Best Financial Tips for 2014

January is a great time to re-set your financial compass so you are headed towards success for the coming year. Here are the favorite tips from the advisors within my companies:

Secure this tax credit…while it lasts. Under the Alabama Accountability Act, our state has set aside $25 million in state income tax credits to be used to provide scholarships for children from low income families who are stuck in failing public schools. The families can use the money to transfer their child to a private school or a non-failing public school. You can redirect up to 50% of your Alabama income taxes ($7,500 maximum for individuals) to a Scholarship Granting Organization and it won’t cost you a dime! Last week, I reserved my tax credit in less than five minutes. Don’t wait on this one. Once the $25 million is used, the opportunity is gone for this year. For a simple step-by-step guide, visit Advisor: Stewart Welch, III CFP®, AEP.

Invest in a better you.  Invest in yourself by getting in shape. Regular exercise has been shown to reduce stress, make you more productive at work, reduce sick days and improve self-esteem. Plus you might meet your next client, referral source or employer while working out. Accountability is the key to success. Find a friend who has similar goals and commit to work out together as ‘accountability partners’. You’ll be more likely to reach your goal and develop a special bond with the person as they reach their goal too. Advisor: Michael Wagner, CPA, CFP®.

Give the greatest gift.  Give your grandchildren a gift that will last, an education. My wife and I set up a 529 college savings plan for our granddaughter when she was born. While your gift is not deductible on your federal tax return, Alabama residents receive a deduction for contributions up to $10,000 into the Alabama plan if you file a joint return, a potential $500 tax savings. All investment income grows tax deferred and all qualified withdrawals are tax free. For more information visit Advisor: Greg Weyandt, CPA, MPA

Avoid this big tax penalty. If you turn age 70½ or older this year, the IRS (generally) requires you begin taking distributions from your retirement plans (IRAs, 401k’s, etc.) by December 31st. This doesn’t apply to Roth IRAs. Owners of Inherited IRAs must also take distributions each year based on a table provided by the IRS (Click Here). Go ahead right now and place a reminder in your calendar or smart phone. The penalty for missing this one is a whopping 50% of the underpayment! Advisor: Beth Moody, MS, CFP®.

Ramp up your 401k. If your company’s retirement plan provides a company match, increase your contributions to take full advantage. Don’t let youth or entry-level pay discourage you. Even small systematic contributions have a significant impact on accumulated savings at retirement. If available, use your 401k’s auto contribution feature to increase your contribution. For example, auto-increase your contributions one percent annually until you reach a savings rate consistent with your goal. You’ll never miss the money and you’ll build a solid retirement plan. A common retirement saving guideline is 10-15 percent of gross income. Advisor: Woodard Peay, MBA CFP®

Give someone the power. A power of attorney is one of the most basic documents of an estate plan. It allows a person you appoint as your “agent” to act on your behalf if you were to become incompetent due to an illness or accident. The laws regarding powers of attorney in Alabama changed on January 1, 2012. A power of attorney drafted prior to January 1, 2012 may not be valid. Check with your estate attorney to see if you should make this simple and relatively inexpensive update to your estate plan. Advisor: Callie Jowers

Share the wealth. You may give up to $14,000 to as many people as you wish free of gift taxes ($28,000 for married couples filing jointly). Children, grandchildren or elderly parents are typical choices for gifts. In addition, paying medical or tuition costs for another person directly to the medical care provider or school does not count against the $14,000 limit. If you have a taxable estate, this is an especially simple and effective tax-reduction strategy. Foster Hyde, M.S., CFP®

Protect your money. Fraud and identity theft through hacking financial accounts is happening more and more.  I recommend that you check your credit report twice a year; now and again at mid-year.  Your first one is free through For the mid-year check, you can request all 3 credit reporting companies in one report for $29.95 through In addition, download smartphone apps for your credit cards and bank accounts and check them several times per week. Advisor: Kimberly Reynolds, MS, CFP®.

Don’t die without this.  While the subject of ones’ mortality is never an exciting topic, death is inevitable for everyone.  Many people delay the execution of a valid Will for this very reason, or because of uncertainty over their exact wishes.  Do not let ‘the perfect be the enemy of the good’ in terms of executing or updating this important document.  Make your best effort now to determine your wishes and get them commemorated on a legal document.  Your family and loved ones will be glad you did! Advisor: Marshall Clay, JD.

Strategy for high income earners. Roth IRAs are one of the best strategies in retirement planning because retirement withdrawals are tax free…forever! Unfortunately, high income earners (AGI above $129,000 for single filers; $191,000 for joint filers) are not eligible for Roth contributions unless you use this little-known strategy: First, roll existing IRAs into your 401k plan (tax free) if allowed or convert your IRA to a Roth (a taxable event). Going forward, each year invest the maximum in a non-deductible IRA (no income limitations), then immediately convert it to a Roth IRA with no income tax consequences. For 2014 you can invest up to $5,500 ($6,500 if you are age 50 or older this year). Advisor: Hugh Smith, CPA, CFP®, CFA