News

Goddard Financial Planning remains “open for business” albeit in new configurations with the team working remotely. We are busily working with clients who need help navigating the current landscape. Note that currently e mail is our preferred means of communication. While we strive to respond to client inquiries within 24 hours, that is not always possible based on our workloads. We appreciate your patience and understanding in this unique time.

We wanted to communicate with clients about the recent Coronavirus Aid Relief and Economic Recovery Act (CARES), which was passed into law on March 27, 2020. While the changes cover a broad array of topics, here are several items we think could have the largest impact on our clients:

Required Minimum Distributions (RMDs) Waived for 2020

We expect this provision to impact a significant number of clients. 2020 RMDs are waived for IRAs and most 401(k)/403(b)/457 plans. This also applies to Inherited IRA RMDs. If you have already taken your 2020 RMD from an employer-provided plan, it may be possible to roll back the distribution if you don’t need the money. This roll back feature does not apply to an inherited IRA Required Minimum Distribution.

Small Business Owners may be eligible for loans through the Paycheck Protection Program

If you qualify as a small business owner, you may be eligible for various programs including the Paycheck Protection Program. A business is eligible if it has less than 500 employees and it can also include independent contractors and sole proprietors. The maximum loan amount is 2.5 times your average monthly payroll costs for the previous year. If you are interested in learning more, visit the Small Business Association website or inquire with your current bank. This provision is time-sensitive, and we encourage you to apply as soon as possible.

Stimulus payments

Stimulus payments will be coming to some of our clients and are based on the adjusted gross income on your most recent tax return. Payments of $1,200 (single/head of household filers) and $2,400 (joint filers) will be sent to eligible taxpayers. An additional $500 payment is made for each dependent child. Payments begin decreasing if the AGI on your tax return exceeded $75,000 (single), $112,500 (HOH), or $150,000 (joint). The payments will be sent automatically, so if you are eligible, there is nothing you need to do in order to receive the payment.

Some retirement plan distributions for COVID-19 related reasons are not subject to penalty

Distributions from qualified retirement plans (such as IRAs, 401(k)s, 403(b)s and 457s) received during 2020 of up to $100,000 for COVID-19 related purposes are allowed without a 10% penalty for pre-59 ½ distributions. These distributions will be taxed evenly over 3 years beginning with year of distribution and may be recontributed within 3 years. Related purposes include a COVID-19 diagnosis for you, your spouse or dependent, and financial hardship as a result of business closures, reduced work hours, lay off, furlough, lack of childcare or other factors as determined by the Treasury.

To evaluate whether any of these changes might impact your plans immediately or as part of your next Annual Review meeting. Consider the information in this newsletter to be an initial interpretation of the CARES law and not personalized advice.

If you have any questions or would like to set up a meeting, please reach out to info@arrivity.com.

While most of the country was enjoying the holidays in late December, Congress was busy putting the final touches on the Setting Every Community Up for Retirement Enhancement Act, better known by its acronym of the SECURE Act. After being signed into law, the new provisions went into effect January 1st , 2020, marking the most notable changes to retirement accounts in several years. While the changes cover a broad array of topics, here are three items we think could impact the highest number of our clients:

Required Minimum Distribution (RMD) Age Increasing From 70 ½ to 72

It all comes down to one important date: June 30, 1949

If you were born on or before June 30, 1949, the RMD start age is still 70 ½. If this applies to your situation, it is likely you have already taken your first RMD.

If you were born after June 30, 1949, the age at which you must take your first RMD from a retirement account is now 72.

For our retired clients who haven’t reached RMD age yet, this change could extend the window for performing partial Roth IRA conversions or harvesting long-term capital gains while in a lower income tax bracket, or it could simply extend the period of tax-deferred growth for your retirement assets by another 18 months.

For those clients who make direct charitable contributions from an IRA, the minimum allowable age for making Qualified Charitable Distributions from an IRA remains age 70 ½, even though the age at which you must begin RMDs may increase to age 72.

Non-Spouse Inherited IRA Distribution Rule Changes

For those who might pass away on or after January 1, 2020 with non-spouse beneficiaries (i.e. children who inherit from a deceased parent), there are new Inherited IRA distribution rules. While there will no longer be annual RMDs, the new rules will require the Inherited IRA to be fully distributed by the end of the 10th year. This has the potential to cause unexpected tax consequences for a beneficiary in prime working years who might inherit a sizable IRA from a deceased parent.

Please note that for non-spouse beneficiaries who inherited IRAs prior to January 1, 2020, there is NO change to your previous distribution schedule (which allowed clients to “stretch” distributions using annual RMDs over their own life expectancy).

Age Limitation Removed for Traditional IRA Contributions

For clients over age 70 ½ and still working, the maximum age limit on Traditional IRA contributions has now been removed. Previously the limit was age 70 ½ for making Traditional IRA contributions.

We’re happy to evaluate whether any of these changes might impact your plan as part of your next Annual Review meeting.

We hope this email finds you well and enjoying these long summer days. Whether it is taking in Seafair, exploring the many great outdoor spots in our region, or simply sitting on your porch and enjoying a cold drink, summer is a busy time of year. While we have been taking time to savor all the seasonal offerings ourselves, we’ve also been busy with continuous growth and refinement of our fee-for-service model. Before the summer completely gets away from us, we wanted to take a moment to let you know about a few of our updates.

We Continue to Expand the Number of Clients We Serve

We are pleased to announce that Sandra Jones, CFP®, CIMA® recently joined our team in the role of Financial Planner. Sandra brings extensive experience and most recently served in an investment management role for Perkins Coie Trust Company, where she worked closely with individuals, trusts, and endowments. Sandra heard about our approach to working with clients and was excited enough by our fee-for-service model that she made the transition to Goddard Financial Planning in May.

As a Financial Planner, she is eager to work directly with new and existing clients of the firm. Sandra will use her expertise, along with our team-based approach, to develop unique, customized plans for clients of all ages. Sandra’s hiring will ease some of the backlog from increased demand over recent months and help us further expand our services. Please take a moment to welcome Sandra the next time you’re in our office.

Website Update

In conjunction with adding a new planner, we have refreshed our website in recent weeks. For many clients, the website is their first point of contact with our firm. Our goal for the site is to provide an easy way to access answers to some of the most frequently asked questions. We have updated the “Our Team” page with current photos and updated bios on each member of our team (including our “Chief Morale Booster”, Rosie).

We also updated the “Our Fees” pages to cover cost estimates and extend transparency to the fee structure for returning clients. These changes help address the most commonly asked questions by returning clients: “What should I expect?” and “What will it cost?”

We hope you will view our updated website and look forward to your feedback.

Just off the Press

We are pleased to share that for the fourth year in a row we have been selected by Advisory HQ as one of the Top 9 Financial Advisors in Seattle and Bellevue, Washington. For more information you can visit this site:

https://www.advisoryhq.com/articles/best-washington-financial-advisors-wealth-managers-and-rias/

We Are Here to Help

When the Greek philosopher, Heraclitus, said, “Change is the only constant in life”, he likely wasn’t referring to escalating trade wars, phone scammers, or traffic gridlock in a growing city. All this change keeps life interesting. While we admit that we don’t have all the answers on coping with change, we do know about personal finance and, more importantly, we like helping people. As planners, we strive to help clients ignore the daily noise and to focus on those things that truly matter.

We have worked with many appreciative clients who value our approach and we are constantly making improvements to all aspects of our business based on your feedback and the needs of the market. The more our satisfied clients spread the word, the more households we can provide with comprehensive financial planning advice. Whether you are a returning client who hasn’t been in to see us in a few years, or you’ve been hesitant to refer a friend because of our wait time, we hope that our increased capacity will help us better serve your needs.

Please don’t hesitate to call or email us to see how we might be of assistance.

Greetings! We hope this email finds you well and looking forward to the holidays. For many of us in the Pacific Northwest, autumn can be a favorite time of year as we transition from the hot, dry end of summer to shorter days, cooler nights, and plenty of color in the trees. Hiking trails tend to be a little less busy (although this is still the Northwest, so that’s relative!) and the fall harvest brings the fruit of the summer season. It’s also a time when daily routines change for those with children, as the structured schedule of the school year replaces the fun chaos of summer.

While autumn can bring back many happy memories, it can be the most unpredictable season in the Northwest. Heavy rain, windstorms, and power outages are all common. A hike can turn into a miserable experience for the unprepared.  That structured routine with children can be a headache for parents trying to juggle soccer practices, ballet lessons, and numerous other activities.

We believe the key to managing this unpredictable season, similar to the investment markets, is with proper planning and coordination. October brought turbulent global markets along with our changing weather. No matter what your personal risk tolerance (which is not a static thing, by the way), most people don’t enjoy watching their hard-earned savings gyrate like a yo-yo.

During periods like this, here are some important things to remember:

• We continue to believe in the phrase “time in the market” rather than “timing the market”.
• Volatility in the stock and bond markets is normal. Don’t let recent years with low-volatility lull you into thinking otherwise.
• Long-term returns in the stock market are “earned” by clients not being swayed into poor decisions during volatile periods like this.
• Our financial plans do NOT assume that your investments will increase in a nice, orderly fashion. Volatility is an inevitable part of the market cycle, which is why we use Monte Carlo analysis to stress-test your retirement model.

For clients with a decade or more to go before retirement, a market decline provides an opportunity to build wealth as you make regular purchases at lower prices. Think of a market downturn as a giant sale on good quality assets.

For our clients who have reached financial independence (or are very close), periods like this can be a good reminder of why we recommend a 2-3 year cash reserve as you transition into retirement. Having cash on hand to weather market storms has helped many of our retired clients “sleep at night” during past downturns.

Regardless of your stage in life, our recommendation is to STAY THE COURSE and don’t let short-term gyrations derail your long-term financial plan.

Everyone’s situation is unique, so if the recent market performance has you on edge, we’re happy to set up a time to review your plan and your investments with you. If our unbiased advice is needed, please let us know.