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Company Stock in a 401k?  Consider Net Unrealized Appreciation (NUA)

When leaving a job for whatever reason, one of the biggest decisions you will face is what to do with your 401(k).  If your plan includes shares of your company's stock, NUA is something to consider during this process.

The Basics of NUA:

  • Net Unrealized Appreciation (NUA) can provide a significant tax break for those holding low-basis employer stock in their retirement plan.
  • There are strict rules that must be followed to take advantage of the NUA option.
  • NUA can provide an additional level of planning flexibility.

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Earnings on Fire

There are a lot of factors when evaluating a company for purchase. Whether one buys a business or franchise, the cash flow and expected cash flow that the company generates will play a large role in the purchase price. While other factors play a role, the same holds true for purchasing stocks. The cash flow, or earnings, are evaluated to help determine the purchase price. Public companies are reporting 2018 first quarter earnings results and the numbers are looking great.

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The B Word...Bonds That Is

We need to talk about bonds more and understand them better. Almost everyone talks more about stocks. Stocks are in the news and get the headlines. Stocks are easier to understand. But bonds are an essential asset class in almost every investor’s portfolio. Fixed income grows in importance as investors grow older. For younger investors, bonds may still serve a purpose-either to fund a specific future cash need or to lessen portfolio volatility.

This article starts with a short primer on bonds and then explains how we at Robinson Smith Wealth Advisors construct bond portfolios and manage the associated risks.

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Using an Exchange Fund to Diversify Concentrated Stock Risk

Many executives acquire company stock or stock options as compensation for performance.  The higher level the executive and the longer their tenure, usually the more stock they accumulate.  This type of compensation can be great when a company is successful and grows, however, it can be challenging for the stock recipient when a large portion of their net worth is concentrated in one company.  Sometimes, their future financial well-being is at risk.  And it’s not just executives, any investor who accumulated or inherited large stock positions could be at risk as well.

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Why You Should Consider Using Your IRA RMD for Charitable Gifts

In 2018 and beyond, more taxpayers will claim the standard deduction and lose the tax benefit of any charitable gifts. But if you have reached 70.5 in age and have an IRA, you may be able to preserve the benefit of the charitable deduction even though you no longer itemize your deductions. The planning strategy will be to make gifts directly from your IRA to qualified charities to offset your required minimum distribution (“RMD”).

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Volatility is Back, as Stocks Drop

On Friday last week the Dow dropped 665 points. Monday, the market was down most of the day but come late afternoon the selling accelerated dramatically. At one point, the Dow was down 1600 points. It rallied back some and ended Monday down 1175 points. Many are wondering what happened and why did the markets fall so far, so fast?

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Concentrated Stock - Too Much of a Good Thing? How to Diversify

This article was updated on February 21, 2018 to reflect current tax laws and limits.

There’s an old investment saying, “Concentrated wealth makes people wealthy, but diversified wealth keeps them wealthy.” One of the most common concentrations of wealth people have are large stock holdings in a single company. Publicly traded companies often compensate employees with stock or stock options, especially upper-level executives. Others may have large holdings from investing early in an initial public offering (IPO) or inheriting a large holding. No matter how it was obtained, owning a large stock position creates investment and planning challenges.

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Why Are Stocks Still Going Up?

Stocks have been going up ever since the Presidential election last November. There have been no significant pullbacks along the way, and stock market highs are reported by the media on a weekly basis. Clients are asking “Why are stocks still going up?”

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Charitable Giving Made Easy with Donor-Advised Funds

This post was updated on February 20, 2018 to reflect new data and the Tax Cuts and Jobs Act of 2017.

Americans have a history of charitable giving, it’s a part of the fabric of our culture.  Many public institutions such as schools, hospitals, museums, and parks owe their existence to charitable donors.  Charitable giving keeps climbing.  According to The Giving Institute, Americans gave $373B to charities in 2015.  And it goes up almost every year.  See Figure 1.

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Happy Birthday Economic Expansion

As June came to a close, the current economic recovery and expansion turned eight years old. That is the third-longest expansion on record since the end of WWII. That’s according to data compiled by the National Bureau of Economic Research (NBER), which marked the end of the Great Recession in June 2009. The NBER is the arbiter of recessions and expansions for the U.S. economy. It bases its calls on data that includes employment, sales, income, and industrial production.

Birthdays are a time for celebration. But when economic expansions start getting older most don’t want to party. Investors usually start fretting over how long it will last.

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