 2035, the same year projected in last year's report. Payroll tax revenue alone would then be sufficient to pay 75% of scheduled OASI benefits.
  • The DI Trust Fund is expected to be depleted in 2028, five years later than projected in last year's report. Both benefit applications and the total number of disabled workers currently receiving benefits have been declining. Once the DI Trust Fund is depleted, payroll tax revenue alone would be sufficient to pay 93% of scheduled benefits.
  • Based on the "intermediate" assumptions in this year's report, the Social Security Administration is projecting that beneficiaries will receive a cost-of-living adjustment (COLA) of 2.2% for 2018.

Trustees Report highlights: Medicare

  • Annual costs for the Medicare program exceeded tax income annually from 2008 to 2015. The Trustees project surpluses in 2016 through 2022 and a return to deficits thereafter.
  • The HI Trust Fund is projected to be depleted in 2029, one year later than projected last year. Once the HI Trust Fund is depleted, tax and premium income would still cover 88% of estimated program costs, declining to 81% by 2050, and then gradually increasing to 88% by 2091. The Trustees note that long-range projections of Medicare costs are highly uncertain.

Why are Social Security and Medicare facing financial challenges?

Social Security and Medicare are funded primarily through the collection of payroll taxes. Because of demographic and economic factors, fewer workers are paying into Social Security and Medicare than in the past, resulting in decreasing income from the payroll tax. The strain on the trust funds is also worsening as large numbers of baby boomers reach retirement age, Americans live longer, and health-care costs rise.

What is being done to address these challenges?

Both reports urge Congress to address the financial challenges facing these programs soon, so that solutions will be less drastic and may be implemented gradually, lessening the impact on the public. Combining some of these solutions may also lessen the impact of any one solution.

Some long-term Social Security reform proposals on the table are:

  • Raising the current Social Security payroll tax rate. According to this year's report, an immediate and permanent payroll tax increase of 2.76 percentage points would be necessary to address the long-range revenue shortfall (3.98 percentage points if the increase started in 2034).
  • Raising the ceiling on wages currently subject to Social Security payroll taxes ($127,200 in 2017).
  • Raising the full retirement age beyond the currently scheduled age of 67 (for anyone born in 1960 or later).
  • Reducing future benefits. According to this year's report, scheduled benefits would have to be reduced by about 17% for all current and future beneficiaries, or by about 20% if reductions were applied only to those who initially become eligible for benefits in 2017 or later.
  • Changing the benefit formula that is used to calculate benefits.
  • Calculating the annual cost-of-living adjustment for benefits differently.

According to the Medicare Trustees Report, to keep the HI Trust Fund solvent for the long-term (75 years), the current 2.90% payroll tax would need to be increased immediately to 3.54% or expenditures reduced immediately by 14%. Alternatively, other tax or benefit changes could be implemented gradually and might be even more drastic.

You can view a combined summary of the 2017 Social Security and Medicare Trustees Reports and a full copy of the Social Security report at You can find the full Medicare report at

Retirement Benefits for Same-Sex Married Couples

The U.S. Supreme Court's landmark decisions in United States v. Windsor and Obergefell v. Hodges made same-sex marriages legal nationwide, and ensured that those marriages would enjoy the same rights and benefits bestowed by state and federal law on traditional marriages. As a legally married same-sex spouse, you'll want to be aware of several retirement plan rules that apply specifically to married individuals.

Beneficiary rights

If you participate in a 401(k) or similar plan at work, federal law provides that your spouse is automatically the beneficiary of your account in the event of your death. You can name someone else as beneficiary, but only if your spouse agrees in writing (witnessed by a plan representative or notary public). Special rules apply if your plan pays benefits in the form of an annuity.

IRAs aren't subject to this federal law, although your state may impose its own, similar requirements. For example, if you live in a community property state, your spouse may have legal rights to your IRA regardless of whether he or she is named as the primary beneficiary.

Even without a requirement that you do so, naming your spouse as beneficiary is often the best choice. One reason is that a spouse beneficiary has more options and flexibility in terms of post-death distributions than a nonspouse beneficiary. For example, spouse beneficiaries generally may take required distributions from employer plans and IRAs at a later date, and over a longer period of time, than nonspouse beneficiaries.

Your surviving spouse may also have two other options that are not available to other beneficiaries. First, your surviving spouse may choose to roll over inherited IRA or plan funds to his or her own IRA or plan. Second, your surviving spouse may elect to simply leave the funds in an inherited IRA and treat that account as his or her own account. In either case, the potential may exist for significant estate planning and income tax benefits. This is because your surviving spouse may defer taking distributions of the inherited funds until his or her own required beginning date, and may also designate new beneficiaries of his or her choice (your children, for example) who could later stretch out distributions even more after your spouse's death.

Traditional pension plan--your right to a qualified joint and survivor annuity

If you participate in a traditional pension plan at work, you'll typically be entitled to receive monthly benefits from the plan after you retire. These benefits are usually based on your age at retirement, as well as your years of service and your average earnings with the company. The normal form of benefit is usually a single life annuity--that is, an annuity that makes monthly payments to you only while you're alive and stops making payments after your death. 

But if you're married, federal law requires that your benefit be paid instead as a qualified joint and survivor annuity (QJSA), unless you elect another payment option (with your spouse's written consent). Though the term sounds complicated, a QJSA is simply an annuity that pays monthly benefits to you while you're alive and continues to pay at least 50% of your benefit to your spouse upon your death.

The payments you'll receive under a QJSA are normally smaller than the amount you'd receive under the single life annuity because those payments are projected to continue until both you and your spouse have died. The single life annuity provides a larger monthly payment because it's projected to be paid over a shorter period of time--one lifetime instead of two. Payments stop once you, the plan participant, die. One of the most important retirement decisions you and your spouse may make is whether to receive your pension benefit as a QJSA (a smaller monthly amount payable over your joint lives) or to waive that benefit in favor of the larger single life annuity.

However, some employers "subsidize" the QJSA. Subsidizing the QJSA occurs when your employer's plan does not reduce the benefit payable during your joint lives (or reduces it less than the amount allowed), despite the longer payout period, making the actuarial value of the QJSA greater than that of the single life annuity option. A subsidized QJSA can be a very valuable benefit for married participants. It's important for you to know whether your employer subsidizes the QJSA so that you can make an informed decision about which payment option to select.

For example, Tom is a participant in his employer's defined benefit plan and is married. His pension benefit payable as a single life annuity is $3,000 per month beginning at age 65. His benefit payable as a QJSA is also $3,000 per month, with 50% of his benefit (that is, $1,500) continuing to his surviving spouse after his death. Tom's QJSA is subsidized: The benefit payable during Tom's lifetime is not reduced, even though benefits will be paid over both Tom's and his spouse's lifetimes.

Your right to a spousal IRA - even if your income is limited

If you're a nonworking spouse, your ability to contribute toward your own retirement is limited. But there is one tool you should know about. The "spousal IRA" rule may let you fund an IRA even if you aren't working and have no earnings. A spousal IRA is your own account, in your own name--one that could become an important source of retirement income with regular contributions over time.

How does it work? Normally, to contribute to an IRA, you must have compensation at least equal to your contribution. But if you're married, file a joint federal income tax return, and earn less than your spouse (or nothing at all), the amount you can contribute to your own IRA isn't based on your individual income; it's based instead on the combined compensation of you and your spouse. 

For example, Mary (age 50) and Jane (age 45) are married and file a joint federal income tax return for 2016. Jane earned $100,000 in 2016, and Mary, who stayed at home taking care of ill parents, earned nothing for the year. Jane contributes $5,500 to her IRA for 2016. Even though Mary has no compensation, she can contribute up to $6,500 to an IRA for 2016 (that includes a $1,000 "catch-up" contribution), because Jane and Mary's combined compensation is at least equal to their total contributions ($12,000). 

The spousal IRA rule only determines how much you can contribute to your IRA; it doesn't matter where the money you use to fund your IRA actually comes from--you're not required to track the source of your contributions. (The spousal IRA rule doesn't change any of the other rules that generally apply to IRAs. You can contribute to a traditional IRA, a Roth IRA, or both. But you can't make regular contributions to a traditional IRA after you turn 70½. And your ability to make annual contributions to a Roth IRA may be limited depending on the amount of your combined income.)

Your right to a qualified domestic relations order 

While we all hope our marriages will last forever, unfortunately that's not always the case. The issue of how retirement plan benefits will be handled in the event of a divorce is especially critical for spouses who may have little or no retirement savings of their own. 

Under federal law, employer retirement plan benefits generally can't be assigned to someone else. However, one important exception to this rule is for "qualified domestic relations orders," commonly known as QDROs. If you and your spouse divorce, you can seek a state court order awarding you all or part of your spouse's retirement plan benefit. Your spouse's plan is required to follow the terms of any order that meets the federal QDRO requirements. For example, you could be awarded all or part of your spouse's 401(k) plan benefit as of a certain date, or all or part of your spouse's pension plan benefit. There are several ways to divide benefits, so it's very important to hire an attorney who has experience negotiating and drafting QDROs--especially for defined benefit plans where the QDRO may need to address such items as survivor benefits, benefits earned after the divorce, plan subsidies, COLAs, and other complex issues. (For example, a QDRO may provide that you will be treated as the surviving spouse for QJSA purposes, even if your spouse subsequently remarries.) The key takeaway here is that these rules exist for your benefit. Be sure your divorce attorney is aware of them. 


Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

How Women Are Different from Men, Financially Speaking

We all know men and women are different in some fundamental ways. But is this true when it comes to financial planning? In a word, yes. In the financial world, women often find themselves in very different circumstances than their male counterparts.

Everyone wants financial security. Yet women often face financial headwinds that can affect their ability to achieve it. The good news is that women today have never been in a better position to achieve financial security for themselves and their families.

More women than ever are successful professionals, business owners, entrepreneurs, and knowledgeable investors. Their economic clout is growing, and women's impact on the traditional workplace is still unfolding positively as women earn college and graduate degrees in record numbers and seek to successfully integrate their work and home lives to provide for their families. So what financial course will you chart?

Some key differences

On the path to financial security, it's important for women to understand what they might be up against, financially speaking:

Women have longer life expectancies. Women, on average, live 5 years longer than men.1 A longer life expectancy presents several financial challenges for women:

  • Women will need to stretch their retirement dollars further
  • Women are more likely to need some type of long-term care, and may have to face some of their health-care needs alone
  • Married women are likely to outlive their husbands, which means they could have ultimate responsibility for disposition of the marital estate

Women generally earn less and have fewer savings. According to the Bureau of Labor Statistics, within most occupational categories, women who work full-time, year-round, earn only 83% (on average) of what men earn.2 This wage gap can significantly impact women's overall savings, Social Security retirement benefits, and pensions.

The dilemma is that while women generally earn less than men, they need those dollars to last longer due to a longer life expectancy. With smaller financial cushions, women are more vulnerable to unexpected economic obstacles, such as a job loss, divorce, or single parenthood. And according to U.S. Census Bureau statistics, women are more likely than men to be living in poverty throughout their lives.3

Women are more likely to take career breaks for caregiving. Women are much more likely than men to take time out of their careers to raise children and/or care for aging parents.4 Sometimes this is by choice. But by moving in and out of the workforce, women face several significant financial implications:

  • Lost income, employer-provided health insurance, retirement benefits, and other employee benefits
  • Less savings
  • A potentially lower Social Security retirement benefit
  • Possibly a tougher time finding a job, or a comparable job (in terms of pay and benefits), when reentering the workforce
  • Increased vulnerability in the event of divorce or death of a spouse

In addition to stepping out of the workforce more frequently to care for others, women are more likely to try to balance work and family by working part-time, which results in less income, and by requesting flexible work schedules, which can impact their career advancement (and thus the bottom line) if an employer unfairly assumes that women's caregiving responsibilities will come at the expense of dedication to their jobs.

Women are more likely to be living on their own. Whether through choice, divorce, or death of a spouse, more women are living on their own. This means they'll need to take sole responsibility for protecting their income and making financial decisions.

Women sometimes are more conservative investors. Whether they're saving for a home, college, retirement, or a trip around the world, women need their money to work hard for them. Sometimes, though, women tend to be more conservative investors than men,5 which means their savings might not be on track to meet their financial goals.

Women need to protect their assets. As women continue to earn money, become the main breadwinners for their families, and run their own businesses, it's vital that they take steps to protect their assets, both personal and business. Without an asset protection plan, a woman's wealth is vulnerable to taxes, lawsuits, accidents, and other financial risks that are part of everyday life. But women may be too busy handling their day-to-day responsibilities to take the time to implement an appropriate plan.

Steps women can take

In the past, women may have taken a less active role in household financial decision making. But, for many, those days are over. Today, women have more financial responsibility for themselves and their families. So it's critical that women know how to save, invest, and plan for the future. Here are some things women can do:

Take control of your money. Create a budget, manage debt and credit wisely, set and prioritize financial goals, and implement a savings and investment strategy to meet those goals.

Become a knowledgeable investor. Learn basic investing concepts, such as asset classes, risk tolerance, time horizon, diversification, inflation, the role of various financial vehicles like 401(k)s and IRAs, and the role of income, growth, and safety investments in a portfolio. Look for investing opportunities in the purchasing decisions you make every day. Have patience, be willing to ask questions, admit mistakes, and seek help when necessary.

Plan for retirement. Save as much as you can for retirement. Estimate how much money you'll need in retirement, and how much you can expect from your savings, Social Security, and/or an employer pension. Understand how your Social Security benefit amount will change depending on the age you retire, and also how years spent out of the workforce might affect the amount you receive. At retirement, make sure you understand your retirement plan distribution options, and review your portfolio regularly. Also, factor the cost of health care (including long-term care) into your retirement planning, and understand the basic rules of Medicare.

Advocate for yourself in the workplace. Have confidence in your work ability and advocate for your worth in the workplace by researching salary ranges, negotiating your starting salary, seeking highly visible job assignments, networking, and asking for raises and promotions. In addition, keep an eye out for new career opportunities, entrepreneurial ventures, and/or ways to grow your business.

Seek help to balance work and family. If you have children and work outside the home, investigate and negotiate flexible work arrangements that may allow you to keep working, and make sure your spouse is equally invested in household and child-related responsibilities. If you stay at home to care for children, keep your skills up-to-date to the extent possible in case you return to the workforce, and stay involved in household financial decision making. If you're caring for aging parents, ask adult siblings or family members for help, and seek outside services and support groups that can offer you a respite and help you cope with stress.

Protect your assets. Identify potential risk exposure and implement strategies to reduce that exposure. For example, life and disability insurance is vital to protect your ability to earn an income and/or care for your family in the event of disability or death. In some cases, more sophisticated strategies, such as other legal entities or trusts, may be needed.

Create an estate plan. To ensure that your personal and financial wishes will be carried out in the event of your incapacity or death, consider executing basic estate planning documents, such as a will, trust, durable power of attorney, and health-care proxy.

Don't Let Rising Interest Rates Catch You by Surpise

You've probably heard the news that the Federal Reserve has been raising its benchmark federal funds rate. The Fed doesn't directly control consumer interest rates, but changes to the federal funds rate (which is the rate banks use to lend funds to each other overnight within the Federal Reserve system) often affect consumer borrowing costs.

Forms of consumer credit that charge variable interest rates are especially vulnerable, including adjustable rate mortgages (ARMs), most credit cards, and certain private student loans. Variable interest rates are often tied to a benchmark (an index) such as the U.S. prime rate or the London Interbank Offered Rate (LIBOR), which typically goes up when the federal funds rate increases.

Although nothing is certain, the Fed expects to raise the federal funds rate by small increments over the next several years. However, you still have time to act before any interest rate hikes significantly affect your finances.

Adjustable rate mortgages (ARMs)

If you have an ARM, your interest rate and monthly payment may adjust at certain intervals. For example, if you have a 5/1 ARM, your initial interest rate is fixed for five years, but then can change every year if the underlying index goes up or down. Your loan documents will spell out which index your ARM tracks, the date your interest rate and payment may adjust, and by how much. ARM rates and payments have caps that limit the amount by which interest rates and payments can change over time. Refinancing into a fixed rate mortgage could be an option if you're concerned about steadily climbing interest rates, but this may not be cost-effective if you plan to sell your home before the interest rate adjusts.

Credit cards

It's always a good idea to keep credit card debt in check, but it's especially important when interest rates are trending upward. Many credit cards have variable annual percentage rates (APRs) that are tied to an index (typically the prime rate). When the prime rate goes up, the card's APR will also increase.

Check your credit card statement to see what APR you're currently paying. If you're carrying a balance, how much is your monthly finance charge?

Your credit card issuer must give you written notice at least 45 days in advance of any rate change, so you have a little time to reduce or pay off your balance. If it's not possible to pay off your credit card debt quickly, you may want to look for alternatives. One option is to transfer your balance to a card that offers a 0% promotional rate for a set period of time (such as 18 months). But watch out for transaction fees, and find out what APR applies after the promotional rate term expires, in case a balance remains.

Variable rate student loans

Interest rates on federal student loans are always fixed (and so is the monthly payment). But if you have a variable rate student loan from a private lender, the size of your monthly payment may increase as the federal funds rate rises, potentially putting a dent in your budget. Variable student loan interest rates are generally pegged to the prime rate or the LIBOR. Because repayment occurs over a number of years, multiple rate hikes for variable rate loans could significantly affect the amount you'll need to repay. Review your loan documents to find out how the interest rate is calculated, how often your payment might adjust, and whether the interest rate is capped.

Because interest rates are generally lower for variable rate loans, your monthly payment may be manageable, and you may be able to handle fluctuations. However, if your repayment term is long and you want to lock in your payment, you may consider refinancing into a fixed rate loan. Make sure to carefully compare the costs and benefits of each option before refinancing.

What happens if my insurance company goes out of business?

What happens if my insurance company goes out of business?

First, the Insurance Commissioner of the domiciled state steps in and corrective actions are taken. Generally in circumstances of an insurer failure, the commissioner tries to get another company to step in and take over the business. For example, American General took over AIG’s contracts back in 2001 and now pays its claims.

If that doesn’t happen then the fall back is to each state’s guaranty association, which will cover policyholder’s benefits in their states up to a specific limit. Each state guaranty association works slightly differently. Below are details for Pennsylvania and New Jersey, but if you are a resident of a different state or want more details about PA or NJ, resources can be found on the National Organization of Life & Health Insurance Guaranty Associations website.


The maximum amount of protection provided by the Pennsylvania guaranty association for each type of policy, no matter how many of that type of policy you bought from your company, is:

Life Insurance Death Benefit: $300,000 per insured life

Life Insurance Cash Surrender: $100,000 per insured life

Health Insurance Claims: $300,000 per insured life

Annuity Benefits as of Date of Insolvency:

$300,000 if contract has been annuitized

$100,000 if contract is in deferred status

Under no circumstances can the statutory obligation of the Guaranty Association exceed the contractual obligation of the insolvent insurer. There is an overall lifetime maximum per individual of $300,000.

New Jersey

The maximum amount of protection provided by the New Jersey guaranty association, for each type of policy, no matter how many of that type of policy you bought from your company, is, with respect to any one insured individual:

Life Insurance Death Benefit: $500,000

Life Insurance Cash Surrender: $100,000

Annuity Benefits (Cash Surrender Value): $100,000

Annuity Benefits (Present Value): $500,000

Health Insurance Claims: No limit

Four Things Women Need to Know about Social Security

Ever since a legal secretary named Ida May Fuller received the first retirement benefit check in 1940, women have been counting on Social Security to provide much-needed retirement income. Social Security provides other important benefits too, including disability and survivor's benefits, that can help women of all ages and their family members.

1. How does Social Security protect you and your family?

When you work and pay Social Security taxes, you're paying for three types of benefits: retirement, disability, and survivor's benefits.

Retirement benefits

Retirement benefits are the cornerstone of the Social Security program. According to the Social Security Administration (SSA), because women are less often covered by retirement plans and live longer on average than men, they are typically more dependent on Social Security retirement benefits. Even if other sources of retirement income are exhausted, Social Security retirement benefits can't be outlived. Many women qualify for benefits based on their own work record, but if you're married, you may also qualify based on your husband's work record.

Disability benefits

During your working years, you may suffer a serious illness or injury that prevents you from earning a living, potentially putting you and your family at financial risk. But if you qualify for Social Security on your earnings record, you may be able to get monthly disability benefits. You must have worked long enough in recent years, have a disability that is expected to last at least a year or result in death, and meet other requirements. If you're receiving disability benefits, certain family members (such as your dependent children) may also be able to collect benefits based on your work record. Because eligibility requirements are strict, Social Security is not a substitute for other types of disability insurance, but it can provide basic income protection.

Survivor's benefits

You probably know the value of having life insurance to financially protect your family, but did you know that Social Security offers valuable income protection as well? If you're qualified for Social Security at your death, your surviving spouse (or ex-spouse), your unmarried dependent children, or your dependent parents may be eligible for benefits based on your earnings record. You also have survivor protection if you're married and your covered spouse dies and you're at least age 60 (or at least age 50 if you're disabled), or at any age if you're caring for your covered child who is younger than age 16 or disabled.

2. How do you qualify for benefits?

When you work in a job where you pay Social Security taxes or self-employment taxes, you earn credits (up to four per year, depending on your earnings) that enable you to qualify for Social Security benefits. In 2016, you earn one credit for each $1,260 of wages or self-employment income. The number of credits you need to qualify depends on your age and the benefit type.

  •  For retirement benefits, you generally need to have earned at least 40 credits (10 years of work). However, you may also qualify for spousal benefits based on your husband's work history if you haven't worked long enough to qualify on your own, or if the spousal benefit is greater than the benefit you've earned on your own work record.
  • For disability benefits (if you're disabled at age 31 or older), you must have earned at least 20 credits in the 10 years just before you became disabled (different rules apply if you're younger).
  • For survivor's benefits for your family members, you need up to 40 credits (10 years of work), but under a special rule, if you've worked for only one and one-half years in the three years just before your death, benefits can be paid to your children and your spouse who is caring for them.

Whether you work full-time, part-time, or are a stay-at-home spouse, parent, or caregiver, it's important to be aware of these rules and to understand how time spent in and out of the workforce might affect your entitlement to Social Security.

3. What will your retirement benefit be?

Your Social Security retirement benefit is based on the number of years you've worked and the amount you've earned. Your benefit is calculated using a formula that takes into account your 35 highest earnings years. If you earned little or nothing in several of those years, it may be to your advantage to work as long as possible, because you may have the opportunity to replace a year of lower earnings with a year of higher earnings, potentially resulting in a higher retirement benefit.

Your benefit will also be affected by your age at the time you begin receiving benefits. If you were born in 1943 or later, full retirement age ranges from 66 to 67, depending on the year you were born. Your full retirement age is the age at which you can apply for an unreduced retirement benefit.

However, you can choose to receive benefits as early as age 62, if you're willing to receive a reduced benefit. At age 62, your benefit will be 25% to 30% less than at full retirement age (this reduction is permanent). On the other hand, you can get a higher payout by delaying retirement past your full retirement age, up to age 70. If you were born in 1943 or later, your benefit will increase by 8% for each year you delay retirement.

For example, the following chart shows how much an estimated monthly benefit at a full retirement age (FRA) of 66 would be worth if you started benefits 4 years early at age 62 (your monthly benefit is reduced by 25%), and how much it would be worth if you waited until age 70--4 years past full retirement age (your monthly benefit is increased by 32%).

What if you're married and qualify for spousal retirement benefits based on your husband's earnings record? In this case, your benefit at full retirement age will generally be equal to 50% of his benefit at full retirement age (subject to adjustments for early and late retirement). If you're eligible for benefits on both your record and your spouse's, you'll generally receive the higher benefit amount.

One easy way to estimate your benefit based on your earnings record is to use the Retirement Estimator available on the SSA website. You can also visit the SSA website to sign up for a my Social Security account so that you can view your personalized Social Security Statement. This statement gives you access to detailed information about your earnings history and estimates for disability, survivor's, and retirement benefits.

4. When should you begin receiving retirement benefits?

Should you begin receiving benefits early and receive smaller payments over a longer period of time, or wait until your full retirement age or later and receive larger benefits over a shorter period of time? There's no "right" answer. It's an individual decision that must be based on many factors, including other sources of retirement income, your marital status, whether you plan to continue working, your life expectancy, and your tax picture.

As a woman, you should pay close attention to how much retirement income Social Security will provide, because you may need to make your retirement dollars stretch over a long period of time. If there's a large gap between your projected expenses and your anticipated income, waiting a few years to retire and start collecting a larger Social Security benefit may improve your financial outlook. What's more, the longer you stay in the workforce, the greater the amount of money you will earn and have available to put into your overall retirement savings. Another plus is that Social Security's annual cost-of-living increases are calculated using your initial year's benefits as a base--the higher the base, the greater your annual increase, something that can help you maintain your standard of living throughout many years of retirement.

This is just an overview of Social Security. There's a lot to learn about this program, and each person's situation is unique. Contact a Social Security representative if you have questions.


The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.  Securities and advisory services offered through Commonwealth Financial Network,® Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

The Trump Tax Plan: What You Need to Know

The big news today is the White House's tax plan, which proposes to cut taxes across the board, relieve millions of people from the burden of paying income taxes, and make filing much simpler and easier—all while keeping the budget in balance (or at least not making the situation worse). The question, of course, is whether it can do all it promises, and whether it stands a chance of passing.

Potential benefits

For individuals and families, the plan reduces the number of tax brackets (the highest of which is currently 39.6 percent) from seven to three, at 10 percent, 25 percent, and 35 percent. It also doubles the standard deduction, to $12,000, so married couples making less than $24,000 would not pay income taxes at all. Finally, it repeals the Alternative Minimum Tax (AMT), which was designed to ensure that higher earners pay a minimum level of taxes, and does away with the estate tax, which taxes inheritances.

From a business perspective, the proposal also offers benefits. The plan cuts the maximum corporate tax rate from 35 percent to 15 percent, a clear potential savings. The border adjustment tax, which would have raised taxes for importers, is nowhere to be seen—another advantage for many businesses. Finally, pass-through businesses, including many small companies, would get a 15-percent tax rate.

All in all, for many taxpayers, the plan looks like a real win.

Potential costs

It would also come with substantial costs, however. To pay for the cuts, the administration would eliminate all tax deductions, except the mortgage, charitable giving, and retirement savings deductions. Notably, residents of states with high taxes would not be able to deduct those taxes. Depending on where you live, and how many deductions you take, you might end up paying more. 

The costs at the federal level could be significant as well. Independent experts report that the plan would raise much less revenue for the country than the current tax laws do. The administration expects lower taxes to spur faster growth, making up for the shortfall, but if not, the deficit would rise substantially. The numbers here are uncertain, as the plan includes few details so far. But it does seem reasonable to conclude that, without that additional growth, the deficit would indeed grow, perhaps by a great deal.

Can it pass?

As presented, the plan allocates much of the tax relief to the wealthy, which means it will be difficult to get votes from Democrats. Eliminating the estate tax and the AMT, in particular, will make it a hard sell. On the Republican side, the possibility that the deficit could rise substantially may alienate the Freedom Caucus and other factions focused on fiscal responsibility. The internal Republican debate is likely to be lively, and the path to passage is not clear at all.

At the end of the day, the current tax plan is perhaps best described as an opening bid, laying out themes and priorities but leaving it up to Congress to fill in the details. And that is how it should be. President Trump has presented a road map for where he wants to go. Congress now has to decide how best to get there.

Although it’s worth examining the proposal as is, it is premature to get too involved, as what (if anything) emerges as law is likely to be quite different.

Authored by Brad McMillian

Four Ways to Double the Power of Your Tax Refund

The IRS expects that more than 70% of taxpayers will receive a refund in 2017.¹ What you do with a tax refund is up to you, but here are some ideas that may make your refund twice as valuable.

Double your savings

Perhaps you'd like to use your tax refund to start an education fund for your children or grandchildren, contribute to a retirement savings account for yourself, or save for a rainy day. A financial concept known as the Rule of 72 can give you a rough estimate of how long it might take to double what you initially save. Simply divide 72 by the annual rate you hope that your money will earn. For example, if you invest your tax refund and it earns a 6% average annual rate of return, your investment might double in approximately 12 years (72 divided by 6 equals 12).

This hypothetical example of mathematical compounding is used for illustrative purposes only and does not represent the performance of any specific investment. Fees, expenses, and taxes are not considered and would reduce the performance shown if they were included

Split your refund in two

If stashing your refund away in a savings account or using it to pay bills sounds unappealing, go ahead and splurge on something for yourself. But remember, you don't necessarily have to spend it all. Instead, you could put half of it toward something practical and spend the other half on something fun.

The IRS makes splitting your refund easy. When you file your income taxes and choose direct deposit for your refund, you can decide to have it deposited among two or even three accounts, in any proportion you want. Qualified accounts include savings and checking accounts, as well as IRAs (except SIMPLE IRAs), Coverdell Education Savings Accounts, health savings accounts, Archer MSAs, and TreasuryDirect® online accounts. To split your refund, you'll need to fill out IRS Form 8888 when you file your federal return.

Double down on your debt

Using your refund to pay down credit card debt or a loan with a high interest rate could enable you to pay it off early and save on interest charges. The time and money you'll save depend on your balance, the interest rate, and other factors such as your monthly payment. Here's a hypothetical example. Let's say you have a personal loan with an $8,000 balance, a 12% fixed interest rate, and a 24-month repayment term. Your fixed monthly payment is $380. If you were to put a $4,000 refund toward paying down your principal balance, you would be able to pay off your loan in 12 months and save $780 in interest charges over the remaining loan term. Check the terms of any loan you want to prepay, though, to make sure that no prepayment penalty applies.

Be twice as nice to others

Giving to charity has its own rewards, but Uncle Sam may also reward you for gifts you make now when you file your taxes next year. If you itemize, you may be able to deduct contributions made to a qualified charity. You can also help your favorite charity or nonprofit reap double rewards by finding out whether your gift qualifies for a match. With a matching gift program, individuals, corporations, foundations, and employers offer to match gifts the charitable organization receives, usually on a dollar-for-dollar basis. Terms and conditions apply, so contact the charitable organization or your employer's human resources department to find out more about available matching gift programs.

The accompanying pages havebeen developed by an independentthird party. Commonwealth
Financial Network is notresponsible for their content anddoes not guarantee their accuracy
or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances withyour representative.Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal agency. Securities and advisory services offered through Commonwealth Financial Network,® Member FINRA/SIPC, aRegistered Investment Adviser.Fixed insurance products andservices offered through CES.



Am I Having Enough Withheld?

If you fail to estimate your federal income tax withholding properly, it may cost you in a variety of ways. If you receive an income tax refund, it essentially means that you provided the IRS with an interest-free loan during the year. By comparison, if you owe taxes when you file your return, you may have to scramble for cash at tax time--and possibly owe interest and penalties to the IRS as well.

When determining the correct withholding amount for your salary or wages, your objective should be to have just enough taxes withheld to prevent you from incurring penalties when your tax return is due. (You may owe some money at the time you file your return, but it shouldn't be much.) You can accomplish this by reading and understanding IRS Publication 505, properly completing Form W-4 (and accompanying worksheets), and providing an updated Form W-4 to your employer when your circumstances change significantly.

Form W-4 helps you determine the proper withholding amount

Two factors determine the amount of income tax that your employer withholds from your regular pay: the amount you earn and the information you provide on Form W-4. This form asks you for three pieces of information:

  • The number of withholding allowances you want to claim: You can claim up to the maximum number you're entitled to, claim less than you're entitled to, or claim zero.

  • Whether you want taxes to be withheld at the single or married rate: The married status, which is associated with a lower withholding rate, should generally be selected only by those taxpayers who are married and file a joint return. Other people (including those who are married and file separately) should generally have taxes withheld at the higher, single rate.

  • The additional amount (if any) you want withheld from your paycheck: This is optional; you can specify any additional amount of money you want withheld.

When both spouses work and have taxes withheld at the married rate, they sometimes end up with insufficient taxes withheld. If this happens to you, remember that you can always choose to withhold at the single rate. In addition, you can determine the proper withholding amount by completing Form W-4's two-earner/two-job worksheet.

Complete the worksheets to claim the correct number of allowances

To understand Form W-4, you must understand allowances. Think of allowances as cash in your pocket at the time that you receive your paycheck. The more allowances you claim, the less taxes are taken from your paycheck (and the more cash ends up in your pocket on payday). For example, you can maximize the amount withheld from your paycheck to ensure that you have enough tax withheld to cover your tax liability by claiming zero allowances. This will reduce the amount of cash you take home in your paycheck. The following factors determine your number of allowances:

  • The number of personal and dependency exemptions that you claim on your federal income tax return
  • The number of jobs that you work
  • The deductions, adjustments to income, and credits that you expect to take during the year
  • Your filing status
  • Whether your spouse works

To claim the correct number of allowances, you should complete Form W-4's worksheets. These include a personal allowances worksheet, a deductions and adjustments worksheet, and a two-earner/two-job worksheet. IRS Publication 505 (Tax Withholding and Estimated Tax) explains these worksheets.

Check your withholding

To avoid surprises at tax time, it's a good idea to periodically check your withholding. If you accurately complete all Form W-4 worksheets and don't have significant nonwage income (e.g., interest and dividends), it's likely that your employer will withhold an amount close to the tax you'll owe on your return. But in the following cases, accurate completion of the Form W-4 worksheets alone won't guarantee that you'll have the correct amount of tax withheld:

  • When you're married and both spouses work, or if either of you start or stop working

  • When you or your spouse are working more than one job

  • When you have significant nonwage income, such as interest, dividends, alimony, unemployment compensation, or self-employment income, or the amount of your nonwage income changes

  • When you'll owe other taxes on your return, such as self-employment tax or household employment tax

  • When you have a lifestyle change (e.g., marriage, divorce, birth or adoption of a child, new home, retirement) that affects the tax deductions or credits you may claim

  • When there are tax law changes that affect the amount of tax you'll owe

In these cases, IRS Publication 505 can help you compare the total tax that you'll withhold for the year with the tax that you expect to owe on your return. It can also help you determine any additional amount you may need to withhold from each paycheck to avoid owing taxes when you file your return. Alternatively, it may help you identify if you're having too much tax withheld. If you find that you need to make changes to your withholding, you can do so at any time simply by submitting a new Form W-4 to your employer.


Decisions, Decisions: Choosing Among Retirement Plan Contribution Types

Decisions, Decisions: Choosing Among Retirement Plan Contribution Types

If your employer-sponsored 401(k) or 403(b) plan offers pre-tax, Roth, and/or non-Roth after-tax contributions, which should you choose? How do you know which one might be appropriate for your needs? Start by understanding the features of each.

Pre-tax: For those who want lower taxes now

With pre-tax contributions, the money is deducted from your paycheck before taxes, which helps reduce your taxable income and the amount of taxes you pay now. Consider the following example, which is hypothetical and has been simplified for illustrative purposes.

Frank earns $2,000 every two weeks before taxes. If he contributes nothing to his retirement plan on a pre-tax basis, the amount of his pay that will be subject to income taxes will be the full $2,000. If he was in the 25% federal tax bracket, he would pay $500 in federal income taxes, reducing his take-home pay to $1,500. On the other hand, if he contributes 10% of his income to the plan on a pre-tax basis — or $200 — he would reduce the amount of his taxable pay to $1,800. That would reduce the amount of taxes to $450. After accounting for both federal taxes and his plan contribution, Frank's take-home pay would be $1,350. The bottom line? Frank would be able to invest $200 toward his future by reducing his take-home pay by just $150. That's the benefit of pre-tax contributions.

In addition, any earnings made on pre-tax contributions grow on a tax-deferred basis. That means you don't have to pay taxes on any gains each year as you would in a taxable investment account. However, those tax benefits won't go on forever. Any money withdrawn from a tax-deferred account is subject to ordinary income taxes, and if the withdrawal takes place prior to age 59½ (or in some cases, age 50 or 55), you may be subject to a 10% penalty on the total amount of the distribution.

Roth: For those who prefer tax-free income later

On the other hand, contributing to a Roth account offers different benefits. Roth contributions are considered "after-tax," so you won't reduce the amount of current income subject to taxes. But qualified distributions down the road will be tax-free.

A qualified Roth distribution is one that occurs:

  • After a five-year holding period and
  • Upon death, disability, or reaching age 59½

Distributions of Roth contributions are always tax-free because they were made on an after-tax basis. And distributions of earnings on those contributions are tax-free as long as they're qualified. Nonqualified distributions of earnings are subject to regular income taxes and a possible 10% penalty tax. If, at some point, you need to take a nonqualified withdrawal from a Roth account — due to an unexpected emergency, for example — only the pro-rata portion of the total amount representing earnings will be taxable.

In order to meet an unexpected emergency financial need of $8,000, Holly decides to take a nonqualified hardship withdrawal from her Roth account. Of the $20,000 total value of the account, $18,400 represents after-tax Roth contributions and $1,600 is attributed to investment earnings. Because earnings represent 8% of the total account value ($1,600 ÷ $20,000 = 0.08), this same percent of Holly's $8,000 distribution — or $640 ($8,000 x 0.08) — will be considered earnings subject to both income taxes and a 10% potential penalty tax.

Keep in mind that tapping your account before retirement defeats its purpose. If you need money in a pinch, try to exhaust all other possibilities before taking a distribution. Always bear in mind that the most important benefit of a Roth account is the opportunity to build a nest egg of tax-free income for retirement. Finally, not all plans allow in-service withdrawals.

After-tax: For those who are able to exceed the limits

Finally, some 401(k) and 403(b) plans allow you to make additional, non-Roth after-tax contributions. This plan feature helps those who want to make contributions exceeding the annual total limit on pre-tax and Roth accounts (in 2017, the limit is $18,000; $24,000 for those age 50 or older).1 As with a traditional pre-tax account, earnings on after-tax contributions grow on a tax-deferred basis.

If this option is offered (check your plan documents), keep in mind that total employee and employer contributions cannot exceed $54,000, or $60,000 for those age 50 or older (2017 limits).

Another benefit of making after-tax contributions is that when you leave your job or retire, they can be rolled over tax-free to a Roth IRA, which also allows for potential tax-free growth from that point forward. Some higher-income individuals may welcome this potential benefit if their income affects their ability to directly fund a Roth IRA. [In addition to rolling the proceeds to a Roth IRA, you may also (1) leave the assets in the original plan (if allowed), (2) transfer assets to a new employer's plan (if allowed), or (3) withdraw the funds.] 2

Which to choose?

Determining which types of plan contributions to make is a strategic decision based on your household's needs and tax situation. Because non-Roth after-tax contributions are generally most appropriate only to those who wish to exceed the contribution limits on pre-tax and/or Roth accounts, it may be best to focus on maxing out those accounts first.

If your plan offers both pre-tax and Roth contributions (check your plan documents), the general rule is to consider whether you will benefit more from the tax break today than you would in retirement. Specifically, if you think you'll be in a higher tax bracket in retirement, Roth contributions may be more beneficial in the long run.

Also, regardless of whether you choose pre-tax or Roth contributions, be sure to strive for contributing at least enough to receive any employer match that may be offered. Matching contributions represent money that your employer offers to help you pursue your savings goal. If you don't contribute enough to take advantage of the full amount of the match, you are essentially turning down free money.

Keep in mind that employer matching contributions are made on a pre-tax basis. Distributions representing employer matching dollars and related earnings will always be subject to regular income taxes and a potential 10% tax penalty if distributed prior to age 59½ (or, in some cases, age 50 or 55).3

Once the annual contribution limit has been reached for pre-tax and/or Roth contributions, it may be time to consider non-Roth after-tax contributions if your plan permits them.

For more information specific to your situation, consult a qualified tax professional. Working with a tax professional cannot guarantee financial success.

Section 403(b) plans may allow employees with 15 or more years of service to make special catch-up contributions in addition to the age 50 catch-up contribution. Under this special rule, the maximum additional catch-up contributions in any year is $3,000 and the lifetime aggregate special catch-up contribution is $15,000.

Keep in mind that distributions of earnings on non-Roth after-tax contributions will be subject to regular income taxes and possibly penalty taxes if the money is not rolled over to a traditional IRA. IRS Notice 2014-54 clarifies the rules regarding rollovers of non-Roth after-tax plan contributions to a Roth IRA.

Employer matching contributions may be subject to a vesting schedule. Plan participants earn rights to the employer matching contributions, and earnings on those contributions, over a period of time. Employer matching contributions are not offered in all plans. Check your plan documents.

529 Plans and Financial Eligibility

529 Plans and Financial Aid Eligibility

If you're thinking about opening a 529 plan, or if you've already opened an account, you might be concerned about how 529 funds will affect your child's chances of receiving financial aid. To help clear up any confusion, here are a few things to remember about how 529 plans are treated under the federal aid formula.

First, why should you be concerned?

The financial aid process is all about assessing what a family can afford to pay for college and trying to fill the gap. To do this, the institutions that offer financial aid examine a family's income and assets to determine how much a family should be expected to contribute before receiving financial aid. Financial aid formulas weigh assets differently, depending on whether they are owned by the parent or the child. So, it's important to know how your college savings plan account or your prepaid tuition plan account will be classified, because this will affect the amount of your child's financial aid award.

A general word about financial aid

Financial aid is money given to a student to help that student pay for college or graduate school. This money can consist of one or more of the following:

•A loan (which must be repaid in the future)

•A grant (which doesn't need to be repaid)

•A scholarship

•A work-study job (where the student gets a part-time job either on campus or in the community and earns money for tuition)

The typical financial aid package contains all of these types of aid. Obviously, grants are more favorable than loans because they don't need to be repaid. However, over the past few decades, the percentage of loans in the average aid package has been steadily increasing, while the percentage of grants has been steadily decreasing. This trend puts into perspective what qualifying for more financial aid can mean. There are no guarantees that a larger financial aid award will consist of favorable grants and scholarships--your child may simply get (and have to pay back) more loans.

The two main sources of financial aid are the federal government and colleges. In determining a student's financial need, the federal government uses a formula known as the federal methodology, while colleges use a formula known as the institutional methodology. The treatment of your 529 plan may differ, depending on the formula used.

How is your child's financial need determined?

Though the federal government and colleges use different formulas to assess financial need, the basic process is the same. You and your child fill out a financial aid application by listing your current assets and income (exactly what assets must be listed will depend on the formula used). The federal application is known as the FAFSA (Free Application for Federal Student Aid); colleges generally use an application known as the PROFILE.

Your family's asset and income information is run through a specific formula to determine your expected family contribution (EFC). The EFC represents the amount of money that your family is considered to have available to put toward college costs for that year. The federal government uses its EFC figure in distributing federal aid; a college uses its EFC figure in distributing its own private aid. The difference between your EFC and the cost of attendance (COA) at your child's college equals your child's financial need. The COA generally includes tuition, fees, room and board, books, supplies, transportation, and personal expenses. It's important to remember that the amount of your child's financial need will vary, depending on the cost of a particular school.

The results of your FAFSA are sent to every college that your child applies to. Every college that accepts a student will then attempt to craft a financial aid package to meet that student's financial need. In addition to the federal EFC figure, the college has its own EFC figure to work with. Eventually, the financial aid administrator will create an aid package made up of loans, grants, scholarships, and work-study jobs. Some of the aid will be from federal programs (e.g., Stafford Loan, Perkins Loan, Pell Grant), and the rest will be from the college's own endowment funds. Keep in mind that colleges aren't obligated to meet all of your child's financial need. If they don't, you're responsible for the shortfall.

The federal methodology and 529 plans

Now let's see how a 529 account will affect federal financial aid. Under the federal methodology, 529 plans--both college savings plans and prepaid tuition plans--are considered an asset of the parent, if the parent is the account owner.

So, if you're the parent and the account owner of a 529 plan, you must list the value of the account as an asset on the FAFSA. Under the federal formula, a parent's assets are assessed (or counted) at a rate of no more than 5.6%. This means that every year, the federal government treats 5.6% of a parent's assets as available to help pay college costs. By contrast, student assets are currently assessed at a rate of 20%.

There are a few points to keep in mind regarding the classification of 529 plans as a parental asset:

•A parent is required to list a 529 plan as an asset only if he or she is the account owner of the plan. If a grandparent is the account owner, then the 529 plan doesn't need to be listed as an asset on the FAFSA.

•Any student-owned or UTMA/UGMA-owned 529 account is also reported as a parent asset if the student files the FAFSA as a dependent student. A 529 account is considered an UTMA/UGMA-owned account when UTMA/UGMA assets are transferred to a 529 account.

•If your adjusted gross income is less than $50,000 and you meet a few other requirements, the federal government doesn't count any of your assets in determining your EFC. So, your 529 plan wouldn't affect financial aid eligibility at all.

Distributions (withdrawals) from a parent-owned 529 plan that are used to pay the beneficiary's qualified education expenses aren't classified as either parent or student income on the FAFSA the following year. However, distributions from a grandparent-owned 529 account are counted as student income on the FAFSA the following year, which has the effect of reducing a student's aid eligibility by 50% because student income is assessed at 50%.

The federal methodology and other college savings options

How do other college savings options fare under the federal system? Coverdell education savings accounts, mutual funds, and U.S. savings bonds (e.g., Series EE and Series I) owned by a parent are considered parental assets and counted at a rate of 5.6%. However, UTMA/UGMA custodial accounts and trusts are considered student assets. Under the federal methodology, student assets are assessed at a rate of 20% in calculating the EFC.

Also, distributions (withdrawals) from a Coverdell ESA that are used to pay qualified education expenses are treated the same as distributions from a 529 plan--they aren't counted as either parent or student income on the FAFSA, so they don't reduce financial aid eligibility.

One final point to note is that the federal government excludes some assets entirely from consideration in the financial aid process. These assets include all retirement accounts (e.g., traditional IRAs, Roth IRAs, employer-sponsored retirement plans), cash value life insurance, home equity, and annuities.

The institutional methodology and 529 plans

When distributing aid from their own endowment funds, colleges aren't required to use the federal methodology. As noted, most colleges use the PROFILE application (a few colleges use their own individual application). Generally speaking, the PROFILE digs a bit deeper into your family finances than the FAFSA.

Regarding 529 plans, the PROFILE generally follows the federal treatment of 529 plans. But check with your individual college for more information.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about specific 529 plans is available in the issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits. As with other investments, there are generally fees and expenses associated with participation in a 529 savings plan. There is also the risk that the investments may lose money or not perform well enough to cover college costs as anticipated.

The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.

 Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

 Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. CURO Wealth Management, 1705 Newtown-Langhorne Road, Suite 5, Langhorne, PA 19047. 215-486-8350[JDS1] 



Election Results

After the Election, What Now?

We wake up this morning to a new era. For the past several years, the United States has had either a Democrat-controlled government or a divided government. As a result of yesterday’s vote, Republicans will soon control the presidency, the Senate, and the House. Throughout the presidential campaign, much of the media coverage on both sides has verged on the apocalyptic, and, indeed, there may be substantial challenges as a new administration comes into power. But the reality is that the sun will come up today and every day thereafter, and the country will move on.

Policy clarity should steady markets

In the wake of the election, financial markets around the world pulled back significantly. Markets hate surprises, and this is a big one. As we recently saw with the Brexit vote, however, a short-term shock doesn’t necessarily spell longer-term problems. Indeed, after a sharp drop, S&P 500 futures have partially bounced back.

Whether the initial pullback worsens depends on if Donald Trump reaffirms some of his policies that appear more economically risky. How he deals with NAFTA, for example, could either reassure markets or rattle them further. He will face considerable pressure to start putting policy specifics in place very quickly.

The other piece of the puzzle will be how Trump works with the Republican Congress. On the face of it, this should be a good partnership, as all are from the same party. At the same time, Trump’s relationship with the party has been fraught throughout the campaign, and some of his policies are at odds with Republican orthodoxy. Certainly, his victory speech was encouraging in this regard, as he asked for the support of those who did not back him, and everyone involved has substantial incentives to act in unison.

There are real risks here, for the economy and the markets, but they are largely under the president-elect’s control. He has the ability to steer the situation with markets by offering clarity on economic policy and by working closely with the Republican Congress. It’s also important to note that many of Trump’s stated policies, such as those related to tax cuts and infrastructure spending, would actually stimulate the economy and could well lead to faster growth in the short term.

U.S. fundamentals remain solid

With economic growth continuing and companies returning to profit growth, the fundamentals of the economy and the markets are sound. The real question here is whether Trump’s election will disrupt that. Absent policy mistakes, there is no fundamental reason that it should.

Despite the significant political differences between the two candidates and the concerns expressed on both sides, the short-term impact of the election could well be minor from an economic perspective. Although there will inevitably be a period of adjustment and possibly volatility, if Trump works effectively with the Republican Congress to enact economically positive policies, the strong fundamentals should act to support both the economy and the financial markets.

In short, although the coverage of Trump’s victory is every bit as dramatic as the victory itself, the fundamentals remain positive and should stay that way. The U.S. economy has weathered many ups and downs since the financial crisis, and this election could be just one more bump in the road.


Authored by Brad McMillan, CFA®, CAIA, MAI, chief investment officer at Commonwealth Financial Network.

© 2016 Commonwealth Financial Network® Securities and advisory services offered through Commonwealth Financial Network,® Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency.


The Family Conversation: Addressing Your Health Care Needs in Retirement

Maybe you and your family have already attempted to have “the conversation.” You know the one: the discussion about your and your spouse’s assets and what will be done with those assets during the rest of your lives and after you pass away. Perhaps, because of your children’s sibling rivalries, the family conversation turned to one about gifts and inheritances and about who deserves more or less of the assets based on “good” or “bad” behavior. If things continued this way, you likely skipped over the most important aspect of this conversation: how the assets will be used to pay for your health care during retirement and how much that health care will cost.

Moving beyond the fear

Most people are aware that life expectancies are on the rise, but we put off thinking about getting older, getting sick or infirm, and having to pay for health care for a prolonged period. Medicare and Medigap premiums, deductibles, and co-payments alone will consume a significant portion of your income. And long-term care expenses can quickly drain even a large nest egg. Recognizing the complications posed by financing health care in retirement can make you fearful and even more reluctant to make any decisions on the matter.

But your family conversation won’t yield a viable plan or a shared understanding without honest and insightful preparation and soul-searching. Asking yourself (and your family) questions about physical, financial, and legal matters is a helpful starting point. You may find it less stressful to review each concept separately. Once you have some answers, you can piece them together to arrive at guidelines for your family’s conversations. And those conversations can lead to building an action plan.

Looking back to get a clearer picture of the future

Before you begin wrestling with your own ideas and concerns, think about your parents’ and grandparents’ experiences:  

  • How old were your grandparents when they died? What illnesses were common among other family members of their generation? You may remember that your grandmother was very forgetful, but you likely don’t remember a diagnosis of dementia.
  • Does longevity run in your family? How old were your parents (and your spouse’s parents) when they died? Or are your and your spouse’s parents still alive? Are they in good health are declining physically or mentally?
  • What were some lessons learned from your grandparents’ and parents’ final years? For example, did an uncle or aunt—or brother or sister—take on the caregiving? How did the caregiver feel about that? It’s common for one sibling to feel saddled with caring for aging parents and grow to resent his or her siblings for not helping with those responsibilities.
  • What is the probability that you or your spouse will live much longer than the other? If one of you incurs large health care expenses during retirement, will the other spouse be able to continue living in his or her current lifestyle?

How and where do you want to live?         

Now, think about how you want to age and how you want to use your assets for your care:

  • Have you thought about long-term care and what it would cost?
  • If you have a long-term care policy, do your children know its benefits?
  • What other resources do you have for funding long-term care?
  • Have you thought about assisted living? If so, what type of assisted living or continuing care residence would offer you the lifestyle you want?
  • If assisted living doesn’t appeal to you, have you considered selling your house and downsizing to a smaller and easier-to-maintain living space, such as a condominium?
  • Will you rely on your children to be your caregivers? One child may be willing to be your caregiver, but has he or she considered how those duties will impact his or her employment and finances?
  • Would you consider relocating to another part of the U.S.? Perhaps your children live in different states, but one of them is more than willing to serve as your future caregiver. Would you be willing to leave established friendships and activities to move where this son or daughter lives?

Whom do you trust?

Even if a dementia diagnosis is not in your future, most people do experience some cognitive decline. So whom do you trust to manage your assets and carry out your financial plan if you are no longer able to? Your most reliable child may live across the country, and the son or daughter whom you (and your other children) are reluctant to trust resides nearby. What do you do?

Beyond these threshold questions, you’ll want to consider several related and equally important issues:

  • Do you have basic estate planning documents, including a last will and testament, power of attorney (POA), and health care POA? If you do have these documents, how old are they? Do they need to be revised?
  • When do you want your general durable POA to take effect—immediately or only years from today after you lose capacity?
  • Do you have a revocable trust? If so, was it drafted and executed before the federal portability and increased exemption amounts became effective?
  • Are the beneficiary designations on your assets correct and up to date? Remember: Those designations—not the terms of your will—determine the distribution of your assets.

Can your family let bygones be bygones?

Finally, ask yourself and your children whether they will be able to put aside long-standing differences to follow through on whatever your wishes may be. This may be the most difficult question to answer objectively.

The answers that guide the conversation you have with your family will be as individual as its members. Your children may not react well to the subject of your lifetime health care needs. But by persisting in your efforts—and factoring aging into the conversation—you can create your own stable framework and perhaps a legacy for your family. And, remember, even if the conversation leads to family strife, you still have a lifeline. Whatever the answers to the questions posed in your conversation and the consequences, you can find helpful guidance by consulting your attorney or financial advisor.

© 2017 Commonwealth Financial Network®

Common Questions and Answers About QCDs (Qualified Charitable Deductions)

Common Questions and Answers About QCDs

As you may know, a qualified charitable distribution (QCD) is a payment made directly from an IRA to an organization that is eligible to receive charitable donations. Although the Protecting Americans from Tax Hikes (PATH) Act made QCDs permanent in 2015, there are specific requirements and circumstances that must be met before an IRA owner can make a QCD. To help you understand the ins and outs of this charitable distribution—and be a go-to resource for your clients—I’ve compiled the following common questions and answers about QCDs.

Q: What Are the Tax Benefits of a QCD?

A: Generally, regular IRA distributions are considered income for the IRA owner and are taxable. Qualifying amounts that clients donate as a QCD, on the other hand, are excluded from their taxable income. As such, they can use QCDs to lower their taxable income and, perhaps, their tax bill while benefiting a cause important to them.

Q: Can an Individual Make a QCD and Take a Charitable Deduction?

A: Although the QCD amount is not taxed, it cannot be claimed as a deduction for a charitable contribution. A tax advisor can help you determine whether a QCD or a charitable deduction provides the most benefit based on their situation.

Q: Who Is Eligible to Make a QCD?

A: To be eligible to make a QCD, the IRA owner must be age 70½. Further, the distribution must be made on or after the date he or she reaches 70½.

Q: What Is the Maximum Distribution Amount?

A: The maximum allowable amount per year that can be distributed as a QCD is $100,000. Any amount above and beyond $100,000 distributed as a charitable donation will not be considered a QCD and will not qualify for the tax benefit under the QCD provisions.

Note: For married taxpayers filing joint tax returns, $100,000 can be donated from each spouse’s IRA.

Q: Can More Than One QCD Be Made per Year?

A: Yes. As long as you are eligible, there is no limit on how many QCDs that can be made. Just be sure that the total amount of the distributions does not exceed the $100,000 annual limit and that the distributions are made by December 31 of the year of distribution.

Q: Can QCDs Be Used to Satisfy Required Minimum Distributions (RMDs)?

A: Yes. QCDs can be used to satisfy RMDs.

Q: Can a QCD Be Made from Any Type of IRA and Retirement Account?

A: No. QCDs can be made only from traditional IRAs and traditional inherited IRAs. (If making a QCD from an inherited IRA, you would still need to be age 70½ to qualify.)

QCDs cannot be made from active retirement accounts that you may have with your employer (e.g., SEP IRAs, SIMPLE IRAs, or qualified retirement plans, such as 401(k)s and 403(b)s). One exception to this rule is for non-active SEP and SIMPLE IRAs; QCDs are available from SEP and SIMPLE IRAs, as long as the plans have been terminated with the employer.

Under certain circumstances, a QCD may be made from a Roth IRA. Roth IRAs, however, are not subject to RMDs and distributions are generally tax-free. So, your clients should consult with a tax advisor to determine if making a QCD from a Roth is appropriate for their set of circumstances.

Q: Are Special Processing Requirements Involved?

A: Yes. To qualify as a QCD, the payment must be made directly from the IRA to the charity. So, when issuing a check from the IRA, the check must be made payable to the charity. The funds cannot be distributed to the IRA owner, for example, and then later donated as a personal check. Typically, the check is mailed directly to the charity. In some situations, it can be mailed to the IRA owner’s address who can then send it to the charity (again, as long as the check is made payable to the charity).

Q: Are All Organizations Eligible to Receive IRA Payments Made as QCDs?

A: No. The receiving charity must be a 501(c)(3) organization eligible to receive tax-deductible contributions. Some of the charities that do not qualify include private foundations and donor-advised funds. Best practice is for your client to confirm with his or her tax preparer or with the organization to confirm eligibility before making the distribution.

Q: How Are QCDs Reported on Tax Documents and Tax Returns?

A: All distributions taken from the IRA will be reported on the Form 1099-R issued to the client and to the Internal Revenue Service (IRS). Here, be sure your client is aware that there is no special coding on this form that designates a distribution as a QCD.

It is recommended that clients notify their tax preparer of their intent to make a QCD. That way, the tax preparer can report the distributions and income recognition accordingly. In general, however, a QCD is reported on Form 1040 as follows: 

  • Enter the full amount as a charitable distribution on the line for IRA distributions.
  • On the line for the taxable amount, enter zero if the full amount was a QCD. Then, enter "QCD" next to this line.

Note: The charitable organization may provide the client with a receipt for the payment, which can be included with the client’s tax filing as proof of the donation.

Q: What if the QCD Is Made from an IRA Consisting of Both Deductible and Nondeductible Contributions?

A: Distributions made under the QCD provisions will be made from the deductible (pre-tax) portion of the IRA before the nondeductible (after-tax) portion.

Posted by Mike Triana

Commonwealth Financial Network® does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation

Shopping for a Mortgage

Shopping for a mortgage can be daunting, even for homeowners who have been through the process before. By being prepared, doing your homework, and asking questions, you can find a suitable mortgage for your circumstances.

Tip #1: Obtain your credit report.

It goes without saying that borrowers with the best credit history get the best terms.

To determine your credit score, a tool used to determine your creditworthiness, lenders rely on three reporting agencies: Equifax, Experian, and TransUnion. Before you begin shopping for a mortgage, get your credit report from all three agencies at If you haven’t requested a report within the last 12 months, there is no charge. Correct any errors immediately, and take steps to improve your score.

Tip #2: Know how much you can afford.

There is a difference between what lenders are willing to lend you and how much you can afford. In their efforts to increase their compensation, real estate agents and mortgage brokers look to get you into the most expensive home and the largest mortgage you can qualify for. But only you can determine how much you can afford.

Review your current spending and obligations and add in closing costs, estimated monthly mortgage, property taxes, insurance, utilities, and maintenance. In addition, consider the following before you make your decision:

  • Will you have enough to pay for moving expenses, furnishings, repairs, or remodeling and still have enough money to make regular contributions to your emergency fund?
  • How soon will you be able to replenish your savings after the down payment?
  • If you were to lose your job, would you have enough money saved to get you through a rough period?
  • Would taking on too much debt prevent you from achieving other important financial goals?
  • If you purchase a home, how would your lifestyle have to change? How would you feel about that?

After answering these questions, you will have enough information to help decide how much you can afford without compromising your future happiness.

Tip #3: Failing to shop around can cost you thousands of dollars.

Get quotes from at least three mortgage brokers or lenders. Just because a mortgage broker is independent doesn’t mean that he or she will offer you the best value available in the marketplace.

When making comparisons between brokers and lenders, be sure that the quote is for the same type of mortgage—that is, for the same amount, down payment, term, and type. This can make it easier to compare rates, fees, points, and insurance costs. And because interest rates can change daily, ask that the interest rate quoted to you is available on a set date. It is also helpful to ask for the loan’s annual percentage rate (APR), as this takes into account additional loan costs such as points, broker fees, and other charges.

Comparing interest rates alone does not give you a fair assessment; you also need to understand overage costs. Overage is the difference between the lowest possible loan price that a lender can afford and the amount you are willing to pay. It can be built into the interest rate, points, or other fees. It is negotiable, so shop around.

Remember that “no cost” can actually mean “hidden costs.” Virtually every mortgage incurs costs. They can be built into longer prepayment penalties (back-end fees), into commissions from the sale of related products or services, or through the interest earned by rolling closing costs into the loan principal. Study the lender’s good faith estimate (GFE) for a full disclosure of your costs.

Tip #4: Read everything and ask questions.

A mortgage is a financial commitment you will have to deal with for a long time. It is always wise to have your own real estate attorney review any contracts you are asked to sign that have to do with your home purchase. If you don’t understand the different types of mortgages, terms, or mistakes to avoid, you may want to consult a good educational resource like, a website sponsored by a Wharton University professor who is a specialist in this field.

Tip #5: Lock in your interest rate.

Quotes are only estimates, and rates are subject to change. Although there are laws governing the use of GFEs, market forces can change the rates and costs before you get to closing. Small changes can have a big impact on affordability. To guarantee the terms quoted, ask for a written lock-in from the lender. (If rates drop, a lock-in can work against you, but remember that only the rate is locked in, not you.) Let the broker or lender know that you are going to shop for the best deal.


This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

Copyright 2016 Commmonwealth Financial Network.

Top 12 Tax Scams of 2016

The IRS recently finished announcing their “Dirty Dozen” list of tax scams for the 2016 filing season. The list compiles the most common scams that taxpayers may encounter year-round. These schemes increase drastically in frequency in the months surrounding the annual filing deadline. Here is the full list that you should be aware of in 2016:

1. Phone scams

Aggressive and threatening phone calls by criminals impersonating IRS agents remain ongoing threats.

2. Phishing

Be on guard against fake emails or websites looking to steal personal information. The IRS will not send you an email about a bill or refund out of the blue.

3. Identity Theft

As we spoke about last week, identity theft is especially prevalent around tax time.  The IRS continues to pursue the criminals that file fraudulent returns using someone else’s Social Security number.

4. Return Preparer Fraud

The vast majority provide high-quality service, but some dishonest preparers set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers.

5. Offshore Tax Avoidance

The IRS offers the Offshore Voluntary Disclosure Program (OVDP) to help people get their taxes in order.

6. Inflated Refund Claims

Be wary of anyone who asks you to sign a blank return, promises a big refund before looking at their records, or charges fees based on a percentage of the refund.

7. Fake Charities

Take a few extra minutes to ensure that your donations go to legitimate and currently eligible charities. has the tools to check out the status of these organizations.

8. Hiding Income With Fake Documents

Hiding taxable income by filing false Form 1099s or other fake documents is a scam that you should always guard against.

9. Abusive Tax Shelters

Be on the lookout for people peddling complex tax avoidance schemes that sound too good to be true.

10. Falsifying Income to Claim Credits

While often done unknowingly, avoid inventing income to erroneously claim tax credits.

11. Excessive Claims for Fuel Tax Credits

The fuel tax credit is generally limited to off-highway business use, including use in farming. Consequently, the credit is not available to most people.

12. Frivolous Tax Arguments

Promoters of frivolous schemes encourage people to make unreasonable claims to avoid paying the taxes they owe. These arguments are wrong and have been thrown out of court in the past.


Protecting Yourself from Identity Theft

Identity theft – when someone uses personal data to do anything from fraudulently opening a new bank account to deceiving the police – is a crime on the rise in the U.S.  Due to this increased prevalence, it is important to know how to best protect yourself from becoming a victim.  Below are some tips to hopefully help keep your identity safe.

  • Check yourself out: Review your credit report periodically for accuracy via websites like
  • Secure your Social Security number: Never carry your SS card with you unless you'll need it. Don't have your SSN preprinted on your checks or give it out over the phone unless you initiate the call to an organization you trust.
  • Don't leave home with it: Carry only the cards and/or checks you'll need for any one trip, including debit, credit, and health insurance cards.
  • Keep your receipts: Don't throw them away or leave them behind as it may contain your credit/debit card number. Don't leave them in a shopping bag in your car in case it is broken into.
  • Shred it: Shred financial records with a cross-cut shredder when disposing.
  • Keep a low profile: Consider removing your name from most national mailing, e-mailing, and direct marketing lists and adding it to the Do Not Call Registry.  Refuse to allow the sharing of your financial information with other organizations.
  • Take a byte out of crime: Install a firewall to prevent hackers from obtaining information from your hard drive, install virus protection software, and update everything on a regular basis. If you provide personal or financial information about yourself over the Internet, do so only on secure websites; to determine if a site is secure, look for a URL that begins with "https" (instead of "http") or a lock icon on the browser's status bar.

The Parent's Guide to the FAFSA

It’s the fourth week of Financial Aid Awareness month, and as promised, this week I am going to talk about the parent’s guide to the FAFSA.  If you’re getting ready to help your child apply for federal student aid on the 2016-2017 FAFSA, here’s what you should be doing over the next few months:

Before the FAFSA

  • Learn the basics of the federal student aid programs such as grants, work-study, and loans.  Federal aid is intended to help cover educational expenses associated with the cost of attendance.
  • Read Do You Need Money for College? to familiarize yourself further with your child’s federal student aid options at
  • Encourage your child to maximize any available free money to help pay for college.  There’s information and a free scholarship search at
  • Understand who counts as a parent for purposes of filling out the FAFSA. shares the definition of “legal parent” and discusses which parent’s information should be reported on the FAFSA when the legal parents are divorced or separated and not living together.
  • You and your child should get FSA IDs.  A FSA ID is a username and password that you’ll be using to sign the FAFSA.  You and your child each need your own FSA ID-and you each need to create your own for privacy purposes. 
  • You and your child will each need to gather the following documents in preparation for the FAFSA: 2015 federal income tax returns, W-2s, and/or other records of money earned, bank statements, records of investments, records of untaxed income (if applicable), and a FSA ID to sign electronically.

Filling out the FAFSA

  • Encourage your child to fill out the FAFSA before state and school deadlines, which may fall as early as February 2016. 
  • Make sure your child goes to to fill out the application.
  • The FAFSA is your child’s application, so keep in mind when it says “you,” it means “you, the student.”
  • Be sure you or your child sees the confirmation page pop up on the screen so you’ll know the FAFSA has been submitted.
  • Depending on your state, you may see a link on the FAFSA confirmation page to your state’s financial aid application.  This will allow your child to transfer their information directly into the state application.

After the FAFSA

  • Both you and your child will receive e-mails letting you know the FAFSA has been processed.
  • Note: It takes about three days for the FAFSA to be processed and sent to the school.
  • Double check the information you reported on the FAFSA.  You can make corrections if necessary.
  • Encourage your child to read all communications from the school carefully and to supply any additional information, forms, or signatures needed by the deadlines the school sets.

Financial Literacy and Student Loan Debt

It’s the third week of Financial Aid Awareness month, this week I am going to talk about the next financial topic that will be on everyone’s mind – student loan debt and a possible solution. 

First let’s talk about some numbers that stand out when we talk about student loan debt.

  • $1.3 trillion is the total of outstanding student loan debt in the United States.
  • $33,000 is the average debt a student has upon graduating from college (also roughly the cost of a brand new SUV).
  • 30% is the number of college students with loans who dropped out of college due to financial concerns.
  • $2.9 billion is how much federal financial aid students left on the table in 2014 because they did not take full advantage of it.
  • 27: The age of the woman who thinks all those numbers amount to a huge problem and who is out to fix it.

Kelly Peeler is the founder of NextGenVest, a New York City based startup focused on improving the financial literacy of high school and college students and helping them get out of college with as little debt as possible.  NextGenVest’s mission is to redesign how students deal with one of the most complex and important financial decision they may have to make. 

Part of fulfilling this mission, NextGenVest has launched a free text-based reminder service to guide students through the financial aid and student loan process.  It’s text-based because that is the easiest way to communicate with high school seniors.  Peeler also wanted NextGenVest to be free because she’s not out to add to the financial burden of college hopefuls.

NextGenVest also strives to improve the financial literacy of high school and college students through the creation a financial literacy curriculum that can be licensed to schools looking to teach these life skills its students.  NextGenVest has created networks of “student impact leaders” that are trained by the company to spread their mission by hosting weekly meetings and bringing financial literacy awareness to their school and surrounding schools.

Currently, NextGenVest has a student presence in San Francisco, Los Angeles, Washington D.C., Philadelphia, and parts of Texas.  

NextGenVest and is not affiliated with CURO Wealth Management or Commonwealth Financial Network.