Even though the federal government has rescued SVB and guaranteed all deposits over the FDIC limit, of $250,000 per account that doesn’t preclude them from doing it again for other banks.

Let’s review and recap how Federal Deposit Insurance Corotation (FDIC) insurance works and what other alternatives are there.

In the United States, any individual account with a balance of up to $250,000 at a bank is insured. Expanding this coverage is straightforward since each type of account at each bank has a coverage of $250,000. As an example, a married couple is entitled to $500,000 of protection for a joint account and $250,000 for each of their personal accounts, resulting in a total of $1 million in coverage at a single bank.

Determining the total coverage for trust accounts can be more complex since you will have to examine beneficiary designations.

FDIC also has a very useful calculator FDIC’s Electronic Deposit Insurance Estimator (EDIE). It helps consumers understand how deposit insurance rules and limits apply to their specific group of deposit accounts at a particular bank.

By entering information about their deposit accounts into the EDIE tool, users can generate a report that provides information on how their deposits are insured, what portion (if any) exceeds coverage limits, and what steps they can take to maximize their insurance coverage.

The report can be printed for future reference and can also be used to help users make informed decisions about how to structure their deposits to ensure maximum insurance coverage.

Are my Retirement Accounts, such as IRA, 401k, or Investment Brokerage Insured?

The Securities Investor Protection Corporation (SIPC) is a non-profit organization created by Congress to protect customers of SIPC-member brokerage firms against the loss of cash and securities in the event of a firm’s financial failure or insolvency.

SIPC provides protection up to $500,000 per customer, which includes a $250,000 limit for cash. This means that if a brokerage firm fails and a customer’s cash and securities are lost, SIPC will work to recover the assets and return them to the customer up to the coverage limit.

It’s important to note that SIPC protection does not cover losses resulting from market fluctuations, fraud, or bad investment decisions. It also does not cover certain types of investments, such as commodities or futures contracts. You should always review their account agreements and understand the risks associated with their investments.

What you need to keep in mind, just like with the FDIC limit, there is a limit of coverage for Multiple Accounts. SIPC refers to this as “Separate capacity”, for example, individual, joint accounts, or trust accounts. Accounts held in the same capacity are combined for purposes of the SIPC protection limits.

Many banks and brokerage firms also offer “Excess SIPC coverage” over the SIPC limit.  This type of coverage is provided by a private insurer, not SIPC. Exact eligibility is not determined until the limits of SIPC are exhausted. You should contact your brokerage firm if you have questions regarding excess SIPC insurance.

Here are a few most typical brokerage firms our clients have accounts at:

Schwab Excess SIPC limit

Fidelity Excess SIPC limit

TD Ameritrade Excess SIPC limit

Vanguard Excess SPIC limit- from Vanguard site- ” Vanguard funds not held in a brokerage account are held by The Vanguard Group, Inc., and are not protected by SIPC. Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.

A workaround for this could be to convert or move funds into a brokerage account.

What if I have my cash accounts with a Credit Union?

Credit Unions are similar to banks and are insured by the National Credit Union Administration (NCUA) for up to $250,000 per account. This means that if your credit union were to fail, your deposits would be protected up to that amount. You can check if your credit union is insured by the NCUA by using the “Credit Union Locator” tool on their website and looking for the blue NCUA logo.

Similar to the FDIC coverage estimator EDIE, credit union members can estimate what their “Share insurance” coverage is thru Share Insurance Estimator.

Where should I keep my cash stash?

Cash Management Accounts

A cash management account (CMA) is a type of financial account that combines the features of a checking account and a savings account in one account. It is typically offered thru a non-bank financial institution or by brokerage firms.

CMAs offer several benefits, such as the ability to earn interest on your cash balances while providing easy access to your money through check-writing, debit cards, and electronic transfers. They can also provide a single account for managing your cash and investments, allowing you to move money between your investment accounts and your cash account quickly and easily.

In addition, many CMAs offer FDIC insurance on cash balances up to a certain limit, which can provide an extra layer of protection for your funds. Most CMA’s can provide a higher FDIC insurance limit as compared to a standard bank account.

Source: www.kitces.com

A cash management account offers a secure way to grow your savings by providing a high-yield interest rate on your deposited funds. With a CMA, your money is held in accounts at partner banks of your financial institution, and in many cases, the deposits are divided among multiple partner banks to further diversify and reduce risk.

Here are a few providers of Cash Management Accounts and current interest rates

Both Schwab and TD Ameritrade offer Cash Management accounts, but their current interest rates are much lower.

Money Market Accounts vs Money Market Funds

While both a money market account and a money market fund have the word “money market” in their name and are used for short-term savings or investment purposes, they are quite different financial products with unique features and risks.

A Money Market Account is a type of savings account that is typically offered by banks or credit unions. It usually offers a higher interest rate than a traditional savings account, but also requires a higher minimum balance. Money market accounts are FDIC-insured up to $250,000 per account, meaning that your money is protected in case the bank or credit union fails. With a money market account, you can withdraw your money at any time, but there may be limits on the number of withdrawals you can make per month.

On the other hand, a Money Market Fund is a type of investment fund that invests in short-term, low-risk debt securities such as treasury bills, commercial paper, and certificates of deposit. Money market funds are typically offered by investment companies and can be purchased through a broker or directly from the fund, examples Vanguard, Schwab, and Fidelity. Unlike a money market account, a money market fund is not FDIC-insured and is not guaranteed to maintain a stable net asset value (NAV). The NAV of a money market fund can fluctuate based on the performance of its underlying securities, and there is a risk of losing money if the fund performs poorly.

Open Multiple Accounts

It’s important to note that while opening multiple accounts at different banks can increase FDIC coverage or Share Insurance with a credit union, it may not always be the most practical or convenient option for everyone. In addition to the added complexity of managing multiple accounts, there may be other costs associated with maintaining these accounts, such as fees or minimum balance requirements.

“Deposit Swapping”-  source wsj.com

A more sophisticated way to manage multiple bank account relationships is to utilize a Deposit Swapping Service. You enroll in a service such as IntraFi and utilize their network of banks that participate in ICS and CDARS programs to provide coverage of multiple millions of dollars of FDIC Insurance. Here is how it works.

Your investment strategy should be aligned with your financial goals and time horizon. Short-term investments, such as cash and cash equivalents, are generally used to meet immediate needs or to serve as a safety net in case of emergencies. However, if your financial goals have a longer-term horizon, it may be more appropriate to consider investing in stocks, bonds, ETFs, mutual funds, or real estate.

These types of investments offer the potential for higher returns over the long-term, but they also come with greater risk. Before investing, it’s important to understand your risk tolerance, investment objectives, and time horizon. You should also consider seeking advice from a financial planner who can help you create a personalized investment plan based on your goals and risk profile.

Ultimately, the key to a successful investment strategy is finding the right balance between risk and reward and staying committed to your long-term goals.

The post How to protect your Cash appeared first on MainStreet Financial Planning.

If your employer offers an Employee Stock Purchase Plan (ESPP) this benefit can be used to help you grow your nest egg.  An ESPP gives you the opportunity to purchase company stock at a discount, which means you will have a built-in profit…free money!  A typical discount is 15%, but each plan is different so you will need to understand the details and rules of your employer’s plan.  Check out this list of some basic things to think about before you dive in:

1. Are you eligible?
   • Check your eligibility and find out the timing of the open enrollment period.
2. Do you need your whole paycheck to live on?
   • Your stock plan purchases get funded by automatic payroll deductions from your paycheck, so you need to be able to afford to put some of your paycheck towards company stock purchases.
3. How much of your salary should you put in?
   • You will need to decide how much you can or want to contribute to the ESPP, there are limits. We’ve seen limits of $25,000, but again, this depends on your employer’s plan.
4. What is your exit strategy?
   • Once you are participating in the stock purchase plan you need to have a strategy for when to sell your shares of the company stock and pay taxes.

Taking advantage of this employee benefit along with other regular saving and investing can help you become financially independent, then you can have a work optional lifestyle! If you are looking for a coach to guide you through building your wealth, lets connect and work on a plan to achieve your goals.

The post Your ESPP work benefit can help you reach financial independence! appeared first on MainStreet Financial Planning.

Small Business

Small Business Owner’s Guide to CARES Act

There are several options available to small businesses who need relief:

Coronavirus Relief options

–Economic Injury Disaster Loans

-Employee Retention Credit

-Deferral of Payment of Payroll Taxes

–Economic Injury Disaster Loans

Please note that both small businesses and self-employed individuals can qualify for up to a $10,000 grant as a part of the Economic Disaster Loan program through the Small Business Administration (“SBA”). Even if your loan is denied you will be able to keep the grant. Cash is expected to be disbursed within a week of application. The application process is simple, completely online, and should only take 15 minutes to complete.

Small Business Relief Options

-Paid sick leave required to be provided by employers and they get a credit against their taxes for providing it.

Payroll taxes:

-Refundable payroll tax credit for 50 percent of wages paid by employers to employees, if 1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or 2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.

-For eligible employers with 100 or fewer full-time employees whether the employer is open for business or subject to a shut-down order is irrelevant.

-The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020, through December 31, 2020.

-Employers and self-employed individuals can defer payment of the employer share of the Social Security tax (6.2%).  Half to be repaid by 12/31/21 and the other half by 12/31/22.

-Small businesses who do not take the previous payroll tax credit (not the deferral) may qualify for loans which are either 1) forgiven (if used for payroll, mortgage/rent, utilities and no employees are laid off) or, 2) if not used for those items in the specified time-frame, carry a maximum 4% interest rate and a term as long as 10 years.

-NOLs (Net Operating Losses) from a tax year beginning in 2018, 2019, or 2020 can be carried back five years, and the taxable income limitation is temporarily removed as well.  (You may remember the Tax Cuts and Jobs Act of 2017 removed NOL carrybacks.)

-Error (from the Tax Cuts and Jobs Act of 2017) that disallowed expensing of some qualified improvement property corrected.  This has been in the works for a while so it got added here where no one is paying attention to “pay-fors.”

Important Dates to Remember

Paycheck Protection Program

Application Opens

April 3, 2020 for Small Business Owners

*pending SBA lenders opening the doors for applications

April 10, 2020 for Sole proprietors and Self-Employed

Links to forms:

Small Business Owner’s Guide to CARES Act

Paycheck Protection Program Application (PPP)

Paycheck Protection Program Outline

SBA Paycheck Protection Program Loan Amount Worksheet

SBA 7A PPP Checklist of documents to gather

Watch Here!

Have questions about small business relief during the coronavirus pandemic? Reach out! We’d love to talk to you.

The post The CARES Act Overview: Small Business Owners appeared first on MainStreet Financial Planning.

It’s a decision you have to make every year: should I do my own taxes or not? Should I hire someone? Purchase a software program for help? Or do I do it the old-fashioned way?

Any choice you make carries with it different time and money considerations. But the right strategy for you may be very different than it is for someone else. The complexity of your taxes, how comfortable you are with your finances, and even recent changes to tax laws all play a factor.

Join MainStreet Financial Planning Founder Jim Ludwick, CFP® for a discussion of different considerations for doing your own taxes or working with a professional. As part of his presentation, Jim reviews some of the factors you should consider on an annual basis, including a decision tree for making your tax preparation choices for this year.

Watch Here!

MainStreet Financial Planning webinars are available to all Continuous Service Clients and Money@Work clients. This event is being made available to former clients and prospects. Attendees will have an opportunity to ask live questions after the presentation.

The post Webinar – Doing Your Own Taxes: Pros and Cons appeared first on MainStreet Financial Planning.

• A CPA
• An Enrolled Agent
• Someone at H&R Block, Jackson-Hewitt or Liberty Tax, among others
• A friend or relative that’s good at doing taxes
• Yourself

How do you evaluate your situation? Who should be your tax preparer? Most Americans are renting or owning a home plus working for an employer or retired. This describes the vast majority of tax filers and became the focus of the Tax Cut and Jobs Act of 2017. Congress promised a postcard size 1040 form and an increased standard deduction so most filers wouldn’t have to itemize. Since the online programs like Tax Cut, TurboTax and TaxfreeUSA promise a free federal return, this would be a good place to start to do-it-yourself instead of seeking out a tax preparer.

What would move you up the line for more experience? Perhaps large medical expenses, a large capital gain or casualty loss. Or some other item where precise calculations and documentation is important. You might do-it-yourself and have a friend or family member look over your output before electronic filing.

Other complications: changing jobs, investing in more than one 401k, moving, have paid student loan interest, sold your home, paid back taxes, or had a big gambling loss or gain. Add in the complications in the previous paragraph and maybe you should visit and use one of the mass-market tax preparation companies that provide an appointment or walk-in service. They do a good job and can also offer a second opinion on your own work at a reduced fee to give you peace of mind.

An Enrolled Agent or CPA usually specialize in folks that own businesses, have stock options, own rental property, maybe have employees, or have large investments in real estate or startup ventures to name a few complicated situations.

CPA’s are licensed at the state level and offer a wider range of services and expertise to include auditing, accounting, and finance, along with business law. An Enrolled Agent is a tax specialist licensed by the IRS. CPA’s have education requirements mandated by each state. Enrolled Agents come under the purview of the IRS and must past a three-part exam on income tax, inheritance tax, gift tax, estate, payroll, and non-profit taxation.

Own or starting a business? CPAs and Enrolled Agents are the best places to start. Not owning a business but complicated? It’s okay to call and speak with a CPA or Enrolled Agent and ask them where you might go for tax preparation and advice. Ask them if they’re taking on new clients. Because of the complications of the Tax Act, many are declining to add new clients this season.

Most MainStreet Financial Planning clients fall into the DIY online or the mass preparation firm categories. There’s no reason not to call a referred CPA or Enrolled Agent and talk with them on the phone to see that it is the appropriate decision for you.

The post Should You Be Your Own Tax Preparer? appeared first on MainStreet Financial Planning.

At the annual XY Planning Network Conference in St. Louis, one of the keynotes was by Michael Gerber, author of the Book called The E-Myth, why most business don’t work and what to do about it.

I read this book years ago and it opened my eyes as a small business owner.

From the keynote presentation, based on his latest book called Beyond the E-Myth, he outlined 7 things all successful businesses need.

• Dream – the great outcome my company will create
• Vision – the form your company must take
• Purpose – the big result you company will produce
• The mission – is to bring dream, vision and purpose to life which involves a turnkey operating system to make it work
• The job or the client fulfillment system, is about developing your “how-to” manuals and software. It involves getting to know your clients better than they do, so you can uncover solutions they can’t find themselves
• The client acquisition system – about attracting potential clients, with a compelling story, leads generation and conversion.
• Franchise prototype – adding management and leadership system to run it for you

The post Why Do Most Small Businesses Fail? appeared first on MainStreet Financial Planning.

Change is awesome. Change is exciting. Gone are the days when people are stuck doing one particular job for all their lives. Embrace the change, take advantage of it.

I want you to be ready financially. Because it’s not going to be easy, and money is where most of us are going to fail if we don’t have it in order.

Here are my tips:

• Build a cushion: The good old emergency reserves. Call it a Freedom Fund. A general emergency fund is 3 to 6 month of living expenses. but if you’re planning a career change, I’d suggest at least 12 months’ worth, to help you cover costs without having to take a job you don’t actually want.
• Slash your budget: Map out your budget. What is absolutely essential? Don’t forget large ticket items. Then find areas where you can cut. Be ruthless: I was still single and supporting only myself when I didn’t have a paycheck, but I had to learn to say no to pricey social outings, travel, and dinners out. Parents have even greater financial responsibilities to cover.
• Plan your future: If you are not starting your own business, use glassdoor.com to figure out what kind of income you can make. Remember that salary is not the only part of the compensation package. What benefits are you going to get? What additional expenses will you have to account for? Will you have to move? What if you can’t make as much as you did before?
• Keep on Saving: Life keeps on going, even in the transition. Do don’t stop setting up money for long-term. Time is on your side. Even if you don’t have a retirement plan anymore, you can contribute to an IRA.

The post Transitions: Changing Careers or Starting a Business appeared first on MainStreet Financial Planning.

Watch the latest Money Date where Anna talks about the FPA NorCal Conference and some of her key takeaways, including finding ways to give, understanding and servicing millennials, and how to get more women into the financial planning profession.

The post Key Lessons from FPA NorCal appeared first on MainStreet Financial Planning.

The last Daily Juice, we talked about setting goals and establishing priorities. If you still haven’t worked on it, spend some time today and go thru this exercise!

Next step: one of the most difficult thing to do is to have consistent commitment. Commitment is a must! There are no excuses. The definition of Commitment: “the state or quality of being dedicated to a cause, activity.”

This concept should be applied to all areas of our life. Finances being one of them.

What are you committing to this year?
-Earning more money
-Spending more wisely
-Saving more

What is it going to be? I know you already have your goals written down. Go back and make yourself a promise. I love this quote by Grant Cardone : “You can make money, or you can make excuses, but you can’t make both”

Until next time, remember: It’s your money, and your future wealth, just one sip at a time.

The post Daily Juice – Commit First, Figure Out the Rest Later appeared first on MainStreet Financial Planning.

2018 is officially here and we are all ready to start fresh. Today’s video talks about setting priorities and goals.

Here is the formula Anna used (learned from Grant Cardone).

Take out a sheet of paper:
1. Divide it into 7 columns
2. Label each column with the following: Income, Wealth, Physical, Spiritual, Familial, Recreational & Professional
3. In each column write your current goals.
4. Duplicate this exact outline on the new sheet of paper and now in each column write what would your life look like of you did top 10 goals.
5. Next, duplicate the same outline and write down what are you going to do to. Give up the bad habits and what you will have to learn (courses to take, books to read, acquire new skills, etc.) to achieve your 10 goals.
6. Finally, the most important ingredient (think of it as a glue) for everything to work is “Commitment.” Promise yourself that you will not give up. Promise yourself, that what you said you will do. Yourself and no one else.

I am going to work on this with you and let’s check in three months to see how much progress we are making.

Until next time, remember: It’s your money, and your future wealth, just one sip at a time.

The post Daily Juice – Setting Goals and Priorities appeared first on MainStreet Financial Planning.