To do so effectively, we need to do 3 things:

1. Reflect.
   1. To lay the foundation for an exceptional 2024, it’s important to get yourself in a positive state. The state you’re in matters! If you don’t take the time to reflect, you will likely come up short. Take a moment to flip through your phone’s photo album, review your calendar, and take inventory of what all you accomplished in 2023. Putting yourself in a positive state will help you dream and plan for the year ahead with excitement.
2. Plan.
   1. What does an awesome 2024 look like for you? The more specific, the better! A good way to do this is to think about each quarter and what 3 or 5 things you want to accomplish. Dig into the ‘why’ behind these goals; make it emotional and powerful. The significance of your ‘why’ will inherently help you find the ‘how.’
3. Measure and stay focused.
   1. To turn your dreams into accomplishments, it’s crucial to establish specific metrics and maintain your focus. In the hustle and bustle of life, staying focused on your ‘why’ can be challenging. Regularly revisit your goals, assess your progress, and adjust course if needed.

By implementing the Reflect, Plan, Measure framework, we will become active participants in the creation of a year filled with intention and excitement.

Great Days Ahead!

• Finishing the day winding down with a glass or bottle of wine before bed
• Keeping an opened container of frosting in the fridge that can be easily (and often) accessed by spoon to satisfy a sweet craving
• A cigar every time you are on the golf course
• Grabbing a bag of candy at the gas station each time you fill up on gas
• Bringing home a bakery treat each time you visit the grocery store
• Sitting down to watch a show with a bag of potato chips
• A beer with the guys or happy hour with the girls most weeknights because it’s cheap, fun and social
• Hitting up your local drive-through after the kid’s sports practice or game, most nights of the week

These are specifically examples of common, every day activities that have been associated with patterns. “When I do this, I also have that”. This is not to be confused with associations that occur occasionally that would be less detrimental towards health. Life’s about balance, right?

But we are what we do consistently, and if unhealthful links and connections are made between activities and poor quality nutritional choices often enough, for example, your body will likely pay the consequences in the long-term.

Consequences of an unbalanced, poor-quality diet can manifest in various ways, such as the following:

• Chronic disease onset like Type 2 Diabetes, heart disease, Alzheimer’s, and/or cancer
• Or, they can imply manifest in the inflammatory state of living overweight or obese, skin issues, weak immune system, cognitive decline, decreased quality of life and increase healthcare costs.

Yikes!

On the flip side, some examples of positive, health-promoting associations could be the following:

• Reading a paperback book before bed each night, phone placed on “do not disturb” and minimal blue light interactions to promote better sleep
• Starting each meal at a restaurant with a side salad before bread or the main course
• Avoiding the candy and bakery aisles of the grocery store because you know they’re triggers for you, and if you don’t buy it, you don’t have access to it
• Upon getting home from work, choosing to walk the dog rather than unleashing him in the fenced in backyard (which would be easier)
• Enjoying evening screen time with a show or movie without the need to snack mindlessly

It’s worth taking the time to personally think about the subtle connections and links between events and activities as it relates to food and beverage, as this could be a blind spot hindering positive progression towards better health.

Recognizing the power of associations is the first step towards positive change. Awareness is key. Be encouraged! You’re always just one choice away from making a healthier decision, and I’m here to support you on the journey.

Here are some tips for getting started:

1. Identify. What is really frustrating you about your daily or weekly routine? Frustration is a driver to change. Be specific here. If you just focused on what was frustrating and what would make it less frustrating/better, what would it be?

2. Reserve. Pick a time in your schedule and dedicate yourself to education (self-education through reading, watching how-to videos, podcasts, in person professional help), as you prepare to make a change.

3. Clarify. Write down a clear goal and put it somewhere you can see it daily, as a reminder to yourself.

4. Take Action. Go and do it! It’s time to execute rather than thinking about it anymore!

5. Practice this for small habit changes or big habit changes. Enlist accountability people as desired. Pat yourself on the back for taking a step of action.

My goals may differ from yours, and in fact, they likely do, spanning personal to professional aspirations. However, the implementation of self-discipline to commit to change and adapt to new ways of living will likely positively impact all areas of your life.

“If you talk about it, it’s a dream, if you envision it, it’s possible, but if you schedule it, it’s real”. Let’s have less talk, more scheduled action and a space created for ourselves to actually adopt behavior change. Cheering you on today!

Nearly 1 in 5 people living in the United States will suffer a disability lasting more than one year before the age of 65.¹

Many individuals do not like to think or talk about a potential long-term disability, but they do need to talk about disability insurance. 

Why Physicians Should Consider Disability Insurance

Imagine not being able to practice your specialized medical skills due to illness or injury. The financial impact could be devastating for you and your family. As a physician, your income hinges on your ability to work. That’s why individual disability insurance as part of your financial plan is crucial for safeguarding your earning potential.

Understanding Disability Insurance Types

Choosing disability insurance involves understanding the different types and the benefits each brings. For example, there are two categories of disability policies, short-term disability and long-term disability. Short-term disability policies are typically obtained as a group policy benefit from one’s employer while long-term disability policies are also offered as a benefit through an employer BUT are more commonly purchased as an individual policy through a broker or financial advisor.

Additionally, you can purchase own-occupation coverage or any-occupation coverage. The difference between the two is meaningful. Under an own-occupation policy, a person is typically considered disabled if they are unable to perform the material and substantial duties of the job they were working at the time they became disabled. Under an any-occupation policy, a person is considered disabled if they are not able to perform substantial duties of any job for which the person may earn a certain percentage of their pre-disability earnings.  

For physicians, it is essential to work with an advisor who understands your needs and unique situation to recommend the right disability insurance strategy.

Key Considerations

Beyond basic understanding of disability insurance, it’s important to understand key factors like the carrier, benefit amount, elimination period, and renewal options.

• Insurance Carrier – know who you are working with. Currently, only 5 carriers offer “true” own-occupation coverage.
• Benefit Amount – the IRS publishesd “Issue & Participation” amounts based on your income and existing disability coverage.
• Waiting Period – the amount of time one must wait to collect benefits when disabled – typically 90, 180, 365, or 730 days.
• Benefit Period – how long one will be eligible to receive their tax-free benefit. This is typically to age 65, 67, 70, or lifetime.

The above list is not all encompassing but should be considered as you construct your insurance package.

Here to Help

At Confluence Financial Partners, we work with physicians to secure and protect their income in the event an unexpected illness or injury becomes reality. Please reach out if you would like to start the conversation today.

Life and disability insurance and life insurance with long-term care benefits are not issued through Confluence Insurance Services. Products and services referenced are offered and sold only by appropriately appointed and licensed entities and financial advisors and professionals. Not all products and services are available in all states. 

1. Centers for Disease Control and Prevention. Disability and Health Data System (DHDS) [Internet]. [updated 2023 May; cited 2023 May 15]. Available from: http://dhds.cdc.gov
     ↩︎

Employers are increasingly offering stock benefits as part of their compensation packages to remain competitive in the job market. These benefits often come in the form of Incentive Stock Options (ISOs) and Restrictive Stock Units (RSUs) which can be powerful tools for building wealth if managed effectively. However, understanding the differences in these benefits is crucial to maximizing their potential and avoiding costly mistakes.

What Are ISOs and RSUs?

Incentive Stock Options (ISOs) give the employee the option to purchase company stock at a fixed price, known as the exercise price. If the company’s stock price increases, you can buy shares at the lower exercise price and potentially sell them at the higher market price, resulting in a profit. The key advantage of ISOs is the potential for favorable tax treatment, where upon a qualifying sale, gains could be taxed at the lower long-term capital gains rate rather than as ordinary income.

Restricted Stock Units (RSUs), on the other hand, are company shares granted to employees as part of their compensation. Unlike ISOs, RSUs are not options to buy stock; instead, they are actual shares that you receive usually after a certain vesting period. Once vested, RSUs are considered and taxed at their fair market value as ordinary income.

The Power of ISOs and How to Manage Them

ISOs can be an attractive benefit, especially in a growing company. However, their complexity means they require careful planning. Here are a few tips:

Avoid the Alternative Minimum Tax (AMT) Trap: Exercising ISOs can trigger the Alternative Minimum Tax (AMT), an additional tax that applies when certain tax preferences make your regular income tax too low. This can be a surprise come tax time, so it’s essential to plan your exercises carefully, possibly spreading them over multiple years and consulting with your financial advisor and tax advisor.

Know Your Timeline: ISOs typically have a vesting schedule, meaning you can only exercise a portion of your options each year. Additionally, once you leave your company, you usually have a limited time to exercise your vested options.

Understand the Tax Implications: ISOs offer a potential tax advantage, but they come with conditions. To qualify for long-term capital gains tax, you need to hold the shares for at least one year after exercising the option and two years after the grant date. Otherwise, your profits may be taxed as ordinary income.

Maximizing RSUs for Long-Term Wealth

RSUs, while more straightforward than ISOs, still require strategic thinking:

1. Plan for the Tax Hit: When your RSUs vest, they’re taxed as ordinary income. This means you might face a significant tax bill when your shares vest, even if you haven’t sold them yet. Some companies offer to withhold shares to cover taxes, but you’ll need to plan for any additional tax liability.  If you decide to hold on to the shares after vesting, you may be exposed to additional capital gains taxes if the stock appreciates and you sell at a later date.
2. Consider Your Investment Strategy: Once your RSUs vest, you can choose to hold or sell the shares. Holding them can be a great way to participate in the company’s long-term success, but it also increases your exposure to the company’s stock. Balancing this with other investments in your portfolio is crucial to managing risk.
3. Diversify Your Portfolio: It’s easy to get caught up in the success of your company, but putting too many eggs in one basket can be risky. Consider selling some of your vested RSUs to diversify your investments and reduce your exposure to company-specific risks.

Final Thoughts

ISOs and RSUs are valuable components of a compensation package, offering the potential to build substantial wealth. However, understanding the details, planning for taxes, and integrating them into a broader financial strategy are essential steps to make the most of these benefits.

At Confluence Financial Partners, we specialize in helping individuals navigate these complexities, ensuring that your stock benefits work in concert with your overall financial plan. If you have ISOs or RSUs and are unsure how to manage them, let’s have a conversation.

About the Author

Jackson Elizondo is dedicated to making a positive impact in his community, a commitment that led him to a career in wealth management. Jackson understands the importance of integrity and trust when building…

Pittsburgh

412-394-3138

jackson.elizondo@confluencefp.com

Email Jackson

Navigating a job change is a significant undertaking, especially for those with considerable assets and financial interests. This guide is designed for professionals, including executives, physicians, and business owners as they work through the intricacies of transitioning to new opportunities.

Here are some important things to consider:

• Review your compensation plan.

Understanding your compensation package is important, because compensation is usually a huge part of transition decision. Beyond salary, bonuses, and deferred compensation, it’s essential to assess the long-term value of your total package. For example, if you are re-locating, consider the impact of cost-of-living adjustments.

Don’t forget to evaluate non-monetary benefits such as professional development opportunities, wellness opportunities, and overall company culture. All of these can have a significant impact on your job satisfaction and overall well-being.

• Evaluate your retirement plan.

What do I do with my old retirement plan(s)?

Roll into an IRA: Working with a financial advisor can help you determine if rolling into an Individual Retirement Account makes sense. The benefits of this option include having more investment flexibility and control. Typically, you will have a broader range of investment options compared to an employer sponsored 401(k) plan. This allows you to diversify your portfolio while also consolidating accounts if you have multiple 401(k)s with previous employers. If you work with an advisor, you will have professional investment management as well as financial planning available. A good financial advisor will also be able to help with tax and estate planning matters, though he/she cannot replace your CPA or attorney.

or

Move your old retirement plan to your new employer: Most employer sponsored retirement plans allow for assets from previous retirement plans to flow into the new plan. This is certainly better than leaving the assets with your old employer’s plan, but this option likely does not include the investment options and flexibility as well as professional management and planning found if you roll assets into a managed IRA. That said, it may be your lowest cost option.

• Understand changes to your health insurance.

Be aware if there is a waiting period for health insurance with your new employer. If that is the case, look into extending your previous employer’s coverage through COBRA if there is a gap.

Have a solid understanding of the different health insurance plans offered by your employer and consider factors such as the network of providers, deductibles, co-pays, coverage for prescription drugs and preventative care to name a few.

Take advantage of  tax-advantaged accounts like Flexible Spending Accounts (FSA)s and Health Savings Accounts (HSA)s if your employer offers them.  These accounts can help you save money on qualified medical expenses. Additionally, HSAs can serve as an additional retirement savings vehicle.

• Review Stock Options and Equity Compensation Programs.

If your previous employer offered stock options or equity, be sure to understand the vesting schedules and the implications of leaving.

Equity compensation can significantly increase your wealth, but also add complexity to your financial and tax planning picture. For example, the decision to exercise stock options should be timed to optimize tax implications and align with your broader financial goals, risk tolerance, and time horizon. Working with a financial advisor can help you make an informed financial decision.

A job transition is an important time and opportunity to reassess your financial strategy. By taking a look at your compensation, retirement planning, healthcare options, and equity compensation, you position yourself for both peace of mind and long-term success.

If Confluence can be a resource to you during this transition, please reach out. We are happy to help!

When someone thinks about socking away money in a college fund for children or grandchildren, the first thing that comes to mind is a 529 plan – a savings plan for qualified educational expenses, which may include not only tuition, but also room and board, books, and other school supplies.  But did you know that a 529 can also be an attractive consideration for transferring generational wealth?

The Advanced:

• Contributions are considered completed gifts.  You can annually give $18,000 (for 2024) per donor per beneficiary, or $36,000 per couple per beneficiary, without being subject to the gift tax.
• “Super funding” – Contributions can be front-loaded, up to $85,000 (up to $170,000 for married couples)– or five years’ worth of contributions at once.  If you decide to do this, you can’t fund the account for the next four years.
• You can name a trust as the account owner, which will give you control even after you’re gone.  Trustees can make decisions for the account that are advantageous to the beneficiaries and ensure your wishes for the account are carried out.
• Contributions to a 529 plan reduce the taxable value of your estate and because contributions are treated as completed gifts, they are immediately removed from the donor’s estate and exempt from the current federal estate tax limit ($12.92 million per person or $25.84 million per couple).
• Another new benefit starting 2024 (per Secure Act 2.0), it is now permissible to rollover up to a lifetime limit of $35,000 tax free from a 529 plan to a Roth IRA.  The money must be moved to a Roth IRA for the beneficiary of the 529 as opposed to the owner of the 529 account; and the account must have been in existence for at least 15 years. Only funds in the plan for at least 5 years are eligible for rollover. (Please note that annual Roth contribution limits will apply based on the rules included in the legislation and the IRS could interpret differently upon implementation.) 

Whether you want to reap the ‘basic’ benefits of a 529 savings account, or want to discuss the ‘advanced’ benefits – the best approach is reaching out to your Confluence Wealth Manager or starting the conversation altogether. We look forward to helping you and your family with education planning in 2024.

About the Author

Known for his professionalism and calming demeanor, Zac is focused on helping his clients reach their financial goals through comprehensive financial planning and unbiased guidance.  Zac and his team support and care for…

Sewickley

724-719-6609

zac.saunders@confluencefp.com

Email Zac