New Taxes Could Change Your Retirement

COVID-19 has impacted America’s finances significantly. To help weather the storm, the country has increased its debt load by 30 to 40 percent. At the same time, our tax rates are at 100-year lows. This unsustainable dynamic simply can’t last.

That’s why numerous tax changes are being considered, many of which target high-income households. Our financial planners have predicted which proposals could become a reality in the next decade. Consider those predictions here and how they might affect your retirement.

Social Security Taxes

One of America’s biggest financial problems is the projected shortfall of Social Security. Most Americans rely on this program to supplement their income after retirement, and it’s in serious need of some shoring up.

In 2020, employees and employers paid a combined 12.4 percent on all earned income up to $137,700. Any income earned above this amount is not subject to a Social Security tax.

Today, there’s talk of reinstating Social Security taxes for higher earners. This would involve being taxed at lower income levels and having taxes kick in again at a higher income, such as $400,000 or $500,000. Our financial planners believe this tax change is likely to occur soon.

Standard Deductions

Several deductions can no longer be written off, chief among them being unreimbursed employee expenses and real estate taxes and state income more than $10,000. These sorts of changes could lead to a system that offers a wide range of deductible expenses capped at 25 or 30 percent of your adjusted gross income. Our financial planners wouldn’t be surprised if this proposal was realized within the next decade.

Step-Up in Basis

A step-up in basis is the process of readjusting an appreciated asset’s value upon inheritance for tax purposes. The proposed change is to eliminate the step-up in basis, which would tax inherited assets based on the appreciated value, not the purchase price.

This potential change could affect taxpayers at all income levels. However, our financial planners think it has a low likelihood of going into effect because it has been discussed for decades without being implemented yet.

Other Tax Predictions

• Corporate income tax rates could creep up slightly, but they shouldn’t reach the level they were at prior to 2018.
• The highest marginal income tax rate is ripe for an increase. This would affect incomes above $600,000 for married couples filing jointly.
• The Section 199A qualified business income deduction might not change much. Since small businesses are still reeling from the required pandemic shutdowns, leaders are likely to avoid any detrimental tax changes.
• Changes to the capital gains tax for incomes above $1 million may take effect. This would tax long-term capital gains at 43.4 percent compared with 23.8 percent now. In other words, capital gains would be taxed as ordinary income.

If you have questions about how these proposed taxes could change your retirement, please contact Nelson Financial Planning. With over 30 years of experience, we know what financial plans work best over time.

Unforeseeable Market Surprises

The current political atmosphere, economic recovery following the COVID-19 pandemic, and recently passed legislation will significantly impact your financial decisions in 2021. Don’t be caught unawares by unforeseeable market surprises! Work with a financial planner to help you navigate your retirement strategy.

Political Control and the Stock Market

Presidential elections tend to significantly impact the stock market and the economy as a whole. With the inauguration of President Joe Biden, you may be wondering, “How will this new presidency affect the stock market?”

No one knows exactly how the market will perform in any given year and past performance is no guarantee of future results. However, MFS Investment Management—an American-based global investment management company—has put together a chart offering some historical perspective. From 1926-2018, the S&P 500 index experienced different annual average returns in relation to the president’s political party and the majority party in both houses of Congress. Consider these five findings:

1. The S&P 500 gained 15 percent per year under Democratic presidents and Republican-led Congresses.
2. The S&P gained 6.6 percent under Republican presidents and Democrat-led Congresses.
3. The S&P gained 11.4 percent when the White House and both Congresses were run by the same political party.
4. The S&P gained 15.6 percent under Democratic presidents and split Congresses (one party controlling the House and the other controlling the Senate).
5. The S&P gained 0.9 percent under Republican presidents and split Congresses. This seemingly skewed data entry could be partly caused by the fact that this scenario has occurred infrequently over the past century.

Having a Democratic president and 50-50 tie in the Senate is the scenario we’re entering right now—the very definition of “divided government.” But if market data tells us one thing, it’s that “gridlock is good.” If the stock market moving forward follows historical trends, we could be in for a healthy S&P 500 annualized return for at least the next four years. That level of certainty—or at least the lack of uncertainty—really boosts the economy and helps businesses make decisions.

COVID-19 and the Economy

While historical market data is useful to consider, a unique and tremendously impactful factor is present in our current economic climate—a deadly pandemic. Moving into 2021, the Biden administration will have to deal with the fallout of COVID-19.

The damage this pandemic has caused is specific to certain sectors of the economy, while others are fairing just fine. Lower-wage jobs have also been disproportionately affected, with engineering, technology, finance, and other professional jobs left relatively unscathed.

Despite undeniable economic damage, the underlying economy is actually showing some strong performance and signs of recovery. Here is some economic data from the end of 2020 to consider as the new year gains steam:

• National unemployment dropped to 6.9 percent—nowhere near 3.3 percent, which is where unemployment was a year ago, but things are moving in the right direction.
• Corporate earnings for Q3 2020 declined by 7.5 percent compared to the previous year. This is far less severe than the anticipated 21 percent decline.
• The Institute for Supply Management (ISM)—a widely looked-at manufacturing index—rose to 59.3, the highest measurement since 2018.
• New factory orders, which serve as forward-looking economic indicators, rose to the highest level they’ve been in 17 years.

Changes Implemented by the SECURE Act

The traditional retirement strategies that financial planners have recommended for decades were upended in early 2020 with the passing of the Setting Every Community Up for Retirement Enhancement (SECURE) Act. This legislation is a significant departure from what the rules used to be regarding retirement accounts.

Before this new bill passed, beneficiaries had the option of spreading out distributions from inherited retirement accounts throughout their lifetime. They would have been required to take out 2 to 3 percent each year, but then the rest of the money could remain in the account, earning interest on a compounded, tax-deferred basis for decades.

With the SECURE Act, beneficiaries must empty inherited retirement accounts within 10 years. This new rule greatly accelerates the payment of taxes on that sum of money and shortens the amount of time the funds can grow.

Adjusting Your Retirement Strategies in Response to the SECURE Act

The tax implications of the SECURE Act are profound. There hasn’t been much analysis yet because the COVID-19 pandemic broke out shortly after the bill was passed, distracting the entire country in the process. Still, everyone should adjust their retirement planning strategies in response to the SECURE Act. Here’s how to be more tax-efficient, not just for you, but for succeeding generations.

Use more of your retirement account now.

The old recommendation was to pay for things like end-of-life medical care with an after-tax account to keep taxes low and preserve any IRAs for the next generation. However, because of the new 10-year rule, it now makes more sense to reverse this recommendation in many cases. Using more of your before-tax retirement accounts now means you don’t end up passing on more taxes to your beneficiaries, who may be in a higher tax bracket when they receive the money than you are as a retiree living on social security.

Pull down the balance of your retirement account with a qualified charitable distribution.

This strategy involves sending your required minimum distribution directly to charity so you don’t have to report that portion as income on your tax return.

Consider converting your account into a Roth IRA.

From a historical standpoint, financial planners have generally recommended traditional IRAs to most of their clients. However, because of the SECURE Act’s 10-year rule, Roth IRAs—which are comprised of after-tax dollars—are getting more attention. Just remember that if you convert a traditional IRA into a Roth account, you must be able to afford the taxes now.

If you need help navigating unforeseeable market surprises and changes brought about by the SECURE Act, please contact Nelson Financial Planning for a consultation today.

6 Numbers You Must Know Before Retirement

Throughout your lifetime, you’ll have many numbers to remember, and as you get older, it seems like there are even more. We’ve got some more numbers for you, and you’re going to want to remember these, because they’re important when you’re preparing for retirement. What are some financial numbers you need to know for your financial future?

1. The first number is your monthly cashflow. It’s important to have a handle on your income vs expenses and know exactly where your money is going. To determine this, write down all your income, subtract all of your expenses, and look at the dollar amount that remains. If it’s a gain, great! If it’s a loss, it’s time to rethink your budget. Use a budget to keep track of the income and expenses occurring on regular basis and be aware of your loss or gain each month.
2. The next number is the money you can expect from your Social Security benefits. What would you get if you took Social Security at age 62? What about the ages between that and 70? Social Security benefits account for about 40 percent of the average retiree’s income, so you’ll need to determine how you’ll pay for the rest of your expenses.
3. Know how much you have in your retirement savings. Calculate how much money you will be able to access from all sources of liquid investments. These are investments you can immediately convert to cash, as opposed to things like real estate, which can’t be easily liquidated. Divide that number by 25 to find the amount of income you could reasonably use to fund your retirement. The sooner you start saving for retirement, the better off you’ll be when you reach retirement age, because compound interest will help you build your fund. Be aware that when you do access your retirement funds, you’ll likely owe taxes.
4. It’s important to know your credit score. This number determines how much you can borrow and how much interest you’ll pay. A score below 760 means there’s room for improvement. Paying your bills on time is the biggest factor in your credit score, and your debt to income ratio also has a big impact.
5. That brings us to the next number: your debt to income ratio. To determine this, add up all of your monthly payments, including rent or mortgage, student loans, credit cards, and other debts. Divide this number by your gross monthly income, and the resulting percentage is your debt to income ratio. Below 35% is optimal.
6. Know the interest rate on your debts. This is the cost of your money. Look at your statements to determine your interest rates, then put your cash into paying down the highest-interest debts.

As you can see, the first three numbers have to do with how much you’re putting away for your retirement- your assets. The last three are about the debt you’re carrying, or your liability. Planning for retirement also involves carefully considering how much money you’ll need once you’re no longer working. The rule of thumb has been to plan for 70 to 80 percent of your current income, but many retirees are finding that a comfortable amount is closer to 100 percent.

When you’re ready to create a strong financial plan for the future that will allow you to live the lifestyle you want to live, Nelson Financial Planning can help. As one of the best financial planning firms in Central Florida, we provide guidance and financial advice so that you can make informed decisions about your future. We believe you should enjoy your retirement, so we’ll work with you to create a plan for a stress-free future. Call (407) 307-3061 or contact us today to set up your free consultation.

When Should you Start Investing

When you’re young, you might not think too much about retirement. It seems like a long way off, but in fact, your youth is the best time to start thinking about setting yourself up for the future. When should you start investing? Probably much sooner than you think.

Why should you start saving for retirement when you’re still decades away from it? Investing in your late teens and early 20s is much more impactful than investing at a later age, even if you invest less money. Do you know why? It’s because of compound interest.

Let’s consider the example of two people investing $2500 each year into a tax-deferred account (assuming a roughly 10% return). One starts at age 18 and continues to invest until they’re 27, investing a total of $22,500. The other doesn’t start investing until they’re 27, but continues until he’s 65, for a total investment of $97,500. Now here’s what may surprise you: the person who started investing at 18 will have $1.5 million in the bank, while the one who began at 27 will only have $1.1 million. So even though the first person put in just a little over 25 percent of what the other person invested, they ended up with nearly half a million dollars more.

Investing 10-15 percent of your income each month when you’re young can yield a healthy retirement account when the time comes. Before you get started, though, create a budget and make sure you’re living within your means. Pay down high-interest debt, so that your debt to income ratio is low- preferably below 35 percent. Then make an appointment with a financial advisor, who can help you create a successful financial plan. Because you’re young, you’ve got plenty of time for your money to grow, but the drawback of being young is a lack of experience. Aligning yourself with a knowledgeable professional is one of the smartest money moves you can make.

If you’re over 18 and this information has caused you to feel hopeless, don’t throw in the towel just yet. The magic of compound interest can still help you. You’ll just have to make a larger investment because you’ve got less time. Even in your 40s, if you contribute the maximum allowable amount to a 401k, you should be able to retire comfortably in your 60s. You’ll have to prioritize your retirement fund, though, not siphoning it off to pay for college or accumulating debt. It’s also important not to make risky investments, but with the right financial advice, it’s possible to save for retirement at almost any age.

When you’re ready to create a strong financial plan for the future that will allow you to live the lifestyle you want to live, Nelson Financial Planning can help. As one of the best financial planning firms in Central Florida, we provide guidance and financial advice so that you can make informed decisions about your future. We believe you should enjoy your retirement, so we’ll work with you to create a plan for a stress-free future. Call (407) 307-3061 or contact us today to set up your free consultation.

What You Need to Know About Your Severance Package

In times of financial upheaval, companies often offer severance packages and/or early retirement to some of their employees. The truth is that by doing this, a company can release someone with years of experience and a commensurate salary, replacing that person with someone who has less experience and can be paid less. Whether or not to take the early retirement or severance can be a stressful question, especially because there’s often a limited time in which to make the decision.

There’s a lot to consider when making this kind of decision. You might be offered a severance package when you’re already nearing retirement age. Do you take the severance or retire early? The severance package may be substantial, but will it cause you to miss out on retirement benefits?

For a person who is not quite at retirement age, a large severance package may be attractive, but is it worth looking for another job? Entering the job market in middle age can be risky. On the other hand, if you’re being offered a severance package, your company may not be doing very well. In that case you could be at risk of losing your job in the near future anyway, which would make taking the offered severance a good idea.

Something that’s important to consider is your health insurance. If you’re suddenly out of a job, where will you get health insurance? More importantly, how will you pay for it? If you opt for COBRA, will you have to pay for the whole thing, or will your employer contribute? Can you possibly move to your spouse or partner’s insurance? Every situation is unique. Severance packages are based on a dollar amount for a certain number of weeks, based the number of years you’ve worked for the company. When you look at the health insurance costs the package might seem less appealing.

If you’re offered a severance package, in some cases you can negotiate a better one. To do this, first conduct some research to determine what you should reasonably be able to expect. Then, gather relevant information about your length of employment current earnings, awards you’ve received for successful service, and anything else that demonstrates your value to the company. Be calm and confident, and once the package is offered, look for areas where it might be increased. If there’s a noncompete agreement included in the package, you may be able to use that as leverage. If the company is unwilling to increase your offer, ask for an extension of benefits. Severance package negotiations are not always successful, so be prepared to politely accept a refusal. If you are successful in your negotiation, make sure to get it in writing as soon as you can.

If you need help deciding what to do about the severance package you’ve been offered, Nelson Financial Planning can help. As one of the best financial planning firms in Central Florida, we provide guidance and financial advice so that you can make informed decisions about your future. We believe you should enjoy your retirement, so we’ll work with you to create a plan for a stress-free future. Call (407) 307-3061 or contact us today to set up your free consultation.

2021 Social Security Changes

2020 has been tumultuous, who knows what 2021 will bring? One thing is certain: there will be some changes to social security. While no one yet knows some of the things that will be changing, we’ve got a pretty good overall view.

• The first important thing to know about Social Security in 2021 is that there will be a 1.3 percent cost of living increase (COLA). This isn’t much of an increase; it’s about a $20 jump per month for most people. If you’re married, and you and your spouse both receive Social Security, you’ll probably see an increase of about $33, and a widow or widower with two kids can expect a raise of about $39 per month. The maximum amount anyone will get is $137 per month, increasing the income of someone who retired at age 66 to a maximum of $3148 per month. Your personalized COLA numbers will be posted in your Social Security account in December 2020, so that you can know what to expect when the raise goes into effect in January.
• Disabled workers will get this COLA as well. SSI for an individual will go up by $11, and for a couple, $16 per month. The number is $16 for a disabled worker, too, and a disabled worker with a spouse and kids is looking at about $29 per month.
• The COLA is less than it has been in recent years, but not by much. The 1.3 percent number was calculated based on year-over-year inflation. To be more specific, it’s the difference between the Consumer Price Index for Urban Wage Earners in the third quarter of 2019 and the third quarter of 2020. There’s not always a COLA, because if the prices have fallen, there’s no adjustment. That happened in 2010, 2011, and 2016, but in 2020, there was a 1.6 percent COLA. The highest COLA since the adjustment became automatic in 1975 happened in 1980; that year it was 14.3 percent.
• The maximum earning cap is going higher, too. Social Security is funded by a payroll tax, which is set at 12. 4 percent on eligible wages. That 12.4 percent is split in half, with employees paying 6.2 percent and employers paying the other 6.2 percent. Self-employed workers have to pay the entire 12.4 percent. If you make over a certain amount of money, though, the amount that’s subject to these taxes is capped. In 2020, the maximum taxable amount was $137,700, but it’s going to be $142,800 in 2021.
• The amount of money you can earn and still receive benefits is going up in 2021. People who take retirement benefits before they hit retirement age, while they’re still working, don’t get full Social Security benefits. The way it’s calculated is that there’s a certain amount they’re allowed to earn and for every $2 above that amount, they lose $1 in benefits. In 2020, the amount a person could earn from working while receiving Social Security benefits was $18,240 per year, but in 2021 it will climb to $18,960 per year. The year you reach full retirement age, the earnings limit goes up to $50,520, and the penalty is reduced to $1 withheld for every $3 you earn, and once you actually turn your full retirement age, there’s no penalty if you choose to work and collect Social Security simultaneously.
• Full retirement age is shifting. When the program was initially established, in 1935, the full retirement age was set at 65. Currently, it’s 66 years and 8 months, but for people who turn 62 in 2021, it will be 66 and 10 months. The full retirement age is set to increase in two-month intervals for people born between 1955 and 1959, and for those more in 1960 or late, it will be 67.
• Medicare increase could reduce some of 2021’s gains. We’re not sure yet how much that will be, but it has the potential to eat into your COLA. The good news, thanks to a recent law change championed by AARP, the increase should be less than has been projected.

Social Security has been around since 1935, and most retirees depend on it, but a lot of myths persist about the system. There’s the idea that Social Security is running out of money or being raided to pay for other programs. Many people also believe that our elected officials don’t pay into the Social Security program like the rest of us. In truth, as long as payroll taxes continue to be paid, Social Security will not run out of money, because it’s a pay-as-you-go system. Senators and representatives have been paying into the program since 1984. And money can’t be stolen from Social Security to pay for other programs, though it can be borrowed. The tax revenue from Social Security is invested in special U.S. Treasury securities, and as with all Treasury bonds, the proceeds can be spent by the federal government on other programs. However, the Treasury, like other bondholders, has to pay the money back, with interest. There are funding challenges, because the retiree population is growing faster than the working population, and people are living longer. This could result in a reduction of benefits by about 2035, though the program still won’t be broke. It’s likely that it will be revamped between now and then to cover the deficit, much like it was in the 1980s.

Another myth is that Social Security is like a retirement savings account, with money being socked away in a personal account for you, paid to you with interest when you retire. Your benefit is not based on how much you put in, but rather how much you earned over your working life. On average, Social Security benefits are about 40 percent of a person’s pre-retirement earnings. That’s one reason it’s important to have a retirement fund that will provide you with supplemental income after you retire.

As we begin to emerge from the COVID-19 pandemic, economists are describing the economic recovery as being K-shaped. The economy is often explained using letters like a U, V, or W, to demonstrate the ups and downs, but what does a K represent? It’s indicative of the fact that people in higher-income households, with jobs that are more flexible and easier to do from home, are doing better in this time of recovery than lower-income families with less portable jobs. Similarly, larger companies have fared better than small businesses. These are factors to consider when you’re making investments during this time of upheaval.

When you’re looking for good advice on building a strong financial plan, Nelson Financial Planning can help. As one of the best financial planning firms in Central Florida, we provide guidance and financial advice so that you can make informed decisions about your future. We believe you should enjoy your retirement, so we’ll work with you to create a plan for a stress-free future. Call (407) 307-3061 or contact us today to set up your free consultation.

Do You Know Where Your Money is Going? What Do you Overspend On?

In our spend-happy culture, it’s sometimes hard to find financial peace of mind. The national credit card debt is up over $200 billion over the past five years, and things like online shopping and keeping up with the Joneses make it almost certain that this number is going to continue to snowball. Enjoying your life is important but having a sound financial plan is vital. One key to gaining a strong financial footing is identifying areas in which you overspend, perhaps listed below.

• Clothing: Don’t pay full price for clothing. There are plenty of tricks for getting around this, from shopping consignment to finding promo codes online to joining loyalty programs.
• Water: Bottled water costs more than gasoline, so skip it. Instead, buy a filter for your home and use reusable bottles.
• Car Insurance: Most people choose an insurance company and stick with it, even if the premiums keep climbing. By shopping around every two to four years, you could reduce your rates by $100 to $200 a year.
• Being over-insured: It’s important to have the insurance you need, but Insurance companies, tend to play on people’s fears, roping them into insurance they don’t need, like extra rental car protection or too much life insurance. Additionally, about 84 percent of Americans don’t ask for basic discounts in their insurance, though these discounts could save hundreds of dollars each year.
• Cheap things: Dollar store items may seem like a bargain, but if they break almost immediately, they’re not such a great deal. Look for mid-priced items of good quality instead.
• Expensive things: While going for the cheapest option often means missing out on quality, buying the most expensive doesn’t guarantee it. Shop carefully: high priced mattresses and top-dollar hotels, for instance, are unlikely to be worth more than more reasonable options.
• Subscriptions: Streaming services, gym memberships, and anything that auto-renews can all cost you in the long run. Take a hard look at what you’ve subscribed to and decide what you can do without.
• Eating Out: It’s fine once in a while, but if you make it a habit you can easily end up throwing away hundreds of dollars every month.
• Eating In: If you’re not careful, it’s easy to overspend in the grocery store, overbuying food you paid too much for and will likely eventually throw away. Never shop when you’re hungry, plan meals before you go, based on the sales, and always shop with a list.

At Nelson Financial Planning we want to help you create a financial plan that provides for your future. As one of the best financial planning firms in Central Florida, we provide guidance and financial advice so that you can make informed decisions about your future. We believe you should enjoy your retirement, so we’ll work with you to create a plan for a stress-free future. Call (407) 307-3061 or contact us today to set up your free consultation.

Financially Savvy House Buying

On 8/17/2020 we did a radio show talking about a Money Magazine article.  This article talked heavily about the proper way to buy a house.  Buying a house can be a very happy and exciting time or a frustrating financial trap.

Buying a home is one of the most expensive purchases most people make in their lives. But before signing any documents and letting your friends and relatives know about this huge financial milestone, there is a very important factor which tends to get overlooked by a lot of future homeowners: not knowing how much house they can afford.

It is completely understandable that many of us allow our excitement and emotions to take over during our home buying journey; especially if you find the house of your dreams. When this happens, it’s easy to forget about the real numbers, which can harm you down the road.

A good way to start figuring out how much house you can afford is by using the 28%/36% rule with your monthly gross income (MGI). 28% represents the portion of your MGI that goes to your mortgage expenses while 36% represents the portion of your MGI that goes to all of your other debt obligations. To be on the safe side, get in touch with your preferred lender to get an idea of what loan amount you can qualify for.

For more on a financially savvy way to buy a house, click on the link to view the article posted by Money Magazine https://money.com/get-items-removed-from-credit-report/ or visit our YouTube channel to watch our 8/17/2020 radio show https://youtu.be/UHcL_nB485I

Hello Friends

2020 will certainly go down as a historical year – and we still haven’t gotten to the election yet! We hope you are well and staying healthy.

Speaking of elections, we thought it would be interesting to go into the archives and pull the election piece we wrote four years ago. At that point, eight years of a Democratic Administration were ending and the election looked like a lock for the Democratic candidate. What’s interesting about this four year old article is that it needs NO updating – except for the date of the election which is November 3 for the 2020 election and not November 8 (which was election day in 2016).

Here are two of the more notable quotes from the article. “Presidents from both parties have raised or reduced taxes, supported or opposed free trade, increased or reduced regulatory burdens etc.” “History tells us that there is no magic formula to the Presidency and stock market movement.” Frankly, we believe that the after shock of the Covid pandemic will consume much of the next Presidential term and dictate the direction of many policy choices.

Despite all of the headlines these days, the markets have shown a remarkable level of resiliency. However, resiliency does not equate to all clear and we expect volatility to increase significantly in the months ahead as the election draws nearer and the economic impact of the continued rise in Covid cases starts to show. As always, remain consistent and know that your allocation is designed to be a bit of an all weather allocation as we never know when crazy stuff is going to happen.

Unfortunately, given the current state of Covid cases, we can’t in good conscience bring together a large group of people for our usual fall meeting formats.  And for that we are deeply disappointed. But we wanted to at least do something that felt normal so we are doing a Shred Day at the office.

Many of you have told us that you have spent this quarantine time organizing things at home and have documents that need to be disposed of properly. Here’s your chance!  We also have the option to bring your old digital devices and computer equipment for proper disposal as well. You can stay in your car and we will unload your car and bring you a box lunch.

Our series of portfolio manager conference calls continues. These calls represent an opportunity for you to hear directly from senior investment personnel about the decisions and changes that are being made on a daily basis to your investments. These calls require no internet or computer equipment – simply dial the phone number and enter the meeting number to connect. Please join us for the following upcoming calls at 5:00 PM sharp and email us any of your questions ahead of time.

If you have not visited with us yet in 2020 please contact the office to arrange a conversation. We are available by phone, video or in person in our outdoor meeting space with the CDC recommended universal masking protocol.

Look forward to seeing you on Shred Day.

Fondly,

Joel Garris

Nelson Ivest Brokerage Services, Inc. & Nelson Financial Planning, Inc. Business Continuity Plan

Nelson Financial Planning, Inc. and Nelson Ivest Brokerage Services, Inc. have developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business.  Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur.  With that in mind, we are providing you with this information on our business continuity plan in case an event occurs that causes significant disruption.

Contacting Us – If after a significant business disruption you cannot contact us as you usually do at 407-629-6477, you should call our alternative number 407-619-5307.  If you cannot access us through either of those means, you should contact the applicable mutual fund or variable annuity company to complete any transactions within your accounts, including investments or redemptions.  The contact information for the four mutual fund families that we predominately do business with is as follows:

American Funds, 1-800-421-4225, P. O. Box 2280, Norfolk, VA 23501-2280

Deutsche AM Service Company 1-800-728-3337, P. O. Box 219151, Kansas City, MO 64121-9151

MFS Service Center, 1-800-225-2606, P. O. Box 219341 Kansas City, MO 64121

Putnam Investments, 1-800-225-1581, P. O. Box 219697 Kansas City, MO 64105

Our Business Continuity Plan – We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business.  In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.

Our business continuity plan addresses: data back up and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and assuring our customers prompt access to their funds and securities if we are unable to continue our business.

Each mutual fund or variable annuity company backs up client records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, we have been advised by the mutual fund and variable annuity companies that their objective is to restore their own operations and be able to complete existing transactions and accept new transactions and payments within a reasonable period of time.  Your orders and requests for funds and securities could be delayed during this period.

Varying Disruptions – Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region.  Within each of these areas, the severity of the disruption can also vary from minimal to severe.  In a disruption to only our firm or a building housing our firm, we will transfer our operations to a local site when needed and expect to recover and resume business as quickly as possible.  In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area and recover and resume business within a reasonable period.  In either situation, we plan to continue in business, direct you to contact the mutual fund or variable annuity company directly and notify you through our customer emergency number at 407-619-5307 how to contact us.  If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customer’s prompt access to their accounts.

For more information – If you have questions about our business continuity planning, you can contact us at 407-629-6477.