Uncommon Cents

Common Beneficiary Mistakes #15

Colorado State Tax Exemptions for Retirees #14

Social Security Maximization #13

RICP, My New Designation #12

Erik:                                     00:06                   

You’re listening to uncommon sense podcast by Bowman financial strategies. I’m your host, Erik Bowman and thank you for joining me today.     

Erik:                                     00:17                   

Hello everyone. Erik Bowman here, owner of Bowman Financial Strategies. I hope you are having a fantastic day. It is April 3rd, 2019. You may have noticed some new letters next to my name. I’ve recently been awarded the designation of RICP, which stands for retirement income certified professional.

Erik:                                     00:43                   

An RICP designee is trained to understand how to structure effective retirement income plans, how to mitigate risks to the plan, and how to create a sustainable income stream to last throughout a client’s retirement years. To achieve this designation, I’ve taken three college level courses with a study time of around 150 hours. These courses include topics such as; sources of retirement income, managing the retirement plan, and strategies specific to the retirement processes. I picked this designation because it has the broadest course of study throughout and it is focused specifically on the needs of the clients that I serve almost exclusively, and that is people transitioning from accumulation to distribution.

Erik:                                     01:55                    In addition to completing these courses, I will also have 30 hours of continuing education every two years to keep this current. This allows me to stay on top of any changes in the regulatory environment that may impact my clients. I feel that this designation is a tremendous benefit to my clientele, because it really helps solidify my knowledge of the tools to help you live well in your retirement years. By having this designation, I’m better able to answer your income questions, but also making sure the plan that we make together is effective, meets your goals, is tax efficient, and can withstand an unknown future, a future that has risks and opportunities. By mitigating the risks and positioning assets to leverage opportunities for growth, our desire is that you experienced the retirement you have always dreamed of. If you’re an existing client, please reach out anytime if you ever have a question or need to sit down to discuss your plan. And if you’re not a client and have questions, please contact our office to schedule an appointment by calling (303) 222-8034 or you can go to our website at www.bowmanfinancialstrategies.com and send us a note. I appreciate your time today. Thanks for listening and I hope you have a fantastic day.

Erik:                                     02:53                   

Thank you for joining me for uncommon sense, the Bowman financial strategies, financial education. I’d love to hear your feedback on financial topics you would like to learn more about. Just drop me an email at [email protected] or go to the Bowman financial strategies website and send me a note on our contact page. In addition, you can always search for topics of interest in my archive on our podcast page at www.bowmenfinancialstrategies.com/podcasts. Have a great day.

Disclosure:                         03:30                   

This communication does not constitute federal tax advice and may not be used as such. Please consult a qualified tax professional for tax advice or assistance. In addition, investment advisory services offered by Change Path LLC, a registered investment adviser. Change Path and Bowman Financial Strategies are unaffiliated entities.

Health Savings Accounts and Retirement #9

Erik:                                       00:06                    

You’re listening to uncommon sense podcast by Bowman financial strategies. I’m your host Erik Bowman and thank you for joining me today.

Disclosure:                          00:18                    

This communication does not constitute federal tax advice and may not be used. As such. Please consult a qualified tax professional for tax advice or assistance. In addition, investment advisory services offered by Change Path LLC, a registered investment adviser, Change Path and Bowman financial strategies are unaffiliated entities.

Erik:                                       00:42                    

Hi everyone. Welcome to Uncommon Sense Episode 2. Uncommon sense being the financial education series by Bowman Financial Strategies. My name is Erik Bowman, your host. Today we’re going to be discussing HSAs. What is an HSA? How has an HSA treated from a tax perspective? How do HSAs interrelate with Medicare and what are some strategies that retirees can utilize HSAs for?

Erik:                                       01:19                     An HSA, for those of you who may not be familiar with the acronym, HSA stands for health savings account and it’s a specifically designed type of savings account where you can put away money on a tax preferred basis to use for qualified medical expenses. A few quick things to know about HSA is just so you don’t get confused and potentially open up the wrong kind of account and therefore wouldn’t have the tax benefits is it differs from an FSA or a flexible spending account. The biggest differences that an HSA, it rolls over year to year and you can accumulate those dollars each year up to the maximum contribution. In the year 2018 for an individual, the HSA maximum contribution limit was $3,450 and for a family HSA contribution limit in 2018 it was $6,900. For the tax year 2019, there’s been a slight increase of $50 to the self only HSA contribution limit, so it’s now $3,500 a family HSA contribution limit we are now at $7,000. one very important stipulation regarding HSAs is that you may only contribute to a health savings account if you have a qualified high deductible health insurance plan. This is very important to understand because if you have a traditional PPO or HMO plan, you cannot contribute to an HSA and enjoy any of those tax benefits. So just to dig in a little bit, and really review, what are the basics of HSA? Is there one of the most powerful tax deferred or tax beneficial plans out there because they’re actually tax beneficial in all three phases. That means that when you make a contribution into an HSA, that’s going to be tax deductible in that year of contribution. And as a side note, you may contribute to an HSA up until the filing deadline for that particular year. So for example, for the year 2018, you can contribute up to the maximum total amount for the household by the filing of April 15th, roughly of April, 2019.

Erik:                                       03:47                    

In addition, when the dollars are put inside of an investment account, which they are allowed to be put inside investment accounts, um, those, that growth is going to be tax free. And then as long as you’re following the rules and using the dollars from the HSA for appropriate medical expenses, it will also be untaxable when you take the money out. So as you can see compared to an IRA or a 401k, what we have is that you get the additional benefit of not only having it be tax free on the way in, but during the entire growth phase. And on the way out, no other retirement plan actually allows for all three phases of those dollars to be tax free. Another interesting caveat for HSAs is that so long as you have had the appropriate type of high deductible health insurance plan, if you never did make your contributions like you could have, you could make current contributions in the current year into your HSA and you can reimburse yourself for previous year’s expenses. Just keep in mind those expenses had to have been incurred while you are under an HSA qualified health insurance plan.

Erik:                                       05:07                    

So the bottom line is that what is available to you and is often under utilized for people who actually have one of these health savings accounts, is that the maximum contributions are not ever made. And this would be even in the face of paying health costs or healthcare costs that would exceed that contribution limits. So there’s money being left on the table, savings and tax benefits that are being left on the table. So what you can think about now is if you’ve contributed to your IRA and your 401k, and even if you have maximized those contributions, and if you’re in your early sixties and have an HSA eligible health insurance plan, it may make sense to contribute to the maximum allowable by law each year, build up a reservoir of tax free funds that were tax deductible in the year of contribution that you can then use it anytime, even after you’ve gone on Medicare.

Erik:                                       06:10                    

One of the questions that I oftentimes get regarding HSAs relates to Medicare. The question often sounds something like this, which is, can I have an HSA or contribute to an HSA while I’m on Medicare? Because those tax advantages sound very beneficial. The quick answer is no. That once you file for Medicare, you are ineligible to contribute to an HSA anymore. That’s a pretty black and white statement by a Medicare and the IRS. However, if you have been contributing into an HSA and you have not utilize those dollars and there is a balance in there that has accumulated over the past couple of years, you may use those dollars with no penalties at any time. Even while you were on medicare, you simply can’t continue to make contributions into the HSA while you were on Medicare.

Erik:                                       07:07                    

It’s really just another way to save for retirement. Although those dollars in order to enjoy the tax benefits and need to be dedicated to healthcare costs, certainly we know that as we enter into retirement and live along fun life and retirement, that there’s a good chance we are going to have healthcare expenses and it’s nice to have a reservoir of dollars available that are treated so special from the IRS from a tax perspective. And once again, you can’t make any new contributions into an HSA once you start Medicare, but you can use your saved up assets inside of your HSA account for qualified health care costs if you are on Medicare. Very important distinction there. And finally, a key takeaway points are number one, if you have an HSA and you’re capable, you should maximize those contributions even if you don’t think you’re going to spend that amount in the current year because those dollars will rollover and you can use those in future years for qualified health care expenses. Second, if you have Medicare, you are not allowed to make additional contributions into an HSA, but you may use the previously accrued balances for qualified health care expenses. I hope you found this podcast on

Erik:                                       08:31                    

HSAs health savings account to be useful and I hope it answered some of the basic questions that you may have about it. Thank you for joining me for uncommon sense, the Bowman Financial Strategies financial education series. I’d love to hear your feedback on financial topics you would like to learn more about. Just drop me an email at Erik, that’s E R I K, at Bowman financial strategies dot com, or go to the Bowman financial strategies website and send me a note on our contact page. In addition, you can always search for topics of interest in my archive on our podcast page at www.bowmenfinancialstrategies.com/podcasts. Have a great day.

Disclosure:                          09:16                    

This communication does not constitute federal tax advice and may not be used as such. Please consult a qualified tax professional for tax advice or assistance. In addition, investment advisory services offered by Change Path, LLC, a registered investment adviser, Change Path and Bowman Financial Strategies are unaffiliated entities.

Financial Planners | Annuities, IRA, Retirement & Investment | Bowman Financial Strategies

Tax Forms


Hi everyone, welcome to Uncommon Cents, Episode #1. Uncommon Cents is The Financial Education series by Bowman Financial Strategies. Today’s Podcast is the inaugural episode of Uncommon Cents and I wanted to provide a brief overview of what you can expect and how this podcast differs from its sister podcast, Mastering Mondays. Many of you may be familiar with Mastering Mondays, a non-financial podcast discussing topics to help you live better in retirement covering topics like health, psychology, food, travel, relationships and hobbies. Uncommon Cents by contrast is focused solely on financial topics with a focus on areas relevant to those that are near or at the transition from Accumulation to Distribution.  

This communication does not constitute federal tax advice and it may not be used as such. Please consult a qualified tax professional for tax advice or assistance.

Today we are talking about tax forms. Just saying it makes every accountant get excited. Ooooh, tell me more about my 1099r, please! Today I am going to review the most common forms that you will run across and some other basic tax preparation tips. Many of these forms are related to accounts I manage for my clients, so if you are a client and you ever have questions about any tax form or need a copy from a current or prior year, please reach out to my office and I am glad to help.
As you prepare for the 2018 tax filing season, you may find these checklists helpful. They outline the forms you should be collecting in the coming months, so you can successfully file your taxes. The IRS has a checklist here, . The financial Website Investopedia has a great article and checklist to help you get prepared here:https://www.investopedia.com/articles/pf/07/tax_prep.asp
Summary of Action Steps to Prepare for Tax Season:
Step 1: Schedule a time with your preparer so you can have your appointment prior to April 17th to ensure you can institute any tax savings actions prior to deadlines imposed by the IRS. If you use an accountant, be early! They get very busy during accounting season, and the first folks in the door will get taken care of first. If you don’t use an accountant, I recommend finding one unless your taxes are extremely simple.
Step 2: Gather information. The forms listed below fall under the umbrella of a group of IRS Tax Forms call Informational Forms. Here is the quick list of the most common forms. There are more! So, do not use this as an exhaustive list. However, these are the forms I most
Step 3: Gather receipts and charitable contribution information. In addition if you are making Charitable contributions, here is a link to the IRS pamphlet that details the type of substantiation you may need to include your contribution as a deduction.
Step 4: Gather all personal information like Social Security numbers for you and any dependents, EINs (companies you own) or Trust Identification Numbers (TIN) for any Trusts you may have.
Step 5: Gather last years tax returns. If you are using a new accountant they will need to see last years tax forms form the state as well as the federal government.
Step 6: Go to your appointment
Here is a quick list of forms I commonly see my clients receiving. You can click on a name of a form in the quick list and it will take you to Investopedia website where you will find the specific description of each form. I wrote a brief description of each form below as well as a slightly longer descriptions and some unique circumstances that may apply to you.
Common Informational IRS Forms:
W2 (Income earned, and taxes paid. For an Employee)
1098 Mortgage Interest Statement
1098-C, E, T (Donations, student loan interest, and Tuition payments)
1099-Misc (Non-employee compensation)
1099-B (reports Gains or Losses on securities investments)
1099-R (IRA distributions)
1099 INT (Interest received)
1099-DIV (Dividend received)
1099-LTC (LTC benefits received)
5498 (IRA contributions)

W2: First, many of you may still be working. If you are an employee of a company, you will receive your annual W-2 from each company you work for. This form is provided by your employer and per the IRS, “It reports the wages earned by employees and the taxes that were withheld from their paychecks. It also reports Social Security tax, a.k.a. the Federal Insurance Contributions Act (FICA) tax, to the Social Security Administration. The FICA tax has two components, the Social Security portion and the Medicare portion, which are separately reported on Tax Form W-2.” You should receive these forms per current federal law by January 31. You may have multiple W2 forms if you worked for more than one company in the calendar year you should receive one from each employer.

1099 MISC: For those who are not W2 employees but earn their income as Independent Contractors, you will receive a 1099-Misc. Per the IRS, “Tax Form 1099-MISC is commonly used among self-employed professionals to report profits from services performed for other organizations. If you are a sole-proprietor and were paid more than $600 for services during a given tax year, the business you worked for is required to send Tax Form 1099-MISC.
1099-R: A common form that our clients will see each year. The 1099-R form is issued by the IRS and reports distributions from IRAs, annuities, profit-sharing plans, insurance contracts, or pensions. The form must be mailed to the recipients by the custodian at the latest by Jan. 31 of the year after the distribution was made

Read more: Form 1099-R. For my clients, you may see this form in 3 common scenarios although all scenarios may not apply to you.

W2 (Income earned, and taxes paid.  For an Employee)

1098 Mortgage Interest Statement

1098-C, E, T (Donations, student loan interest, and Tuition payments)

1099-Misc (Non-employee compensation)

1099-B (reports Gains or Losses on securities investments)

1099-R (IRA distributions)

1099 INT (Interest received)

1099-DIV (Dividend received)

1099-LTC (LTC benefits received)

5498 (IRA contributions)

These are just the highlights; however, they probably represent 80% or more of the tax forms you should receive. Your situation is unique and what applies to someone else may not apply to you, so be sure to get with an accounting professional to ensure you are not paying more in taxes than you need to. With all the tax changes in the last year, I believe it is wise to consider using an accountant. Speak with your accountant to determine how these tax forms will be used to calculate your taxes each year. And, you don’t want to get sideways the IRS.
I hope this note helps you prepare, and maybe gets you started earlier than you would have otherwise.

Thank you for listening to the Bowman Financial Strategies Uncommon Cents Podcast and Blog. I appreciate your time. Please feel free to send me questions by going to our website at www.bowmanfinancialstrategies.com and go to the Contact Us page or send me an email at [email protected] Finally you can always reach us at 303-222-8034.
Now go ahead and use this Uncommon Cents information to LiveWell in retirement!

Schedule a Call