What will happen next?
Navigating a perilous economic landscape.
Inflation. A hawkish Fed. War in Ukraine. Tensions in Taiwan. Energy cost spikes in Europe. Continued supply chain disruptions. Labor shortages.
Sounds like a new verse of Billy Joel’s “We Didn’t Start the Fire.”
Unfortunately, this is not history or entertainment, but our modern economic landscape.
So what will happen next? No one knows for sure. We could link to as many articles that say we have “hit bottom” and things are turning around, as we could furnish articles saying the momentary stabilization is a “false floor” and to expect the doomsday of 1970s stagflation. As for inflation, take your pick from articles that say inflation is (1) over, (2) here to stay, or (3) has only just begun.
We don’t have a crystal ball and those who claim to know are usually full of hot air.
Federal Reserve Chair Jerome Powell (right), Vice Chair Lael Brainard (center), and Federal Reserve Bank of New York president and CEO John Williams (left), at the central bank's annual symposium in Grand Teton National Park in Moran, Wyo., Friday, Aug. 26, 2022
The best you can do is diversify and have appropriate holdings based on your objectives and time horizon. There’s no specific, time-sensitive “move” to make based on that advice. Rather, it’s about proper fundamentals: building out positions that hedge your risk exposure, while obtaining the highest return for risk assumed.
We’re here to help you do that with a variety of unique financial structures, from professional asset management to risk-shifting solutions that allow you to participate in market gains without incurring losses, and leveraged strategies that supercharge wealth accumulation without bearing market risk.
Minding your money: our new partnership with Physician Bank
Critical to our work with doctors and other successful individuals is earnings management planning. We have recently partnered with Physician Bank, a new division of Heritage Bank NA, to coordinate cash management for clients running medical practices and other business entities. In addition to favorable interest rates for liquid checking and certificate of deposit accounts, Physician Bank offers a partnership buy-in program for medical practices, substantial unsecured lines of credit, full home loan financing (no down payment) without PMI, and a relationship with a private banker.
For our clients, the additional benefit is their business banking, whereby we can coordinate personal and professional cash management for financial planning purposes. Practice revenue can be tracked and transferred into personal checking (salary equal to personal lifestyle costs plus taxes), a cash reserve, and then the excess deducted to fund a variety of tax-optimized structures, including:
- Medical, premium refund disability, and long-term care insurance (199A plan)
- Defined benefit pension plans, defined contribution plans, captives, and trust accounts
- Bonus for critical illness loss mitigation program
- Bonus for Leveraged Tax Free Life Income Program (LT-FLIP)
- Guaranteed principal, guaranteed return investments:
- Legal reserve, fixed, indexed annuities providing guaranteed income for life
- Legal reserve whole life insurance
Contact us to arrange a personal introduction.
Proposed legislation on Qualified Opportunity Zones (QOZ) and Social Security Taxes
A few recent political headlines include the Inflation Reduction Act, which among other things will allow Medicare to negotiate prescription drug prices, and the President’s Executive Order on student loans, which may actually trigger a tax implication for some, as the forgiven debt is treated as income under some states’ laws.
Separate from these items, we are following a few developments in Congress:
- The Opportunity Zones Transparency, Extension and Improvement Act, introduced in early April, makes some revisions to the original 2017 law that created Qualified Opportunity Zones (QOZs). It aims to increase reporting requirements, extend the capital-gains benefits for investors and improve support for public and private investment, among other changes. As of this writing, the bill has not yet been scheduled for debate. Unless new legislation advances, QOZs are scheduled to end at the conclusion of 2026.
- The You Earned It, You Keep It Act would repeal federal taxes on Social Security benefits. The tax cut would be paid for by extending the payroll tax to wages over $250,000 a year. Wages over $147,000 are currently exempt from Social Security payroll tax. Almost half of all households might pay taxes on a portion of their Social Security benefits, and 12 U.S. states tax Social Security at various income levels.
- Changes being proposed in several versions of a “Secure Act 2.0” bill include raising the required minimum distribution age from 72 to 75 (expanding the window for Roth conversions of qualified money, paired with charitable structures to offset tax liability) and increasing catch-up provisions for those nearing retirement age. Different versions of this bill must be reconciled between the House and Senate.
Our clients have access to the authorities in institutional real estate for Qualified Opportunity Zones. Furthermore, accounting for projected social security income, including likely taxes, is included as part of our comprehensive distribution planning analysis for our clients.
Meet with us
For over 30 years, our firm has helped successful physicians and dentists (as well as other productive individuals) across the country maximize the efficiency, control, and safety of the conversion of their earnings into spendable savings.
You can now schedule your initial consultation or client review meeting with us electronically.
We look forward to visiting with you.
Sincerely,
Jeffrey Taxman, MBA
Principal
Physicians Financial Services
402.399.8820 (o) | 402.681.9007 (m)
402.397.9510 (f) | jtaxman@pfsfa.com
Online: www.pfsfa.com
Matthew Taub, JD
Associate
Physicians Financial Services
402.399.8820 x105 (o) | 531.375.5962 (d)
402.960.2571 (m) | mtaub@pfsfa.com
Online: www.pfsfa.com
Physicians Financial Services specializes in the unique financial needs of doctors and their families, as well as other productive individuals. A national practice, PFS has administrative offices in Omaha, Nebraska.
You Need Not Be a Doctor: we also work with other productive individuals with similar financial needs.
All information provided by Physicians Financial Services is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. Such information also is not and should not be deemed to be an offer to purchase or sell or a solicitation of an offer to purchase or sell, or a recommendation to purchase or sell any securities or other financial instruments. The content in this promotional literature is based on sources that are considered reliable. No guarantee is provided on its accuracy, correctness or completeness either express or implied. The information provided is purely of an indicative nature and is subject to change without notice at any time. The information provided does not confer any rights. The value of your investment may fluctuate. Results achieved in the past are no guarantee of future results. You must make your own independent decisions regarding any securities or other financial instruments mentioned herein. You are advised to seek professional advice as to the suitability or appropriateness of any products and their tax, accounting, legal or regulatory implications.
DOCTORS’ FINANCIAL EDUCATION. Financial Education Series. | © Copyright 2022 Physicians Financial Services. | Jeffrey L. Taxman, MBA, | PFS Consulting LLC | 1810 South 108th St., Omaha, NE 68144, jtaxman@pfsfa.com, 402.399.8820 (o), 402.397.9510 (f)