Hi Sarah, congratulations on your retirement next year. An IRA can be helpful - are you planning to add that to increase retirement funds? Do you have any taxable accounts for retirement?
mjcooper, I just moved to Florida and I love no state tax. That said, I still pay GA tax on income earned in GA...like my rental houses. Living in Florida for more than 6 months should make that your tax home. BUT, you will still have to pay CT taxes on any CT earnings. States are getting VERY aggressive on this. If you use a CPA, I would consult him to make sure you are doing everything you need to do. It sounds like you are making a good list. Include keeping any investment or interest paying bank accounts in FL. You do not want CT to get any tax reporting forms with your name on them.
That's excellent that you're contributing the max to your employer IRA. What to do next with your cash that you have depends on your personal goals. Some goals may include saving into an emergency fund that may protect you to cover your expenses for 6 to 12 months or so. Included in this fund can be money for unexpected expenses. I assume that all of your credit cards are paid off monthly. If you don't have a house, some save for a down payment. Saving up front for cars and vacations make sense. If you'd like to add to your retirement savings. most everyone can save $5,500 annually into an IRA ($6,500 if you're 50+). Also, for retirement savings, you can save unlimited amounts in taxable accounts. An example is a Vanguard, Fidelity or other low cost Total Stock Market Index Fund. Talk to the Rep. to help you figure out a fund that's a fit for you.
mjcooper, please hire a tax attorney to get an opinion and advice you can rely on should your actions be challenged. Lots of people do this and the successful ones generally get an attorney to navigate the specifics. And follow Bobbie's suggestions for recording and reporting . . .
Hello Deb - If you are in a position to get those things, go for it. A % of what they sell for could be through common stock (ask for anti-dilution protection) or through phantom stock or options. If they lose funding they may not be able to pay you severance, so remember to accept what you can live with salary-wise and the rest is out of your control. More money does mean more taxes.
Deb, most start up tech companies offer good stock plans/options and I've seen clients make some VERY good money when they were acquired. And I agree with Tim re: if they don't have the money at some point they simply won't be able to pay severance.
Hi Duds, best protection could be to control spending all years so there is a big pot, make her the beneficiary, see an estate planning attorney so you both protect what you've built.
Duds - I recommend working with a financial planner to figure this out. You certainly seem to be in a good position.
Deb, I think they've covered most points and I have found start-ups expect you to take the risk along with them -
Duds, it sounds like you are doing everything right to include working at a job you love and don't want to quit. Working longer and waiting to collect social security until 70 will go a long way for your wife's security. If you are worried about the pension reduction at your death, you can buy several stacked term life insurance policies to cover the reduction. You may want to consult an advisor about this. Otherwise congratulations on a financial life well lived.
Deb, there are so many rules surrounding company stock plans and they are all different (ESPP-employee stock purchase plans), performance awards, Non Qualified options, Incentive Stock Options. A single answer is simply not possible. To be safe, just provide for paying ordinary income tax on any gains you make from these plans. Then any news to the contrary will be good news. If you do get options, consult with an expert/CPA or planner BEFORE you exercise them.
Hi Deb, generally cap gains but it would matter what form compensation it actually comes through as - if you get an offer, perhaps take it to an advisor or CPA for review and suggestions - we do this a lot with job changes. Good luck to you!
Kiplinger, thanks so much for making this happen. It was a wonderful experience as usual and I was particularly pleased to see so many questions from young adults. As always, I learned a lot from my fellow advisors. Best wishes to all for a happy holiday.
And, that's a wrap! We'd like to extend a huge thank you to all of the NAPFA advisers who answered questions today. Don't forget that you can find a fee-only personal finance adviser near you at NAPFA.org.
Join us for another installment of Jump-Start Your Financial Plan with Kiplinger and NAPFA on February 19, 2015. Happy holidays!