We are excited to share page 2 of the NEW Code of Ethics and Standards of Conduct from the CFP Board – Effective October 1, 2019.

Being a CERTIFIED FINANCIAL PLANNER™ holds us to these high standards of Ethics and Conduct. Here at LFA, we have always held ourselves to a stricter code and now others in the field will have to do the same.

Financial Planning is still a young profession compared to others out there – lawyers, doctors, etc. and it is still being molded further each year in existence. At Lighthouse Financial Advisors, we knew that the Future of excellent Financial Planning was in providing Ethical advice that helps you the most and now, the CFP Board is pushing this as well. This is a great step forward for the Financial Planning profession and we can’t help but love the fact that we were ahead of the curve – having the opportunity to provide ethical, conflict-free advice for all those who have walked through our doors.

Plan On!

Credit: CFP Board Code and Standards PDF found at https://www.cfp.net/docs/default-source/for-cfp-pros—professional-standards-enforcement/CFP-Board-Code-and-Standards-with-Commentary & https://www.cfp.net/for-cfp-professionals/professional-standards-enforcement/code-and-standards

 

The Tax Cuts and Jobs Act of 2017 imposed significant changes to the 2018 tax code especially for self-employed people but one area it did not change is the benefit of Solo 401(k) or individual 401(k) plans. These retirement plans are designed for companies with one employee (or an employee and spouse) that want to maximize retirement savings.  Unlike SEP IRAs, traditional IRAs and traditional 401(k) plans, the Solo 401(k) provides both tremendous tax advantages and low operating costs to set-up and maintain.

A Solo 401(k) offers the same maximum annual pre-tax contribution amount as a traditional 401(k). For 2018, the amount is $18,500 (a $500 increase from 2017) for those younger than age 50. People that turn 50 or older in 2018 can contribute an additional “catch-up” contribution of $6,000. These contributions are deemed employee contributions.  A major benefit of the Solo 401(k) for less profitable companies is the ability to contribute up to 100% of your self-employed earnings towards this employee contribution. For example, if your company has a profit of $20,000 then $18,500 can be contributed as an employee contribution if you are under 50 and $20,000 can be contributed if 50 or older. Not only are these contributions tax deductible against your Federal income but also against your New Jersey income. Employee contributions must be completed by December 31st.

In addition, a Solo 401(k) offers the opportunity for pre-tax employer contributions with a maximum of $36,500. This amount is based on up to 20% of your net self-employment income (business income minus half your self-employment tax). Employer contributions must be completed by deadline to file taxes.

These are huge tax savings and allow self-employed people to save aggressively for retirement.

Another advantage is the low cost to set-up and operate the Solo 401(k) plan. Fidelity is renowned for offering Solo 401(k) plans without set-up costs or annual fees.