Why It Matters – Issue 2

To all our readers, best wishes for a happy, healthy, and prosperous New Year!

Resolutions are the trademark of each new year and 2019 is no different. PWA Wealth Management is resolved to bolster our communications and operating efficiencies. Here’s what we have in store:

  • Goal Policy Statement – PWA Wealth Consultants are committed to working with you to articulate a Goal Policy Statement (GPS) – a wealth fulfillment roadmap – that addresses both short- and long-term goals, along with conditions that influence their realization.
  • Market Pulse – A monthly video broadcast that speaks to what we are seeing in the markets. Insights will be posted to our website and sent to you via email.
  • Centralized Scheduling – Client meetings with PWA Wealth Consultants will be scheduled by Kathleen DeWald, one of our team members. This change will afford our Consultants more time focused on you — and less time on managing calendars.

Let us know if you have made any financial- or investment-related resolutions. We are pleased to assist you in making them stick!

Before digging into this quarter’s Why It Matters, we are delighted to announce that our Pittsburgh office is moving.

Effective February 1, 2019, our Pittsburgh team will be located at:

PWA Wealth Management

One Oxford Centre

301 Grant Street Suite 2925 Pittsburgh, PA

15219 412.931.2700

Please stop by any time! Complimentary client parking is available. Please call us in advance for detalis.

In this issue of Why It Matters, we tackle:

  •  myQUEST: Your personal wealth fulfillment hub.
  • Cybersecurity: How to bolster your online protection.
  • Donor-Advised Funds: Making the most of your “giving  strategy

 

As part of PWA Wealth Management’s quest to deliver the best possible service, the best available technology, and the best conceivable outcomes, two themes regularly surface in our conversations with clients:

  1. Stability – You want firm footing during periods of market turbulence and uncertainty.  myQUEST provides a comprehensive, fully integrated picture of your financial status that reduces anxiety and stress.
  2. Trust – Believing in yourself – and us, as your wealth management partner – is fundamental. myQUEST nourishes a deep-rooted belief that you are, indeed, equipped to fulfill your financial dreams. Your personal wealth fulfillment website helps to clarify, prioritize, and monitor both short- and long-term goals

When you think of myQUEST, think of:

Your personal wealth fulfillment hub enables you to take inventory of everything. You no longer need to visit bank or credit card websites or hold onto various paper documents to account for your spending and saving. You no longer need to keep track of your investment-related accounts with separate entities. Under one umbrella, you have access to:

  • Checking Accounts – Transactions and balances, at your fingertips!
  • Credit Cards – Transactions, balances, and payments, at your fingertips!
  • Deferred Compensation — Retirement account information (pension, 401(k), 403(b), etc.),including their respective holdings, at your fingertips!
  • Investment Portfolios – Up-to-date information, including allocations and holdings, at your
    fingertips!
  • Cost Basis Information – Essential for tax optimization, at your fingertips!
  • Budget – Are you saving more than you spend? What categories need trimming and which
    ones need bolstering?
  • Goal Status – Progress toward discrete personal goals is tracked daily. Funding college,
    retirement, vacation, a new house… is updated daily.
  • Vault – A virtual safety deposit box for storing everything from birth certificates and
    passports to tax returns and insurance policies. Regarding the latter, the Vault is a terrific
    place for storing photographs of your belongings. God forbid you should ever need to make
    a claim on your Property and Casualty Insurance, but, if that need happens, you have
    appropriate documentation – at your fingertips.

myQUEST provides a single location for housing all pertinent information, allowing us to collaborate any time and any place. Please call and schedule a time with your PWA Wealth Consultant to begin your quest today.

 

With the introduction of myQUEST, PWA Wealth Management recognizes and respects your need for ensuring online safety and protection. To that end, we consulted Gary Rossi from Fidelity to discover best practices in the field of cybersecurity.

Gary Rossi worked 14 years with the FBI investigating white collar crimes of cybersecurity and financial fraud. Since 2003, he has worked at Fidelity where he leads all Customer Fraud/Identity Theft investigations and Anti-Money Laundering cases. Here’s what we learned:

  1. Use two-factor authentication whenever possible: it’s like having two locks on your door, instead of one. When you log into your accotunt, you enter a password. Afterwards, the website will send you a code, either as a text to your cell phone or to an email address, which you would then enter into the website. It may cost a few extra seconds of time, but the pay-off is undeniable.
  2. Freeze your credit with the three major credit bureaus: Equifax (800-349-9960), Experian (888-397-3742), and TransUnion (888-909-8872). Doing so will not allow a fraudster to open fake accounts in your name. This can be done for free and will not affect your credit rating. When requesting a freeze on your credit, be sure to remember the PIN to unfreeze your accounts at a later date.
  3. Practice good “cyber hygiene”
    • Don’t use the same password for every website. While this might seem extreme, by doing   so you make it much easier for someone to access all of your accounts. A good tip is to   have a common phrase that only you know and then make it unique to each website.
    • Don’t click on unfamiliar links or attachments where malicious software (“malware”) can
      be quickly downloaded to your computer.
    • Don’t click on pop-up ads on your phone or computer, as this could be malicious software   in advertisement or “malvertising.”
    • Don’t open emails unless you are positive you know the sender. Be certain that the “From”   line corresponds with the “Subject” line.

Remember, technology is a thing of the present. Optimizing your Internet use through tools like myQUEST can be immensely beneficial, but be smart in their application! PWA Wealth Management is prepared to help you every step of the way. Let us know if you have questions.

Donor-advised funds (DAF) have been around for a while, but they have primarily been used by the ultra-wealthy. Under the new tax laws, DAF may be incorporated into simple charitable giving plans for anyone.

What is a Donor-Advised Fund?

It’s a charitable investment vehicle that allows you to make contributions and receive an immediate tax deduction, while directing grants from the fund over time. It’s a perfect option for those who want to use advanced strategies and maintain their giving habits each year.

Simply make your gift to the DAF during the year in which you plan to itemize your deductions, getting the immediate tax break for your contribution. Then, you can make grant recommendations to any IRS-qualified public charity, even during the years when you’re not contributing to the donor-advised fund.

What are the tax advantages?

A DAF allows gifts of cash through a check or wire transfer, but also offers a big tax advantage for gifts of non-cash assets. By contributing long-term appreciated assets such as bonds, stocks, or real estate, fund donors can avoid the capital gains tax, along with the Medicare surcharge, they would have incurred by selling the assets. This allows donors to give up to 23.8% (the maximum tax) more through the fund to their charities of choice, while also receiving a charitable deduction for the fair, full market value of the donated assets.

At PWA, we are recommending for some clients that they consider a new strategy called “bunching” when creating the charitable giving plan. With the new tax laws, the standard deduction nearly doubled to $24,000 (married couple) and $12,000 (single person). This makes the charitable deductions by donors a moot point unless they give beyond those thresholds.

Conversely, you can get that deduction even if you do not give in a certain year. In alternating years, the relatively large charitable contributions, in combination with other itemized deductions like mortgage interest and state and local taxes, will increase the likelihood of exceeding the standard deduction and, thus, provide the taxpayers with additional tax savings. By bunching charitable giving, you can use a donor-advised fund to combine several years’ worth of giving into one year and gain the maximum tax benefits available.

Let’s consider the following example*:


In this example, a married couple might normally make $14,000 of charitable donations each year. If they use a DAF, they could bundle two years’ worth of charitable giving into one year, thereby exceeding the $24,000 standard deduction and gaining an additional $14,000 of deduction ($38,000 deduction minus $24,000 standard deduction equals $14,000 in additional deduction).

In Year 2, they would forego making a charitable deduction, but still benefit from the standard deduction of $24,000. In Year 3, the process starts anew again.

A DAF allows them to make grants on their own timetable, which allows the donor to “level” out their charitable giving. This provides the ability to still support their favorite causes each year to the amount of $14,000 that they were used to doing with their traditional giving. The money may also be invested depending on their giving strategy to the charities, potentially increasing the amount available for grant making. Furthermore, this technique becomes even more tax-efficient if the donors are able to fund the gift to the DAF using long-term appreciated marketable securities. They’ll be able to avoid paying the income tax on the appreciation on those securities, in addition to enjoying a full fair market value deduction for the gift.

Let us know if you are insterested in learning more.

*Source: https://www.aefonline.org/bundle-charitable-giving

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