While making mistakes is inevitable – we’re all human, and that comes with the territory – in many cases mistakes can be at least mitigated by course correction. Retirement planning – and, indeed, all financial planning – is, thankfully, one of the areas where we can adjust.

But it’s important to make that course correction as soon as possible – and keep a clear eye ahead, so as to avoid making more mistakes (insofar as we can).

There are common mistakes people make when planning for retirement – and they may not all be what we think they are.

Here are some of those mistakes – and ways to avoid them:

Not Starting with a Clear Goal

From the moment you start saving for retirement (ideally, as soon as you start working), you need a clear goal for those retirement savings. That goal is your destination – and without a destination, you can’t map a clear course. This is not to say your goal can’t change – very likely it will, and that’s when we re-draw the map. But without a goal, a destination to aim for, it’s all too easy to get lost along the way.

And that goal is what you – not your friends, not your colleagues – want out of your retirement. That’s personal, unique to you as an individual. You want a certain, specified amount of capital and/or income so you can (fill in the blank – spend more time with your family, open a bed and breakfast in your dream location, buy a racehorse, volunteer for your favorite charity, etc.).

Again, this goal can alter – the important thing is that you save with a purpose. Write your purpose down – keep it, refer to it, change it when your goals change. But keep it like a talisman, to remind yourself of your purpose in saving.

Trying to Navigate Your Road Alone

Now that you have your goal, your purpose, you’re all set, right? All you have to do is save! Unfortunately, that’s an unwise attitude, which usually doesn’t pay off. Take guidance – ask your virtual CFO or other trusted financial advisor to help you devise a plan – your roadmap to get you from where you are now to where you want to arrive at the end of the journey.

Your advisor is the mapmaker who can point the clearest path toward your goal – avoiding circuitous routes, helping you move down your road effectively and methodically – in line with your purpose. S/he can point out that what you may be doing isn’t actually advancing your stated purpose. Sometimes that will mean correcting what you’re doing; other times your advisor can help you realize your goal has changed without your knowing it. Then, it’s time to re-draw your map in light of the new destination.

But your trusted financial advisor is also your guide along that road – your co-pilot, your wingman (or woman), riding shotgun for you. S/he will be there to ensure you are on track at every checkpoint.

Spending Time and Money Against Your Purpose

Part of developing your goal is understanding what you value – and, even before you retire, your time and your money should be spent, not only on working and saving for the future, but living toward your goals – i.e., spending your time and money consistent with your purpose in the present. While delayed gratification is an important part of planning and saving, it’s important that your goal, your purpose, is paramount, and you should be furthering that purpose throughout your life.

Don’t put in 80-hour weeks on a regular basis (sometimes this may be necessary, but it shouldn’t be your default). This will result in burnout for yourself, shortchanging not only your work itself, but your family and friends, your recreational activities – starving yourself and them of the attention and focus on the super-values away from work which will give you a well-lived life. And if a well-lived life isn’t part of your goal, ask yourself why.

Studies show that over time, the happiest people are those who spend their time and money on what matters most to them. So, do that, and be happier.

Letting Your Money Sit Idle While You Work

Your virtual CFO or trusted financial advisor can help ensure you are saving enough, and investing it wisely, so that it will always be working for you; growing as you grow.

Spend what your financial planning allows for – it may come as a surprise, but a lot of people spend less than they could, given their income, even when they are saving a generous amount toward the future.

Don’t be afraid to live as big as you dream – and never be afraid to dream big, bigger, biggest – to the limit of what’s realistic for you in light of your purpose and goals.

Again, delayed gratification is an excellent habit, but it’s no substitute for a purpose, or for a fully experienced life. There’s room for all of these in everyone’s life.

You work hard for your money – make it return the favor.

Letting Money Become Your Goal

Investing is not the game, it’s the strategy. Because the game itself is living life as you want to – now and in the future.

Money shouldn’t be an end in itself – it’s a means toward an end – and that end is your goal – the place you want to get to.

Investing for its own sake becomes an empty pursuit. What you should strive toward, in your work, your free time, and your financial planning, is something far more real and personal to you.

Don’t get me wrong – it’s great to save, to invest, to watch your assets grow. But growth means harvest – never lose sight of the fact that your money is invested to bear fruit to sweeten your life, and the lives of your loved ones.

Not Letting Your Guide Help You on the Downslope

More mountain climbers die on the way down than they do reaching the peak. The reason these deaths on the downslope have declined is that more climbers take guides with them all the way, up the mountain and down.

Once you’ve saved enough (or think you have) to achieve your retirement goals, you still need guidance in developing and executing a plan for what comes next.

You have enough money to fund your goals – but have you taken into account the other expenses reaching retirement age will bring?

Your virtual CFO or financial advisor will help you develop a retirement plan which can help you safely navigate your way through retirement – achieving your end-goals (whether they are exactly the same as when you started saving or have evolved into something altogether different) while ensuring you and your family are taken care of in the day-to-day process of living.

At Rigby Financial Group, we aim for long-term relationships with our clients. We don’t stop working for you when you have a financial plan, or when tax season is over. Rather, we want to be there for you and with you as you travel your unique, individual path.

We will help you:

• Identify why money is important to you – what you want from it, what it can help you avoid, etc.
• Clarify what you value in your life and help devise ways to get more of that now, even while saving for the future.
• Get to know your unique picture – your life, your goals, your family, your financial picture, are not the same as anyone else’s – and RFG celebrates you in all your individuality.
• Devise plans, strategies, and processes to help the unique you follow your singular path through an irrepeatable life toward your individual goal.
• And be there with you all through the long process of implementing, revising and adjusting the plans and processes as your life, family, and financial picture change.

 

For better or worse, you are in your life for the long haul – don’t you deserve an advisor who is, too?

Whatever stage in the retirement planning process you are in, RFG can help you get your ducks in a very tidy row! Please click here to email us directly – we are always here to help.

Until next time –

Peace,

Eric

For more on planning for retirement, see:

What Your HSA Can Do for You – Now and in the Future

Increased Retirement Plan Contribution Limits for 2024

Roth IRAs and Income Tax Liability – How to Protect Your Assets

SECURE 2.0 Enacted – Key Highlights

Ensuring a Happy Retirement

Taxation in Retirement – Be Prepared!

Roth IRAs – To Convert, or Not to Convert?

Should You Roll Your 401(k) Into an IRA When You Retire?

The Ins and Outs of RMDs – Explained

Allocating Your Retirement Portfolio

Planning for Retirement in a Volatile Market

How the SECURE Act Changed Retirement Plans

The SECURE Act of 2019

Retirement looms for an ever-increasing number of baby boomers (I suspect a lot of us qualify).

Many of us may shy from what we perceive as an uncomfortable – but postponable – subject – but we shouldn’t.

Rather, we should plan carefully for what is inevitable. Unless we “die in harness,” which God forbid, we have a long life to experience and enjoy after our working lives are over.

And we shouldn’t put this planning off until after the fact – as all too many of us are inclined to do.

Here are some steps we suggest taking the year before you retire – if you haven’t done so before.

Create An Income Plan

Do you have a clear picture of where your income will come from after you retire?

How much income can you expect from:

• Social Security
• Your individual retirement accounts (IRAs)
• Any employer-sponsored retirement plans you participate in, whether defined-benefit (e.g., pension plans) or defined-contribution (e.g., 401(k)s, 403(b)s, 457(b)s, etc.)
• Other sources, such as income from real estate investments or new business ventures, inheritances, etc.

 

It’s important to know where your income will come from, and how much that income will be in aggregate.

Develop a Plan for Your Post-Retirement Healthcare Needs

Age, if we’re lucky, brings us greater wisdom. Unfortunately, it also brings us increased expenditures on healthcare – even if we eat healthily, exercise, and do everything we can to optimize our health.

When planning for retirement, you need to consider:

• Health insurance. While you have paid for Medicare coverage throughout your working life, automatic coverage is limited to Plans A (inpatient care at hospitals, skilled nursing facilities, nursing homes, and hospices, and some home health services) and B (medically necessary services, including ambulances, preventive services including most visits to physicians, limited prescription drugs, and some medical equipment such as those which provide oxygen). You can also opt for Parts C and D coverage (private company offered Medicare Advantage plans, which cover Parts A and B and often offer additional services and/or Part D, which provides more coverage for prescription drugs). So, you need to determine which Medicare plan you need, as well as allow for costs such as premiums, co-pays, etc.
• Any hereditary propensity toward areas of concern – are you genetically predisposed to develop any serious conditions? If so, that, too, needs to be considered.
• Some businesses offer lifetime health coverage for partners or high-level employees – does yours? Is there a premium or other charge to you after retirement?

 

And once you’ve allowed for all these factors, you need to incorporate those fixed and potential costs into your retirement planning.

Cut Down on the Pieces of Your Financial Puzzle

Often, we accumulate many pieces which make up our financial picture – but, when planning for retirement, consider:

• How many retirement accounts do you have? What type(s) are they – IRAs, 401(k)s or other employer-sponsored plans? Maybe you have a mixture of both. Do you need all of them individually? Maybe the answer is “yes,” but it’s important to see whether they can be streamlined. Multiple IRAs can be combined into one, even if you want to keep your employer-sponsored plan assets where they are.
• How many in-force life insurance policies do you have? Do you need them all? If your children are grown and self-supporting, and your spouse is well-provided for via other estate planning vehicles, you may not need any of them.
• Do you have disability insurance, other than that which may be provided by your employer? The latter will likely cease to be effective once you retire; and when you’re no longer receiving earned income, do you really need disability insurance?
• You may need or want to have several non-qualified investment accounts (separate accounts for yourself and your spouse, a joint investment account, etc.). But can you consolidate at all?

 

Create a Post-Retirement Spending Plan

Taking into account the post-retirement income you can count on, determine:

• Your fixed expenses (e.g., medical insurance, home maintenance, utilities, landscaping, vehicle purchases and maintenance, etc.).
• If you will have more than you need for these, congratulations! What, then, do you want to do with your extra cash?

 

Additional Pre-Retirement Considerations

Other aspects of retirement planning include:

• Your asset allocations. Whether you have one investment account or 20, and whether you have all your assets in qualified retirement accounts or not, the best asset allocation for you before you retire may not be optimal afterward.
• Your home – do you want to stay in the home you have now, or do you want to change. Whether that change is downsizing, upscaling, or moving to an entirely different place, it’s a choice you need to make, and once your family needs to be in the loop about – though the final decision is and should be yours (and your spouse’s, if you’re married).
• Any travel plans you have. Many people put off travel they would dearly love to do until they’ve retired. That’s not a right-or-wrong choice, it’s a preference. But if you do want to travel, that represents additional projected expenditures which need to be factored into your planning.

 

This touches on the final, vital consideration:

What’s Next?

Retirement, of course, represents, if not necessarily the end of your working life, at least the end of a significant portion of it.

But, as T.S. Eliot wrote,

In my end is my beginning.

You can choose to start a new business or buy an existing one that’s been your dream – like a winery, if you’re an oenophile.

You can choose to stay quietly at home, enjoying time with family and friends, read the books you’ve never had the time to, attend musical concerts, theatre, more films – in short, you can do anything your income allows and your inclination sends you toward.

But it’s vital to know what those options are – and which ones you want to pursue.

Because one thing about retirement – it takes away the structure your working life gave you.

Structure is important – and even more so is having purpose in your life.

Never let yourself waste away the rest of your life drifting – unless that’s your deliberate and desired choice.

But make that choice – don’t let idleness – or anything else – choose you.

Your virtual CFO can help you plan for every aspect of your retirement. This planning, in turn, needs to focus on what you want out of your retirement – your goals, your needs, your desires.

At Rigby Financial Group, we will custom-tailor a retirement plan to meet your needs. We never take a cookie-cutter approach.

Please click here to email us directly – we are here to help.

Until next time –

Peace,

Eric

As some of our clients near retirement, they often ask whether they should roll their 401(k) (or 401(k)s) into an existing or new IRA.

The answer is (as it so often is) – maybe.

There are pros and cons to such a rollover, which should be weighed in light of your individual circumstances and needs.

Potential Benefits of an IRA Rollover

• • Wider variety of investment options – while this is not always the case, usually an IRA offers more choices than an employer-qualified plan to allocate your assets.
  • Fixed income choices – 401(k) plans generally have limited bond or annuity options for investment; it may well be that, once you retire, you will want a more significant portion of your assets invested in fixed-income funds. An IRA’s fixed-income investment options are only limited by your IRA custodian and usually are far more diversified; therefore, you may find better fits for your needs with an IRA.
  • Consolidation of assets – research shows that baby boomers may change jobs as many as twelve times over their careers. It is often a good plan to consolidate your retirement assets into a single account – and if you haven’t done this before retirement, this might be the time to do it. It is much easier to keep track of a single account that provides a total picture of your retirement funds than to monitor a dozen or even three or four accounts.
  • Control over withdrawals – some 401(k) plans allow only full-account withdrawals upon the participant’s termination from the plan. IRAs provide the option of regularly scheduled or at-will withdrawals without penalty once you are over age 59½. However, there are some benefits with regard to withdrawals from your 401(k) assets, such as leaving them where they are – see below.

  Potential Benefits of Leaving Your 401(k) Where It Is

  

  • Different age-eligibility for penalty-free withdrawals – if you are retiring after reaching age 55, but before you are 59½ – or if you would like the ability to make penalty-free withdrawals during those 4½ years – your 401(k) may allow you to withdraw funds without incurring the 10% early-withdrawal tax penalty under IRS code section 72(t) In addition if you had planned to retire at age 70, but find yourself unready at that point to give up your occupation, you can continue to contribute to your 401(k) – unless you own 5% or more of your employing company – until you retire, and you need not take required minimum distributions (RMDs) while you are still working. An IRA has no such flexibility regarding early withdrawals and RMD age requirements.
  • Legal protection of assets – if you are facing a lawsuit, ERISA rules protect assets in an employer-sponsored retirement plan from creditors. IRA assets have some protection, but not as much as a 401(k) plan, and the level of protection can vary by state.

   

  Another factor to consider is the fees on your existing 401(k) and any IRA you contemplate rolling that account into. While IRAs will sometimes have lower costs, this is only sometimes the case, mainly if your 401(k) plan is with a larger employing company. It pays (in savings) to look closely and carefully at the costs of all plans available to you.

  Before you decide – and before retiring – please consult your virtual CFO or other trusted financial advisor. S/he will listen to you, understand your needs and goals, review your account(s) – both existing and contemplated – and guide you toward the best choices – because the right decision for one person isn’t always in another’s best interest. Each person is unique, as are their family, financial situation, and goals, and your financial advisor knows that. S/he can custom-tailor a plan for your retirement – one that fits your needs.

  If you are wondering whether you should roll your employer-sponsored retirement plan into an individual retirement account, please get in touch with Rigby Financial Group – we are at your service. And we never take a one-size-fits-all approach. We are here to help you – as the unrepeatable individual that you are and that no one else ever can be.

  Please click here to email us directly – let us know how we can help.

  Until next time –

  Peace,

  Eric

Halloween has been celebrated in one form or another for over 2,000 years – it dates to the ancient Celtic festival of Samhain, which was celebrated on October 31 with bonfires outside and hearth fires in homes left to burn out as the harvest was gathered. That date was the official year-end, with the new year beginning on November 1.

On Samhain, it was believed that the barriers between the living world and the netherworld weakened, allowing interaction with the dead. Costumes were often worn as disguises, to confuse evil spirits which might be hunting for you.

The word Halloween itself descends to us from Scottish tradition, as a contraction of All Hallows Eve, following Pope Gregory III’s dedication of November 1 as All Saints Day in the 8th century AD (though the original institution of All Saints Day, which was initially May 13, is credited to Pope Boniface IV and dates to the early 7th century AD).

But wherever it comes from, there is no better place to celebrate tradition, history, and the ghostly world than New Orleans. In 2022, Travel & Leisure Magazine honored New Orleans among the “13 Best Places to Celebrate Halloween.” New Orleans has everything you need for spooky fun – we have ghostly tours, haunted hotels, bars and mansions, the Krewe of Boo parade, and festivities appropriate for all ages from mid-October on through the day itself.

And you know we love to decorate – and are great at it!

We hope you and your families go all out for it and have a blast! But when trick-or-treating, be careful and aware. Not all the ghouls out there are friendly.

Wishing you all a safe spooky holiday!

What are your ghostly plans for today? Please click here to email me directly – it might provide inspiration for future Halloweens.

Until next time –

Peace,

Eric

We’ve written more than once about the importance of keeping your beneficiary designations current.

In fact, one of the first things we do at RFG with new clients is to ask to see beneficiary statements on all relevant accounts and insurance policies, both life and disability. We also ask to review these periodically, as life’s circumstances change for us all, and it is of vital importance that we (as individuals) make sure our beneficiary statements reflect such changes appropriately.

Did you know that, according to Supreme Court precedent, beneficiary designations trump your will’s explicit provisions?

Case In Point

We recently became aware of an actual instance – a case study – of the unfortunate consequences to a family when a beneficiary designation was left unreviewed and unchanged for decades.

Today, we’ll share that story with you – in the hope that it will spur all of us to be conscientious in ensuring our assets and benefits are secured to those we want to have them – now, not in the past. And that we continue that diligence into the future as our life circumstances change (and they will). Now is only for now, and eternal vigilance is the price of liberty, security, and informed peace of mind.

Almost 40 years ago, a man took a new job with the benefit of a 401(k)-retirement account. He named his wife the sole beneficiary of this account. Back then, there was only physical paperwork to complete (but you could still change your beneficiary or beneficiaries by completing and submitting an updated beneficiary form).

This couple had moved in together, married, and bought a home together. In fact, they intended to—and to an extent, did—build a life together. But the marriage lasted only a few years before the couple divorced. On his death in 2015, the man left two living brothers.

However, he had never changed the beneficiary designation on his 401(k), which held assets valued at over $750,000 at the time of his death. His long-divorced spouse remained the sole beneficiary.

The two brothers sued to stop the ex-wife from inheriting this account since the marriage had ended decades earlier.

After years of court battles and appeals, the courts finally ruled that the ex-wife, as the sole beneficiary designated by her now-long-ex-husband, was entitled to the entire account—which, by the time the case was finally adjudicated, had grown to over $1 million in assets.

The company holding the account had proven they’d provided numerous notifications of the option to change beneficiaries, and the man had, in fact, logged into the now-online account more than a few times. The holding company further demonstrated that they had repeatedly recommended that all participants review their beneficiary designations.

Is this what we want for our hard-earned assets? That they devolve to those we’d no longer prefer to have them – through our failures of vigilance and diligence?

I think we would all have to answer “no.”

So, how do we avoid this?

Get Your Ducks in a Row

If you have assets you want to protect, we recommend consulting a financial and estate planning expert, like the team at Rigby Financial Group. Whether it’s your virtual CFO or another trusted financial advisor, take counsel with someone with the experience and expertise to ensure that your financial and estate planning – including your beneficiary designations – keeps pace with your life.

Because, as life goes on, things happen, relationships change, new loved ones emerge. And, as they do, your estate planning should move with them.

You should have primary and contingent beneficiaries designated on all:

• Individual retirement accounts (IRAs)
• Employer-sponsored accounts, such as pensions, 401(k)s, 403(b)s, 457(bs), ESOPs, etc.
• Life insurance policies
• Disability insurance policies

Keep Those Ducks in Their Proper Row

It’s crucial that these designated beneficiaries be reviewed and updated to ensure that the designations align with your current life circumstances and goals and stay aligned as those circumstances and goals alter.

Review your beneficiary designations upon:

• Marriage (whether it’s your first or your sixth!)
• Divorce
• The birth of a child or grandchild
• The death of a family member or close friend (even if that person is not one of your designated beneficiaries – contemplating such a death may change your wishes)
• If a plan administrator changes (sometimes glitches occur when systems change over)

Even when you think nothing’s changed, it’s a good idea to review your beneficiary designations at least every 2 to 3 years. People move, telephone numbers, email addresses can change – even if the right people are designated, keep their contact information updated.

Think of your overall estate plan as an engine, driving your assets to their proper destination(s). Complete with many moving parts, all of which require attention, maintenance, and perhaps repair.

And consider regular review of your beneficiary designations – and your entire estate plan – as a tune-up for your car – every so often, it’s necessary.

If you wonder whether your beneficiary designations might need updating, there’s a good chance they do. Please click here to email me directly – RFG is here to help you!

Until next time –

Peace,

Eric

Most privately-held businesses created and registered before January 1, 2024 are required to file beneficial ownership information (BOI) with the Financial Crimes Enforcement Network (FinCEN), which is a part of the U.S, Department of the Treasury (DOT), by January 1, 2025.

For businesses created or registered after January 1, 2024, but before January 1, 2025, filing is required within 90 days after receiving actual or public notice that the creation or registration has become effective.

Reporting businesses created or registered after January 1, 2025 must file within 30 days of actual or public notice that the creation or registration has become effective.

For all reporting businesses created or registered after January 1, 2024, the BOI reporting requirements extends to “company applicants” as well (see below for specifics concerning “company applicants”). This requirement does not apply to businesses created and registered prior to January 1, 2024.

Several members of the U.S. House of Representatives have pleaded for a delay to the effective date of this reporting requirement, but to no avail.

While litigation against implementation of this reporting requirement is ongoing (see below), we recommend you be prepared to file these reports ahead of the deadline, as there is no guarantee that the courts will resolve every lawsuit before the deadline, nor that a nationwide preliminary injunction will be issued.

Does This Reporting Requirement Apply to Your Business?

If your business is a U.S. entity:

• Created under U.S. laws (which include state and Native American tribal laws);
• A corporation or LLC; and
• Created via filing of a document or documents with a secretary of state or similar office or

 

Your business is an entity:

• Created under the laws or a foreign nation; and
• Registered to do business in any U.S. State or Tribal jurisdiction via filing of a document or documents with the secretary of a U.S. State or similar office

 

Unless you work in one of the exempted industries – click here for the full exemption list – you may have to file BOI reports with FinCEN.

What Constitutes Beneficial Ownership?

“Beneficial owners” are those individuals who, directly or indirectly, either:

• Exercise substantial control over your business, or
• Own or control at least 25% of the ownership interests of your business.

 

Sounds simple? Well, it’s not. There are many criteria by which FinCEN may deem a person to exercise “substantial control” over a business. These include:

• Senior officers (e.g., president, chief financial officer, general counsel, chief executive officer, chief operating officer).
• Anyone who can appoint or remove a senior officer or a majority of the board of directors.
• Important decision makers, who include those with direction or determination of, or substantial influence over, the business, its finances, or its structure.

 

Determining whether an individual qualifies as a beneficial owner can be complicated. A further potential complication is that “beneficial ownership” covers those who exercise any other form of “substantial control” over the business in addition to the above categories. This is very vague wording; we hope future guidance will provide more specific criteria to identify what those other forms of substantial control represent in practice.

Further, the “beneficial ownership” status includes those individuals who control an intermediary entity that exercises “substantial control” over the reporting business.

There are exceptions, such as for minor children who may, through inheritance or gift, possess sufficient ownership of the reporting business to qualify. In this case, the requirements would allow for reporting such information about the parent or legal guardian of the child in question.

For businesses created or registered after January 1, 2024, which must follow the reporting requirements for “company applicants,” company applicants are those individuals who directly file the documents creating domestic or registering foreign reporting businesses, as well as those who exercise primary responsibility for directing or controlling the filing of the creation or first registration documents.

Again, for businesses created or registered before January 1, 2024, FinCEN does not require the filing of BOI for company applicants.

What Beneficial Ownership Information Does FinCEN Require?

If your business is a “reporting business,” as defined by the rule, FinCEN requires you to report:

For the reporting business itself:

• Full legal name.
• Any trade name or “doing-business-as” (“DBA”) name.
• Complete current U.S. address of the principal place of business.
• Jurisdiction (state, tribal, or foreign) of formation; and
• IRS taxpayer identification number (TIN).

 

For foreign reporting businesses, the required information includes the state or tribal jurisdiction of the first U.S. registration to do business in this country. If a foreign company does not have an IRS issued TIN, FinCEN requires a foreign-issued TIN and the name of the issuing jurisdiction.

For each individual with “beneficial ownership interest,” including “company applicants” for those reporting businesses created or registered after January 1, 2024, FinCEN requires:

• Full legal name.
• Date of birth.
• Complete current address.
• Unique identifying number (e.g., Social Security number); and
• An image of a U.S. passport, a state driver’s license, or a state identification document or card. A foreign passport is accepted for those who may have none of these.

 

This represents only an overview of the new FinCEN reporting requirements, not a complete explanation of every aspect.

Litigation: Current Status

On March 1, 2024, in National Small Business United d/b/a the National Business Association, et al. v. Janet Yellen, in her official capacity as Secretary of the Treasury, et al., U.S. District Court Judge Liles Burke (Northern District of Alabama) granted summary judgment banning enforcement of the FinCEN reporting requirements, ruling that the CTA is unconstitutional – but only as applied to the named Plaintiffs in the case.

These consist solely of the National Small Business Association and its members (some 60,000-plus, representing ~0.1%-0.2% of the small business owners FinCEN reporting requirements would have applied to), plus Isaac Winkles and any reporting companies in which he has beneficial ownership interests.

On behalf of the DOT, on March 11, 2024, the Department of Justice filed a Notice of Appeal, sending the case to the U.S. Court of Appeals for the Eleventh Circuit, which agreed to hear the appeal. The Court heard oral arguments on September 27, 2024, and is proceeding on an expedited timeline, but, as we noted above, there is no guarantee that a decision will be reached in any specific timeframe.

Further, whatever the decision may be, or whenever it may be reached, that almost certainly won’t be the final word – the losing side, whether it is the DOT or the National Business Association, et. al., is very likely to appeal the verdict to the Supreme Court and, absent the issuance of a nationwide injunction, preliminary or otherwise, the reporting requirements will likely remain in effect for most businesses.

Other lawsuits against the DOT implementing this reporting requirement include:

• Black Economic Council of Massachusetts, Inc. (BECMA) et. al. v. Yellen et. al. (filed 5/29/2024)
• National Federation of Independent Businesses (NFIB) et. al. v Yellen et. al. (filed in Texas 5/28/2024)
• William Boyle v. Yellen et. al. (filed in Maine 3/15/2024)
• Small Business Association of Michigan et. al. v. Yellen et. al. (filed 3/1/2024)
• Robert J. Gargasz Co., L.P.A. et. al v. Yellen et. al. (filed in Ohio 12/29/2023)

 

Again, we would strongly encourage you to confer with your CPA or Virtual CFO as well as your business attorney to ensure your business is ready to comply with the new reporting requirements in advance of the reporting deadline.

If you have any questions about the FinCEN reporting requirements, please click here to email us directly – let us help you, that’s what we’re here for!

Until next time –

Peace,

Eric

On April 23, 2024, the U.S. Federal Trade Commission (FTC) issued a new rule banning businesses from instituting non-compete agreements with any new hires and prohibiting enforcement of existing non-compete agreements with an exemption for in-force agreements concerning “senior executives,” defined narrowly to include those earning over $151,164 annually and having “final authority to make policy decisions that control significant aspects of a business entity or common enterprise.” Employees with such final authority only for “a subsidiary or affiliate of a common enterprise” were not included in this exemption.

However, according to the new rule, new or existing employees promoted to such positions could not be required or requested to enter into non-compete agreements.

The FTC estimates that ~30 million people, representing ~20% of workers, are subject to some form of non-compete agreement.

Predictably, several lawsuits against the FTC’s ban were filed, some within 24 hours of the FTC approving the new rule – even before the rule was published in the Federal Register on May 7, 2024.

This new rule was scheduled to become effective on September 4, 2024, but court action prevented it from taking effect.

The Principal Lawsuits

Within the 24 hours following the FTC’s adoption of the non-compete agreement ban, lawsuits against the ban were filed in Texas courts, both by the Chamber of Commerce of the United States of America (Chamber of Commerce) and by Ryan, LLC (The Ryan Case, Ryan), a Dallas-based tax services and software provider.

Since Ryan LLC filed its suit first, the court allowed the Chamber of Commerce to join the Ryan lawsuit. Also joining were the Business Roundtable, the Texas Association of Business, and the Longview Chamber of Commerce, under the jurisdiction of the Dallas Division of the U.S. District Court for the Northern District of Texas (Dallas Court). The sole named Defendant in this case was the FTC.

Also filed was a lawsuit by ATS Tree Services, LLC (The ATS Case, ATS), which filed suit in May 2024 against the FTC, FTC Chair Lina M. Khan, and FTC Commissioners Rebecca Kelly Slaughter, Alvaro Bedoya, Andrew N. Ferguson, and Melissa Holyoak, in their official capacities. This lawsuit was filed under the jurisdiction of the U.S. District Court for the Eastern District of Pennsylvania (Pennsylvania Court).

The Ryan Case

• On July 3, 2024, the Dallas Court issued a preliminary injunction against the FTC’s ban taking effect as scheduled on September 4, 2024 – but only with respect to the named Plaintiffs (see above).
• On August 20, 2024, Judge Ada E. Brown issued a memorandum opinion and order granting the Plaintiffs’ request for summary judgment (Filed July 19, 2024) against the FTC. Her opinion held that the new FTC rule banning non-compete agreements was unlawful and prohibited enforcement of that rule on a nation-wide basis.

 

The ATS Case

• In this case, on July 23, 2024, Judge Kelley B. Hodge issued a memorandum opinion denying the Plaintiff’s Motions for Stay of Effective Date and for Preliminary Injunction against the FTC.
• It’s important to note that these are only denials of Plaintiff’s Motions; the case proper has not been argued on the specific merits.
• However, subsequent to the Dallas Court order, ATS filed a Motion to Stay Proceedings on September 6, 2024. The FTC filed its Opposition to the Motion on September 11, 2024.

 

Next Stop . . .?

In our opinion, it is likely that the FTC will appeal the Dallas Court’s ruling. The appeal would be taken to the U.S. Court of Appeals for the Fifth Circuit.

Should this appeal fail, the FTC might then appeal to the Supreme Court of the United States (Supreme Court) for a more favorable judgement.

Depending on the outcome of the ATS Case, any appeals thereof (which would be to the U.S. Court of Appeals for the Third Circuit) and any appeals of the Dallas Court’s ruling in the Ryan Case, there is the possibility of a Circuit split, which might make it more likely that the Supreme Court would grant certiorari and hear these cases, or one of them, since they have sole and final authority in resolving Circuit splits.

However, at present business owners across the United States remain free to enforce existing, and enter into new, non-compete agreements as they see fit – according to the laws of their state.

State Laws Differ on Non-Compete Agreements

It’s important to realize that, while federal rules and the outcomes of these lawsuits are of critical importance to business owners, state laws vary widely on the uses and restrictions governing non-compete clauses.

• Only in 12 states, Alaska, Kansas, Maryland, Michigan, Mississippi, Nebraska, North Carolina, Ohio, South Carolina, West Virginia, Wisconsin, and Wyoming, are non-compete agreements subject to no restrictions.
• Four states, California, Minnesota, North Dakota, and Oklahoma ban non-compete agreements entirely.
• That leaves 34 states with differing restrictions on such agreements. Some of these are pay-based, some limit effective post-employment duration, and some restrict non-compete agreements based on other considerations.

Louisiana limits the post-employment duration of such agreements to two years and requires specificity in writing as to the areas in which the employer conducts business. Those working in automobile sales may not be subject to, nor may their employers require, non-compete agreements. In addition, effective January 1, 2025, special rules govern non-compete agreements concerning physicians.

We strongly recommend you consult with your vCFO (or other trusted financial advisor) and your business attorney about any existing non-compete agreement templates you currently use or contemplate implementing.

If there is anything I and my team can help you with, please click here to email me directly. RFG is here to help you – that’s our passion and our reason for existing.

Until next time –

Peace,

Eric

I’m a big believer in playing to our strengths – I don’t think that’s news to anyone who knows me. When we work from a place of strength, a place of confidence and interest, we enjoy what we’re doing. We lose track of time as we delve into our subject; we take pride in our achievement. We feel we’ve accomplished something worthwhile.

When we’re tackling a subject which is less in tune with our natural abilities, we don’t enjoy ourselves nearly as much. Time drags on, and the result is perhaps better than we might have managed a year ago, but it’s not our best work and doesn’t provide the same level of satisfaction in ourselves and our accomplishments.

But, as a business owner, I must realize that playing to my strengths can be taken too far – and that’s a pitfall we all encounter, no matter what our strengths are or how many we have.

For example, decisiveness in leadership is a great and necessary asset. But it can lead us to want to decide now, shutting down our teams’ input and feedback – with the result that we may not have all the necessary facts on which to base our decision, and our team members will not feel heard or respected.

The drive to achieve is core and key to the entrepreneurial mind. We love taking on challenges, overcoming obstacles, inspiring those around us to do the same. But we can, as a result, go into overdrive ourselves in this area, leading to burnout and depletion of our inner resources. We can push our team members too hard, leading to the same depletion and burnout in them.

The converse can happen when we truly desire to foster and support our teams, encourage them in their own strengths, listen to everyone’s ideas. Because we risk letting that supportive attitude tip over into lax discipline, lost productivity as they “find their footing.” Listening to every single idea from every single team member can lead to long, meandering meetings which waste time and hamper decision-making.

Those who are driven to achieve, while wanting to be decisive and supportive as well, can snap between the extremes of each of those strengths – we decide we’ve been driving our people too hard, and ease back too far. When we become impatient with the resulting drops in productivity and focus among our team, we may return to over-driving them.

This is far from conducive to our best interests as business owners. Our teams need reliable and consistent leadership, they need us to make firm decisions, to inspire and encourage them, to demand their best and give them space to achieve that best, to listen to them, but to always keep the reins in our own hands, reading our teams so that we can ease them back when they’ve pushed themselves a little too far (or we have), and pushing them again if they mistake compassionate management for indulgence.

But if we are going to be the leaders we want and need to be, we first must understand ourselves, how we operate as individuals, what our strengths are, and how we let them stray into weaknesses.

Some tips I’ve found helpful on this path:

• Schedule solitary time on a regular basis. Take a walk, meditate, pray, etc. – whatever works to calm and focus our minds. Then, we think about our day, what situations we encountered, and how we responded – or did we react? Which is intentional and mindful; reaction is a reflex – which do we want to govern our actions? Mindfulness, or knee-jerks? Mindfulness and intentional actions will serve us far better – certainly in our business, but also in our personal lives. Because being mindful gives us more real control – and we have the most control over our own selves. We can improve the way we handle our realities.

 

 

• Ask for feedback from our team on how they perceive us. Make the questions specific, serious – and compose them mindfully with an eye to making our business a better place for ourselves and our clients as well as for our teams. This feedback should be anonymous, which will allow our teams to be honest with us.
• Ask our friends, ask our spouses (they will almost certainly have some suggestions!), ask our children, maybe, what they think we do and handle well, and what we could be doing better.

 

Sometimes we must embrace a little discomfort – that’s just life. We have to do the hard thing – whether it’s the release of an employee who, try as they may, just can’t measure up to what we need, disengaging with a client whose demands are unreasonable and who makes you and your team anxious and unhappy, or improving the way we work with our people – clients and team members alike (and our families, too!).

It’s about finding balance. We’ve each been given a unique combination of strengths, and we should celebrate and use them – but mindfully and with measure. So that they remain strengths, rather than flipping into weakness.

Yes, all of this is our job, if we want our team to be its most productive, our business its most profitable and enjoyable for everyone, and ourselves the best version of who we are.

Impossible? Very likely it is – but we can strive toward that goal, even if we won’t perfectly attain it. Perfection is not in our reach, but improvement always is.

After all, we’re entrepreneurs – we do love a challenge! And there are Robert Browning’s words of wisdom:

“Ah, but a man’s reach should exceed his grasp, Or what’s a heaven for?”

How do you balance your strengths to ensure you use them rightly, and don’t push them into weaknesses? Please click here to email me directly – I’d love to hear your strategies!

Until next time –

Peace,

Eric

Estate planning is vital for anyone with significant assets – most of you already know this. But it comes with a variety of considerations and often involves a multi-pronged approach to ensure every aspect of your estate plan furthers your goals for your family and your business and is aligned with your core values.

This can be especially true for real estate investors. Estate planning which encompasses a considerable real estate portfolio has its own unique aspects – and pitfalls.

Avoiding those pitfalls while devising a comprehensive estate plan will require the input of expert professionals – you will want to consult:

• Your virtual CFO, CPA, or other trusted financial advisor,
• Your estate attorney, and
• Your real estate attorney

 

Together, these advisors can guide you toward the best way – for you and your family – to protect your heirs and your assets as you would like them to be.

One significant potential pitfall you’ll want to ensure your heirs won’t have to deal with if your assets are over-concentrated in real estate holdings is:

Ensuring Liquidity

Please don’t leave your heirs with a potential tax bill they can’t pay with the cash they have on hand, either from their own assets or your estate.

Ensure your assets have sufficient diversification and your estate plan is arranged to avoid this situation.

Arrange liquidity protection for your family now, before they, amid their grief, have the unwelcome surprise of receiving a whopping tax bill on an estate with high-value assets but insufficient cash to pay the tax liabilities.

LLCs – Protection for Yourself, Your Assets, and Your Heirs

We strongly recommend that real estate investors place each separate property within a dedicated LLC. This provides protection for your other assets against potential liability claims brought against any given property in your portfolio.

When you pass the LLCs to your heirs, that same protection goes along with them, ensuring their other assets remain safe from such potential claims.

Basic Components of Estate Planning

Any good estate plan will be comprised of certain non-variables.

As a real estate investor, you will likely need:

• A will
• Powers of attorney (POAs), both durable (usually for your spouse, but you can choose someone else you trust), and medical (ditto)
• A trust, or more than one – you may already have a real estate investment trust set up but ask your vCFO and your estate and real estate attorneys whether using an irrevocable grantor trust would be a good idea

 

Trusts

An essential feature of trusts is that, in most cases, the assets they hold do not have to go through the probate process before passing to the trust’s designated beneficiaries, unlike assets inherited through your will. This saves your heirs time and money, which can be a real benefit to grieving families.

However, it’s essential to understand that in most cases, trust-held assets, unlike assets inherited via your will, receive no step-up in basis – this means that potential tax liabilities to your heirs and beneficiaries would be based upon the assets’ value at the time they are placed in the trust, not their value at the time of your death. Assets left to your heirs via your will do receive the step-up in basis; therefore, there is the potential to avoid paying tax on significant capital gains.

One potentially mitigating factor is that with an irrevocable trust, you can retain the right to swap assets in and out of the trust so long as they are of equivalent current value. That means you can remove a long-held asset that has appreciated significantly over time from the trust and replace it with an asset of equivalent value that has appreciated less.

Consult with your advisors to ensure that the choices you make will best benefit your family and protect the value of your assets on their behalf.

Other Considerations

At RFG, we strongly recommend that if your estate’s value is more than ~$14 million, you take advantage of the estate and gift tax exemptions at their current level, as provided for in the 2017 Tax Cuts and Jobs Act (TJCA). While the exemption level for 2025 has yet to be announced, for 2024, it is $13.61 million per individual and $26.22 million for married joint filers.

This provision of the TCJA expires on December 31, 2025, absent Congressional action to extend it, which remains an open question. As of January 1, 2026, the exemption will revert to its pre-TCJA level, adjusted for inflation, and is expected to be ~$7 million for individuals and ~$14 million for married joint filers.

You can gift portions of your assets tax-free during your lifetime, removing them from your taxable estate. The IRS has confirmed that gifts made up to the highest amount of the exclusion (which will likely be increasing in 2025) – there will be no tax consequences since the exclusion level used will be the law when the gifts are made.

Of concern for real estate investors, too, is the potential use, when making gifts to your heirs, of the IRS’ allowable valuation discounts on assets gifted for “lack of control” and “lack of marketability.” These should be discussed in depth with your advisors, as the discounts can be as much as 30% to 40% of the assets’ value and can provide your heirs with significant tax savings – if they are correctly applied and the gifts appropriately structured to take advantage of them.

We cannot recommend highly enough that you take advantage of your trusted advisors — your virtual CFO and your estate and real estate attorneys.

Your virtual CFO or other trusted financial and estate advisor knows you, your assets, your family, and your financial situation. She can help you determine the best plan for you.

Because your family and your goals, your situation, and your dreams for your legacy are as unique as you are, the virtual CFOs at RFG don’t just know this – we celebrate it! Our solutions are bespoke and tailored to fit your needs, goals, dreams, and your family’s welfare.

We are experts and experienced advisors for real estate investors. If you have any questions about how to plan for the disposition of your real estate to your heirs, we invite you to consult with us.

Please click here to email us directly – at RFG, helping you is what we are all about!

Until next Wednesday –

Peace,

Eric

Well, for us in Louisiana, another year – and another hurricane! A Category 2 Hurricane when she made landfall on Wednesday, September 11, 2024, Francine has left a lot of damage in her wake.

On Friday, September 13, 2024, the Internal Revenue Service (IRS) announced the measures it will implement in order to provide some tax filing relief to those who’ve been impacted across the entirety of Louisiana – and the IRS will assume that includes every resident and business in the state.

Tax Filings and Payments

Principally, the IRS will postpone filing and payment deadlines for Louisianians which would have been effective from September 10, 2024, through the end of the year until February 3, 2025.

This will include postponements for:

• The filing of business and individual tax returns for 2023, for those who have filed valid extensions. This particular relief item has no applicability to the payment of federal income tax liabilities pertaining to 2023, as such payments were due at the time of the filing of the extensions, prior to Francine’s landfall on September 10, 2024.
• The filing and payment of quarterly estimated income tax payments which would have been due on September 16, 2024 and January 15, 2025.
• The filing of payroll and excise tax returns which would have been due on October 31, 2024 and January 31, 2025. Penalties for failing to make payroll and excise tax payments due during the period September 10, 2024 through September 24, 2024 will be waived if payment is made by September 25, 2024.

 

These reliefs will be applied automatically for every individual and business with an address of record in Louisiana on file with the IRS. No action on the part of residents or businesses will be required.

The IRS will also work with individuals and businesses who have recently relocated their residence and/or business to Louisiana from an area unaffected by Francine. If this is true of your household or business, you may receive a late filing or penalty notice, but any penalty and/or interest will be abated if you take the proper actions with the IRS.

Some taxpayers living outside Louisiana may still qualify for tax relief. Some who will be eligible are those who work assisting relief activities within Louisiana, if they are affiliated with a recognized government or philanthropic organization.

Uninsured or Unreimbursed Disaster-Related Losses

Individuals and businesses located in Louisiana who suffer disaster-related losses which are either uninsured against or are unreimbursed have the option of claiming these losses on either their 2023 or 2024 federal tax returns.

There is a six-month window to choose which year’s tax return will claim such losses following the due date of the income tax return for the disaster year (2024), without consideration of any extensions filed. This means that businesses have until September 15, 2025, and individuals until October 15, 2025, to make their choices. Please be sure to write the applicable Federal Emergency Management Administration (FEMA) declaration number, 3614-EM, on any return claiming such losses.

We Louisianians have been here before, and will likely see more disasters, if we’re lucky enough to stick around for them. And Rigby Financial Group has assisted businesses and individuals deal with the fallout from such disasters for many, many years – we know all the drills.

We invite you to consult with us – having expert assistance – from those with decades of experience in dealing with disasters for our clients (and for ourselves, too – we’re not immune by any stretch of the imagination!) can bring assurance and comfort to uncertainty.

Please click here to let us know how we can help you.

Until next time –

Peace,

Eric