The PFC’s Corner – October Published Oct. 8, 2019 By Randy Gerard, CFP 139th Airlift Wing ROSECRANS AIR NATIONAL GUARD BASE, Mo. -- It’s the 4th Quarter, Time to Win the Game! The “game” that I am speaking of, for sure, is the “Money Game”. Whether we want to play or not, regardless of our education, knowledge or experiences, “money” is the way our economy works. Many decades ago there was more of a “bartering” economy were products, service or a combination were exchanged to support society. While these type of exchanges most certainly still exist, they are by no means mainstream except in perhaps very undeveloped economies or regions where the knowledge of money is totally unknown. So, at this time of year, I feel it is important to take relative stock on our financial status and consider strategies that might help us end the year with a “win” financially. Following are three areas that I help members evaluate: TSP YTD, PLAN CHANGES INCOME TAX PLANNING HOLIDAY SPENDING STRATEGIES THRIFT SAVINGS PLAN As of October 1, all of the stock selections are up double digits: I Fund-13.2%; S Fund-17.6%; C Fund-20.5%. Even the bond fund, F Fund, is up 8.5% YTD. The point here is in the last quarter of the year it’s important to assess how your investment selections are performing and evaluate the need for change based on your individual situation. Many factors affect the markets and you know past performance is no guarantee of future returns, so let’s sit down and discuss options. On September 15 the major changes for the TSP Modernization Act were implemented, most which are new and will exist in addition to current options. In general, these changes made access and distribution options more participant-friendly. To summarize- Multiple, partial and age-based withdrawals are allowed Required Minimum Distributions (RMD) will be done by the TSP if not set up For those with a Roth portion in their TSP, distributions can be elected to be from Roth, Traditional or proportional mixture of both In addition to these changes, the TSP is also moving to improve the performance of the funds through increased stock ownership. Let me know if you want to see how this could help you achieve your retirement goals. INCOME TAX PLANNING In the fourth quarter there are a couple of strategies that may help you reduce your income tax bill come next year. Here are a few of the most common (and easiest to perform): Utilize the online withholding calculator at IRS.GOV to estimate accuracy of your current withholding exemption claims with the new tax law. Your 2018 return was the first year and gave you an indication, but if your family/income changed or if you adjusted your W-4 withholding this year, do a re-estimate to avoid an ugly surprise. Harvest gains-For those that have investment accounts outside of retirement plans (TSP, 401(k), IRA, etc.) now is the time to assess gains and losses YTD and possibly match gains against losses to minimize/eliminate taxable capital gains in 2019 If you have an excess in your emergency fund, it is most likely a taxable bank or money market account so moving a portion into a tax-free municipal bond fund could help. Many members I’ve talked to have side businesses, usually their spouse. Don’t make mistakes with the earnings from that venture by inadvertently reducing taxable income by maximizing expenses. Claim some taxable income for that spouse and open one of the many self-employed retirement plans as an option. HOLIDAY SPENDING STRATEGIES A sustainable and effective financial plan needs to cover most, if not all, phases of a family’s finances in my experience. So with this in mind, here are some thoughts for the upcoming holiday season that might help you avoid or reduce ‘dollar headaches” in January: Set a reasonable level of expectations/budget: Family size; # of gifts, $ limit per gift; Consider all costs: Travel to visit?; shipping; Get organized: Make list; shop early sales; resist temptation to buy “it’s on sale” Large family/list: Consider Secret Santa; gift exchange; hand-made gifts Think of finances like your health-when you’re really sick you sometimes may wonder if you’re ever getting better and when in good health you don’t contemplate a future illness. As in health so it is in finances-better to be financially sound than wondering how to pay the bills! Have a great October and 4th Quarter! Randy Gerard, 816-236-3659, email@example.com.