Both Jeff and Ellen are in their late 50s with two high school-age kids. Both are engineers, making them a dual-income family. Over the years, they accumulated many different kinds and types of investment accounts. Their portfolio was an alphabet of investments. Besides retirement plans with their current employers, they each had several orphan retirement and rollover accounts from past employers, as well as Roth IRAs, 529s, UTMA accounts, and individual and jointly owned investment accounts with several different companies. Imagine how many different websites, not to mention passwords, Jeff and Ellen had to visit just to obtain their statements, totals, and allocations of their investments.
In 2017, Jeff "took the plunge" and resigned from his job as a corporate engineer to achieve a longtime dream of opening his own consulting firm. Jeff's new company was immediately successful and showed a net profit of more than $240,000 in its first year. Because of the couple's lifelong practice of living below their means, eliminating debt, maxing retirement savings, and saving a substantial emergency fund, they were able to meet most of their lifestyle and living expenses from Ellen's net income. This put them into a position to save a high percentage of Jeff's income for retirement and other goals.
This is when Jeff came to us seeking advice on business structure, tax reduction strategies, and retirement planning. Jeff was unaware that as a consultant he could put up to $62,000 away in a unique 401(k) plan available only to owners of a business. Additionally, we showed him that by coordinating this type of 401(k) with a defined benefit plan (DBP), he could make a much larger annual actuarial calculated contribution based on his age, the amount of desired future income, and several other factors. In Jeff’s case, he is able to invest an additional $110,000 per year into his DPB based on his retirement income goal and budget. Since most of this $172,000 contribution is paid by his firm, Jeff avoids paying up to a 43% in taxes on these contributions (24% federal, 4.25% Michigan, 12.4% FICA, and 2.9% Medicare tax rate). His actual tax reduction was more than $60,000 the first year he started this retirement plan.
We worked closely with a recommended CPA to support Jeff and Ellen's personal and business accounting needs. We then provided an executive summary of their financial life by using Investor360°, our secure online account aggregation system. Before we started working with Jeff and Ellen, they had to go to several websites to view their account information, get balances, and update their financial plan. With Investor360°, these busy professionals now have the following available to them:
Access to their complete, up-to-date financial life in the palm of their hands
The power to see it all 24/7, with secure access from anywhere, whether at home or away while traveling. Access is secure and available to all of account balances regardless of whether they are held through our firm or others.
Get trade confirmations, brokerage statements, consolidated statements, and easy-to-read summaries of all accounts and holdings, with one easy click
Organize personal information in the Investor 360°electronic document vault. Upload important, personal information, such as tax returns, passports, legal items, estate documents, and other important documents, easily and securely in one place.
Options to choose paper mailings or receive them electronically and go paperless
Investor360° has options to easily import necessary account information to TurboTax software
So, for Jeff and Ellen being busy professionals with full lives, having all their finances organized and secure gives them the assurance that their financial life is under control, more free time away from the computer and desk, and more time to live a life of passion with family and loved ones.
* This example is for illustrative purposes only. Actual performance and results will vary. The example does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.