Frequently Asked Questions

There are no minimums at our firm. We work with young professionals adding a hundred dollars to their Roth IRA every month, as well as high-net worth individuals with millions under asset management, and everything in between. We manage more than 600 business retirement plans of every size. Our mission is to help as many people as possible become financially successful, whatever that success looks like for them.

The cost of college has risen dramatically, by thousands of dollars, and student loan debt is in the trillions in America. But there are tax-advantaged ways to save for and pay for college costs, as well as strategies to help minimize your family’s EFC*, or expected family contribution on the FAFSA (free application for financial student aid). The best way to save depends on your individual situation, but some options include 529 plans, Roth IRAs, life insurance and UTMAs (uniform transfers to minors act). We can include college education expenses in your holistic financial plan.

*The EFC will be replaced by the SAI (student aid index) for the 2023/24 school year.

There are many different types of retirement plans for businesses, and TFS can help people find the right one for their structure, number of employees, and their goals. Here is some basic information about some of the options:

SIMPLE IRAs
SIMPLE IRA stands for Savings Incentive Match Plan for Employees Individual Retirement Account. A SIMPLE IRA functions fairly similarly to a traditional IRA, but it has a higher contribution limit. A SIMPLE IRA allows both the employee and the small business owner or sole proprietor to make contributions. The maximum contribution limit is $13,500 for 2021, and the catch-up limit is $3,000 for those 50 or older.

SEP IRAs
A Simplified Employee Pension IRA (SEP IRA) is a traditional IRA for self-employed people and small business owners. Because of the rule requiring equal contributions as a percentage of compensation to employees, a SEP IRA is generally best for those with few or no employees. (Solo 401(k) and SIMPLE IRA plans allow employee contributions, SEP plans do not.) The maximum annual contribution is up to $58,000 in 2021 with an additional $6,500 catch-up if 50 years or older.

Solo 401(k)s
A Solo 401(k) may be an excellent fit as an owner-only business with no (or few) employees. The solo 401(k) allows the listed owner(s) and their spouse (if he/she earns income from the business) to make a maximum annual contribution up to $58,000 in 2021 with an additional $6,500 catch-up if 50 years or older. Solo 401ks allow for traditional (reduction of income) or Roth (after tax) contributions.

401(k) Plans
Employer-offered 401(k) retirement plans allow employees to contribute up to $19,500 for 2021, with workers over age 50 permitted catch-up contributions of an additional $6,500. That means anybody, including business owners, could be reducing their taxable income by as much as $26,000 per year. But tax benefits don’t stop there for business owners. There’s also a tax credit available for those with 100 employees or less starting a small business 401(k) plan for the first time with a $500 credit for each of the first three years. You can also deduct plan management expenses as well as matching contributions the business makes to employees participating in the plan.

Profit Sharing Plans
A flexible employer contribution plan that can allow employees to participate in the success of the company. If the company does not make a profit, it does not have to make a contribution to the plan, however the company does not need to be profitable to have a profit-sharing plan. Great way to share the wealth and lower taxable income to the business. Profit sharing plans allow business owners to save as much as $58,000 per year in 2021 before taxes—or $64,500 per year with catch-up contributions.

Every state’s 529 college saving plan is different. In Iowa, Iowa taxpayers who are 529 participants can deduct up to $3,474 for 2021 (adjusted annually for inflation) of their contributions per beneficiary, including rollovers, in determining their adjusted gross income for Iowa income tax purposes. This deduction applies to each beneficiary account they own and contribute to. For example, married participants who contribute to separate accounts on behalf of their two children can deduct up to $13,896 (4 x $3,474) in 2021.

For 2021, the annual gift-tax exclusion is $15,000 per donor, per recipient. A giver can give anyone else—such as a relative, friend or even a stranger—up to $15,000 in assets a year, free of federal gift taxes.

At The Financial Specialists, we do a complete needs analysis, looking at your beneficiaries, your annual income, mortgage amount owed, other debt, retirement income needs, whether or not you want your kids to go to college, and many other issues. We usually recommend a combination of term plus permanent insurance. For retirees, hybrid long-term care insurance is something we often look at. Unlike traditional long-term care (LTC) policies, new hybrid LTC policies allow your beneficiaries to receive an optional death benefit if you do not end up needing long-term care, so these LTC policies are no longer “use it or lose it.”

Many people think insurance is only about protecting against a major accident or unexpected death. But the truth is that during the course of your career, you are three and a half times more likely to need disability coverage than you are to die and need life insurance—and approximately 90% of disabilities are caused by illnesses rather than accidents.

Charitable giving of your required RMD can sometimes provide you with a tax benefit while helping your favorite charity. We can help you determine the best way to handle your RMDs based on your goals.