February 2014 - NorthStar Capital Advisors

Oklahoma Schools Required To Teach High School Students to Manage Finances

Oklahoma high school students, effective this May, now must demonstrate an understanding in banking, taxes, investing, loans, insurance, identity theft and eight other areas to graduate.

The intent of personal financial literacy education is to inform students how individual choices directly influence occupational goals and future earnings potential. Successful money management is a disciplined behavior and much easier when learned earlier in life.

Real world topics covered by the Oklahoma standards include the following:

Earning an income;
Understanding state and federal taxes;
Banking and financial services;
Balancing a checkbook;
Savings and investing;
Planning for retirement;
Understanding loans and borrowing money, including predatory lending and payday loans;
Understanding interest, credit card debt, and online commerce;
Identity fraud and theft;
Rights and responsibilities of renting or buying a home;
Understanding insurance;
Understanding the financial impact and consequences of gambling;
Bankruptcy; and
Charitable giving

22: Your Magic Retirement Number

Most Americans need to save more to assure a financially secure retirement.

But many people struggle with key retirement questions like “how much do I need to save?”

You should save 22 times the annual income you want to have in retirement.

For example, if you want $100,000 in annual income (not including Social Security), then you need to have $2.2 million in total retirement savings.
(22 x $100,000 = $2.2 million)

See this recent article in the Wall Street Journal on how researchers arrived at this magic number of 22.

IBM and AOL Are Messing with Your 401(k)

401(k) accounts are an important part of many people’s retirement savings. And the employer match is a critical part of that system. So when big companies like IBM and AOL start monkeying with that match, you should pay attention because other companies may follow suit!

IBM changed its 401(k) system in 2012 to hand out employee matches in one lump sum at the end of the year leading to an uproar. IBM employees are now missing out on compounding throughout the year that they used to get from contributions peppered in throughout the year. In addition, if you leave IBM before December 15th and you’re not retiring, you lose the match entirely.

Experts warned that others would try to follow IBM’s example by watering down their 401(k) programs as well. Sure enough, AOL took things even further!

AOL said starting in 2014, an employee must be active on December 31st to receive the company match. Furthermore, the contribution will a “one time lump sum after the end of the Plan Year.” So you have to stay with the company through the end of year and you don’t even get the match during 2014!

The protest following AOL’s announcement was so intense, AOL chief Tim Armstrong reversed the changes to the 401(k) policy after just one week of bad publicity.

11 Questions To Ask When Hiring A Tax Preparer

The IRS started accepting tax returns January 31^st so it’s a good time to start thinking about your own taxes. Kelly Phillips Erb recently wrote an article that provides an excellent check list of questions to ask your tax preparer when filing your taxes before handing over your w-2’s or 1099’s:

Do you have a PTIN? (This is a Tax Preparer Identification Number)
What is your tax background? (CFP®, CPA, EA, JD, VITA) Tax preparers that are being compensated for their time should carry one of the these professional designations or certifications: CERTIFIED FINANCIAL PLANNER™, Certified Public Accountant, Enrolled Agent, Juris Doctor, Voluntary Income Tax Assistance.
Have you prepared a tax return before?
Do you know the requirements for filing returns in my area? (Filing taxes for income earned in multiple state or states other than the one you are currently residing in)
What records or documentation will you need from me? It is a good idea to bring the previous year’s tax returns as well as all income documentation, and proof of any expenses that you think could be deductible.
How do you determine your fee? (By the hour or per line item on the return, etc.)
Can I file electronically? (Pretty much a given – just about all returns are e-filed now)
Who will sign my return? Remember the first question. Do not trust a preparer that will not sign your return or cannot tell you who will be signing your return.
Will I receive a copy of my return? (This sounds like a given but sometimes preparers do not provide a copy of the return without a request)
How do I find you if there is a problem with my return after the tax season is over? (Especially important if the preparers is only in business during tax season)
What happens if I get audited?

Be sure to check out Erb’s article for the “right” and “wrong” responses to these key questions.

Source: Forbes

Oklahoma Schools Required To Teach High School Students to Manage Finances

22: Your Magic Retirement Number

IBM and AOL Are Messing with Your 401(k)

11 Questions To Ask When Hiring A Tax Preparer

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