Business Succession Planning

Business Succession Planning

One of the most difficult yet important decisions that an owner or owners in a business are faced with is how the business will survive or be transferred when they are no longer serving in the same capacity or roles within the business. Many, if not most owners pour their time, energy and resources into growing a successful business and want to ensure that it continues on whether due to retirement, disability, or even death. It is imperative to put together a logistical plan, considering all of the financial and non-financial factors that will need to be addressed to ensure a successful transition of ownership. There are a number of different ways to plan for business succession that if implemented may help your business or organization to thrive long after you depart as owner.

According to Fit Small Business, there are 5 different ways to transfer ownership in a small business. Selling to a co-owner, leaving it to an heir, selling to a key employee, selling to an outside party and selling back to the company. Each one of these has pros and cons to them and it is wise to consider which ones are best suited for your company. In some cases, such as with a sole-proprietorship, the options may be more limited and can cause the succession planning process to be difficult in ensuring a seamless transition. Where there are co-owners or partners involved, the options are greater but the other considerations such as timeline, valuation and the method of funding can create some complications. In this blog post we are going to share with you some of the strategies that can be implemented into your business succession plan.

Selling to a co-owner: Business partnerships are often formed at the beginning or in the early stages of growth for small companies. Generally you see two (or more) owners who execute a partnership agreement that lays out the amount of equity each partner is entitled to as well as what their responsibilities are to the partnership. Over the lifetime of the partnership the company grows and develops with their customers or clients which often can lead to the value of the company to increase as a whole, which each equity holder will realize individually. But what if one of the owners wishes to no longer be involved in the business? What if they suffer an injury that impares them from being able to fulfill their responsibilities? What if something tragic happened like a sudden death for one of them? Any of these situations can be dealt with through setting up a small business succession plan and the best time to implement one is at the outset of the partnership or creation of the company. It is a best practice to periodically review the plan as time goes by and the business evolves.

So what is the best strategy to wind down a partnership like this? The answer is “it depends.” If you are looking to sell to a co-owner or partner you can choose to self-fund the transaction, take out a loan from a financial institution, or negotiate a long-term payout of the equity. In the case of an unexpected situation such as death or disability, oftentimes a business will use a buy/sell agreement that is funded by life insurance. You can use either term life insurance or a permanent policy (universal life/whole life) for this and the proceeds are used for the remaining partner or partners to buy out the interests of the deceased or disabled pattern. Term insurance tends to be more cost effective but does not pay out if the departing owner retires or is disabled. There are permanent policies that can be utilized for those instances. Buy/Sell agreements are taken out between all of the owners involved and have to be continuously funded and updated as the business equity valuation grows.

Outside Purchase: Sometimes there is nobody to sell to within your organization, which can cause an owner(s) to look outside for interest in buying the business and its assets. There are competitors that may want to acquire for strategic business purposes, entrepreneurs and even private equity firms that may want to purchase to strategically grow and spin off the business. The type of business that you own will make a big difference in the valuation of your company for this type of transaction. If your business is in your name as well as heavily reliant on you as the owner of the relationships, it could lead to a lower valuation than if your company was ready to be transitioned in a more turnkey manner. Some business owners may strategically decide to brand their business outside of their own name so that it can help down the road for this type of a business succession. One of the drawbacks to this type of a transition is that the owner or owners are usually giving up the culture and in some cases the future direction of the business to the new owners that probably do not have the same emotional or financial ties to the business as it has existed pre-sale. Selling to an outside buyer generally happens in a cash transaction or procurement from the buyer of a business loan. 

Heir: If the goal of the owner or owners is to keep the business in the family and you have identified one or more members of the family that could “take the reigns” and run the organization, then this is a good way to handle a business succession. It can deepen the client relationships that have been fostered over the years and also decrease the amount of change and frustration that can arise when a company comes under new ownership. It also allows for the owner or owners to still have some involvement in business as they are often consulted or kept around to keep the status quo while the heirs (as owners now) make important decisions on the growth and direction of the organization. In most cases (over 70%) this is not a successful transition due to the fact that most inherited businesses within a family are changed or renamed by the successor and in many cases the family member lacks the skills or drive necessary to keep the business moving forward and growing. While many business owners wish to have the business stay in the family for years to come, it is one of the most likely options to have it be messy and cause disruption to the business. Especially if you have qualified and talented people working for the business that feel minimized or marginalized in the new organization. 

Key Employee(s): If there is someone or a group of people that are integral parts of the company and wish to continue working for and owning either all or a part of the business then selling to a key employee is the way to go. This type of business succession plan is generally the most efficient and positive way to execute due to the strong business relationships with the clients as well as the culture of the firm itself. Generally the key employee or employees are capable and willing to assume the responsibilities of running the organization and have been around for a long enough period of time to have already made an impact in the culture and success of the organization. Many times as the company grows through the years and the owner or owners get older, they will try to cultivate, educate and develop the key employees or employees that they would like to transition the business to. It can have positive long-term financial implications to the owner and also the employees that will take over in the future. 

If you have a business that has equity to it, business succession planning is one of the most important steps that you can take to ensure that the hard work and efforts that have been put in through the years can provide you with the greatest value when you sell or something unexpected happens to one or more of your owners. If you have a business currently but do not have a solid business succession plan in place, reach out to any of the financial advisors at Walkner Condon Financial Advisors for a no obligation meeting and we are happy to help get you started with this important step. There is a lot that goes into the planning involving business retirement plans, structuring the payment or payments to best align with your personal goals and needs, as well as finding the right resources to make the plan come together. We are happy to help!


Jonathon Jordan

How to Hire a Nanny During COVID-19

How to Hire a Nanny During COVID-19

As those with children at home are well aware, the COVID pandemic has greatly changed childcare in 2020 (and potentially beyond). Many schools are no longer meeting in person, thousands of daycare centers have closed, and generally speaking most families’ “normal” child care setup has been drastically altered. Not only do many families have to watch their children now that they are home, but they are expected to guide them through their school curriculum and still perform at their day job remotely. 

Some families that pay for childcare have saved quite a bit of money since the pandemic since they no longer are paying the recurring childcare bill (for the time being). I recently had a conversation with some clients that are expecting a baby. The costs of childcare, of course, came up. Unless your family is in the fortunate situation of having one spouse stay-at-home or have extended family in the area to help care for your children, you are probably going to have to pay child care costs. A lot. “A lot” as in nearly the amount of a second mortgage in many cases. I’ve mentioned how expensive it is to raise children in a past blog post.

Instead of focusing on the fact that childcare is expensive, let’s focus on strategies to help reduce some costs, have more flexibility, and (potentially) be an alternative childcare option for those that are worried about how daycare centers etc. are handling their COVID-19 procedures and the exposure to more children. Additionally, we will outline how to go about hiring a nanny and some considerations that come along with that decision. Remember, I’m not an epidemiologist, doctor, public health figure, or the like. Rather, I’m your friendly neighborhood financial advisor that has simply received input from clients informing me that they like the idea of hiring an in-home nanny for multiple reasons: one of which is more control of who their child is coming in contact with in this COVID era. 

If my family decides to hire a nanny, where do I begin? 

First and foremost you will need to find someone that has demonstrated caretaking qualities, is trustworthy, and aligns with your family’s values. You should interview several candidates. You can find candidates through, local “Mom” groups, or by simply asking others in a similar life stage that are already in your network. If you are going to do a “nanny share”, where you and another family (or two) collectively find a nanny to watch your children as well as the other family’s children. Ideally you find a family that you get along with and have similar or complementary schedules. Joining a nanny share can considerably cut your costs, especially if you have additional children. For example, if you have one child and are paying $300/week for that child to go to daycare, your second child could very well double your weekly payment to $600/week for both children! With a nanny share, it is expected that you should give your nanny a pay increase when you have additional children, but it isn’t expected to double their pay. 

OK, we found a trustworthy nanny, now what?

I would recommend “doing it by the book”, and formally establishing an entity to pay your nanny. This means legally paying your nanny. To be more clear, this means not paying them cash under the table! I believe that there is a social obligation to your nanny when you hire them. Some of these responsibilities include withholding taxes for them and paying into unemployment. By formally reporting wages for your employee and paying into Social Security, you provide earnings history (in case they apply for a loan, for example) as well as help them earn Social Security credits. In the situation where you need to layoff or furlough your nanny, paying into the Unemployment Insurance program will allow them to collect unemployment benefits. During Safer-at-Home orders, many families furloughed nannies. Assuming they are eligible, your nanny can receive some sort of income through the state unemployment program during their furlough. 

You are considered a Household Employer and your nanny is considered a Household Employee. Many simply establish a sole proprietorship in their name. This is the easiest route but could potentially expose you to more liability (vs. establishing an LLC, for example. You may want to discuss this with an attorney as I cannot give legal advice). You will have to register for an Employer Identification Number (EIN) online through the IRS. One thing that is overlooked is for the Household Employer to have their nanny complete an I-9 form to show that their employee is authorized to work in the United States. 

I have my EIN, how do I handle taxes and unemployment insurance?

You will have to register your Household Employer through the state. If you pay your nanny more than $2,200 in gross wages to your nanny in 2020 (or $1,000 in any calendar quarter), you are required to withhold and pay Social Security, Medicare, and Unemployment Insurance taxes (see the IRS Household Employer Tax Guide). In Wisconsin, there are a couple of steps to do this. For Unemployment Insurance, you register through the Department of Workforce Development (DWD). You will also need to complete your Business Tax Registration through the Department of Revenue. One common misconception is that your nanny is a 1099 employee; this is not true! Your nanny is a W-2 employee. You should have them complete a W-4 form upon their hire (and associated state form, like Wisconsin’s WT-4) for withholding. 

When it comes to paying taxes, you will have to submit your nanny’s wages on a quarterly basis in Wisconsin. A common mistake is to submit your quarterly Unemployment Insurance payment to the Department of Workforce Development and neglect to submit your quarterly payment to the Department of Revenue, or vice versa. You need to complete both of these items every quarter. If you are a sole proprietor, you account for your nanny’s federal income taxes withheld taxes when you file your annual tax return, via Schedule H. A good habit is to automatically put your nanny’s withheld amounts in a savings account, knowing that you will have to submit those taxes at some point. You could also withhold an additional amount from your personal wages to help account for any extra taxes that might be due when you file your tax return. 

Now that I’m an employer, what risks are involved?

Being an employer with an employee exposes you to some risks. You should definitely consider a Workers Compensation Policy to protect you and your family in the case of your nanny getting injured or ill while on the job. Become familiar with the laws in your state, as some states require Household Employers to procure a Workers Compensation Policy. The State of Wisconsin does not require you to have a Workers Compensation Policy. 

How do I pay my nanny?

The mode of payment isn’t necessarily as important as tracking your nanny’s gross wages, taxes withheld (federal, state, Medicare, Social Security, etc.). For example, paying them by physical check or even Venmo is fine. I would highly recommend using a software such as NannyPay or HomePay. This will make it much easier for you to track and report quarterly wages to the state, generate a year-end W-2 for your nanny, or provide them with paystubs. 

What else should I be on the lookout for?

Review options through your employer’s benefits package that might give you a tax break. I’m specifically thinking of a Dependent Care FSA. Most families that hire a nanny will pay their nanny more than $5,000 (the maximum a married filing jointly couple can contribute to a Dependent Care FSA in 2020) in a given year, you might as well take full advantage of using an FSA so you can pay a portion of child care expenses income tax free. Work with your accountant to see what other tax breaks might be available to you, such as the Child or Dependent Care Tax Credit.

Have I talked any of you out of hiring a nanny? Seems like a lot of work, doesn’t it? It can be more work and more responsibility, however speaking from experience I think it is actually quite manageable. I know that my family (and some of my clients) have saved money by going the nanny or nanny share route. If this is something that you would like to learn more about, please reach out to me! I can give you my perspective as a financial advisor as well as my personal perspective since my family has decided to choose a nanny share setup over daycare. 

Mitch DeWitt


The Winding Road to a Universal Fiduciary Standard (Or Not)

The Winding Road to a Universal Fiduciary Standard (Or Not)

When one visits the doctor, it gives great comfort to know that the physician has taken the “hippocratic oath” to do no harm, and always put the patient’s needs first. If a specific treatment option, prescription, or advice were given because a doctor had been financially incentivized to do so, it would be a betrayal of that oath. It would erode trust, and irreparably harm the doctor-patient relationship. In financial services, however, there is no hippocratic oath. Over the past few years, we have seen efforts to delineate who is actually a fiduciary and what the responsibility of an advisor is to their client. Here, we take you down a review of what has transpired out of the recent regulatory changes and how it may impact financial professionals and their clients in the future. 

Investment Advisers Act – The Beginning

The Investment Advisers Act of 1940 established regulations on investment advisers. It states who needs to be registered with the Securities and Exchange Commission (now firms with over $100 million in assets under management), as well as the role and responsibilities of investment advisers to their clients. Current regulations have been built on top of this legislation in an attempt to modernize how advisers interact with their clients, as well as the expectations of a certain level of care and limits to conflicts of interest.

DOL Fiduciary Rule – The First Attempt

In 2015, President Obama made it clear that he supported rulemaking that required retirement advice to follow a fiduciary standard. His administration tasked the Department of Labor to develop a framework to establish rules, which involved an extensive amount of feedback from financial advisors, the general public, and the regulators. Out of this came the DOL Fiduciary Rule in 2015, to be implemented in 2016. The rule required advisors to disclose any financial compensation from outside sources due to their recommendations, put their clients’ needs first in all advice, and seek to avoid conflicts of interest. This included receiving commissions, 12b-1 fees (trails paid by mutual fund companies to the advisor or firm), receiving “referral fees” and required any fees collected to be a “fee for service” or an “asset management” fee that was not dependent upon the advice rendered. 

This had a potentially massive impact on 401(k) plan advisors, which were not required to be fiduciaries on their plans previously if they accepted commissions and were acting as “registered representatives” (in contrast to fee-only investment advisors, who must act as fiduciaries). Additionally, the DOL Fiduciary Rule was supposed to impact IRA assets as well, which are not covered by ERISA. This was a major bone of contention, as the Department of Labor was essentially regulating a type of asset over which it arguably had no jurisdiction.

The DOL Fiduciary Rule was one of the first attempts to require financial advisors who received commission-based compensation and the firms that employed them to put their clients first in the eyes of the law. It was intended to help bridge the gap between the appearance of being a fiduciary and actually having to act as one. 

Just because it may have been welcomed by some in the investment advice industry and many in the general public does not mean it was a popular rule, however. Investment companies saw it as a compliance nightmare and a threat to their revenues, particularly in commission-based products. Additionally, it would have granted much greater regulatory power to the Department of Labor over financial advisors and related investment and financial advice-giving companies. There was considerable pushback as a result, and once the Trump administration became involved, the rule was in peril. The implementation was delayed multiple times and, ultimately, killed off in 2018 by the Fifth Circuit Court of Appeals.

Regulation Best Interest, Form CRS, Standard of Conduct for Investment Advisers 

After the ultimate failure of the DOL Fiduciary Rule, the SEC began their attempt to modernize regulations and disclosures in regards to broker-dealers, as well as registered investment advisors. In 2019, the SEC adopted a package of rulemaking and interpretations called SEC Regulation Best Interest, or “Reg BI”, that allowed advisors and firms to enter into “Best Interest” contracts that disclosed the conflict of interest that existed if they received any other types of compensation other than the types allowed under the fiduciary rule. 

According to the SEC, “Under Regulation Best Interest, broker-dealers will be required to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. Regulation Best Interest will enhance the broker-dealer standard of conduct beyond existing suitability obligations and make it clear that a broker-dealer may not put its financial interests ahead of the interests of a retail customer when making recommendations.”

Additionally, Form CRS became a required document for both registered investment advisors and broker-dealers. This document was designed to offer a plain English view of the services offered by the investment professional, how compensation and fees work, and any disciplinary history the financial professional has faced. To view an example of this, here is the Form CRS for our firm. 

The SEC also issued their interpretation of the standards of conduct for investment advisers (which, incidentally, is a really well-written document). The goal of this appeared to be a restatement of what is expected of investment advisers – a duty of care and a duty of loyalty. They reaffirmed that an investment adviser is a fiduciary and must act in the client’s best interest at all times. A contrast was made between broker-dealers and investment advisers in that their compensation models may be different, namely the ability to accept commissions in a broker-dealer environment, which causes a separate and distinct difference in the conflicts of interest present and the necessary disclosure.

Regulation Best Interest and Form CRS were implemented with a compliance date of 6/30/2020. The standards of conduct were effective on 7/12/2019.

Code of Ethics and Standards – The Fiduciary Update by the CFP® Board

Seeing a regulatory hole between the Investment Advisers Act of 1940 and a fiduciary standard, the CFP Board has established a set of fiduciary guidelines and rules that govern CFP® professionals. The last major update of these standards was in 2007. Around the same time of developing Reg BI, The Certified Financial Planner Board of Standards developed the Code of Ethics and Standards of Conduct. This went into effect in October of 2019 with enforcement beginning on June 30, 2020

According to the CFP Board, “This is a significant strengthening of the prior standard, which required a CFP® professional to act as a fiduciary only when providing financial planning. The fiduciary obligation includes a duty of loyalty, a duty of care, and a duty to follow client instructions. Other important changes in the Code and Standards include more detailed requirements for fully disclosing material conflicts of interest, obtaining informed consent, and managing those conflicts.” 

The most important part of this update to the rule is the expansion of fiduciary duty to act in the best interests for clients in all situations, not just during the financial planning process. For advisors that hold a CFP® designation, those that are employed at broker-dealers and insurance companies may find new challenges in meeting this fiduciary standard, particularly if they continue to sell commission-based products. 

DOL Fiduciary Rule – Take Two is On The Way

In 2018, the Department of Labor Fiduciary rule was ordered to be sent back to the drawing board to review the viability and come up with any revisions. In January of this year, the DOL sent the revised rules to the OMB (Office of Management and Budget) and in June they were announced. In a shocking move, it was recommended that an exemption that offers “a new prohibited transaction class exemption for investment advice fiduciaries.” This would allow financial advisors and fiduciaries potentially to receive compensation such as commissions, 12b-1 fees, mark-up and mark-down compensation, sales loads, and revenue sharing compensation. This would impact both ERISA accounts (example: 401k plans) and IRAs.

Under the goal of maintaining regulatory efficiency, transactions that are compliant under Regulation BI would be deemed as meeting with DOL Fiduciary Rule standard. A loophole seems to exist in the rule for insurance professionals, which sell annuities inside of retirement plans for a commission. According to the initial proposal, it appears a fiduciary relationship does not exist in a one-time transaction with no expectation of ongoing review as well as no requirements to comply with Regulation BI if one is not a Registered Representative.

As before with the original DOL Fiduciary Rule, this has come under some criticism. In an article from Thinkadvisor, “Barbara Roper, director of investor protection for the Consumer Federation of America, said the rule ‘reopens loopholes in the definition of fiduciary investment advice, making the standard easy to evade. It creates a new exemption to allow advisers to get conflicted compensation, subject only to Reg BI’s weak, non-fiduciary standard.’”

What Does This Rulemaking and Regulation Actually Seek to Accomplish?

First off – are you completely confused yet? If the answer is “yes”, you are not alone. The original DOL Fiduciary Rule by the Obama Administration was definitely a nod towards bringing more investment professionals under a more uniform fiduciary standard. As it failed and Reg BI was implemented, a more “fiduciary lite” version was put into its place. This is likely to follow when the rules are finalized for the new version of the DOL rule. 

Where this goes from here will likely depend on what happens after the presidential election, and where the regulatory winds are focused. There is a chance that this nod to increased focus on conflicts of interest and disclosure will eventually lead to a uniform fiduciary standard at some point for all financial “advisors” — meaning insurance, broker-dealer, and investment advisers. The other possibility is that we continue to see the bifurcation in fiduciary standards applied to these groups, as we have in the most recent series of rulemaking.

One thing is clear to us – the best way to insure that you are working with someone who is working in your best interest and acting as a fiduciary is to hire a financial advisor that works at a fee-only firm and does not accept commissions from the sale of investment products at any time. Additionally, working with a CFP® that follows strict standards of care may also be something that investors seek out when they are looking for a long-term relationship with a financial professional whose practice centers their financial well-being.

Clint Walkner

Jonathon Jordan, CFP®


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Kid Lessons for Adults: Back to Basics

Kid Lessons for Adults: Back to Basics

This is the first installment of my new four-part series entitled “Kid Lessons for Adults.” “Back to Basics” lays the groundwork for this series, and how these lessons relate to money, investing, and financial planning. 

With graduation season upon us and so many video speeches being delivered, I was struck by how often these commencement addresses are about the core lessons we were taught early in life. It’s easy to forget those earliest, most fundamental life lessons sometimes, and many of us are still learning how to apply them to our adult lives. Far too often in adulthood, it seems that we prefer to seek out the path filled with complications and complexity, while the less cluttered path remains untraveled.  

“Back to basics” is such a simple phrase, that its power is often overlooked. Why do the basics matter when facing a task as complicated as planning a retirement? The basics matter because the entire outcome of the plan is predicated on how it is initially built, and “the basics” tend to be the foundation. For instance, take a basic component to any retirement plan, such as the annual amount contributed to a 401k or 403b account. If we model an annual contribution for a 20 or 25 year period of time, but the client stops contributing after 5 years, the original outcome of the plan will be horribly inaccurate. Therefore, we must consistently strive for accuracy in even the most basic of components in our plans, as well as ongoing adjustments, to ensure the best chance for an accurate outcome. Simple habits, like increasing the amount of money saved towards retirement with every salary raise or bonus, can have a big positive impact on the plan’s chance of success.   

The idea of “back to basics” can and should apply to other facets of our financial lives as well. Events like job changes, buying or selling a home, and sending our kids off to college can get complicated very quickly. However, if we’re able to take a step back and look at the data objectively, we find that the correct option is easy to identify in many cases. Working through these complex decisions by isolating variables, then solving for the remaining variables is a great way to keep emotional decision-making in check. We try to break large decisions down to a series of smaller, more manageable decisions that will ultimately lead us to better outcomes. It has been my experience in business that highly-charged emotions are not conducive to making solid financial decisions. The ebb and flow of investment markets can foster a whole host of emotion, from fear to greed to regret to disappointment to resentment. By understanding the likely impact of these movements on the potential outcomes in a financial plan, clients are better equipped to handle these difficult times without letting emotion influence the outcome. The same is true when buying or selling a home. Working through a long, arduous real estate transaction can be a breeding ground for bad decisions, mainly because of the emotion of choosing a home and the complexity of most housing transactions. Remember the phrase “back to basics.” The overall transaction should be seen as a series of small decisions made in due time without looking five decisions down the path. The best advice given to climbers attempting to summit Mt. Everest is “just take one more step.” There may be thousands of steps left to take, but your focus should be on the next one.   

The money basics as a kid were simple and easy to understand– I want to buy an item for $40 and I earn a $10 allowance. Therefore, focus on saving four straight allowances, and I can get the item. While many things in our lives get more complicated and harder to solve as we become adults, the idea of breaking down problems to their basic components and intentionally directing our focus to the smaller decisions will lead to better outcomes.

Nate Condon

Your Financial Plan – Boring Equations or a Path to Your Dreams?

Your Financial Plan – Boring Equations or a Path to Your Dreams?

A Financial Plan as a Living Document

Financial advisors believe strongly in the utilization of a financial plan and what it can do for your future. It is a powerful tool that helps to simplify dozens of variables down to an output that is manageable and quite useful in making life altering decisions. However, the industry has, in many ways, failed to articulate exactly what a financial plan is and, more importantly, what it can do for a motivated individual. We make our financial plans the center of our client relationship because it is the road map to our clients achieving a work optional lifestyle. When clients incorporate their life dreams into the equation, it can be the roadmap to happiness. 

Think Big and Think Creatively 

The goal planning phase is always one of the first things discussed when starting a plan. It tends to coalesce around monthly income, health care costs and potential long-term care needs. It goes without saying that these items are imperative in any well constructed financial plan. Just as important, however, are the lesser thought of dream-based goals. We strongly encourage our clients to think creatively about the things that they have always wanted in life, especially things that are not necessarily thought of in financial terms. Have you always wanted a huge, professionally designed garden or a finished garage with flat screen TVs and a sound system for football Saturdays? How about working a job simply for the enjoyment of the job and not because you need the paycheck, such as mowing fairways on a golf course or cutting flowers in a gift shop? These are exactly the kind of goals that round out a well built financial plan. Many people would be much happier in life if they could stop working 50-hour, pressure packed weeks for a job that simply brought them enjoyment and fulfillment. The question is how do you get there?

Flexible Choices and Flexible Results

We have the ability to incorporate many different ideas, goals, wishes, dreams, and even some pipe dreams into a financial plan. We can model out what a satisfying part-time job for the last 5 years of your working life would look like. We can carve out a lump-sum of money to be allocated to a “crazy thought” that might just bring you decades of enjoyment. We enjoy that level of planning because it is truly where dreams can be achieved. As we all know, tomorrow is promised to no one. While that doesn’t mean we should throw caution to the wind and only live for today, it does mean we should strive for things that we maybe didn’t think were possible. Many of our clients have worked and saved for the future. Together, let’s see if that future contains something you didn’t think was financially possible. 

Nate Condon


The SAVERS Act – A Unique Retirement Savings Opportunity?

The SAVERS Act – A Unique Retirement Savings Opportunity?

Will I be able to put more money into my 401(k)? If a recent bill called the Securing Additional Value for Every Retirement Saver Act (SAVERS Act) passes through Congress, the answer could be yes. The bill was introduced in the House of Representatives in late April and would still need to pass through the House, the Senate, and be signed by the President before becoming law. The SAVERS Act could (temporarily) open significant doors for enhancing tax-advantaged saving and investing for retirement. 

Supercharged Contributions…

The act proposes to triple – yes – triple! the amount that one would be able to contribute to their 401(k), 457, or IRA. The current (2020) maximum amount that one is able to contribute towards their 401(k) and 457 is $19,500, while the IRA is capped at $6,000. These caps exclude any “catch-up” contributions (e.g. those aged 50 years and older can contribute an additional $6,500 to their 401(k), for a total of $26,000 in 2020). 

For the clients of ours that are already maxing out their 401(k), their 457, and IRA simultaneously that are looking for additional tax-advantaged vehicles to save for retirement: this bill will be important to follow because if it becomes law your contribution strategy in 2020 could very likely change (but don’t forget to talk about your strategy with us first!). 

But Only Temporarily…

“This sounds too good to be true; there must be some sort of limit.” Yes, there is a limit. Remember when I mentioned “temporarily” earlier? The IRS wouldn’t let too many people defer such a large chunk of their tax bill indefinitely! The SAVERS Act proposes these changes for the tax year 2020.

Typically the amount that the IRS allows you to put into these tax-advantaged vehicles is increased by $500 or $1,000 every few years. If the SAVERS Act were to become law it could potentially present a once-in-a-lifetime opportunity for high-income earners that have the wherewithal to save. Representative Patrick McHenry of North Carolina (who introduced the bill) said, “Every American is feeling the economic impact of COVID-19. We need to give savers the opportunity to shore up the savings they have worked so hard to grow.”. We will continue to monitor the progress of the SAVERS Act and be ready to advise our clients on their retirement contribution strategy if and when it is signed into law. 

Mitch DeWitt