Frank Wealth ManagementGroupStephen Frank, AIF®Wealth Management Adviser3771 Attucks DrPowell, OH 43065614-791-4806sfrank@sfwmg.comwww.sfwmg.com

October 2015Six Common 401(k) Plan Misconceptions

2015 Year-End Tax Planning Basics

Frequently Asked Questions on Opening a529 Plan Account

My employer now offers wellness benefits aspart of its employee benefits package. Butwhat are they?

Frankly SpeakingOctober 2015Six Common 401(k) Plan Misconceptions

See disclaimer on final page

Do you really know as much as you think youdo about your 401(k) plan? Let's find out.

1. If I leave my job, my entire 401(k)account is mine to keep.This may or may not be true, depending onyour plan's "vesting schedule." Your owncontributions to the plan--that is, your pretax orRoth contributions--are always yours to keep.While some plans provide that employercontributions are also fully vested (i.e., ownedby you) immediately, other plans may requirethat you have up to six years of service beforeyou're entitled to all of your employercontributions (or you've reached your plan'snormal retirement age). Your 401(k)'s summaryplan description will have details about yourplan's vesting schedule.

2. Borrowing from my 401(k) plan is abad idea because I pay income taxtwice on the amount I borrow.The argument is that you repay a 401(k) planloan with dollars that have already been taxed,and you pay taxes on those dollars again whenyou receive a distribution from the plan. Thoughyou might be repaying the loan with after-taxdollars, this would be true with any type of loan.

And while it's also true that the amount youborrow will be taxed when distributed from theplan (special rules apply to loans from Rothaccounts), those amounts would be taxedregardless of whether you borrowed moneyfrom the plan or not. So the bottom line is that,economically, you're no worse off borrowingfrom your plan than you are borrowing fromanother source (plus, the interest you pay on aplan loan generally goes back into youraccount). But keep in mind that borrowing fromyour plan reduces your account balance, whichmay slow the growth of your retirement nestegg.

3. Because I make only Rothcontributions to my 401(k) plan, myemployer's matching contributions arealso Roth contributions.Employer 401(k) matching contributions arealways pretax--whether they match your pretax

or Roth contributions. That is, those matchingcontributions, and any associated earnings, willalways be subject to income tax when youreceive them from the plan. You can, however,convert your employer's matching contributionsto Roth contributions if your plan allows. If youdo, they'll be subject to income tax in the yearof the conversion, but future qualifieddistributions of those amounts (and anyearnings) will be tax free.

4. I contribute to my 401(k) plan at work,so I can't contribute to an IRA.Your contributions to a 401(k) plan have noeffect on your ability to contribute to atraditional or Roth IRA. However, your (or yourspouse's) participation in a 401(k) plan mayadversely impact your ability to deductcontributions to a traditional IRA, depending onyour joint income.

5. I have two jobs, both with 401(k)s. Ican defer up to $18,000 to each plan.Unfortunately, this is not the case. You candefer a maximum of $18,000 in 2015, pluscatch-up contributions if you're eligible, to allyour employer plans (this includes 401(k)s,403(b)s, SARSEPs, and SIMPLE plans). If youcontribute to more than one plan, you'regenerally responsible for making sure you don'texceed these limits. Note that 457(b) plans arenot included in this list. If you're lucky enough toparticipate in a 401(k) plan and a 457(b) planyou may be able to defer up to $36,000 (amaximum of $18,000 to each plan) in 2015,plus catch-up contributions.

6. I'm moving to a state with no incometax. I've heard my former state can stilltax my 401(k) benefits when I retire.While this was true many years ago, it's nolonger the case. States are now prohibited fromtaxing 401(k) (and most other) retirementbenefits paid to nonresidents. As a result, onlythe state in which you reside (or are domiciled)can tax those benefits. In general, yourresidence is the place where you actually live.Your domicile is your permanent legalresidence; even if you don't currently live there,you have an intent to return and remain there.

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2015 Year-End Tax Planning BasicsAs the end of the 2015 tax year approaches,set aside some time to evaluate your situationand consider potential opportunities. Effectiveyear-end planning depends on a goodunderstanding of both your currentcircumstances and how those circumstancesmight change next year.

Basic strategiesConsider whether there's an opportunity todefer income to 2016. For example, you mightbe able to defer a year-end bonus or delay thecollection of business debts, rents, andpayments for services. When you defer incometo 2016, you postpone payment of the tax onthat income. And if there's a chance that youmight be paying taxes at a lower rate next year(for example, if you know that you'll have lesstaxable income next year), deferring incomemight mean paying less tax on the deferredincome.

You should also look for potential ways toaccelerate 2016 deductions into the 2015 taxyear. If you typically itemize deductions onSchedule A of Form 1040, you might be able toaccelerate some deductible expenses--such asmedical expenses, qualifying interest, or stateand local taxes--by making payments beforethe end of the current year, instead of payingthem in early 2016. Or you might considermaking next year's charitable contribution thisyear instead. If you think you'll be itemizingdeductions in one year but claiming thestandard deduction in the other, trying to defer(or accelerate) Schedule A deductions into theyear for which you'll be itemizing deductionsmight let you take advantage of deductions thatwould otherwise be lost.

Depending on your circumstances, you mightalso consider taking the opposite approach. Forexample, if you think that you'll be paying taxesat a higher rate next year (maybe as the resultof a recent compensation increase or theplanned sale of assets), you might want to lookfor ways to accelerate income into 2015 andpossibly defer deductions until 2016 (when theycould potentially be more valuable).

Complicating factorsFirst, you need to factor in the alternativeminimum tax (AMT). The AMT is essentially aseparate, parallel federal income tax systemwith its own rates and rules. If you're subject tothe AMT, traditional year-end strategies may beineffective or actually have negativeconsequences--that's because the AMTeffectively disallows a number of itemizeddeductions. So if you're subject to the AMT in2015, prepaying 2016 state and local taxes

probably won't help your 2015 tax situation,and, in fact, could hurt your 2016 bottom line.

It's also important to recognize that personaland dependency exemptions may be phasedout and itemized deductions may be limitedonce your adjusted gross income (AGI) reachesa certain level. This is especially important tofactor in if your AGI is approaching thethreshold limit and you're evaluating whether toaccelerate or defer income or itemizeddeductions. For 2015, the AGI threshold is$258,250 if you file as single, $309,900 ifmarried filing jointly, $154,950 if married filingseparately, and $284,050 if head of household.

IRA and retirement plan contributionsDeductible contributions to a traditional IRA andpretax contributions to an employer-sponsoredretirement plan such as a 401(k) could reduceyour 2015 taxable income. (Note: A number offactors determine whether you're eligible todeduct contributions to a traditional IRA.)Contributions to a Roth IRA (assuming youmeet the income requirements) or a Roth401(k) plan are made with after-tax dollars--sothere's no immediate tax savings--but qualifieddistributions are completely free of federalincome tax.

For 2015, you're generally able to contribute upto $18,000 to a 401(k) plan ($24,000 if you'reage 50 or older) and up to $5,500 to atraditional or Roth IRA ($6,500 if you're age 50or older). The window to make 2015contributions to an employer plan generallycloses at the end of the year, while you typicallyhave until the due date of your federal incometax return to make 2015 IRA contributions.

Important notesThe Supreme Court has legalized same-sexmarriage nationwide, significantly simplifyingthe federal and state income tax filingrequirements for same-sex married couplesliving in states that did not previously recognizetheir marriage.

A host of popular tax provisions (commonlyreferred to as "tax extenders") expired at theend of 2014. Although it is possible that someor all of these provisions will be retroactivelyextended, currently they are not available forthe 2015 tax year. Among the provisions:deducting state and local sales taxes in lieu ofstate and local income taxes; the above-the-linededuction for qualified higher-educationexpenses; qualified charitable distributions(QCDs) from IRAs; and increased businessexpense and "bonus" depreciation rules.

AMT "triggers"

You're more likely to be subjectto the AMT if you claim a largenumber of personalexemptions, deductible medicalexpenses, state and localtaxes, and miscellaneousitemized deductions. Othercommon triggers include homeequity loan interest whenproceeds aren't used to buy,build, or improve your home;and the exercise of incentivestock options.

Required minimumdistributions

Once you reach age 70½, yougenerally must start takingrequired minimum distributions(RMDs) from traditional IRAsand employer-sponsoredretirement plans (an exceptionmay apply if you're still workingand participating in anemployer-sponsored plan).Take any distributions by thedate required--the end of theyear for most individuals. Thepenalty for failing to do so issubstantial: 50% of the amountthat should have beendistributed.

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Frequently Asked Questions on Opening a 529 Plan Account529 plans are savings vehicles tailor-made forcollege. Anyone can open an account, lifetimecontribution limits are typically over $300,000,and 529 plans offer federal and sometimesstate tax benefits if certain conditions are met.Here are some common questions on openingan account.

Can I open an account in any state's529 plan or am I limited to my ownstate's plan?Answer: It depends on the type of 529 plan.There are two types of 529 plans: collegesavings plans and prepaid tuition plans. With acollege savings plan, you open an individualinvestment account and direct yourcontributions to one or more of the plan'sinvestment portfolios. With a prepaid tuitionplan, you purchase education credits at today'sprices and redeem them in the future forcollege tuition. Forty-nine states (all butWyoming) offer one or more college savingsplans, but only a few states offer prepaid tuitionplans.

529 college savings plans are typicallyavailable to residents of any state, and fundscan be used at any accredited college in theUnited States or abroad. But 529 prepaid tuitionplans are typically limited to state residents andapply to in-state public colleges.

Why might you decide to open an account inanother state's 529 college savings plan? Theother plan might offer better investment options,lower management fees, a better investmenttrack record, or better customer service. If youdecide to go this route, keep in mind that somestates may limit certain 529 plan tax benefits,such as a state income tax deduction forcontributions, to residents who join the in-stateplan.

Is there an age limit on who can be abeneficiary of a 529 account?Answer: There is no beneficiary age limitspecified in Section 529 of the InternalRevenue Code, but some states may imposeone. You'll need to check the rules of each planyou're considering. Also, some states mayrequire that the account be in place for aspecified minimum length of time before fundscan be withdrawn. This is important if youexpect to make withdrawals quickly becausethe beneficiary is close to college age.

Can more than one 529 account beopened for the same child?Answer: Yes. You (or anyone else) can openmultiple 529 accounts for the same beneficiary,as long as you do so under different 529 plans

(college savings plan or prepaid tuition plan).For example, you could open a college savingsplan account with State A and State B for thesame beneficiary, or you could open a collegesavings plan account and a prepaid tuition planaccount with State A for the same beneficiary.But you can't open two college savings planaccounts in State A for the same beneficiary.

Also keep in mind that if you do open multiple529 accounts for the same beneficiary, eachplan has its own lifetime contribution limit, andcontributions can't be made after the limit isreached. Some states consider the accounts inother states to determine whether the limit hasbeen reached. For these states, the totalbalance of all plans (in all states) cannotexceed the maximum lifetime contribution limit.

Can I open a 529 account in anticipationof my future grandchild?Answer: Technically, no, because thebeneficiary must have a Social Securitynumber. But you can do so in a roundaboutway. First, you'll need to open an account andname as the beneficiary a family member whowill be related to your future grandchild. Thenwhen your grandchild is born, you (the accountowner) can change the beneficiary to yourgrandchild. Check the details carefully of anyplan you're considering because some plansmay impose age restrictions on the beneficiary,such as being under age 21. This may pose aproblem if you plan to name your adult son ordaughter as the initial beneficiary.

What happens if I open a 529 plan inone state and then move to anotherstate?Answer: Essentially, nothing happens if youhave a college savings plan. But most prepaidtuition plans require that either the accountowner or the beneficiary be a resident of thestate operating the plan. So if you move toanother state, you may have to cash in theprepaid tuition plan.

If you have a college savings plan, you cansimply leave the account open and keepcontributing to it. Alternatively, you can switch529 plans by rolling over the assets from thatplan to a new 529 plan. You can keep the samebeneficiary when you do the rollover (under IRSrules, you're allowed one 529 plansame-beneficiary rollover once every 12months), but check the details of each plan forany potential restrictions. If you decide to staywith your original 529 plan, just remember thatyour new state might limit any potential 529plan tax benefits to residents who participate inthe in-state plan.

529 plan assets surpass$230 billion

Assets in 529 college savingsplans reached $231.9 billion inthe first quarter of 2015, a10.1% increase over the firstquarter of 2014. (Source:www.savingforcollege.com,June 11, 2015)

Note: Investors shouldconsider the investmentobjectives, risks, charges, andexpenses associated with 529plans before investing. Moreinformation about 529 plans isavailable in each issuer'sofficial statement, which shouldbe read carefully beforeinvesting. Also considerwhether your state offers a 529plan that provides residentswith favorable state taxbenefits. As with otherinvestments, there aregenerally fees and expensesassociated with participation ina 529 savings plan. There isalso the risk that theinvestments may lose moneyor not perform well enough tocover college costs asanticipated.

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Frank WealthManagement GroupStephen Frank, AIF®Wealth Management Adviser3771 Attucks DrPowell, OH 43065614-791-4806sfrank@sfwmg.comwww.sfwmg.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015

The accompanying pages havebeen developed by an independentthird party. CommonwealthFinancial Network is notresponsible for their content anddoes not guarantee their accuracyor completeness, and they shouldnot be relied upon as such. Thesematerials are general in nature anddo not address your specificsituation. For your specificinvestment needs, please discussyour individual circumstances withyour representative.Commonwealth does not providetax or legal advice, and nothing inthe accompanying pages should beconstrued as specific tax or legaladvice. Securities and advisoryservices offered throughCommonwealth Financial Network,Member FINRA/SIPC, aRegistered Investment Adviser.Fixed insurance products andservices offered through FrankWealth Management Group.

How do I compare my health insurance options duringopen enrollment?The decisions you makeduring open enrollmentseason regarding healthinsurance are especially

important, since you generally must stick withthe options you choose until the next openenrollment season, unless you experience a"qualifying" event such as marriage or the birthof a child. As a result, you should take the timeto carefully review the types of plans offered byyour employer and consider all the costsassociated with each plan.

With most health insurance plans, youremployer will pay a portion of the premium andrequire you to pay the remainder throughpayroll deductions. When comparing differentplans, keep in mind that even though a planwith a lower premium may seem like the mostattractive option, it could have higher potentialout-of-pocket costs.

You'll want to review the copayments,deductibles, and coinsurance associated witheach plan. This is an important step becausethese costs can greatly affect what you end uppaying out-of-pocket. When reviewing the costsof each plan, consider the following:

• Does the plan have an individual or familydeductible? If so, what is the amount that willhave to be satisfied before your insurancecoverage kicks in?

• Are there copayments? If so what amountsare charged for doctor visits, specialists,hospital visits, and prescription drugs?

• Will you have to pay any coinsurance onceyou've satisfied the deductible?

You should also assess each plan's coverageand specific features. For example, are therecoverage exclusions or limitations that apply?Which expenses are fully or partially covered?Do you have the option to go to doctors whoare outside your plan's provider network? Doesthe plan offer additional types of coverage forvision, dental, or prescription drugs?

In the end, when reviewing your options, you'llwant to balance the coverage and featuresoffered under each plan against the plan'soverall cost to determine which plan offers youthe best value for your money.

My employer now offers wellness benefits as part of itsemployee benefits package. But what are they?It's no surprise that yourcompany has started offeringwellness benefits, since manyemployers are already offering

these types of programs as part of an overallemployee benefits package. According to theSociety for Human Resource Management(SHRM), in 2015, 80% of organizationsprovided wellness resources and information,and 70% of organizations offered some type ofwellness program to their employees. (Source:2015 Employee Benefits, Society for HumanResource Management, 2015)

When it comes to running a business, wellnessbenefits are definitely a win-win for mostemployers. Not only do they potentially reducehealth-care costs by promoting healthier living,but they may also boost employee productivityand morale. The types of wellness programsvary among employers, but they typically covera variety of healthy living issues, such as:

• Smoking cessation• Exercise/physical fitness• Weight loss

• Nutritional education• Health screenings

More recent additions to the wellness benefitsarena include fitness/activity tracking, credit forregistering and participating inmarathons/races, and company-sponsoredseasonal weight-loss challenges.

For employees, wellness benefits not only canhelp them adopt and live a healthier lifestyle,but can also provide them with financialbenefits. Currently, employers that offerwellness programs are allowed to offerincentives to employees of up to 30% of thecost of their health-care premium (up to 50% forsmoking cessation). These incentives areusually in the form of premium discounts and/orcash rewards.

It's important to note that with certain types ofwellness incentives, such as cash bonuses orgift certificates, the value of the reward may betreated as taxable wages. As a result, it may besubject to payroll taxes.

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