Sign up for webinar email notifications http://bit.ly/MFLN-Notify Provide feedback and earn CEU Credit with one link: We will provide this link at the end of the webinar Welcome to the Military Families Learning Network Webinar This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306. Current Personal Finance Issues for Financial Practitioners
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Current Issues for Financial Practitioners 2014-2015
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Sign up for webinar email notificationshttp://bit.ly/MFLN-Notify
Provide feedback and earn CEU Credit with one link: We will provide this link at the end of the webinar
Welcome to the Military Families Learning Network
Webinar
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
Current Personal Finance Issues for Financial Practitioners
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
Research and evidenced-based professional development
through engaged online communities.
eXtension.org/militaryfamilies
Welcome to the Military Families Learning Network
POLL
How would you best describe your current employer?
Millennial Credit Card Use• Millennials are far more likely than older adults to
make due without credit cards.
• Princeton Survey Research Associates Summer 2014 study: More than 60% of millennials (age 18 to 29) said they did not have a single major credit card vs 35% of adults age 30+
• Reasons cited include CARD Act restrictions on young adults and fear of debt, especially on top of student loans
• Published in Psychological Science in 2014: http://pss.sagepub.com/content/early/2014/06/25/0956797614540467.abstract
• An employee’s decision to contribute to a 401(k) predicted action to correct poor physical health indicators that were revealed during an employer-sponsored health examination
• Employees who saved for the future in a 401(k) showed improvements in abnormal blood-test results and health behaviors about 27% more often than non-contributors did
• Findings were attributed to individuals’ time-discounting trait that predicts long-term behavior
Tax Refund Identity Theft• 2/14 article: 1.6 million taxpayers affected in first six
months of 2013 vs 271,000 for ALL of 2010
• Billions of dollars in potentially fraudulent refunds
• Drug dealers and gangs and prisoners are doing for easy money; working on volume (even if IRS stops 9 of 10 attempts, they are making money on 10% !)
• Legitimate taxpayers expecting tax refunds face months of delays
Health Care Reform• About 8 million people picked plans through
exchanges in 2014; estimate of 13 million in 2015: http://online.wsj.com/articles/health-law-coverage-expansion-gets-tougher-1411944893
• “Some of this population has never had insurance. They may not even know the term copay”
• About 85% of people who enrolled in private coverage through the ACA obtained premium subsidies, according to HHS: http://online.wsj.com/articles/hundreds-of-thousands-face-health-law-subsidy-deadline-1412006417
More on Health Care Reform• Large employer mandate (to provide coverage)
penalties postponed in 2/14 to 2016 (50-99 workers) or 2015 (100 + workers): http://online.wsj.com/news/articles/SB10001424052702304558804579375213074082656
• Insurers and employers will be required to send the IRS files to determine health law compliance in 2016 (for 2015 tax year returns)
• IRS can’t enforce health care penalty with liens but can withhold if from future tax refunds: http://online.wsj.com/articles/penalty-for-not-having-health-coverage-can-be-thousands-of-dollars-1411748343
•“The summit wasn’t just a single day; it was the beginning of a larger movement. It’s a movement about creating change-in our laws, in our business policies, and in our society. Because all Americans should be able to have both a job and a family.”
• Once every 5 years for most workers (25, 30, etc.); those not getting benefits and not registered online
• SSA still encouraging online accounts through http://www.ssa.gov/myaccount/
• Expects to mail 48 million statements vs. >14 million online accounts
• SS statement is a valuable retirement planning toolhttp://www.investmentnews.com/article/20140917/BLOG05/140919930/social
-security-resumes-mailing-statements
Reverse Mortgages• As of 1/14, lenders are required to assess the
financial condition of prospective borrowers to determine if their income is sufficient to pay future property taxes and insurance; http://www.onefpa.org/journal/Pages/MAR14-Retirement-Trends,-Current-Monetary-Policy,-and-the-Reverse-Mortgage-Market.aspx
• $625,000 lending limit (amount of home value that can be used to calculate eligible loan amount) for 2014: http://reversemortgagedaily.com/2013/12/06/fha-keeps-reverse-mortgage-loan-limits-unchanged-for-2014/
IRS Policy on Taxation of Bitcoins (3/14)
• Bitcoins are a virtual currency made by computer algorithms and sold in unregulated exchanges
• Operate like currency; pay for goods and services
• IRS will treat Bitcoins as property, not currency
• Wages paid in Bitcoin are subject to withholding
• Bitcoin traders are subject to capital gains taxhttp://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance
Tips for Practitioners• Incorporate 2014 trends and research findings into
outreach efforts
• Correct previous misperceptions and outdated information (i.e., things that you said “Who Knew?” to)
• Make all of your outreach efforts “actionable” (e.g., Web links, application forms, 1:1 counseling sessions)
• Review new (2014) financial education resources
Tips for Clientele• Don’t automatically elect to stay on company plan
through COBRA if unemployed; check out policies available on www.healthcare.gov and online
• Calculate retirement savings need for better planning accuracy and as motivation to save
• Plan for a constrained retirement lifestyle, if needed
• Understand that using an ATM not affiliated with your bank can result in TWO fees: one charged by lender and one charged by owner of ATM
Beware of ATMs Like This
Tips for Clientele• Develop a spending and savings plan for increased
financial discipline and motivation to save
• Understand the financial implications of long-term dependency by adult children
• Negotiate with credit card companies for lower interest and waived fees
• Consider ETFs as an investment vehicle for goals
• Avoid large tax refunds that can be held up by identity theft; adjust W-4 form accordingly
New or Revised Financial Education Resources in 2014
Annual Limits Publication
“The Bible”:
Annual Limits Relating to Financial Planning (College for Financial Planning): http://www.cffpinfo.com/annual-limits/
New and Archived MFLNPF Webinars
Sallie Mae: The College Planning Toolbox
https://www.salliemae.com/plan-for-college/college-planning-toolbox/ •Includes information on grants and loans, scholarship searching, student loan calculators, award letter analyzer (for comparisons), and more
• Focus on best practices in financial literacy education for college students
• Good resource list with links
Rutgers Cooperative ExtensionPersonal Health and Finance Quizhttp://njaes.rutgers.edu/money/health-finance-quiz/
• Believed to be FIRST combined online health and personal finance behavioral practice assessment tool; IRB approved at Rutgers
• Three distinct uses:
– Stand-alone self-assessment tool for users
– To collect data for ongoing research
– For educators to use for SSHW program evaluation (pre- and post-program score)
Any Other New Financial Education Resources Developed in 2014?
Preview of Expected 2015 Personal
Finance Changes
2015 Personal Finance Announced Changes
• 1.7% COLA for Social Security recipients in 2015
• 2015 maximum taxable earnings: $118,500 ($117,000 in 2014)
• 2015 earnings limit under FRA: $15,720 ($15,480 in 2014)
• Increase in elective deferral limit for employer retirement savings plans to $18,000 ($17,500 in 2014)
• Increase in catch-up contribution limit for workers age 50+ to $6,000 or $24,000 total ($5,500 and $23,000 in 2014)
2014 Military-Specific Personal Finance News and Issues
• 9/14 Law: Changes the default option in TSP to the L fund (Lifecycle) from the G fund (effective Summer 2015): http://www.govexec.com/pay-benefits/2014/09/senate-approves-bill-default-new-hires-riskier-higher-yielding-tsp-fund/94358/
• 3/14 CFPB Report on Servicemember Debt: http://files.consumerfinance.gov/f/201403_cfpb_snapshot-report_complaints-received-servicemembers.pdf
• Other?
Key Take-Aways• A third of U.S. workers have no retirement savings
• Tax refund identity theft is increasing significantly
• Health care reform affects both insurance coverage and income taxes
• Free credit scores are becoming more commonplace
• Mailed Social Security benefit estimates are returning
• Tax-deferred plan limits are increasing in 2015
Key Take-Away Applications• Encourage people to save something for retirement
• Encourage people to file taxes early and avoid a large tax refund that can be held up by thieves
• Encourage people with ACA health insurance to accurately estimate income for subsidies
• Encourage people to seek out free credit scores
• Encourage people to read SS benefit estimates and get online account at http://www.ssa.gov/myaccount/
• Encourage people to save more for retirement in 2015
Comments? Questions?
Next Personal Finance Webinar
Year End Tax Planning StrategiesTuesday, December 9, 11 a.m. ET
• https://learn.extension.org/events/1675• Speaker: Dr. Barbara O’Neill• 1.5 CEUs for AFC-credentialed participants
Military Families Learning Network
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
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