Latest News from The Musuneggi Financial Group

The SECURE Act

Long-established retirement account rules change

Provided by Christine Pikutis-Musuneggi, CRPC®, CLTC, LACP

The Setting Every Community Up for Retirement Enhancement (SECURE) Act is now law. With it, comes some of the biggest changes to retirement savings law in recent years. While the new rules don’t appear to amount to a massive upheaval, the SECURE Act will require a change in strategy for many Americans. For others, it may reveal new opportunities.

Limits on Stretch IRAs. The legislation “modifies” the required minimum distribution rules in regard to defined contribution plans and Individual Retirement Account (IRA) balances upon the death of the account owner. Under the new rules, distributions to individuals are generally required to be distributed by the end of the 10th calendar year following the year of the account owner’s death.1

Penalties may occur for missed RMDs. Any RMDs due for the original owner must be taken by their deadlines to avoid penalties. A surviving spouse of the IRA owner, disabled or chronically ill individuals, individuals who are not more than 10 years younger than the IRA owner, and child of the IRA owner who has not reached the age of majority may have other minimum distribution requirements.

Let’s say that a person has a hypothetical $1 million IRA. Under the new law, your beneficiary should consider taking at least $100,000 a year for 10 years regardless of their age. For example, say you are leaving your IRA to a 50-year-old child. They must take all the money from the IRA by the time they reach age 61. Prior to the rule change, a 50-year-old child could “stretch” the money over their expected lifetime, or roughly 30 more years.

The new limits on IRAs may force account owners to reconsider inheritance strategies and review how the accelerated income may affect a beneficiary’s tax situation.

IRA Contributions and Distributions. Another major change is the removal of the age limit for traditional IRA contributions. Before the SECURE Act, you were required to stop making contributions at age 70½. Now, you can continue to make contributions as long as you meet the earned-income requirement.2

Also, as part of the Act, you are mandated to begin taking required minimum distributions (RMDs) from a traditional IRA at age 72, an increase from the prior 70½. Allowing money to remain in a tax-deferred account for an additional 18 months (before needing to take an RMD) may alter some previous projections of your retirement income.2

The SECURE Act’s rule change for RMDs only affects Americans turning 70½ in 2020. For these taxpayers, RMDs will become mandatory at age 72. If you meet this criterion, your first RMD won’t be necessary until April 1 of the year after you reach 72.2

Multiple Employer Retirement Plans for Small Business. In terms of wide-ranging potential, the SECURE Act may offer its biggest change in the realm of multi-employer retirement plans. Previously, multiple employer plans were only open to employers within the same field or sharing some other “common characteristics.” Now, small businesses have the opportunity to buy into larger plans alongside other small businesses, without the prior limitations. This opens small businesses to a much wider field of options.1

Another big change for small business employer plans comes for part-time employees. Before the SECURE Act, these retirement plans were not offered to employees who worked fewer than 1,000 hours in a year. Now, the door is open for employees who have either worked 1,000 hours in the space of one full year or to those who have worked at least 500 hours per year for three consecutive years.2

While the SECURE Act represents some of the most significant changes we have seen to the laws governing financial saving for retirement, it’s important to remember that these changes have been anticipated for a while now. If you have questions or concerns, reach out to your trusted financial professional.

Christine Pikutis- Musuneggi, CRPC®, CLTC, LACP may be reached at 412-341-2888 or christine@mfgplanners.com.


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – waysandmeans.house.gov [12/25/19]

2 – marketwatch.com  [12/25/19]

 

Facing the Fears of Goal Setting

FINANCIAL FIRSTS

Christopher S. Musuneggi, CFS, RFC
President, The Musuneggi Financial Group

Securities & Investment Advisory Services Offered Through H. Beck, Inc. Member FINRA, SIPC. H Beck, Inc. and The Musuneggi Financial Group, LLC are not affiliated.

Getting Started

  • Identify your investment goals
  •  Prioritize your saving
  •  Start with a budget

Your investing goals

Whether you’re working with an advisor or managing your own portfolio, the first question is always the same: What are you saving for?

  • Retirement
  • College funding
  • Emergencies
  • Major purchase
    • House
    • Wedding
    • Dream vacation

Saving for retirement might be the most important thing you ever do with your money. And the earlier you begin, the less money it will take!

Saving enough for college might seem impossible. But families like yours are doing it every day, and it’s easy for you to start too.

EMERGENCY FUNDS – Being prepared for life’s surprises can take a burden off your mind—and someday, your wallet.

A house, a wedding, a dream vacation: Don’t forget to plan and save for the big moments in your life!

Retirement

When it comes to preparing for retirement, there are a lot of things you can’t control—the future of Social Security, tax rates, and inflation, for example. But one big thing that you can control is the amount you save.

The earlier you start saving for retirement, the less you’ll need to put away each year. That’s why the best time is now.

How much am I going to need?

That depends on many things, including your lifestyle, your retirement age, and your other sources of retirement income.

What type of account should I use for my retirement savings?

Many people have access to workplace plans (401(k)s, for example) as well as IRAs and general savings accounts.

How much do I need to know about investing to manage my savings?

It’s good to have some basic investing knowledge.

How much am I going to need?

You don’t need very much to get started, and the total amount you save completely depends on your family’s goals and resources. It’s something you can think about either now or as college approaches—but in the end, it’s probably not as much as you think.

College

When it comes to saving for college, there are a lot of myths out there. What’s true? What’s false? We have the answers.

Only rich people can save for college.

False. About half of all American families are currently saving for college. And you don’t need a lot of money to get started. The most important thing you can do right now is to take the same first step they did: Open an account.

Scholarships or financial aid will pay for college.

Most likely false. Getting a full scholarship or enough financial aid to cover the whole cost of college is unlikely. Only a small percentage of students have their entire tuition covered, let alone housing, books, and fees. (And, in case you were wondering, an even smaller number of students pay for college by winning the lottery.)

I can start saving no matter how old my kid is.

True. It’s never too late to start saving for college. The more you save now, the less you’ll have to borrow. So if your child is in high school, don’t let that stop you.

I’ll lose the money if I don’t use it for college.

False. Even if you save in a type of account that’s specifically meant for college, you can use the money to pay for many trade and vocational school expenses. Or you can give the money to someone else (a qualified family member) to use for college or even graduate school. Even the least flexible account types will give you your money back for whatever reason, no questions asked, although you may have to pay taxes or penalties on any amount your account has earned (but not on your contributions).*

I’ll miss out on financial aid if I save for college.

False. The amount you’ve saved for college or any other goal has much less of an impact on your financial aid than your overall income does. In other words: If your income is high enough, you’ll be expected to pay for at least part of your kid’s college expenses, whether you bothered to save anything or not.

Emergency Fund

Emergencies—from a broken bone to a layoff—are a fact of life. When you’re faced with life’s unexpected events, you can be ready. What are emergency funds for?

An emergency fund is a stash of money set aside to cover the financial surprises life throws your way. These unexpected events can be stressful and costly.

 

 

Here are some of the top emergencies people face:

  • Job loss.
  • Medical or dental emergency.
  • Unexpected home repairs.
  • Car troubles.
  • Unplanned travel expenses.

Aside from financial stability, there are other pros to having an emergency reserve of cash.

It helps keep your stress level down.

It’s no surprise that when life presents an emergency, it threatens your financial well-being and causes stress. If you’re living without a safety net, you’re living on the “financial” edge—hoping to get by without running into a crisis.

Being prepared with an emergency fund gives you confidence that you can tackle any of life’s unexpected events without adding money worries to your list.

It keeps you from spending on a whim.

You’ve heard the saying “out of sight, out of mind.” That’s the best way to store your emergency money. If the cash is only as far away as your closest debit card, you may be tempted to use it for something frivolous like a designer cocktail dress or big-screen TV—not exactly an emergency.

Keeping the money out of your immediate reach means you can’t spend it on a whim, no matter how much you’d like to.

And by putting it in a separate account, you’ll know exactly how much you have—and how much you may still need to save.

It keeps you from making bad financial decisions.

There may be other ways you can quickly access cash, like borrowing, but at what cost? Interest, fees, and penalties are just some of the drawbacks.

In a nutshell, you should have at least 3 to 6 months’ worth of expenses. We recommend closer to 6.

Major Purchases

Saving for a big event in your life is exciting! What’s your plan to pursue your goal? How long will it take you to save?

How long it takes depends on what your goal is, how much you need, and how much you can put away every month.

You have options on how to grow your savings, too.

You could just add up whatever’s left over in your bank account after you pay your bills each month.

Why not use a credit card? There are ways around saving for your goal, like using credit cards or borrowing from other savings, but they often come with drawbacks. But putting that money in a separate investment account instead can have major benefits. 

You could invest your money. 2 benefits of investing to pursue your goal:

It keeps you from buying something else. No matter how much you really want to check this savings goal off your list, it’s all too easy to spend the money on something else when it’s just sitting in your bank account.

Maybe you think that willpower alone will be enough to keep you on course. If so, that’s great! But what if it doesn’t?

The best way to ensure that your money goes toward your goal is to move it out of your bank account before you’re tempted to spend it. Keeping this money in a separate account also makes it easier to see the progress you’re making toward your goal.

It gives you a chance to potentially reach your goal faster. Let’s say you want to save for a down payment on your first home. You expect to need about $10,000, and you budget $200 a month toward your goal.

Keeping the money in a bank account typically means you’ll earn a pretty low rate of return—0.5%, for example.

At that rate, it will take you a little over 4 years to reach your goal, during which you’ll deposit a total of $9,800.

If you instead invest the money in a moderate-risk investment and earn an average return of 5%, you could reach your goal 4 months earlier—with total deposits of only $9,000.*

*There are risks involved with investing, including possible loss of principal. An example provided herein is hypothetical and not indicative of any particular investment vehicle. It does not reflect the fees and expenses associated with any particular investment. Also, this example does not take into account any state and/or federal taxes that you would owe on your withdrawal. Actual results will vary and fluctuate with market conditions. In addition, rates of return will vary over time, particularly for long-term investments. There is no assurance that any particular strategy will work under all market conditions.

Your Savings Priorities

Now that you know your financial goals, you know that we are talking GoalS…plural. So you also need to figure out how to effectively juggle those goals.

What Comes First?

  1. Save for retirement
  2. Pay off debt
  3. Start emergency fund
  4. Save for college
  5. Save for major purchase

If you haven’t started saving for retirement through your employer or on your own, get started on this goal first. Remember, you can’t take out a loan to fund your retirement.

Next, pay off any consumer debt you might have. This type of debt, like credit card balances or car loans, is usually short term and not tax-deductible. It typically carries a high-interest rate as well.

Once you’re saving for retirement and you’ve paid off your high-interest debt, you should put aside money to build an emergency fund to cover at least 3 to 6 months’ worth of living expenses. You don’t want to be caught off guard when something unexpected happens.

If you’ve got kids or other children in your life and you’re planning to support them in continuing their education, this should be next on your list.

Once everything else is off to a good start, begin saving for a major purchase.

Your Budget

Statistics tells us the leading cause of household stress is money. Yet many people don’t have a system for knowing where their money goes once it comes in the door.

A budget tracks where your money comes from and where it’s going, and this is an important practice for everyone, no matter what your income or goals are. It can be as simple as tracking your money with a basic spreadsheet.

First, you need to know where your money is coming from. What do you earn? Do you have multiple sources of income? Don’t include gifts or bonuses unless you’re certain of them.

Second, know where your money is going. Include every expense and purchase, from your credit cards and student loans to last-minute trips to Trader Joes. Online purchases count here, too.

Once you know where your money is going, study that list a bit. Separate your essential expenses—like rent or mortgage—from non-essentials. Be brutally honest here. Maybe your internet connection is essential, but your Netflix subscription isn’t.

Then you need to add up both columns—income and expenses (include essential and non-essential for now)—and compare.

If you’re spending more than you make, it’s time to look carefully at those non-essentials and cut out what you can.

If your expenses are less than your income…great! You’re in a better position to start saving for those goals we identified earlier. But don’t waste this opportunity by suddenly over-spending. Still look to your non-essentials to see what can be cut; saving more now is a smart strategy, and your future self will thank you!

 

Thank you!

The Musuneggi Financial Group
www.mfgplanners.com
412-341-2888
info@mfgplanners.com

1910 Cochran Road
Manor Oak Two, Suite 520
Pittsburgh, PA 15220

 

  1. Registered Representatives may only conduct securities business with residents of the state(s) and Jurisdiction(s) in which they are properly registered. For additional information, please contact us.

 

2020 Fraud Warning

2020 FAQsAccording to consumer advocates and civic authorities there is a new potential fraud scam that is really simple to fight: Just write out the year “2020”. According to an article in USAToday, scammers can alter a date written “1/6/20” to any different year (for example adding “19” to make the date “1/6/2019” with very little work at all.

Legal experts suggest writting out the full year “2020” easily prevents any confusion… or opportunity for scammers or fraudsters to mess with your documents.

Read the full article by clicking here

Christine Pikutis-Musuneggi Receives National Quality Award

Following is the Press Release from NAIFA regarding Christine’s Quality Award. Congratulations, Christine!

(Tuscola, Illinois) ― December, 2019 ― Christine Pikutis-Musuneggi, CRPC®, CLTC, LACP with The Musuneggi Financial Group, LLC has received the NAIFA Quality Award from the National Association of Insurance and Financial Advisors (NAIFA), the industry’s leading professional association.
 
The NAIFA Quality Award recognizes advisors for their commitment to excellence in service to their clients and industry, their pursuit of education and training and their adherence to NAIFA’s Code of Ethics.
 
“NAIFA is committed to recognizing and rewarding professionalism and achievement,” says Jill M. Judd, LUTCF®, FSS president of NAIFA. “The NAIFA Quality Award recognizes individual agents for demonstrating the highest standards.”


About NAIFA: Founded in 1890 as The National Association of Life Underwriters (NALU), NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every Congressional district in the United States. NAIFA members assist consumers by focusing their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members.  Visit NAIFA’s website at www.naifa.org.
 
 

Toys for Tots 2019

On December 10, 2019, The Musuneggi Financial Group’s Toys for Tots drive culminated with their annual Donation Party. The party celebrates the toys collected over the two-month campaign and ends with the “stuffing” of a bus from our partners from South Fayette School District. Thank you to everyone who contributed toys and to the South Fayette orchestra and students who helped pack and stuff the bus!

 

See You in 2020!

Year-End Financial Checklist

Your Year-End Financial Checklist

Six aspects of your financial life to review as the year draws to a close.

Provided by Christine Pikutis-Musuneggi

year-end financial checklistThe end of the year can help remind us of last-minute things we need to address and long-term goals we want to accomplish. To that end, here are six aspects of your financial life to think about as this year leads into the next. 

Keep in mind, this article is for informational purposes only and is not a replacement for real-life advice. Make certain to conduct a tax or legal professional before modifying your tax strategy. The ideas presented are not intended to provide specific advice.

Your investments. Set a goal to review your investments with your financial professional. You’ll want to come away from the meeting with an understanding of your portfolio position. Review your approach to investing and make sure it suits your objectives. Look over your portfolio positions and revisit your asset allocation. Remember, asset allocation and diversification are approaches to help manage investment risk. They do not guarantee against investment loss.

Your retirement strategy. You may want to consider contributing the maximum to your retirement accounts. It’s also a good idea to review any retirement accounts you may have through your work. This is also a great time to decide on making catch-up contributions. 

Your tax situation. It’s a good idea to consider checking in with your tax or legal professional before the year ends, especially if you have questions about a 2019 expense or deduction. Also, it may be a good idea to review any sales of property as well as both realized and unrealized losses and gains. Look back at last year’s loss carryforwards. If you’ve sold securities, gather up cost-basis information. As always, bringing all this information to your financial professional is a smart move.

Your charitable gifting goals. Plan charitable contributions or contributions to education accounts and make any desired cash gifts to family members. The annual federal gift tax exclusion allows you to give away up to $15,000 in 2019, meaning you can gift as much as $15,000 to as many individuals as you like this year, tax free. Such gifts do not count against the lifetime estate tax exemption amount, as long as they stay beneath the annual federal gift tax exclusion threshold. 1,2 Besides outright gifts, you can explore creating and funding trusts on behalf of your family. The end of the year is also a good time to review any trusts you have in place. Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

Your life insurance coverage. The end of the year is an excellent time to double-check that your  policies and beneficiaries are up to date. Don’t forget to review premium costs and beneficiaries and think about whether your insurance needs have changed. Several factors could impact the cost and availability of life insurance, such as age, health, and the type of insurance purchased as well as the amount purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, you may pay surrender charges, which could have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Finally, don’t forget that any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Life events. Here are some questions to ask yourself when evaluating any large life changes in the last year: Did you happen to get married or divorced in 2019?   Did you move or change jobs?   Did you buy a home or business? Was there a new addition to your family this year? Did you receive an inheritance or a gift? All these circumstances can have a financial impact on your life as well as the way you invest and plan for retirement and wind down your career or business.

Contact Christine Pikutis-Musuneggi at 412-341-2888 x314, by email or schedule an appointment. View Christine’s bio.

Christine Pikutis-Musuneggi, CRPC®, CLTC, LACP Financial Planner
The Musuneggi Financial Group, LLC Manor Oak Two, Suite 520,1910 Cochran Road Pittsburgh PA 15220

 


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities & Investment Advisory Services Offered Through H. Beck, Inc. Member FINRA, SIPC. H. Beck, Inc., MarketingPro, Inc and The Musuneggi Financial Group, LLC are not affiliated. 

  

Citations:

1 – turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N#:~:text=The%20annual%20federal%20gift%20tax,may%20be%20increased%20for%20inflation.) [11/22/18]

2 – irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax[9/23/19]

Musuneggi Financial Group Earns Service Award

The Musuneggi Financial Group, a financial planning firm located in the south hills of Pittsburgh, was awarded for their “Superior Record of Community Service” by H. Beck, Inc. Christopher Musuneggi, the firm’s President accepted the award on behalf of the firm. An honorarium of $5,000 was given with the award which Musuneggi will present to the Salvation Army Pittsburgh Temple.
 
“We were pleased to receive recognition of our efforts with this award,” said Christopher Musuneggi, President. “Everyone at our firm, our clients and our community help us with our charitable efforts. 
 
In addition to work with the Salvation Army, The Musuneggi Financial Group supports and provides services to community organizations such as Toys for Tots, Dress for Success Pittsburgh, Single Steps Strategies, The Center for Women’s Entrepreneurship at Chatham University, as well as Keystone Oaks Foundation for Educational Excellence. The firm’s annual Holiday Donation Party for Toys for Tots will be Tuesday, December 10th from 4:00 PM – 7:00 PM at their offices in Scott Township.
 
“Our focus has always been on our community and the individuals we serve,” said Mary Grace Musuneggi, Chairman and CEO and the firm’s founder. “We are thankful for the blessings in our lives and believe in working to bless others through our work and our service.”

Christopher Musuneggi receiving the H. Beck Outstanding Service Award from H. Beck Inc. President Michelle Barry for the firm’s work with multiple charities and civic organizations. The Honorarium presented with the award will be donated to the Salvation Army Pittsburgh Temple. 

Why We Support Small Business Saturday

Small Business Saturday is November 30, 2019. The tenth anniversary of the day to celebrate small business created and promoted by American Express. Why does the Musuneggi Financial Group support small business Saturday? Because small business matters.

The Power of Small Business

Small businesses help drive the economy. Consider these statistics from the Small Business Administration:

  • 99% of all businesses in the U.S. are small businesses.
  • 64% of new jobs created over the past three decades were in small businesses.
  • 40% of all retail jobs are in franchise or small businesses.
     

As reported by Grasshopper.com, some additional small business stats:

  • Small businesses donate 250% more than larger businesses to non-profits and community causes (Source: Seattle Good Business Network).
  • If you spend $100 at a local business, roughly $68 stays in your local economy.
  • If you spend the same are a large business, only $43 stays in the local economy (Source: Civic Economics Study in Grand Rapids, Michigan

Small Business Matters

The Musuneggi Financial Group is a small business. But we’re not promoting ourselves… we’re promoting our clients, our friends, our neighbors and our vendors. Because small businesses matter to the economy, and small businesses are one of the reasons that our business and our community thrives.

Shop on Small Business Saturday

On November 30, stop by your local hardware store, grab a treat at a local bakery or sweet shop, have lunch at a local diner and pick up some Christmas gifts at a local shop. We encourage you to talk to the shop owners about their small business adventure. And we might bump into you… because we’ll be out celebrating Small Business Saturday as well!
 

ElderCare Strategy

Long Term Care Planning

Your Extended Care Strategy

Are you prepared for the possibility – and expense – of eldercare?

Do you have an extra $33,000 to $100,000 to spare this year? How about next year, and the year after that? Your answer to these questions is probably “no.”

What could possibly cost so much? Eldercare.  

According to the AARP Public Policy Institute, a year of in-home care for a senior costs roughly $33,000. A year at an assisted living facility? About $45,000. A year in a nursing home? Approximately $100,000.1

Medicare has limitations.

Generally speaking, it will pay for no more than 35 hours per week of home health care and only up to 100 days of nursing home care, following a hospitalization. It may pay for up to six months of hospice care. If you or someone you love happens to develop Alzheimer’s disease or another form of dementia, Medicare will not pay for any degree of room and board for them at an assisted living facility.2

Medicaid is another resource entirely.

For seniors who are eligible, Medicaid can pick up assisted living facility or nursing home expenses, and even in-home eldercare, in some instances. Qualifying for Medicaid is the hard part. Normally, you only qualify for it when you have spent down your assets to the point where you can no longer pay for eldercare out of pocket or with insurance.2

You need a strategy.

An extended care strategy may factor into a thoughtful retirement strategy. After all, your retirement may be lengthy, and you may need such care. The Social Security Administration projects that a quarter of today’s 65-year-olds will live past age 90, with a tenth making it to age 100.1

Insurance companies have modified extended care policies over the years. Some have chosen to bundle extended care features into other policies, which can make the product more accessible. An insurance professional familiar with industry trends may be able to provide you more information about policies and policy choices. 

Waiting for federal or state lawmakers to pass a new program to help with the costs of eldercare is not much of a strategy. It is up to you, the individual, to determine how to face this potential financial challenge.2

If you lead a healthy and active life, you may need such care only at the very end. Assuming you do require it at some point, you may consider living in an area where you can join a continuing-care-at-home program (there are currently more than 30 of these, essentially operating as remote care programs of assisted living communities) or a “village network” that offers you some in-home help (not skilled nursing care, however).1

Those rare and nice options aside, retirement saving also needs to be about saving for potential extended care expenses. If insurance addressing extended care is not easy to obtain, then a Health Savings Account (HSA) might be an option. These accounts have emerged as another solution to extended care needs. An HSA is not a form of insurance, but it does provide a tax-advantaged savings account to which you (and potentially, your employer) can make contributions. You can use these funds to pay for most medical expenses, including prescription drugs, dental care, and vision care. You can look into this choice right away, to take advantage of savings over time.3

Once you reach age 65, you are required to stop making contributions to an HSA. Remember, if you withdraw money from your HSA for a nonmedical reason, that money becomes taxable income, and you face an additional 20% penalty. After age 65, you can take money out without the 20% penalty, but it still becomes taxable income.3

An HSA works a bit like your workplace retirement account. Your employer can make contributions alongside you. However, the money that you contribute comes from your pretax income and can be invested for you over time, so it may grow as your contributions accumulate.3

There are also some HSA rules and limitations to consider. You are limited to a $3,500 contribution for 2019, if you are single; $7,000, if you have a spouse or family. Those limits jump by a $1,000 “catch-up” limit for each person in the household over age 55. Your employer can contribute, but the ceiling is cumulative between your contributions and theirs. For example, say you are lucky enough to have your employer put a hypothetical $1,000 into your account in 2019; you may only contribute as much as the rest of your limit, minus that $1,000. If you go over that limit, you will incur a 6% tax penalty, so it is smart to watch how much you contribute.3

Alternately, you could do without an HSA and simply earmark a portion of your retirement savings for possible extended care costs.

The Bottomline

One thing is for certain: any retiree or retirement saver needs to keep the possibility of extended care expenses in mind. Today is not too soon to explore the financial options to try and meet this challenge.    

Presented by

Christine E. Musuneggi, CRPC®, CLTC, LACP

Contact Christine at 412-341-2888 or email Christine. You may also schedule an appointment via Christine’s online calendar here.

 

 


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and Investment Advisory Services offered through H. Beck, Inc. Member, FINRA & SIPC 6600 Rockledge Drive, 6th Floor Bethesda, MD  20817-1806.  (301) 468-0100 H. Beck, Inc. and The Musuneggi Financial Group, LLC. are not affiliated. 09102019-MY-9647

Citations.

1 – marketwatch.com/story/long-term-care-insurance-has-a-shaky-future-here-are-new-ways-to-tackle-the-high-cost-of-aging-2019-05-22 [8/4/19]

2 – health.usnews.com/health-care/patient-advice/articles/dementia-care-in-assisted-living-homes [8/21/19]

3 – investors.com/etfs-and-funds/personadd paal-finance/hsa-contribution-limits-hsa-rules/ [3/13/19]