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10 Questions to Ask a Retirement Planning Consultant

10 Questions to Ask a Retirement Planning Consultant

Ask a twenty-something about their retirement goals, and they will probably laugh at you. Unfortunately, many people don’t think about retirement savings until way later in life, if ever. The sad fact is, according to the US Census information, 60% of unmarried Americans have no retirement savings, while 35% of married couples have not saved for retirement. The reason, according to website Motley Fool ranges from not earning enough money, to having other priorities or simply being to young to feel it is a priority.

The painful truth is, every dollar you save in your twenties will vastly help you reach your retirement goals in the future, simply by applying the rules of investment savings. Look at it this way, at 10% growth, your initial investment would double in just 7 years.

Another way to guestimate your investment growth is to use the Rule of 72. This shortcut for calculating how long it will take for an investment to double assumes that growth compounds annually. To figure your investment growth, simply divide 72 by your expected annual rate of return. Whatever that number is, will represent how many years it will take to double your money.

So, if you have not yet started, but are interested in beginning some savings for your eventual retirement, you will want to find a financial planning consultant to help you develop a path that works best for you and your specific life path.

As you search the web for the right person, we thought it might be useful to share a few thoughts on how to select the right financial consultant for you. These ten questions are not the be-all and end-all, but they will help guide you to an informed decision.

1. How will you determine what I need for retirement?

A good consultant is first a good listener. You want to judge the person you select to entrust your savings with someone who has listened to your desires and does what they say they will do. Your needs are unique, so don’t be swayed by a cookie-cutter program.

2. Does it matter what kind of thing I want to invest in? Do I have to choose just stocks?

Some people have a 401(k). Some people have an IRA. There are those who dabble in futures and risky options. Others invest in a home with a rental property, while others meticulously invest in several rental properties, or even their own business. The point is, there are lots of investment opportunities in this country. And, while your collection of comic books might end up thirty years from now to be a good investment, they may not be the retirement nest egg you can rely upon. It’s important to talk these ideas through with a professional who can help you find a good balance to help you achieve your financial goals. This is particularly true if you have specific religious, social or political beliefs that may guide your investment strategy.

3. Should I invest in one really great company?

Back in the 1950’s people retired on the value of their stock portfolio consisting completely of IBM, GM or even the stock of the company they worked all their life. Those days are passed, and the world of investment is far more complex. The chances that your hot tip on the next Google or Tesla might fund your entire retirement is about as sound as betting on the 4th race at Belmont racetrack. Retirement savings is not about betting on longshots. Your financial advisor will be able to establish an investment portfolio that balances your tolerance for risk and your needs for a certain rate of return. That will likely be a mix of stocks, stock funds, bonds, and maybe other investment types as well. The mix ensures you get the maximum results over your investment horizon while protecting, as best as possible, against the downsides of market cycles.

4. What about taxes?

Taxes are a big concern, because they can require thirty or forty percent of your savings, unless you plan accordingly. Today, there are ways to save for retirement where you pay taxes with today’s dollars and pull them out of your savings account when you retire tax free. It’s important to discuss taxes and tax planning when talking about your retirement savings plans. Over time, your income may change. Your retirement plans may change. You can be certain that rising taxes will also change and impact your plans.

5. What kind of retirement plan should I have? Does it matter?

As we mentioned earlier, there are many kinds of retirement plans. Your employer probably offers a 401(k) plan (or a 403(b) plan if you work for a nonprofit) and that is an excellent start as these plans often have incentives for savers. If your employer offers a percentage or two of matching funds for your savings, why would you turn down an opportunity to earn free money to help you retire?  Of course, if your company does not offer a savings plan, you can always open a personal IRA plan, or a ROTH Ira plan. A good advisor will be able to speak to you about all of these options, and what might work best for you.

6. Most of my income goes to bills. How do I save for retirement? How do I get started?

No doubt, it’s a hard battle. Yet, as difficult as it might be when you are young, think of how tough making ends meet will be decades from now when you are ready to retire, or if you are forced into retirement due to a disability? Even a small amount of savings every week will make a difference. If you have $20 or $50 a paycheck automatically removed, chances are you won’t even miss the money after a while. Some advisors say taking the cost of a cup of coffee at a Starbucks every day from your budget and moving it to savings could make you a millionaire in 40 years. The point, of course, is that even small amounts at the beginning will deliver you real savings in a few years. The earlier you start, the better off you will be in retirement.

6. Most of my income goes to bills. How do I save for retirement? How do I get started?

No doubt, it’s a hard battle. Yet, as difficult as it might be when you are young, think of how tough making ends meet will be decades from now when you are ready to retire, or if you are forced into retirement due to a disability? Even a small amount of savings every week will make a difference. If you have $20 or $50 a paycheck automatically removed, chances are you won’t even miss the money after a while. Some advisors say taking the cost of a cup of coffee at a Starbucks every day from your budget and moving it to savings could make you a millionaire in 40 years. The point, of course, is that even small amounts at the beginning will deliver you real savings in a few years. The earlier you start, the better off you will be in retirement.

7. Does the economy impact when and how much I should save?

This is an excellent question to ask an advisor. There are so many factors that go into a successful retirement approach. Let your advisor talk to you about how the economy impacts your approach.

8. What experience do you have and why is that important/not important to my needs?

Credentials vary widely. Your advisor may have all of the appropriate licenses, but lack having credentials such as CFP (Certified Financial Planner) or be a CPA. Worry about having someone who holds the proper licenses, but don’t stress the advanced credentials. If you trust the person and see the results they have demonstrated from other clients, you should feel comfortable in building a relationship with them.

9. Is there a way to get insurance to work as an investment, too?

Another great question to ask, and yes, some advisors will help you use insurance products as part of your investment strategy. Everyone should have some sort of insurance at different periods of their life, such as young parents and couples with a mortgaged home. However, annuities are insurance policies that offer the ability to get payments down the road while still providing insurance value.

10. Does my financial consultant need to be in my hometown? Is it legal to use someone from out of state?

While every state requires professionals to be licensed in their jurisdiction, your investment professional does not have to be local. Ask your professional about their qualifications, and, if they reside out of state, learn if they hold licenses to practice in your state.

If you are looking to find a consultant for your retirement savings goals, insurance, or tax savings initiatives, please feel free to contact our offices for a no-cost, no-obligation consultation about your needs.

IRS notice and cup of coffee example image

What Happens When You Ignore IRS Notices

IRS notice and cup of coffee example image

What happens when you ignore IRS notices

Okay, you did it. You ignored the IRS notice. And maybe another notice.  Perhaps a third?  Maybe you forgot. Or perhaps you panicked and just didn’t know what to do. Whatever the reason, be certain the IRS will not just forget about you.

The IRS sends out millions of notices each year.  Most IRS notices are notifications regarding math errors that have resulted in you either owing additional tax, or perhaps earning an unanticipated refund. On the other hand, the letter may be a request for additional information, such as a copy of a 1099, or some other form that may be required to confirm your return is correct.

You may be thinking, if I just ignore this notice, the IRS may just forget about this notice.  Not a chance.

The good news is that some notices are just informational. If you receive a notice and there are no other instructions to contact the IRS, there may be no need to respond to the notice.  If you happen to disagree with the information—even if no response is required—the IRS gives you 30 days to contact them. After that, whatever was decided is the final word.

On the other hand if you have ignored a notice that required a response, you will have several chances (between 4 and 5, according to the agency) to respond before the IRS takes more decisive action.  After the first notice is ignored, you may receive what they refer to as a 90-day notice. At this point, the IRS has assessed the taxes due and may tack on additional penalties. To respond, you will need to send a response to the Tax Court for a remedy.  If you ignore that notice, the IRS’s decision will be final and collection of tax and penalties will be demanded. Penalties and interest may also accrue with time. 

Office Audits

Sometimes, the IRS will send a notice to schedule an office audit. This is an in-person meeting with an IRS representative to review one or several issues on your return. Again, if you fail to respond in time, they will issue a 90-day notice which, if ignored, will set in motion an aggressive collection process. Penalties will be assessed, and if ignored, collection efforts may result in the issuance of a Federal tax lien, a wage garnishment, and other levies. 

Field Audits

The most intrusive IRS audit is a field audit. This privilege is usually reserved for higher net-worth taxpayers and can be triggered by a number of factors, from specific financial activities, or specific holdings (such as crypto currency trading) or other simply a review of deposits and other financial assets being reported on your return.  If you ignore a field audit, you will open yourself up to the IRS agent having the right to examine all of your financial activities on your return. Things can get ugly quickly.

The best solution is to contact a tax professional as soon as possible to review your situation, develop a strategy, and represent you in front of the IRS.  If for no other reason, a tax professional will be able to keep an even keel on emotions when responses require composure.

If you have been ignoring an IRS notice, you should act quickly to resolve the issue with the IRS. For professional advice and assistance, feel free to contact a ZMC tax professional to discuss your next steps.

If you are still within your 90-day response window and need to make a payment, try contacting or use the IRS2Go app to pay with Direct Pay for free. You can also use a debit or credit card through an approved payment processor for a fee to pay your tax bill.

More information about IRS notices is available by visiting the IRS website and reading the IRS Publication 594, called The IRS Collection Process.  If you want to learn more about penalties and interest the IRS may levy, look for IRS Publication 17, Your Federal Income Tax.

On the other hand, if all of this gives you cold chills, feel free to contact our offices for a confidential, no-obligation consultation about your situation and what we might be able to do to remedy your issue.

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So You Just Got an IRS Letter! Now What?

Receiving IRS letter example image

So you just got an IRS letter! Now what?

Every year, the Internal Revenue Service (IRS) mails out millions of written notices to taxpayers, including businesses and individuals. Correspondence takes many forms and involves a number of different requests. Some are simple information requests, such as a copy of a 1099 you may (or may not) have received or a request for more information regarding a specific deduction. Other notices require preparation, such as failure-to file-notification, or an audit notice.

The Taxpayer Advocate Service, an independent organization within the IRS, notes that the most common notice the IRS mails to taxpayers is the IRS Form CP14, which is a notice of underpayment of taxes. By law, the IRS is to send notices within 90 days of tax deadline to individuals that may have underpaid their prior year taxes. These letters inform the taxpayer that they have a balance of more than $5 on their account. 

Did you receive a CP14 notice?  If you did, it is important to read the notice carefully, as the payment shortfall may be the result of several different actions. You may have neglected to pay the full amount due, or simply made a math error. Or, there may be a penalty, a filing error, or a deduction or credit that has been disavowed for some reason. 

So, what do you do?

Well, if the amount you owe seems appropriate to you and you want to pay it, the solution is fairly simple. There are instructions on the form for sending what you owe. On the other hand, if you have questions regarding the underpayment, or dispute the amount, you need to contact the IRS promptly.

However, before you reach for the phone, you may want to reach out to a professional to make that contact on your behalf. Why? Because a tax professional knows how to talk to the IRS in order to extract the best outcomes for you. Conversations with the IRS are rarely simple, and can quickly become thorny. Say the wrong thing, ask the wrong question or get upset and your simple issue may become a larger problem. The same result goes for anyone who ignores a notice. Your professional will act as your advocate, to confirm what is being claimed, calmly dispute any claims, and negotiate the best solution for you.

Most disputed claims need to be answered by mail with the IRS within 30 days, and may require a copy of your return along with any other documentation, including a copy of the IRS notice. 


Don't Wait

Here’s the thing: even if you agree with the notice, speed is important. Delaying payment or response—even if you are not disputing the notice—may cost you in penalties and interest that keep rolling until you pay in full.

But don’t panic. Many notices are for information, and if they don’t require a response, you should not reach out to the IRS, simply follow the instructions on the notice.

One last piece of advice: Beware of scammers!  If you receive an e-mail that looks like the IRS, be very wary of the sender. The IRS almost exclusively uses the US Postal Service. If the email you receive has an odd email address that is not a .gov address, it is a fake.  Never send money to a notice with a link—in fact, don’t even click that link—as it is like a phishing scheme. Also, look carefully at (and keep) the outer envelope of the notice to verify it really came from the IRS and not some fraudster.

If you recently received an IRS notice and have questions or need help, please do not hesitate to reach out to us for assistance.

IRS notice

Did You Receive an IRS Notice?

IRS notice

Did You Receive an IRS Notice?

Time is NOT on Your Side

Every year, taxpayers receive notices from the IRS. Notices can be simple requests for more information or notification that you made a small math error that they have corrected. Sometimes, however, they want to audit specific items, deductions and even multiple years. Whatever the IRS requests, it is important to understand two things: their requests are not to be ignored, and time is almost never on your side. The third second thing to understand: Ignoring the IRS is done at your own peril.

When it comes to communicating with the IRS, many people decide to use a professional as their go between in negotiating with the taxing authority.  Have representation provides specific benefits to you, including:

  • A buffer between you and the authority during the process
  • Preventing you from disclosing too much information they didn’t request that could prompt further inquiry
  • Having a professional with a history of working with the IRS on your side
  • The ability to discover the real reason for the inquiry—and how best to respond
  • Having a negotiator with knowledge of the code and no emotional attachment to the issue.

The last point is especially important to remember. Not all government employees have a complete understanding of the 70,000-plus pages of tax code, and sometimes they get things wrong.  In addition, some employees may not be up to date on case law challenges in tax court impacting the way a tax return has claimed an exemption, deduction or credit.

Most IRS inquiries are relatively simple to resolve, however if you have certain deficiencies, the resolution may be more complex, for example:

  • Non-filing a return for one or several years
  • Statements with Taxes due that have gone un-responded
  • Letters threatening wage garnishment or a tax lien
  • Audit notification notices
  • Threats to levy bank accounts.

When dealing with the issues above, it is important to talk to your professional immediately to review your available resources, possible resolution scenarios, and additional information that you may have may offer a positive impact on the amount owed.

Communication is always the key. Quite often, after communicating with the IRS, the items in question can be clarified without penalty and sometimes with no additional amount owed or even a credit to the taxpayer.  According to the IRS, most common notices are to notify you that your return has been adjusted and your refund is smaller or larger than anticipated, or that the return has been amended by the IRS (typically due to a math error) , or they require additional information about the return. Sometimes they merely need to verify information.

What to Do With an IRS Notice

First and foremost, read your notice carefully, and be sure to keep the notice in a safe place. If it requires a response, reach out to your professional for advice. Timely responses can avoid additional penalties and interest. More importantly, some remedies have a time limit for response.  So, if you need to appeal, your rights may be limited if your timeline has lapsed.

Parting Thoughts

Fear often keeps us from responding to the IRS until it is too late. If you receive a notice and you know it is incorrect, be sure to act promptly to protect your rights.  And if you know you owe money but don’t have it in hand, try paying whatever you can as soon as possible. While not the most favorable terms, the IRS is almost always willing to accept partial payment and establish payment plans with taxpayers.  You can always pay off the balance as soon as you can, but ignoring an IRS payment is a recipe for costly headaches coming to your mailbox very soon.

Need a helping hand? Our no-charge 30-minute consultation is a great opportunity for us to be introduced, learn about your issues and make preliminary recommendations for moving ahead.