Image of Planner with text Estate Strategies The Basics

Estate Strategies: The Basics

Determining how you will create a legacy for your family starts with creating an estate plan. This type of financial plan is key to protecting your assets for the future. Estate plans are not limited to those that are extremely wealthy. In fact, everyone can and should implement an estate strategy into their financial plan in order to figure out who will manage your affairs should you no longer be able to and who will become beneficiaries of your assets when you pass away. If you would like to learn more about the basics of implementing an estate strategy, keep reading!

  1. Determine Your Goals

With an estate strategy, you begin to outline your goals in a manner that will benefit your family later on. Eventually, you will  be leaving your assets behind, so the best thing you can do is have a plan for them. You will want to determine exactly who will be responsible for what, if your beneficiaries have or will have specific needs that you would like to take care of.

  1. Power of Attorney

A power of attorney is a legal document that helps you prepare for the future when planning what  to  do with your financial affairs. Should  you become unable to manage your assets, the power of attorney that you elect has the legal right to determine what to do with your finances and make decisions on your behalf. Typically, power of attorneys are family members or even close friends that you grant the power to early on just in case you end up being unable to make conscious decisions. We highly recommend having a power of attorney involved with your estate plan, as it can be essential in the case of an emergency.

  1. Name Beneficiaries

We have mentioned the word “beneficiaries” in this article above, however, it is important to  know exactly what a beneficiary is and how you can name them. Should you have assets that require beneficiaries to be named, it is essential to make sure your assets are in good hands. Beneficiaries are those that inherit assets on your behalf. As you have worked hard for your assets, you want to make sure they end up in good hands, which can be a daunting, yet very personal task that should be taken on early to prevent any delays in planning.

While we know that estate strategies can be quite complex, they are great to have in place. Once your estate strategy is established, you will feel better knowing that should any kind of emergency take place leaving you unable to make decisions regarding your assets by yourself, that your assets and belongings are in the hands of the people you chose and according to the plan you put in place.

If you would like to learn more about estate planning, visit our website here. Should you have any questions  regarding your current estate strategy, we would be happy to help guide you along the way. Give us a  call at (301) 907-9790


when is the right time to collect social security

When is the Right Time to Claim Social Security Benefits?

When is the right time to claim Social Security benefits? There is no clear-cut answer. The truth is, the answer can be different for everyone. Not everyone has the same needs for Social Security. While one family may rely heavily on their Social Security benefits, another may only need them for supplemental income during retirement. Regardless, money is money, and you want to make sure you are getting as much out of your benefits as you can. A whopping 96% of retirees don’t choose the right time to claim their benefits, and you want to be part of the smart 4% (United Income). Keep reading for our tips to consider when designing the perfect Social Security plan for your family.


How Early Can I Claim My Benefits?

You can claim your benefits as early as age 62. However, claiming your benefits this early results in receiving a benefit amount that is significantly lower than the amount you would receive if you waited until full retirement age to claim your benefits – 30 percent lower, to be exact (Forbes). For individuals turning 62 today, the full retirement age is 66 ½. So, if you can wait until after your 66th birthday, we recommend you do. Claiming your benefits early while you are still working can also create more taxes for you. With a proactive tax plan, you can minimize the taxes owed on your benefits. We can help you create a plan!


What If I Wait to Claim My Benefits?

If you wait until your full retirement age to claim your benefits, you will receive the full amount you’re entitled to. However, if you choose to wait even longer, you can increase your benefit amount by 8 percent with every year after your full retirement age, up to age 70. If you are in good health and expect to live a long, healthy retirement, then waiting until age 70 to claim your benefits might be the best option for you. However, if you have health issues, it might be more beneficial for you to claim your benefits at retirement age or even earlier. Social Security maximization is even more valuable for couples that are married, considering there is a 50% chance one will live to age 92, and a 25% chance that one will live to age 97 (Financial Planner LA). If you’re married, waiting is the better option.


How Can I Fully Maximize My Social Security Benefits?

If you don’t necessarily need your benefits for income, then you’re probably thinking about waiting until age 70 to claim your benefits. However, there is a way to maximize your benefits even further. That is, by investing them. For the average American, claiming benefits early and investing them is too risky. However, if you are near the top 1% of the richest Americans, you have the luxury of having a little fun with your benefits. If you claim benefits early and invest them, you could potentially accrue more assets for your retirement. However, you are playing with fire and you should be careful so as not to ruin your retirement security.


Whether you’re thinking about claiming your benefits early or waiting until you’re 70, we can help you make a decision! If you are interested in scheduling a complimentary personal review of your social security scenario including a free Social Security optimization report Contact Plotkin Financial Advisors today!

New Year? Get Your Taxes Ready

With the arrival of the New Year it’s time to start thinking about tax filing.  The federal government estimates that about 60% of taxpayers use paid preparers to calculate and file their returns.  It is never too early to start organizing your receipts, forms and other tax documents.  You and your tax preparer will benefit from having all the pertinent information in one place.  Remember, last year’s tax return can be a good tool for making sure you aren’t missing anything.   Even if you have an accountant that does most of the leg work for you, it is important that you know what is happening with your own tax planning.

Standard or Itemized

It is a good idea to understand the difference between taking the standard deduction and itemizing your deductions.  After the big changes in 2018 which increased the standard deduction, you and your accountant should consider whether you will be better off itemizing your deductions or sticking with the standard.  In 2019, the standard deduction for a single filer was $12,200 and if you’re married and filing jointly it increased to $24,400. You should discuss with your tax preparer all the possible deductible items you qualify for as well as any tax credits you might be eligible for.

Retirement and Estate Planning

Your tax planning should also take a look at the bigger picture to plan for your retirement and estate planning needs.  You want to make sure you are doing the most you can for your retirement funds by contributing as much as you can towards them.  Discussing your retirement funding with your investment advisor during your annual portfolio review is a great way to keep on track.  If your estate value is less than $11.4 million, you will benefit from the increased exclusion amount for federal estate taxes and your heirs will not need to worry about federal estate taxes after your passing.  However, if your estate is close to or more than $11.4 million you may want to consider gifting possibilities to avoid or lessen federal estate taxes.

What Factors Should I Consider Before Contributing to a Roth TSP?

Before considering anything, it is important to know what a Roth TSP is. A Roth TSP, or Thrift Savings Plan, is a tax-deferred retirement savings and investment plan specifically for federal employees and members of the uniformed services. A Thrift Savings Plan is similar to a 401(k) plan, which is a retirement savings plan offered by employers of private-sector corporations. Those who take part in utilizing a TSP can save for retirement, as well as potentially receiving matching contributions made by their employer and receive reductions on their current income taxes.

Determining if a Roth TSP is right for you is a daunting task, and there are several factors to take into account when making this decision. Typically, Roth TSPs are a good match for individuals who anticipate their tax rate to be higher once they are in retirement than it is now. However, when you make contributions to your Roth TSP, there will be no reduction in your adjusted gross income like there is when you choose the traditional route. This is one of the key factors to think about when making the decision of which type of plan to choose.

Another factor to consider when deciding if a Roth TSP is right for you is the fact that your take-home pay will be reduced by more than it would if you choose the traditional option. Traditional 401(k) plans are created using pre-tax dollars and allow you to take home as much money as possible (not including taxes), whereas Roth contributions do not. Traditional TSPs will enable you to make contributions before taxes are taken out of your paycheck, which you then pay taxes on future withdrawals. Roth TSP contributions mean that taxes are paid up front, and your contributions are made with after-tax income.  You may contribute up to $19,000 to your Roth TSP for 2019 ($19,500 in 2020) and if you are over age 50 you may also make an additional $6,000 catch-up contribution ($6,500 in 2020).  This is considerably more than you may be able to contribute to a Roth IRA, which is $6,000 plus a $1,000 catch-up contribution if you are over age 50.  That said, if you want to contribute to a Roth IRA outside of your TSP and your income is over $206,000 (married filing jointly) or over $139,000 (filing single) you may not be eligible to contribute directly to a Roth IRA.  If your income is below these limits we recommend speaking to a CPA or financial advisor to determine if you are eligible for a full or partial contribution.

Roth TSP withdrawals do not require you to pay state or federal income taxes, which means if you have a higher tax bracket in retirement, the stronger your Roth account will be in the long run. Roth TSPs are great for those who are good savers because they are more likely to benefit from the tax-free withdrawals that come with choosing a Roth account.  Furthermore, Roth TSP’s are not subject to required minimum distributions (RMD’s).  This gives the account owner the added flexibility to only take withdrawals on cash flow needed as opposed to a mandated withdrawal percentage set by the IRS.  Given that many federal government retirees have a taxable pension and social security, the Roth TSP is an option to have a tax-free resource for later in retirement.  For additional information on required minimum distributions you may visit the IRS’s website:      

As more and more employers offer their employees a choice between traditional or Roth retirement savings accounts, it is important to take these factors into account when determining if a Roth TSP is a good fit for you. It is important to think about what your tax rate is now, and what you think it will be in the future in order to properly decide if a Roth TSP or traditional TSP is right for you.

When making decisions like this, it may be helpful to speak with a financial advisor to make sure you understand all your options. Plotkin Financial Advisors is here to help you understand the options available to you, especially when it comes to making decisions for your financial future. Contact us to learn how we can serve you today!

Securities offered through Independent Financial Group, LLC (IFG) a registered broker dealer and Member FINRA/SIPC. Advisory services offered through Plotkin Financial Advisors, LLC, a registered investment adviser. Plotkin Financial Advisors, LLC and IFG are unaffiliated entities.


Consolidating your Financial Accounts

When it comes to simplifying your personal finances consider consolidating your accounts.

Consolidating your Financial Accounts

Over the course of a career it is very possible for individuals to accumulate multiple checking, savings, brokerage, and retirement accounts. The likelihood for this increases as we get married, move, change jobs, etc., but it can unnecessarily impede your financial progress. That said, we encourage households and individuals to review their existing accounts to make their savings and investments more efficient.

Furthermore, you can consolidate all your accounts to one or two institutions. For example, you can limit your checking and savings account(s) to one bank, and your investment and retirement accounts to one financial institution.

Below are some potential advantages to account consolidation:

  1. Estate Planning
    • Oversee fewer accounts as opposed to many at separate financial institutions.
    • Streamlines recordkeeping for surviving spouse.
    • More efficiently review account beneficiary information.
  2. Investment Planning
    • Allocation is more efficient to one account rather than multiple accounts.
    • Performance is monitored over fewer accounts.
    • Automating your contributions or withdrawals in retirement is simplified with one account versus multiple accounts.
  3. Tax Planning
    • Fewer statements alleviates the task of income tax reporting.
    • Cost basis is better managed.
  4. Cash Flow Management
    • It is easier to track income and expenses.

Where do you start?

Take the time to list all your accounts, and it may become abundantly clear after listing all your accounts that it makes sense to consolidate! You may want to list these accounts in the format below:

Account #1
Account #2
Account #3

Non-retirement/Investment Accounts
Brokerage Account # 1
Brokerage Account # 2
Brokerage Account # 3

Retirement Accounts
Traditional IRA # 1
Traditional IRA #2
401(k) # 1
401(k) # 2

You may want to work an accountant or financial advisor to make you are aware of any tax consequences that may arise from consolidation. The Certified Financial Planners™ at PFA, LLC are here to help you with all your planning needs. Let us know how we can help you reach your financial goals.

Securities offered through Independent Financial Group, LLC, Member FINRA/SIPC.  Advisory services offered through Plotkin Financial Advisors, LLC.  Plotkin Financial Advisors, LLC and Independent Financial Group, LLC are not affiliated.

7 Criteria to Evaluate Your Current 401(k) or 403(b) Plan

As more lawsuits are filed against Plan Sponsors and Plan Fiduciaries, many companies and nonprofits are taking steps to evaluate their current defined contribution plans.   Here are seven criteria we suggest should be used to evaluate your current plan.

1. Fund Suite

How many investment options do you have? Does your plan allow for Exchange Traded Funds (ETFs)?

Recent lawsuits filed against university 403(b) plans highlight the fact that many plans have hundreds of investment options. Plan participants have paralysis and can’t fairly allocate among so many overlapping options, many of which may be underperforming high cost mutual funds.

Your best option may be open architecture, whereby a fund suite of about 28-42 funds are carefully selected from over 20,000 mutual funds and exchange traded funds (ETFs)
Use of low cost ETFs may lower overall fund expenses. Too many investment options and/or your plan does not allow for ETFs – It’s a red flag!

2. Investment Policy Statement and Ongoing Monitoring

ERISA does not require an Investment Policy Statement, but does suggest that there be guidelines. So why not have an Investment Policy Statement (IPS)? The purpose of an IPS is to set forth the policies for selecting the funds in the fund suite and the policies for monitoring and replacing poor performing funds. Funds must be selected based on fund performance vs. the benchmark and vs. the peer group. Plan participant’s time horizon and risk tolerance are also key factors. Lack of an investment policy statement and lack of a monitoring policy are red flags!

3. Plan Expenses

If your overall plan expenses are greater than 1.2% of plan assets, you may be paying too much. The negative compounding effect that expenses have on one’s future retirement is very serious. Many plan Sponsors do not even know how to calculate plan expenses and many believe that the only expense paid is the annual (or quarterly) administrative charge.

When calculating total plan expenses, you need consider the following:

a. Average fund expenses;
b. Administrative expenses;
c. Hidden charges and revenue sharing; and
d. Advisory fees

You also need to know whether these fees are a percentage of plan assets or a fixed charge. Fixed costs imply that, as assets grow over time, expenses as a percentage of plan assets will decline over time. Fully variable fee structure is a red flag!

4. Services Provided

Does your advisor do anything? What services are to be provided according to the plan documents? Independent advisors could provide many useful services, including:

i. non-discretionary investment advisory services;
ii. discretionary authority of plan assets –selection and monitoring of funds, alleviating your fiduciary risk;
iii. selection, monitoring and replacement of service providers;
iv. fee and cost review comparison of existing Plan compared to other available options;
v. ongoing monitoring of investment options and plan performance;
vi. selects the funds in the fund suite, monitors and replaces funds;
vii. participant education and enrollment, which helps to maximize plan participation;
viii. development of the Plan’s investment policy statement; and
ix. development and maintenance of a fiduciary audit file.

An advisor that charges you money for limited (or no) services, is a red flag!

5. Experience and Qualifications

What makes your advisor qualified to administer the plan, provide services to the plan and act as a fiduciary to the plan?

While the number of plans and the amount of plan assets under administration are key factors to consider, there are a few other factors that are also important. Other factors to consider are licensing, legal registration, educational background and certifications.

In our opinion, an independent registered investment advisor (RIA) is preferable to a stock broker or insurance broker – licensed to sell insurance. RIAs are supervised by FINRA and the Securities and Exchange Commission. Being independent means that they are less likelyto offer proprietary products, which is a good thing.

Educational background demonstrating expertise in business, economics, and finance are important. In addition, certifications like CFA Charterholder (CFA), Certified Financial Planner (CFP) and Accredited Investment Fiduciary (AIF) demonstrate knowledge of investing and personal finance, as well as a commitment to a Fiduciary obligation to plan sponsors and plan participants.

6. Conflicts of interest

A plan that includes revenue sharing, finder’s fees and proprietary funds may pose a conflict of interest. In order to get compensated, brokers often push poor performing proprietary funds – funds owned and managed by the third party administrator or record keeper. These funds are often higher priced compared to other available alternatives.

A broker that wants to switch you from one third party administrator (i.e. MassMutual) to another (i.e. Principal) with no good reason is a red flag! The advisor could be earning a fee equal to 1% of plan assets – making it a clear conflict of interest.

A fund suite with a significant number of proprietary funds is a red flag!

7. Suitability Standard or Fiduciary Standard – To what standard is the advisor held?

A Registered Investment Advisor is held to the fiduciary standard, while most brokers are held to a lower ‘suitability standard’. Consider it a red flag if your advisor is unwilling to agree in writing to its fiduciary duties.

For a free, no obligation review of your 401k or 403b plan, please contact

Michael Edberg, CFA, CDFA™, AIF® at 301-907-9790 or

IMPORTANT NOTE: This blog is for informational purposes only and comments will not be posted on this site.

Attention Income Investors: Preferred Shares May Be Overvalued!

  • For yield-starved investors, preferred shares have been beneficial.
  • The problem is many have chased yield and many preferred shares are overvalued.
  • A careful look reveals there are many preferred shares trading in excess of their call price
  • Lastly, many preferred share ETFs are skewed towards REITs and Financials – understand your sector exposures

It’s been difficult to find income and yield with global interest rates being suppressed by central banks and a lack of fiscal policy stimulus from the U.S. government. It’s been a real tax on savers and investors that depend on fixed income to support their retirement. There’s nothing inherently wrong with preferred shares, but you need to look closely at the price you pay.

a. Preferred Shares Have Been a Solid Option

By keeping rates low, it was theorized, that investors would be forced into riskier assets. As a result we saw the run-up in Master Limited Partnerships – and their subsequent demise as oil and gas prices fell. We’ve also seen a run-up in preferred shares. Below is a graph showing the performance of the iShares U.S. Preferred Stock ETF (PFF) for 2016. It shows two things: (i) high volatility with a decline of 8.5% to a low of 35.89, followed by a run-up of 12.4% from the February low; and (ii) a good overall return with a year-to-date return of over 9%, both capital appreciation and dividends (current annual yield is about 5.6%).

(Source: Charles Schwab)
Jason Zweig points out in a recent Wall Street Journal article that PFF, which seeks to track the preferred stock index market, has taken in $2.2 billion in new money so far this year. This inflow of new capital is likely the reason that the price of preferred stocks has risen, which almost never happens with most of their return coming from their fixed dividends. This year, however, almost half the 9% total return of the S&P preferred index has come from rising share prices.

b. Many Have Chased Yield and Many Preferred Shares are Overvalued.

The top 10 holdings of PFF show a few things. First, nine of the top 10 holdings are financials, which represents a significant sector overweight. Next, you can see the run-up six month returns driven by a demand for yield from yield starved investors. What you don’t see is the largest single holding is actually cash standing at 3.6% of PFF’s portfolio.


Investors are unaware of the differences between preferred shares, common equity and bonds. One key difference – preferred shares are often callable. In fact, 28% of PFF’s $17.5 billion in holdings are callable by the end of 2016, according to Jason Zweig. Issuers of preferred shares have the right —not the obligation — to redeem those securities, taking them off the market in order to refinance at lower rates. The threat of rising interest rates suggests that many of these callable preferred shares will actually be called at, typically, a price of $25.

c. Many Preferred Shares are Trading in Excess of Their Call Price

For Example, GMAC Cap Pfd shares, currently trading above $25.20 are callable on September 18, 2016 at a price of $25.

Jason Zweig points to another good example. He highlights the $950 million in preferred securities from Bank of America’s Merrill Lynch Capital Trust II, whose price shot up from $25 in February to $26.50 in June, far above the $25 par value. Then, in July, the bank announced it would call the securities on August 15, 2016. Their price fell 2% in a day. This was one of PFF’s largest holding in July 2016.

d. Many Preferred Share ETFs are Skewed Towards REITs and Financials – understand your sector exposures

About 80% of preferred shares are issued by real estate investment trusts, banks and other financial companies. Investors need to understand that they are not just gaining exposure to a ‘different financial product’, but they could be unwittingly increasing their exposure to real estate investment trusts, banks and other financial companies.

IMPORTANT NOTE: This blog is for informational purposes only and comments will not be posted on this site.

[1] Article by Jason Zweig (Wall Street Journal August 12, 2016).
[2] Jason Zweig (Wall Street Journal August 12, 2016).
[3] Jason Zweig (Wall Street Journal August 12, 2016).

Nearly Half of Physicians Behind in Preparing for Retirement

According to a recent report prepared by the American Medical Association Insurance Agency, nearly half of the physicians who responded to a recent survey consider themselves behind in preparing for the financial future of themselves and their families. The survey results indicated gaps in personal financial knowledge and lack of confidence in financial decisions related to retirement savings, life and disability insurance coverage and estate planning.

Only half of the physicians reported reviewing their personal finances on a quarterly basis, while less than 30% reviewed them annually and less than 15% only reviewed them ‘as the need arose.’

In the report, only 6% of the physicians said they are ahead of schedule in retirement planning. More than half, particularly those under the age of fifty, stated they are behind in planning and saving for retirement.

Physicians under 40 were very concerned about having enough money for retirement, paying off their own medical school debt, funding children’s college educations, taking care of aging parents and having enough life insurance.

“It makes sense that physicians would have little time to spend on their own financial situations,” said J. Christopher Burke of the AMA Insurance Agency.

Planning for retirement is not just a matter of building up a large sum in a 401(k) or profit sharing plan. In addition, many physicians and dentists have a substantial amount of equity in their practices – an asset that can potentially be converted into an income stream during retirement years.

At Plotkin Financial Advisors we help physicians and dentists prepare not only for retirement, but also a profitable exit strategy for their practices.

For more information contact Shim Plotkin, CFP® at 301-907-9790 or by email at

IMPORTANT NOTE: This blog is for informational purposes only and comments will not be posted on this site. If you would like to contact the author, please email us at

Little Known CSRS Government Employee Benefit

federal-government-programsFor federal government employees under CSRS or CSRS Offset, the Voluntary Contributions Program (VCP) allows you to set aside extra money for retirement.  Contributions to the program are after-tax money and you can contribute up to 10% of all of the base pay you’ve earned over your entire CSRS career.  You must be still working to take advantage of this special benefit or separated from service butnot retired.

As an example, if you have worked for 20 years and your average base pay during this time was $70,000, your aggregate total salary is $1,400,000.  Of course, your base pay will have changed over the years, but for this example we will assume the base pay did not change.

Under the VCP, you can contribute up to $140,000 (10% of $1,400,000), either as a lump sum or over a period of time.

The VCP was originally established to allow CSRS employees to set aside more money in order to buy a higher pension.; and you can use the VCP this way.

But here is the unique part of the program – you can also max fund a Roth IRA.  For those of you who think you make too much money to fund a Roth IRA, this is a fantastic option.  The income limits do not applywhen you transfer to a Roth IRA from the VCP.  All growth in the Roth IRA is tax free and there are no required minimum distributions.

Very few people have heard about the VCP, let alone the ability to max fund a Roth IRA.  If you are a current CSRS government employee, or know someone who is, contact us so you can learn how to take advantage of this government program.

IMPORTANT NOTE: This blog is for informational purposes only and comments will not be posted on this site.  If you would like to contact the author, please email us at