Berry Salad with Limoncello Liqueur

Berry Salad with Limoncello Liqueur
Preferred Planning Associates
James M. Kirkland, AIF®
President
3080 Ackerman Blvd., Ste. 210
Kettering, OH 45429
937-610-5595
jkirkland@ppaohio.com
www.ppaohio.com
Hello everyone,
I hope everyone had a great
Memorial Day. We couldn't have
asked for a better kick-off to summer
between the holiday, graduation
parties, and the weather. I will talk
with you soon.
James
What better way to kick off summer than with a
refreshing salad like this one? Enjoy!
Ingredients
7 oz. Greek yogurt (recommended: Fage Total)
1/3 cup good bottled lemon curd
1 Tbsp. honey
1/4 tsp. pure vanilla extract
2 cups sliced strawberries (1 pint)
1 cup raspberries (1/2 pint)
1 cup blueberries (1/2 pint)
2 Tbsp. sugar
3 Tbsp. limoncello liqueur
1 banana, sliced
Fresh mint sprigs
Directions
For the lemon yogurt topping, whisk together
the yogurt, lemon curd, honey, and vanilla, and
set aside at room temperature.
For the fruit salad, carefully toss together the
strawberries, raspberries, blueberries, sugar,
and limoncello. Allow them to stand at room
temperature for about 5 minutes, to let the
berries macerate with the sugar and liqueur.
Gently fold the banana into the mixture.
Serve bowls of fruit with a dollop of lemon
yogurt on top. Top each with a fresh sprig of
mint.
June 2015
Berry Salad with Limoncello Liqueur
Age-Based Tips for Making the Most of Your
Retirement Savings Plan
Three College Savings Strategies with Tax
Advantages
How important are dividends in the S&P 500's
total returns?
Page 1 of 4
See disclaimer on final page
Age-Based Tips for Making the Most of Your Retirement Savings Plan
This hypothetical example
is for illustrative purposes
only. Investment returns will
fluctuate and cannot be
guaranteed.
1
2
All investing involves risk,
including the possible loss
of principal, and there can
be no assurance that any
investment strategy will be
successful. Investments
offering a higher potential
rate of return also involve a
higher level of risk.
3 Asset allocation is a
method used to help
manage investment risk; it
does not guarantee a profit
or protect against a loss.
4 There is no assurance that
working with a financial
professional will improve
your investment results.
5 Withdrawals from your
retirement plan prior to age
59½ (age 55 in the event
you separate from service)
may be subject to regular
income taxes as well as a
10% penalty tax.
No matter what your age, your work-based
retirement savings plan can be a key
component of your overall financial strategy.
Following are some age-based points to
consider when determining how to put your
plan to work for you.
Also, while you're still decades away from
retirement, you may have time to ride out
market swings, so you may still be able to
invest relatively aggressively in your plan. Be
sure to fully reassess your risk tolerance before
making any decisions.2
Just starting out
Reaching your peak earning years
Just starting your first job? Chances are you
face a number of financial challenges. College
loans, rent, and car payments all compete for
your hard-earned paycheck. Can you even
consider contributing to your retirement plan
now? Before you answer, think about this: The
time ahead of you could be your greatest
advantage. Through the power of
compounding--or the ability of investment
returns to earn returns themselves--time can
work for you.
This stage of your career brings both
challenges and opportunities. College bills may
be invading your mailbox. You may have to
take time off unexpectedly to care for yourself
or a family member. And those pesky home
repairs never seem to go away.
On the other hand, with 20+ years of
experience behind you, you could be earning
the highest salary of your career. Now may be
an ideal time to step up your retirement
savings. If you're age 50 or older, you can
Example: Say at age 20, you begin investing
contribute up to $24,000 to your plan in 2015,
$3,000 each year for retirement. At age 65, you versus a maximum of $18,000 if you're under
would have invested $135,000. If you assume a age 50. (Some plans impose lower limits.)
6% average annual rate of return, you would
Preparing to retire
have accumulated $638,231 by that age.
It's time to begin thinking about when and how
However, if you wait until age 45 to invest that
to tap your plan assets. You might also want to
$3,000 each year, and earn the same 6%
adjust your allocation, striving to protect more
annual average, by age 65 you would have
of what you've accumulated while still aiming
invested $60,000 and accumulated $110,357.
for a bit of growth.3
By starting earlier, you would have invested
$75,000 more but would have accumulated
A financial professional can become a very
more than half a million dollars more. That's
important ally at this life stage. Your
compounding at work. Even if you can't afford
discussions may address health care and
$3,000 a year right now, remember that even
insurance, taxes, living expenses,
smaller amounts add up through
income-producing investment vehicles, other
1
compounding.
sources of income, and estate planning.4
Finally, time offers an additional benefit to
You'll also want to familiarize yourself with
young adults: the ability to potentially withstand required minimum distributions (RMDs). The
greater short-term losses in pursuit of long-term IRS requires you to begin taking RMDs from
gains. You may be able to invest more
your plan by April 1 of the year following the
aggressively than your older colleagues,
year you reach age 70½, unless you continue
placing a larger portion of your retirement
working for your employer.5
portfolio in stocks to strive for higher long-term
Other considerations
returns.2
Throughout your career, you may face other
Getting married and starting a family
decisions involving your plan. Would Roth or
At this life stage, even more obligations
traditional pretax contributions be better for
compete for your money--mortgages, college
you? Should you consider a loan or hardship
savings, higher grocery bills, home repairs, and withdrawal from your plan, if permitted, in an
child care, to name a few. Although it can be
emergency? When should you alter your asset
tempting to cut your retirement plan
allocation? Along the way, a financial
contributions to help make ends meet, try to
professional can provide an important
avoid the temptation. Retirement needs to be a third-party view, helping to temper the emotions
high priority throughout your life.
that may cloud your decisions.
If you plan to take time out of the workforce to
raise children, consider temporarily increasing
your plan contributions before leaving and after
you return to help make up for the lost time and
savings.
Page 2 of 4, see disclaimer on final page
Three College Savings Strategies with Tax Advantages
To limit borrowing at college time, it's smart to
start saving as soon as possible. But where
should you put your money? In the college
savings game, you should generally opt for
tax-advantaged strategies whenever possible
because any money you save on taxes is more
money available for your savings fund.
529 plans
529 plan fast facts
Total assets in 529 plans
reached a record $247.9 billion
at the end of 2014 (up from
$227.1 billion in 2013). The
total number of accounts was
12.1 million (up from 11.6
million in 2013), and the
average account balance was
$20,474 (up from $19,584 in
2013). Source: College
Savings Plans Network, 529
Report: An Exclusive Year-End
Review of 529 Plan Activity,
March 2015
A 529 plan is a savings vehicle designed
specifically for college that offers federal and
state tax benefits if certain conditions are met.
Anyone can contribute to a 529 plan, and
lifetime contribution limits, which vary by state,
are high--typically $300,000 and up.
Contributions to a 529 plan accumulate tax
deferred at the federal level, and earnings are
tax free if they're used to pay the beneficiary's
qualified education expenses. (In his State of
the Union speech in January, President Obama
proposed eliminating this tax-free benefit but
subsequently dropped the proposal after a
public backlash.) Many states also offer their
own 529 plan tax benefits, such as an income
tax deduction for contributions and tax-free
earnings. However, if a withdrawal is used for a
non-educational expense, the earnings portion
is subject to federal income tax and a 10%
federal penalty (and possibly state tax).
Coverdell education savings accounts
A Coverdell education savings account (ESA)
lets you contribute up to $2,000 per year for a
child's college expenses if the child
(beneficiary) is under age 18 and your modified
adjusted gross income in 2015 is less than
$220,000 if married filing jointly and less than
$110,000 if a single filer.
The federal tax treatment of a Coverdell
account is exactly the same as a 529 plan;
contributions accumulate tax deferred and
earnings are tax free when used to pay the
beneficiary's qualified education expenses. And
if a withdrawal is used for a non-educational
expense, the earnings portion of the withdrawal
is subject to income tax and a 10% penalty.
The $2,000 annual limit makes Coverdell ESAs
less suitable as a way to accumulate significant
sums for college, though a Coverdell account
might be useful as a supplement to another
college savings strategy.
Roth IRAs
Though traditionally used for retirement
savings, Roth IRAs are an increasingly favored
way for parents to save for college.
Contributions can be withdrawn at any time and
are always tax free (because contributions to a
Roth IRA are made with after-tax dollars). For
529 plans offer a unique savings feature:
parents age 59½ and older, a withdrawal of
accelerated gifting. Specifically, a lump-sum gift
earnings is also tax free if the account has been
of up to five times the annual gift tax exclusion
open for at least five years. For parents
($14,000 in 2015) is allowed in a single year
younger than 59½, a withdrawal of
per beneficiary, which means that individuals
earnings--typically subject to income tax and a
can make a lump-sum gift of up to $70,000 and
10% premature distribution penalty tax--is
married couples can gift up to $140,000. No gift
spared the 10% penalty if the withdrawal is
tax will be owed if the gift is treated as having
used to pay a child's college expenses.
been made in equal installments over a
five-year period and no other gifts are made to Roth IRAs offer some flexibility over 529 plans
that beneficiary during the five years. This can and Coverdell ESAs. First, Roth savers won't
be penalized for using the money for something
be a favorable way for grandparents to
other than college. Second, federal and college
contribute to their grandchildren's education.
financial aid formulas do not consider the value
Also, starting in 2015, account owners can
of Roth IRAs, or any retirement accounts, when
change the investment option on their existing
determining financial need. On the flip side,
529 account funds twice per year (prior to 2015,
using Roth funds for college means you'll have
the rule was once per year).
less available for retirement. To be eligible to
Note: Investors should consider the investment contribute up to the annual limit to a Roth IRA,
objectives, risks, fees, and expenses
your modified adjusted gross income in 2015
associated with 529 plans before investing.
must be less than $183,000 if married filing
More information about specific 529 plans is
jointly and less than $116,000 if a single filer (a
available in each issuer's official statement,
reduced contribution amount is allowed at
which should be read carefully before investing. incomes slightly above these levels).
Also, before investing, consider whether your
And here's another way to use a Roth IRA: If a
state offers a 529 plan that provides residents
student is working and has earned income, he
with favorable state tax benefits. Finally, there
or she can open a Roth IRA. Contributions will
is the risk that investments may lose money or
be available for college costs if needed, yet the
not perform well enough to cover college costs
funds won't be counted against the student for
as anticipated.
financial aid purposes.
Page 3 of 4, see disclaimer on final page
Preferred Planning
Associates
James M. Kirkland, AIF®
President
3080 Ackerman Blvd., Ste. 210
Kettering, OH 45429
937-610-5595
jkirkland@ppaohio.com
www.ppaohio.com
IMPORTANT DISCLOSURES
James Kirkland is a Registered Representative
offering Securities through Cambridge
Investment Research, Inc., a Broker/Dealer,
member FINRA/SIPC. He is also an Investment
Advisor Representative offering Investment
Advisory Services through Cambridge
Investment Research Advisors, Inc., a
Registered Investment Advisor. Cambridge,
Broadridge, and Preferred Planning Associates
are not affiliated companies. Cambridge does not
offer tax or legal advice.
Broadridge Investor Communication Solutions,
Inc. does not provide investment, tax, or legal
advice. The information presented here is not
specific to any individual's personal
circumstances.
To the extent that this material concerns tax
matters, it is not intended or written to be used,
and cannot be used, by a taxpayer for the
purpose of avoiding penalties that may be
imposed by law. Each taxpayer should seek
independent advice from a tax professional
based on his or her individual circumstances.
These materials are provided for general
information and educational purposes based
upon publicly available information from sources
believed to be reliable--we cannot assure the
accuracy or completeness of these materials.
The information in these materials may change
at any time and without notice.
How important are dividends in the S&P 500's total
returns?
In a word, very. Dividend
income has represented
roughly one-third of the total
return on the Standard &
Poor's 500 index since 1926.*
rates have made fixed-income investments less
useful as a way to help pay the bills, In 2012,
dividends represented 5.64% of per capita
personal income; 20 years earlier, that figure
was only 3.51%.*
According to S&P, the portion of total return
attributable to dividends has ranged from a high
of 53% during the 1940s--in other words, more
than half that decade's return resulted from
dividends--to a low of 14% during the 1990s,
when the development and rapid expansion of
the Internet meant that investors tended to
focus on growth.*
Note: All investing involves risk, including the
potential loss of principal, and there can be no
guarantee that any investing strategy will be
successful. Investing in dividends is a long-term
commitment. Investors should be prepared for
periods when dividend payers drag down, not
boost, an equity portfolio. A company's dividend
can fluctuate with earnings, which are
influenced by economic, market, and political
And in individual years, the contribution of
dividends can be even more dramatic. In 2011, events. Dividends are typically not guaranteed
the index's 2.11% average dividend component and could be changed or eliminated.
represented 100% of its total return, since the
*Source: "Dividend Investing and a Look Inside
index's value actually fell by three-hundredths
the S&P Dow Jones Dividend Indices,"
of a point.** And according to S&P, the dividend Standard & Poor's, September 2013
component of the total return on the S&P 500
**Source: www.spindices.com, "S&P 500
has been far more stable than price changes,
Annual Returns" as of 3/13/2015
which can be affected by speculation and fickle
market sentiment.
Dividends also represent a growing percentage
of Americans' personal incomes. That's been
especially true in recent years as low interest
What is a myRA?
The myRA (for my Retirement
Account) is a new workplace
retirement savings account
available through the U.S.
Treasury Department. The
myRA is a Roth IRA (with some special
features) funded by payroll deduction.
which earned 1.89% in 2013 and 2.31% in
2014. Your account principal is fully
protected--the value of your account can never
go down, and the bonds are backed by the full
faith and credit of the U.S. government. You
can keep, and continue to contribute to, your
account if you change jobs.
It's hoped that employers that currently don't
offer a workplace retirement plan will make
myRAs available to their employees. However,
even if your employer doesn't have a formal
myRA program, you can set up an account
online at myra.treasury.gov and simply provide
a direct-deposit form to your employer.
You can withdraw your funds at any time. Your
own contributions are tax free when withdrawn.
Earnings are also tax free if you're at least 59½,
disabled, or a first-time homebuyer (limits
apply), and you satisfy a five-year holding
period. You can transfer your account to a
private-sector Roth IRA at any time. However,
once your account reaches $15,000 (or you've
had the account for 30 years, whichever comes
first), you must transfer the account to a
private-sector Roth IRA.
Your contributions to your myRA account are
made on an after-tax basis through payroll
deduction. (Your employer doesn't contribute
to, or administer, your account.) You can
contribute up to the annual IRA limit--$5,500 in
2015, $6,500 if you're 50 or older (that limit
includes all of your myRA, traditional IRA, and
regular Roth IRA contributions).
Your contributions are invested in newly
created government bonds that earn the same
variable interest rate that's available through
the government's Thrift Savings Plan G Fund,
The distinguishing features of a myRA are the
ability to contribute through payroll deduction,
access to the new retirement bond, safety of
principal, and the ability to make very small
contributions. Also, there are no fees to
establish or maintain the myRA. However, with
its single investment option and $15,000 cap,
the myRA lacks the flexibility of a regular Roth
IRA, which for many may be the better option.
Page 4 of 4
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015