Since it first became available in 2006, many employers have added the Roth 401(k) to their benefit packages as a retirement savings option. A Roth option is available for Individual Retirement Accounts (IRAs) and 401(k) and 403(b) accounts. To see if a Roth 401(k) would be appropriate for your situation, let’s take a closer look. To Roth or Not to Roth To start, let’s consider the advantages and disadvantages of both types of 401(k)s. With a traditional 401(k), you make contributions on a pre-tax basis, which lowers your current income subject to taxation, and earnings in the account have the potential to grow tax deferred. However, your distributions in retirement are subject to ordinary income tax. On the other hand, your contributions to a Roth 401(k) are made with after-tax dollars, but potential earnings and distributions are tax free, as long as you have held the account for at least five years and are at least 59½ years old. However, non-qualified distributions may be subject to income tax and a 10% early withdraw penalty may also apply. So, is it better to pay taxes on your retirement funds now or later? The most appropriate choice for you may depend on your current tax situation and your long-term financial goals. It is important to keep in mind that the 401(k) annual deferral limits – $19,500 for taxpayers under age 50 and $25,500 for those age 50 or older in 2021 – apply to all 401(k) contributions, regardless of whether they are made on a pre-tax or after-tax basis. If you contribute to a Roth 401(k), you may have to reduce or discontinue contributions to your employer’s traditional 401(k) plan to avoid

Reviewing a tax return can be an informative exercise to ensure you understand all sources of income and tax liabilities for the prior year. Take a look at our checklists to make sure you know what items to review while you are doing your taxes:   Download Our Checklist for Retirees   Download Our Checklist for Someone Still Working           This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. Puckett & Sturgill Financial Group and LPL Financial do not offer tax advice.  

While the 2020 tax year saw some significant changes to filing deadlines due to the effects of the global pandemic, the 2021 tax season seems to be set to be on track with normal filing deadlines. With the pandemic still in sight, it is important to consider that these dates may be subject to change. Below is a list of the filing deadlines for the upcoming 2021 tax year that you will want to be sure to put into your calendar. Individual Income Tax Returns Individual tax returns are slated to return on May 17th for federal tax filing. That means your return will need to be postmarked before midnight on that date to avoid any late fees or penalties if you owe taxes for the year. If you are unable to have your tax return completed by that time, you will need to file an extension by that date. It is important to remember that filing an extension does not disqualify you from paying your taxes by May 17th. It simply means you will have until a later date to send in your completed paperwork. You will need to pay any owed taxes by the deadline to avoid any late fees or penalties. Estimated Tax Payments If you are self-employed or receive income from outside of a regular paycheck employment, you will need to make quarterly tax payments if you will owe more than $1,000 in self-employment income. If you had been filing estimated taxes in 2020, your final 4th quarter payment would need to be postmarked by January 15th. For income made during the 2021 tax year, you will need to make your first quarterly tax payment by April

Only one-in-four Americans (27%) feel very confident that they will have enough money to live comfortably when they retire, according to the 2020 Retirement Confidence Survey Summary Report.⁠11 While the number is up slightly from the 2018 survey (23%), it underscores a pervasive sense of uncertainty among those approaching retirement age. While there is no single action that can boost the collective confidence of retirees, there are several key investment mistakes that, if avoided, can help maximize retirement savings and provide confidence to those who are entering their Golden Years. Pitfall #1: Failing to Maximize Your Contribution If you can afford to do so, contributing the maximum amount to your employer-sponsored retirement plan will increase the chances that you’ll reach your investment goal. The earlier you start, the better; it will allow your investments, and any potential earnings to grow on a tax-deferred basis. Pitfall #2: Failing to Develop a Concrete Plan Establishing clear goals that incorporate a time element (number of years until retirement) is necessary to create a relevant investment plan. Without such a plan, it is difficult to understand whether your savings will provide you with the living standard to which you’ve grown accustomed and for each year of your retirement. Pitfall #3: Short-Term Investment Mindset The stock market fluctuates; that’s a fact. And in the short-term they face a relatively high risk of price volatility. But in the long-term stocks have historically delivered relatively stable earnings. So selling off your holdings whenever the market takes a dip is a sure way to incur losses that impact your long-term goals. Pitfall #4: The Quest for Perfection Buying low and selling high is evergreen advice, but trying to

Tax identity theft is when someone steals your Social Security Number, files a tax return with your number, and directs a refund to their own bank account. In other cases, this type of identity theft may involve a scam artist calling on the phone, pretending to be a rep from the Internal Revenue Service (IRS), and demanding payment over the phone. To protect yourself, keep these tips in mind. Remember the IRS Doesn’t Make Surprise Phone Calls The IRS does call taxpayers, but these calls are never a surprise. By the time an IRS agent calls you about a delinquent tax bill, you should have received numerous notices and demands for payment in the mail. If you get a call that you weren’t expecting, the caller is likely a scam artist. Hang up and contact the IRS directly. Never make a payment over the phone. Be Aware of the Signs That Someone Has Filed a Return in Your Name There are several red flags that can indicate someone has fraudulently filed a tax return in your name, and they include the following: A letter from the IRS about a tax return you know you didn’t file A tax transcript that you didn’t request A notice that an online account has been created in your name A notification that your online account has been accessed or disabled when you know you didn’t take those actions A rejection notice saying you already filed when you try to file your return electronically IRS records indicating that you received wages or income from an employer you didn’t work for If you notice any of these red flags, you should also reach out to the IRS and

Financial wellness, like physical wellness, isn’t something you should ignore. Instead, it’s a critical concept for anyone who wants to be knowledgeable and confident about their finances, and in fact, financial wellness is so important that more than half1 of employers now offer financial wellness programs to their workers. So, what is financial wellness and why is it so important? Keep reading for an overview of this concept.  What Is Financial Wellness? Financial wellness refers to having a happy, healthy, and relatively stress-free relationship with your finances. Typically, people who have financial wellness have the following four elements in place: Their income covers their expenses and allows them to stay on top of their debt repayments. They have savings for emergencies or financial upsets such as critical home repairs, unexpected medical bills, or job loss. They are saving and working toward long-term financial goals. They have the freedom to make choices that allow them to enjoy their lives.  Which Factors Determine Your Financial Wellness? The amount of money you earn plays a significant role in your ability to create a plan for financial wellness, but this is certainly not the only factor you need to take into account. You should also consider how you manage your money. For instance, someone could make a million dollars per year but feel stressed due to overspending, not having a savings account, or being in an excessive amount of debt. In contrast, another person could earn $100,000 a year and have financial wellness due to managing their money carefully.  How Do You Manage Financial Wellness? If you are having trouble with financial wellness, look for tools and education to help you develop a healthier relationship

As we enter a new year many things in our lives have been altered, adjusted, or at least reinformed by the experiences brought to light from the pandemic and the year that was, 2020. Here at Puckett and Sturgill Financial Group we empathize and understand how life can change in an instant.  It’s part of what we deal with every day as financial professionals.  Our ability to offer guidance and direction, relevant to individual and unique circumstances, is always priority one. One thing that stands out in my experiences is the importance clients express when meeting with a professional guide who truly puts them first.  We listen to help make sense out of the decisions you’re facing. As CERTIFIED FINANCIAL PLANNERS™, we act in your interest, taking the time to discover the details, and understand your views before fitting you into any planning outcomes.  We take care to offer solutions designed along your objectives and consistent with your risk acceptance too. Most of us, you, and I, understand things we learned early in life have truths that tend to stand the test of time. We’ve all heard the sayings, “you get what you pay for” and “nothing is free” or “there’s risk in most decisions” and “nothing ventured, nothing gained”. These sayings may invoke fear, we understand.  Even so, we help clients consider these concerns or fears when designing and planning for them.  Outcomes are centered toward your life goals and intentions. We’re only a phone call away and happy to listen.  Give us a call and let’s see how we can help you “make a plan”.   -From the desk of David A. Hemler, MS, MPAS®, CFP®    

A lot of 401(k) investors end up making the same mistakes when choosing their investments. The results are low returns and unbalanced portfolios. Avoiding these four mistakes is a good start for getting more out of your 401(k). There is no easy answer to how you should allocate your 401(k). You have to make these decisions on your own based on your personal risk tolerance, investment choices and the allocation of your other investments. Mistake #1: Going Overboard on Risk Avoidance Many 401(k) plan participants are either overwhelmed by the list of investment choices or are simply afraid to take any risk in their investments, and so put all of their savings into a money market or stable value fund. Sometimes the money market fund is the default option for their employer’s plan — meaning their money ends up there, earning very low interest. Nobody bothers to change it. Money market and stable value funds are basically fancy words for cash, a low risk, low return investment, and the return from cash usually lags behind inflation. This means that a 401(k) in these safe investments will probably decline in value over time. For many folks, the investment horizon is long, so you can tolerate some volatility to get the higher returns later. Mistake #2: The Equal Allocation Trap Another common mistake made by investors in their 401(k)s is to invest an equal portion into each available investment option. This is called the 1/N Rule. There are many problems with taking this approach. First, you do not need to invest in every option available in your plan. Especially now that target date retirement funds (mutual funds that change allocation based on

In an increasingly paper-free society, organizing your financial documents can still be a challenge. No matter how simple or complex your financial picture might be, it takes some thought-out organization to keep your tax documents, service records, and paid bills in a format that will allow you to easily access information when you need it. What steps can you take now to organize your financial documents for 2021 and beyond? Clean and Evaluate If your financial files look more like a pile of loose papers, it’s time to clean up this pile and evaluate what you have. Broad category labels like “House,” “Bills,” “Healthcare,” or “Taxes” can be enough to help you begin sorting documents into piles. Once you have your documents organized into tidy piles (or online file folders), the next step is to determine what you need to keep. Saving documents you’ll never need again can lead to clutter and leave you unable to find information quickly. On the other hand, throwing something away too early (like W-2s or 1099s) can create a headache if you’re audited or need to go back to find something specific. Create a Filing System After you have a better idea of what financial documents you’re dealing with, you can create a filing system. There’s no one-size-fits-all answer here, and the best filing system for you, is the one that is easiest for you to use. This can mean creating folders by month, keeping items segregated by category, or something else—whatever makes sense for you based on what you’re trying to keep organized. Decide on a Storage Option If you’re not a fan of paper clutter, your financial organization strategy may be to use a desktop scanner to scan and store

New Year’s is traditionally the time to review your life and make resolutions for change. In addition to thinking about working out, eating healthy, and meeting personal and professional goals, you should also think about your finances. To make the most of the New Year, keep the following tips in mind. Outline New Goals To ensure you’re moving in the right direction, take some time to outline your goals. Think about long-term goals such as buying a home, sending the kids to college, or retiring by a certain age, and consider reaching out to a financial professional to get help creating a path toward those goals. Also, think about your short term goals. What do you want to accomplish this year? Do you want to save a certain amount of money? Expand your business? Reduce your spending so you can afford a vacation? Regardless of what you want, make a plan to get there. Review Your Expenses When you’re thinking about finances, you always need to consider two sides of the equation — spending and earning. Set aside some time to review your expenses and identify areas you can make cuts. Depending on your situation, you may want to skip buying lunches, or cancel some of your streaming services. You should also take some time to review your cell phone bill, insurance premiums, and similar expenses. Once you’ve made an assessment, considering shopping around to see if you can get a better deal. Update Your Tax Deductions Do you anticipate owing tax this year or getting a refund? If so, you should update your tax deductions. To do so, just ask your employer for a new Form W-4 and make