Client Accomplishments

  • Robert had enrolled in original Medicare Parts A & B a year ago but was considering a change to Medicare Advantage.  He had read that Medicare Advantage, unlike original Medicare, covered dental, hearing and vision costs, and also capped out-of-pocket expenses.   What he did not fully appreciate was that by enrolling in a MA plan, he would be limited to using the specified health care providers contracted by the Plan and included in its network.   Virtually all U.S. doctors and hospitals accept original Medicare, so original Medicare enrollees do not have to worry about health care when travelling.  MA beneficiaries do not enjoy this sense of ubiquity, and must consider what risks they bear when visiting other parts of the country.   Use of an out-of-network provider may be allowed, but it is imperative to know for which situation and at what cost.    Robert was a NY resident who lived in Florida for the winter months, and it was important that he could see doctors down there as readily as he could in NY.   I was able to find a MA Plan which permitted him to see Florida health care providers at no extra cost, provided he notified the Plan of his temporary change in residency.  As his hearing loss was becoming more of a problem, I determined that a MA Plan would be appropriate for Robert under these circumstances. 
  • Debbie was estranged from her husband but still legally married and confused as to what category she should submit her tax returns for the current year.  Should she file as a single person or married? If married, separately or jointly?  As far as the IRS is concerned, unless divorce proceeding are complete a couple “married“ in any sense of the word must file as married.  In the past her husband had filed returns containing (what she thought) were inaccuracies and omissions, and she wanted to secure some relief from future liability for an evasive or fraudulent return.   Married filing separately would provide this protection.  By filing in this manner, however, she would lose the opportunity to take advantage of tax benefits such as the tuition/fees and student loan interest deductions, as well as the earned income and child tax credits.  Moreover the couples’ standard deduction of $12,600 would be cut in half.   In the end, I helped Debbie discern that the extra cost from filing MFS was less burdensome than possible exposure to a tax return audited for errors and the resulting penalties and fines.
  • Cari was unable to make a contribution to either a traditional IRA or Roth IRA, because husband Ray was covered under an employer sponsored retirement plan and their combined income exceeded the prescribed IRS threshold.  We were able to demonstrate to Cari that by establishing a non-deductible IRA, and then transferring the funds held therein to a Roth, her objective could be fulfilled.  This approach assumes Cari has no other Traditional IRA assets and there is at least an interval between setting up the non-deductible IRA and the transfer of its initial contribution. 
  • Jessica by virtue of her industriousness had saved $50,000 for college by the time she was 17.  She had accumulated this money in a bank account bearing her name.  Unfortunately, the $50,000 would be assessed for financial aid purposes at 20%, reducing her eligibility for assistance by $10,000.  We moved this money into a 529 account, where it would be assessed at only 5.64%, allowing her to receive another $7,180 in aid.  If Jessica decides not to attend college and withdraw the money from the 529, she would pay taxes on the earnings by a 10% penalty.
  • Bonnie, age 64, was in the early stages of a divorce from her second husband.  They were married 15 years. Her first husband, with whom she was married for 11 years, was deceased.  Bonnie had worked for many years and had compiled the required earnings record for a Social Security benefit.   She was hoping to supplement her own Social Security benefit with a spousal and/or survivor benefit.   As she was currently married she was only eligible for a spousal benefit on husband #2.  We were able to demonstrate to her, however, that once the divorce was finalized, she would be able to claim a survivor benefit on the first husband.  A survivor benefit, 100% of the deceased spouse’s claim, would be higher than the divorced spousal benefit, which would only be 50% of the second husband’s payout.  Moreover, collecting a survivor benefit would have no effect on her own, which she could suspend until age 70 and earn delayed credits while she waited.     
  • Karen was offered the opportunity to enroll in her employer’s Executive Deferred Compensation Plan.  She was already contributing to the 401 K Plan and wanted to know the difference between the two programs.  We explained that, with respect to the 401 K, her contributions would be deposited into an account bearing her name, and she could make adjustments to its allocation as often as she wished.  If/when she separated from service, she would have almost immediate access to the money.  Under the Deferred Compensation Plan, the contributions credited to the account would be unfunded and constitute a mere promise by her employer to make payments in the future.   If the company was to go out of business, Karen would have no recourse and all the money in the account forfeited.    Moreover, the money would not be available to her until age 65, the age designated by the company as its Full Retirement Age, whether or not she was still employed there.   As Karen was looking to defer as much of her salary now as possible, the ability to change her investment mix was not important, and her employer had excellent long term prospects, she elected to enroll in the Plan.