4th Quarter Newsletter

NEWSLETTERKNOWLEDGE IS YOUR POWER
FOURTH QUARTER 2018

Upcoming Workshop: Retirement Planning

You have worked and saved for years, and now you want to
retire. Perhaps the following questions have crossed your mind:

• How do I make my portfolio
last a lifetime?

• How do I take money out of
my retirement accounts?

• What do I need to know about
Social Security?

• What taxes do I need to know
about in retirement?

We will address these questions and more at our upcoming
workshop hosted by Juli Erhart-Graves, CFP. This workshop is
designed for those who want to prepare for retirement.

The workshop is open to anyone, so please bring a friend
who is interested in this topic. We will have complimentary
refreshments, but space is limited, so please RSVP.

WORKSHOP DETAILS: WHEN: Wednesday, Jan. 23, 6-7:30 p.m.

RSVP: By Wednesday, January 16 by calling WHERE: The Pyramids, Pyramid Three,
317-872-5090 or emailing Lower Level, Conference Room A & B
[email protected] (3500 DePauw Blvd, Indianapolis, IN 46268)

COST: None, but space is limited.

Worley Erhart-Graves Financial Advisors is a Registered Investment Advisor. Registration as an investment advisor is not an endorsement of the firm by
securities regulators and does not mean the advisor has attained a particular level of skill or ability. All expressions of opinion reflect the judgment of
the authors as of the date of publication and should not be construed as personalized investment advice. Different types of investments involve varying
degrees of risk, and there can be no assurance that any investment will either be suitable or profitable for a client’s portfolio. Worley Erhart-Graves Financial
Advisors is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Worley Erhart-Graves Financial Advisors, Inc., is affiliated with Smitson Erhart-Graves Tax Advisors, LLC, through common control and ownership. Smitson
Erhart-Graves Tax Advisors provides accounting and tax preparation services. If you require such services, we may recommend you use Smitson Erhart-
Graves Tax Advisors, although you are under no obligation to do so. Fees for financial planning and investment advisory services are separate and distinct
from the fees Smitson Erhart-Graves Tax Advisors charges for their services.

Don’t Leave Your Loved Ones in a Puzzle

Juli Erhart-Graves, CFP®

Over the Thanksgiving holiday, I put blocks of sugar in my have spent time preparing instructions for the appropriate
beehives. This common practice gives bees an additional person, your loved one will spend days, if not weeks, trying
source of food to get them through the winter. As I got into to figure out your financial life and put together the puzzle
the first hive, I found my bees had already died. I was sad, but pieces.
it had been my weakest hive, so I wasn’t entirely surprised. This
hive had a poor queen that, in hindsight, I should have replaced Think of it this way: Someone is responsible for walking into
this summer. Regardless, I had to spend some time cleaning your home and picking up where you left off. What do they
out the hive. As I did this, I reflected on how this task translates need to know? They probably need to know how to get into
into the human world. As the beekeeper, I knew what I had to your email so they can get paperless statements and invoices.
do in the dead hive, so I had the job wrapped up in about 20 They need to know about your routine income and expenses,
minutes. That’s not the way it goes in our lives nowadays. As a including your mortgage and utilities. They need to know
financial planner, I have seen a medical emergency turn into a the location of important documents, passwords, and keys.
scattered puzzle that loved ones have to piece together over Also important is a list of people to contact, such as your tax
several weeks. preparer, financial planner, insurance agent, and attorney.
As you can imagine, having an instruction letter to reference
We all have different ways of running our financial lives. during this time would be invaluable.
Some of us have everything set up on auto-pay, while others
still write checks. Some people like to get paper statements, Spend some time this holiday season writing down instructions
while others get everything via email. We deal with different to be used in the event of your incapacity or death. Then, share
insurance companies, utility providers, and credit card those instructions with the appropriate person. Don’t think of
companies. When a crisis occurs and you can’t manage your this as a gloomy topic—think of this as another way you can
financial world for a while, others have to step in. Unless you show your family and friends that you love them.

Tradition and Holiday Food

Gail Gill, CFP®

My favorite part of the holidays is the food. It starts with That was a long time ago. Since then, to keep with tradition,
a Thanksgiving feast and ends with a New Year’s Day a family member will wake up at 6 a.m. on December 23 and
brunch. For me, it’s no longer about one specific day. stand in line outside the Swedish Bakery in Andersonville (in
Instead, I reach out to friends and family the entire month Chicago) to buy cardamom dough coffee cake with almond
to share a holiday meal. and cinnamon sugar filling, Limpa bread, and other Swedish
delights to share on Christmas Eve.
When I was a child in Chicago, the holiday dinner had
a Swedish theme since my grandparents immigrated In February 2017, the bakery closed after 88 years in business.
through Ellis Island from Sweden. On Christmas Eve, a When the owner was asked by a reporter why the bakery
large table would be set with fine china, silver flatware, closed, he said, “The food scene in Chicago is competitive.
and crystal goblets. The kids would be sitting on thick People are not interested in history. They’re interested in
telephone books. We’d always start with an appetizer of making their own history, and that’s understandable.”
tomato juice with a lemon wedge. Then came the herring,
Swedish meatballs, Swedish rye bread known as Limpa, So, this year we’ll be attempting to make our own cardamom
and the dreaded smelly lutefisk. (I was always thankful coffee cake and Limpa bread. Who knows, maybe passing
they cooked that in the basement. Just catching a whiff of on the “baking experience” will inspire the young family
the lye-soaked fish coming up the stairs was enough.) members to keep the tradition alive. One can only hope.

What It Means to Extend a Tax Return

Pam Smitson, CPA, CGMA

Filing an individual tax return extension is often misunderstood balance due is not paid by the April deadline. Compare it to a
and sometimes abused. A federal tax extension is a form filed consumer charge card. If you make a late payment, you are
with the IRS to request additional time to file your income tax billed a penalty and additional interest. Taxes are treated the
return. The extension period is six months and grants additional same.
time to submit a complete and accurate tax return.
If you normally make quarterly estimated tax payments,
At times, taxpayers will have good reasons to extend their include an estimate for the first quarter in your payment.
return, such as missing information or life getting in the Otherwise, expect some underpayment penalties the
way. Other times, tax preparers will recommend you file following year.
an extension due to the complexity of the return, awaiting
guidance, specialized forms due to tax reform, or limited time In any case, filing an extension does not increase your
remaining in the tax season to complete the return. Many likelihood of being audited by the IRS if the return is properly
preparers, such as myself, will issue a cut-off date for clients to filed by the extension deadline. It is always better, and less
submit their tax information so they can plan their workload, costly, to file an extension rather than to file an incomplete
ensuring all client returns and extensions are completed by the return or one you have not had time to review carefully before
tax deadline. signing.

Some ask if you should do anything differently when filing
an extension. The answer is no. You should still give your tax
preparer all information available as early as possible to allow
time to determine if you expect a refund or, more importantly,
have a balance due.

When tax documents are not available, extensions are made
without payments. Confusion exists when it is believed filing
an extension also extends paying your tax liability. It does not.
Underpayment penalties and interest are assessed when the

Where Will the Market Be in 2019?

Bonnie Struck, CMFC®

Even with the dramatic market swings this year, it is hard to A flat market signals lagging investor interest due to the
imagine we will end 2018 where we started. On December 31, uncertainty with trade tariffs, healthcare, and political
2017, the Dow closed at 24,719. As I write this article, the Dow posturing, to name a few possibilities. Investors must not
is at 24,622. That is correct—it has been a flat performance become apathetic because of all the “investment noise”
year. Where do investors go from here? on TV, radio, and the internet. Instead, focus on the strong
fundamentals (e.g., historically low interest rates, low
At the recent Schwab conference in Washington, D.C., fund unemployment, strong corporate earnings, etc.), take time
managers and economists were all expressing the same to periodically reassess your portfolio holdings, and increase
sentiment: “This may be the correction we have all been your savings as you receive bonuses and pay increases.
preparing for.” A correction is when stocks decline 10% from
their recent highs. According to Deutsche Bank, on average, Investors cannot predict market corrections but can position
the stock market has a correction about once a year; however, themselves for the inevitable volatility with an appropriate
they have been quite infrequent since the Great Recession. portfolio allocation based upon their individual situation.

STANDARD PRESORT
US POSTAGE
PAID

INDIANAPOLIS, IN
PERMIT NO. 937

3500 DePauw Blvd. | Suite 1035
Pyramid One, Third Floor
Indianapolis, IN 46268

317.872.5090 Phone
855.872.5090 Toll Free
317.872.5095 Fax

wefinancialadvisors.com

Out With the Old and in With the New A Warm We are happy to add two staff to Smitson
Welcome Erhart-Graves Tax Advisors! Please join us in
welcoming the newest members of our team.

Inflation has ticked higher in the last year, so that means many of the IRS limits will Robyn Avery
be increasing. In addition, Social Security recipients will receive a 2.8% cost-of-living
increase in their benefits for 2019. TAX ADMINISTRATOR

For Social Security recipients who are still working and under their full retirement Robyn joined the Smitson Erhart-
age, the earnings limit will increase to $17,640. For those subject to this limit, Social Graves team in 2017 with 12 years of
Security will deduct $1 from benefits for each $2 earned over this amount. experience in the banking industry.
She also has a certification in Early
The maximum amount of earnings subject to Social Security tax is increasing to Childhood Development. If you
$132,900 next year. spoke on the phone with Robyn, you
may have heard an accent. She was
The annual gift tax exclusion amount (the amount you can gift without filing an born and raised in New Zealand and
informational gift tax return with the IRS), is one of the few numbers that did not moved to the United States with her
change. It remains at $15,000 for 2019. husband and two children in 1999.
Robyn enjoys running, walking, and
The maximum Modified Adjusted Gross Income (MAGI) for making Roth IRA spending time with her friends. She
contributions will increase to $203,000 for married couples filing jointly, with phase- also is an avid traveler.
out limits beginning at $193,000 MAGI. For single and head-of-household taxpayers,
Roth IRA contribution limitations begin at $122,000 with total phase-out at $137,000. Sherry Carter

Health Savings Accounts (HSA) will get a small increase. Contributions for individuals TAX ACCOUNTANT
will increase to $3,500, and those with family plans get a boost to $7,000. Those aged
55 and older can still contribute an extra $1,000. Sherry has been in the accounting
industry since her first job out of
Retirement account IRA and Roth IRA 2019 Additional college. She went to Ball State
contribution limits Contribution Limit “Catch Up” Limit University and earned her bachelor’s
are also increasing and master’s degrees in accounting.
for 2019. If you are $6,000 $1,000 She has prepared taxes for 13 years,
contributing to one on top of working as an accounting
of these accounts, be 401k, 403b, 457 $19,000 $6,000 manager and CFO for the last
sure to update your 20 years. Sherry loves the water,
contribution rate to SIMPLE IRA $13,000 $3,000 spending time at her family cottage,
account for the new traveling, and reading.
amounts. SEP-IRA $56,000 N/A