Carolyn Stewart

Who must report?
Companies that are required to register with their state Secretary of State must register with
the Financial Crimes Enforcement Network (FinCEN). These entities include LLCs, corporations
and partnerships.

What companies are exempt?
The Corporate Transparency Act includes a number of exemptions including large entities that [1] employ more than 20 full-time employees, [2] gross more than $5 million/year, and [3] have a physical presence within the US. Tax-exempt entities are also exempt.

What must companies report?
Companies must report “beneficial ownership” information. A beneficial owner is someone who
exercises substantial control over the company or owns 25% or more of the company.

Companies must report the following information for beneficial owners:

1. Legal name
2. Date of birth
3. Residential address
4. Driver’s license or passport information

Alternatively, individuals may apply for a FinCEN identifier and provide the identifier
to the reporting entity instead.

What are the deadlines?
Companies created before 2024 have until January 1, 2025 to register.
Companies created in 2024 have 90 days to register.
Companies created after 2025 have 30 days to register.
Once a company reports, the company has 30 days to provide updated filing information
in the event of a change.

Who files this information?
Your tax advisor or your attorney may be able to assist. CT Corporation and Harbor Compliance
offer a filing service for a fee. You may also self-prepare. https://boiefiling.fincen.gov/

Jonathan J. Robertson

n this video, Cheryl Holland discusses Abacus’s tradition of planting pinwheels for Child Abuse Prevention Awareness month in support of the Children’s Trust of South Carolina.

Cheryl R. Holland

Financial advisors frequently help clients think through their estate plan prior (and in addition) to meeting with an attorney.  When parents begin working on their estate plan, the usual statement is:  “treat my children equally.”  Then the question arises:  “is treating equally actually fair?”  People often incorrectly mix fairness with equality.

Many different scenarios come into play when parents want to treat children differently as part of the estate plan. Sometimes treating children differently reaches an outcome that can be fairer than treating children equally. Differences come in many different forms:  (1) differing levels of assets going to children; (2) one child receives a specific asset; or (3) one child receives assets “outright,” while the other child receives assets in trust.

Why would parents want to leave more assets to one child than another?  A few examples are:

• One child has significant medical challenges.
• One child provides for a larger family.
• One child earns more money than the other(s).
• One child has received more financial support throughout his/her life, and the parents want to even things up after their deaths.
• One child provides more support to the parent as the parent ages, and the parent thinks it is fair to leave more money to this child as partial compensation.

Sometimes parents want to leave a specific asset to one child.  While parents may still provide the same level of assets to each child, the children still might not think of things as being equal. For example:

• If you own a family business, it may make sense to leave that business to the child who works in the business rather than to multiple children who may or may not be involved.
• Sometimes one child has a greater connection to the family vacation home (or the family home) than the others.

Another common scenario where “not being equal” arises is the manner in which your children inherit their assets.  It may make sense to use a trust structure for one child, but not for the other(s). This situation frequently arises wherein there is a significant gap in age (or skills) among the children, mental health or substance abuse challenges, or concerns about divorce and/or asset protection.

Inequality coupled with a lack of communication can cause pain.  When children lose a parent, they usually aren’t at their best emotionally, and tempers can run high.  It’s easy to assume the worst rather than the best.  Children can feel resentment towards each other and towards the financial advisor and the attorney.  It’s easy for a child to equate the amount of money parents are leaving to them with the amount of love that you feel for them.   Work beforehand to create a plan.  Fortunately, good communication can address many of these challenges and lead to successful outcomes—from a letter to meetings with children to honest conversations.

You can write a letter that goes with your estate plan. While a letter isn’t a legally binding document, it can explain your thought process as to why you chose to create your estate plan.  Children might disagree with your reasoning, but they will at least know you made your decision with both love and with thought.

Additionally, a family meeting may be helpful.  Sometimes clients choose to have these meetings as a group or one on one with each child (or as a combination of both).  A meeting allows you to answer questions and address concerns your heirs may have.

Perhaps the best plan is to have a conversation and also write the letter. People remember conversations differently, and memories change over time.  Having something in writing can go a long way to ensure that your children understand your choices when you are no longer around to tell them yourself. Talk with your legal (or financial advisor) to have help facilitating the meetings and/ or provide examples of letters to children.

While estate planning is not always an easy task, taking the initiative to ensure that your children understand your wishes and how you plan to distribute your assets will make it easier for your heirs when you are no longer alive. 

Jonathan J. Robertson

If you’ve been investing in the financial markets for a long time, you could have a portfolio that has grown significantly in value. Which could present a tax problem. However, there is a way to avoid some of these capital gains, and it involves tax planning across generations.

Mike Switzer interviews Abacus Advisor Stephen Maggard, CFP®.

Stephen E. Maggard

Many of us are not sure how long to retain certain financial records; consequently, we often end up keeping boxes of documents that take up precious space.  The list below outlines how long to keep your common financial documents and the time frames for keeping and/or destroying these documents.      

• Tax returns—seven years.  The IRS has six years to challenge your return if you underreported your gross income by 25% or more.  Keep all your supporting data with your returns (i.e., W-2s, 1099s, 1099-Rs, receipts, etc.).

• Brokerage statements—one year. Keep monthly statements for one year and shred them if your annual statement summarizes all activity for the year. 

• Retirement plan statements—one to seven years.  Keep statements for one year and shred them if your annual statement summarizes all activity.  Save annual statements for 3 to 7 years and keep records of non-deductible contributions indefinitely.

• Home improvement and other real estate records—until you sell the home, plus another seven years.  The records establish your cost basis in the home and could help lower your capital gains tax on the property when you decide to sell.

• Credit card statements—one month.  Shred credit card statements once you check them for accuracy, unless they are your only record of a tax-related transaction.

• Pay stubs—one year.  You can shred your pay stubs once you get your W-2, but check to be sure the numbers match before you destroy. 

• Utility and phone bills—one month.  You can shred these documents once you have received the next statement showing that you paid.  Keep the bills if they are needed for tax purposes. 

• Warranties and receipts—until the item is no longer owned, or the warranty has expired.  Receipts for big-ticket items are necessary to activate the warranty or to replace a defective item; receipts can also be used to prove an item’s value to an insurance company.

• Bank records—one to seven years. Keep monthly statements for one year.  Keep bank records related to your taxes, business expenses, home improvements and mortgage payments for seven years; shred those that have no long-term importance.

• Insurance policies—until the policy has lapsed or the property has been sold.

• Household inventory of valuable items—forever, or until items are no longer owned.  Make sure the inventory is updated when new items are purchased, sold, or given away. 

If you follow these guidelines for taking care of your financial documents in a timely manner, not only will you be able to free up space, but also you will have accurate, up-to-date files that can be easily

J. Abigail Mason

Target date retirement funds (also known as target date funds) are a popular option for managing your retirement savings. Often offered by retirement plan providers like 401(k) plans, these funds are designed to offer a simplified approach to long-term investing and retirement planning. Knowing how these funds work may help you to decide whether or not a target date fund will benefit your retirement.

How do target date funds work?

Target date funds are structured around a specific retirement year or “target date.” Investors should select a target date fund that aligns with their expected retirement year. Early on, the fund aims to maximize long-term growth potential by primarily investing in stocks. The specific allocations and investments within the fund are determined by the fund manager.  Younger investors typically have a longer investment horizon and can tolerate more risk. As the retirement date approaches, the fund gradually becomes more conservative, increasing its allocation toward bonds and other fixed income investments. The goal of this gradual shift in allocation is to focus on capital preservation and risk management as the investor approaches retirement age and may need to start withdrawing funds.

Why choose to invest in target date funds?

Target date funds are simple, convenient, diverse, and cost efficient.  The following offers more explanation of each:

• Simplicity and convenience: One of the primary advantages of target date funds is that they are designed to be straightforward and simple to use. Once you choose a fund based on your target retirement date, the fund manager handles all the asset allocation decisions and rebalancing (bringing your portfolio back in line with your target allocation). This kind of management can be particularly appealing if you lack the time, expertise, or desire to actively manage your investments.
• Diversification in a single fund: Target date funds are typically composed of a broadly diversified portfolio of investments, meaning the fund’s dollars are spread across different types of investments to help manage risk in your portfolio. Since holding multiple funds in your 401(k) may result in overlapping investments and differing objectives, owning a single fund provides the benefits of broad diversification while avoiding duplicate investments in your plan.
• Cost efficiency: Many target date funds offer competitive expense ratios, which can be lower than the fees associated with actively managed funds or having to build and manage your own diversified portfolio. Lower expenses can result in higher returns over the long term due to the power of compounding. Be sure to check with your plan provider to determine fund-specific fees.

Is a target date fund the right choice for me?

Target date funds can be a great choice for investors with straightforward goals and needs, or investors who lack the time or skill to construct a diversified portfolio. Consider your individual financial goals, risk tolerance, and investment time horizon when selecting a specific target date fund.

Not all target date funds are created equally, so it is important to review the details, fees, historical performance, and strategy of the specific fund before making an investment decision. Periodically review your investments to ensure they remain on track with your retirement objectives. As with any major investment decision, consider consulting with your financial advisor to ensure that your investment choices align with your long-term financial plan.

Bailey O. Davis

For many years now, companies have seen the myriad benefits of operating in a “paperless” environment. Households, on the other hand, have been reluctant to realize the benefits of transforming your important personal information from a bulky paper filing system into a streamlined digital masterpiece. This article will give you a plan and the tools to tackle this seemingly daunting task, which, if done
correctly, can be an invaluable future resource.

Counter intuitively, the primary advantage for going paperless is easy retrieval and organization of information – not to reduce paper. Other advantages include disaster proofing, reducing clutter, and the ability to access your documents from anywhere and on any device. The following points demonstrate how to create, implement, and maintain a paperless environment.

Start with a plan.
The plan should be simple to learn, easy to implement, and manageable to maintain. Initially, you may be overwhelmed by the task because you had years or decades of accumulated files. To get started, pick a firm date and everything from that point forward goes into your paperless system.

Be flexible with entering documents into the system.
There are numerous types of scanners on the market, but most households will have some sort of multifunction scanner/printer combination. These work perfectly in a paperless system, but don’t limit yourself to one entry method. An under appreciated and very convenient scanner is your smartphone. There are apps that take pictures of documents then convert them to scanned images without loss of quality or speed, and you will never have to go digging around for your receipt when you need to return an item! For large scanning volumes, I recommend a standalone scanner. They offer increased speed with single pass duplexing and larger sheet capacity than most multifunction printers.

Choose where you want your files to live.
I recommend using cloud based storage. There are many companies that, for a reasonable cost, provide online document storage and retrieval from any internet ready device. The most popular providers are Evernote, Dropbox, and Google Drive. If you are concerned about online security, password protect or encrypt your individual files to provide secondary measures in case of a security breach. For those unwilling to store information online, you can use your computer storage. However, external backup is absolutely essential in this case. Hard drives can and will fail, so make sure you are prepared. I cannot stress this enough.

Make sure you can find what you are looking for.
Again, the most important reason to go paperless is to easily find what you need when you need it. At a minimum, use a consistent strategy for naming your files. like to include the date, provider, and brief description of the contents. For example, 2016-11-28 Costco receipt, 2015 1099 Charles Schwab, or 2016 10-15 Labcorp Test Results. Create subject folders or groupings of documents such as Medical, Tax, Home, Auto, etc. Many scanners and programs will have a helpful function called Optical Character Recognition (OCR) that makes every word in the scanned document searchable. Document tags are also useful when searching through your documents.

Use technology to your advantage.
There are tools and services that make going paperless easier. Evernote Premium, for example, has built in OCR capability, tagging, and document/note encryption. Many scanners have the ability to send directly to cloud storage providers, and you can transfer documents from your smartphone or tablet. Another app that I found extremely helpful is called www.Filethis.com. It automatically downloads statements (user provides login information) from various companies with which you have relationships including brokerage statements, electric bills, cable/internet providers, and medical bills.

Keep a physical copy of important documents.
When transitioning to a paperless home, you should scan anything you might need in the future. Importantly, there are a handful of items that you should scan and also keep the physical copy in a safe location. These items include anything with a raised seal such as birth/death certificates, notarized documents (including wills, trusts, and other estate planning documents) and contracts with original signatures.

Commit and shred.
Now that you have the tools you need and a plan to implement, you have to commit to making the transition. It will take time to make it a habit but the extra effort will be worth it. To make the transition easier, I suggest you set up a pair of physical boxes initially. One for document shredding and one for keeping documents that fall into the categories in the previous step. This will help keep the scanned
documents separate from those waiting to be scanned, filed, or discarded.

Stephen “Scotty” J. Scott

Place a separate credit freeze at all three credit reporting agencies [ Experian, Transunion, Equifax ] using the following instructions:

• Experian  |  
  • Visit www.experian.com/freeze and click Create a free account.
  • Enter your personal information. Click submit. 
  • Answer security questions to verify your identity.
  • Experian will provide a confirmation letter containing a PIN. 
  • Call 888-397-3742 or visit  www.experian.com/freeze to permanently or temporarily remove the freeze. You will need your Experian PIN to lift the freeze by phone.

• Transunion  | 
  • Visit www.transunion.com/credit-freeze and click add freeze.
  • Enter your personal information and click submit and continue to step 2.
  • Create a Transunion account by entering a username and password.  Click submit and continue to step 3.
  • Answer security questions to verify your identity.
  • Transunion will provide a confirmation letter containing a PIN. 
  • Call 888-909-8872 or log into your Transunion account at service.transunion.com/dss/login.page to permanently or temporarily remove the freeze. You will need your Transunion PIN to lift the freeze by phone.

• Equifax  | 
  • Visit www.equifax.com/personal/credit-report-services/ and click place or manage a freeze.
  • Enter your personal information and click continue.
  • Create an Equifax account by entering a username and password.  Click continue.
  • Answer security questions to verify your identity.
  • Equifax will provide a confirmation letter containing a PIN.
  • Call 800-349-9960 or log into your Equifax account at my.equifax.com/membercenter/#/login to permanently or temporarily remove the freeze. You will need your Equifax PIN to lift the freeze by phone.

Stephen “Scotty” J. Scott

What do you do with excess funds in a 529 Plan?

Imagine that if, as a parent, you have saved diligently to fund your child’s 529 plan so that she can attend the college of her dreams, but instead your daughter chose to enroll at a public university rather than a private one. You have money left over in the 529. Good news! You can take advantage of a new option for utilizing the remaining funds in the 529 plan and build a nest egg for your daughter.

Recent legislation (part of the SECURE 2.0 Act) has created a new way to use 529 plan funds to fund retirement savings. Starting January 1, 2024, beneficiaries of 529 plans can roll over up to a lifetime limit of $35,000 into a Roth IRA—free of tax and penalties. This new tool is a great way to supercharge a Roth IRA for an individual who does not need the funds for college. If you start rolling over funds from the 529 plan at your child’s age 21, the funds could grow to over $1,000,000 by the time the child retires at age 70!

Because of this new legislation, parents (or grandparents) may choose to overfund a beneficiary’s 529 plan in order to take advantage of this new rule and begin a retirement fund for their children/grandchildren.  As you contemplate rolling money from a 529 plan to a Roth IRA, you want to ensure you follow the following rules:

• The beneficiary of the 529 plan must be the same individual as the owner of the Roth IRA.

• The 529 plan must have been in existence for 15 years.

• No contributions or earnings from the previous 5 years can be transferred from the 529 plan into the Roth IRA.

• The transfers are limited to the annual Roth IRA contribution limit for that year less any “regular” traditional or Roth IRA contributions that have been made in that year. For example, if the annual contribution limit is $6,500, and you have already made a $1,000 contribution to the Roth IRA, you are only allowed to roll over $5,500 from the 529 plan to the Roth IRA. The IRS sets the contribution limit, which changes annually. 

• The individual must have earned income to make the transfer. The transfer cannot be for more than the compensation received or for more than the annual Roth IRA contribution limit.

• There are no annual income limits for the transfer, unlike a regular Roth IRA contribution that has a modified adjusted gross income limit.

• The rollover is made directly from the 529 plan to the Roth IRA. (Remember – you are only able to have one rollover for a 529 plan in one year. This transfer counts as that rollover.)

The funds will grow tax-free in the Roth IRA. If the Roth IRA owner leaves the funds in the Roth until age 59 1/2, any withdrawals will be tax-free. Using money from a 529 plan to fund a Roth IRA allows a parent to provide a nest egg to their child to help ensure their child’s financial stability in retirement.

You should seek the advice of a financial advisor or CPA when considering a 529 plan conversion to a Roth IRA.

Laird W. Green