Relief for Hurricane Victims

There’s a little bit of good news for survivors of hurricanes Harvey, Irma, and Maria. President Trump signed into law the Disaster Tax Relief and Airway Extension Act of 2017 on September 29. This provides relief provisions for the victims of these hurricanes, which are basically the same provided for victims of Hurricane Katrina in 2005.

Qualified Hurricane Distributions (I guess we can call these QHDs) are made from an eligible retirement plan to an individual whose primary residence is in one of the disaster areas during the specified dates and has suffered economic losses:
·      Hurricane Harvey with distributions between August 23, 2017 and January 1, 2019
·      Hurricane Irma with distributions between September 4, 2017 and January 1, 2019
·      Hurricane Maria with distributions between September 16, 2017 and January 1, 2019

Each individual can withdraw a maximum of $100,000 per plan. This means a married couple can withdraw up to $200,000 from plans. IRAs, 401(k)s, and other retirement plans are eligible.

Once the distribution has been made, the individual has up to three years to repay the distribution. The repayments can be made into any retirement plan belonging to the individual as long as the initial distribution could have rolled over to that plan receiving the payment. For example, if you had a 401(k) at both your current employer and a previous employer, you could do a distribution from the previous employer’s 401(k) and repay it to your current employer’s 401(k).


Pre-tax funds withdrawn from qualified plans will be taxable, however they will not be subject to the 10% early distribution penalty. Also, there is no mandatory 20% withholding for qualified hurricane distributions.

For most people, a $100,000 distribution would be a significant taxable event. The new law helps by spreading the tax burden over three years. For example, if someone took $60,000 from their qualified plan, they would include $20,000 of income for 2017, $20,000 for 2018, and $25,000 for 2019. It is also possible to pay tax on the total amount in the year of the distribution.

If you have been affected by hurricanes Harvey, Irma, or Maria, the Disaster Tax Relief and Airway Extension Act of 2017 offers significant options for you to repair the damage to your home.

Equifax hack

As you probably have heard, the credit reporting agency Equifax announced that it suffered a data breach affecting 143 million U.S. Consumers. This hack exposed names, Social Security numbers, addresses, birth dates, and drivers license numbers. These are all critical pieces of information used by identity thieves.

Did this affect me?
You can see if you were a victim of Equifax's hack by visiting
This is probably one of the largest data breaches in history, since most U.S. adults have their credit history on file with Equifax. Because of this, we recommend freezing your credit.

Freeze your credit
You should freeze your credit at each of the three credit bureaus. This freeze locks your credit file with a special PIN. This PIN will be required for anyone to access your credit file.
The following phone numbers and links can be used to freeze your credit:

Depending on your state, it can cost from $0 to $10 to freeze your credit at each agency.

Congratulations College Graduate!

You now have your first job out of college. Or maybe you know someone who is in this situation. What do you do?

This is an exciting time in your life. You’re probably going from very little income to what seems like a lot of money. How do you manage unfamiliar situation?

Your first step is to create a budget. A good rule is 50/20/30. Learning this rule can help you with financial success!

The first 50% will go towards your fixed expenses. This includes things like rent, car payments, and insurance.

Next comes an allocation of 20% towards your savings & debt. Start building up your emergency fund (6 months of expenses). If you have accumulated student loans, you will start paying them from this part. If your employer offers a 401(k) with a match, make sure to put in enough to get the maximum match. You don’t want to leave free money on the table! A Roth IRA may also be a great savings vehicle for you.

The last 30% goes to your living expenses. This includes food, entertainment, and clothing. If there are big ticket items you wish to buy, like a TV, save some money out of this budget item until you have enough to purchase it.

Many people run into problems because they don’t have an emergency fund. The emergency fund insulates you from unexpected ‘life events’ like a car accident. By having this fund, you don’t have to go into debt to handle the situation.

Your budget isn’t etched in stone. It will change over time. But if you can stick to the 50/20/30 principles, you should be able to live comfortably without the stress of money.

Teachers: 403(b) or Roth IRA?

Teachers often have a wide range of 403(b) (or Tax Sheltered Annuity) options. They usually have choices of several annuities and some mutual funds. The 403(b) program offers the opportunity to defer taxes until retirement.

Tax deferral means you save on taxes today. Unfortunately, that means you will be paying taxes in the future. A future tax bill means a future debt to Uncle Sam.

Some people have found that they end up paying just as much tax in retirement as when they were working. How can that be? During working years, people often have some big tax deductions due to mortgage interest and kids. In retirement, people usually have their mortgage paid off and the kids are out of the house. Without those major deductions, people usually take the standard deduction, meaning they don’t have many write-offs.

This is where the Roth IRA can be handy. As you draw money out of your Roth IRA at age 59 ½ or later, the money is totally tax free! The one exception to this is if your initial contribution was less than 5 years ago, you must wait 5 years to take out the gains.

The Roth IRA also has the advantage of being able to withdraw the principal tax AND penalty free! While it isn’t a good idea to take money out of your IRA early, it is a nice option in case you have an emergency.

The Roth IRA does have some downside vs 403(b)s. As of 2017, you can only contribute up to $5,500 (or $6,500 if you’re over 50) while you can contribute up to $18,000 ($24,000 if you’re over 50). Also, you must earn less than $118,000 ($186,000 if married filing jointly).

The answer doesn’t have to be only Roth or only 403(b). Sometimes a combination of both can be the right choice. This makes sense when you can contribute more than the maximum Roth limits.

Which is your best option? 403(b) or Roth IRA? We can review your tax return and help you decide. As a financial planning firm that offers access to both 403(b) and Roth IRAs, we can help you make the right choice. Call us at (702) 870-7711 or email us at

Five Easy Steps to Use a Tax Return to Fund an IRA

Did you know that you can have your income tax refund directly deposited into an IRA? The maximum you can contribute is $5,500 (or $6,500 for those 50 and over) for 2016 and 2017. Best of all, you can split this between multiple accounts. So a husband and wife with a  refund of $11,000 can fully fund both their IRAs!

Here are the five steps:
1.     Prepare your tax return.
2.     How much is your refund? You can only fund up to the maximum limits of the IRA.
3.     How many accounts? If you have only one IRA to fund, that can be done on the 1040. If you have multiple accounts, prepare IRA Form 8888 to direct the refund to up to three accounts.
4.     Be careful! There are six cautions provided by the IRS on Form 8888. Make sure you do not fall into any of these traps.

5.     Follow up! If you are doing a deposit for the previous year, make sure the custodian codes the deposit correctly. If your refund is adjusted due to errors, you may need to do an amended return to adjust the IRA deposits.