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Peter Locke

What is a Credit Freeze? and How can you use it for Cyber Risk Management?

Here’s how you can freeze your credit to protect yourself from identity theft and fraud. It’s free to file a credit freeze, and don’t worry, it won’t have any negative impact on your credit. This is the most secure method of risk management on your credit – if you have no near or intermediate need to establish a new line of credit (i.e. a new credit card, home or car purchase) then this is a full lockout from credit predators.  What is a Credit Freeze? A credit freeze, also known as a security freeze, is a powerful tool that helps safeguard your credit reports. By implementing a credit freeze, you block unauthorized individuals from accessing your credit reports and prevent them from opening fraudulent accounts in your name.  When you apply for credit, such as a loan or credit card, the lender or card issuer usually checks your credit history to make an informed decision. However, if your credit is frozen, the potential creditor is unable to access the necessary data to approve the application. This provides an added layer of protection against identity theft and fraudulent activities. By initiating a credit freeze, you take control of who can access your credit information. It puts a barrier in place, ensuring that only authorized entities can view your credit reports. This proactive measure significantly reduces the risk of scammers misusing your personal information to exploit your credit and financial well-being. Remember, a credit freeze is a powerful tool to protect your credit and prevent unauthorized access. It gives you peace of mind and empowers you to take charge of your financial security. When should you get a Credit Freeze? Knowing when to get a credit freeze is crucial for protecting your financial well-being. Here are some instances where freezing your credit is highly recommended: Not actively seeking credit: If you’re not currently in the process of applying for a new credit card, loan, or any other form of credit, it’s wise to freeze your credit. By doing so, you create a proactive barrier against potential identity theft and unauthorized access to your credit reports. With the ease and cost-free nature of credit freezes today, it’s a recommended practice for all consumers to safeguard themselves in this way. Suspected data compromise: If you suspect that your data, such as your Social Security number or other identifying information, may have been compromised, it’s crucial to get a credit freeze. This is particularly important in the event of a data breach, where your sensitive information could be at risk. By freezing your credit, you prevent fraudsters from exploiting your compromised data to open fraudulent accounts or commit identity theft. Your Social Security number is especially vital to protect, as it holds significant value for potential identity thieves. If there’s any indication that your Social Security number may have been disclosed, initiating a credit freeze becomes even more crucial. In summary, it’s advisable to freeze your credit when you’re not actively seeking new credit and as a proactive measure to protect yourself against potential data breaches or compromised personal information. By taking these preventive steps, you can significantly reduce the risk of falling victim to identity theft and financial fraud. How to Freeze Your Credit: First, you’ll need to reach out to each of the three credit bureaus individually to freeze your credit. Take note of these names: Equifax, Experian, and TransUnion. You can contact them through the following methods: Equifax: Give them a call at 800-349-9960 or visit their website. You can also find a step-by-step guide for freezing your credit with Equifax. Experian: Go online to initiate the freeze or call 888-397-3742 for more information. If you need a detailed walk-through, we have a guide for freezing your credit with Experian as well. TransUnion: Call them at 888-909-8872 or visit their website. You can find a comprehensive guide for freezing your credit with TransUnion. Remember, freezing your credit with these three major bureaus should be your top priority. However, for an extra layer of security, you can also freeze your credit report with two lesser-known credit bureaus that may have information about you: Innovis: Reach out to them at 866-712-4546 or visit their website. National Consumer Telecom & Utilities Exchange: Contact them at 866-349-5355 or visit their website. Before initiating the credit freeze, it’s a good idea to gather all the necessary documents. While the specific requirements may vary slightly among the credit bureaus, you will generally need to provide the following information: Social Security number Date of birth Address Depending on how you choose to initiate the credit freeze (online, by phone, or by mail), you might also need additional documents, such as: Copy of your passport, driver’s license, or military ID Copy of tax documents, bank statements, or utility bills Proof of address, such as a utility bill If you opt for a phone freeze, be prepared to answer some authentication questions as well. Once the credit freeze is in place, your credit file will be secure until you decide to lift the freeze temporarily. This is necessary when you want to apply for new credit. To unfreeze your credit, simply visit the website of the credit bureau and use the same account you used to freeze your credit. Alternatively, you may be able to unfreeze your credit by phone or postal mail by providing certain verifying information. Unfreezing typically takes effect within minutes if you do it online unless you choose postal mail. There are various reasons why you might need to unfreeze your credit temporarily. For example, when applying for a new credit card, loan, rental apartment, or cell phone, the lender will need to check your credit. Some “buy now, pay later” services, like Affirm, also require you to lift credit freezes at all bureaus where they’ve been placed. When unfreezing your credit, keep these tips in mind: Visit the website of the credit bureau where you originally froze your credit. Use the same account you used

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July 6, 2023 No Comments

Dear Next American President: Preserve Section 199A Deduction of The Tax Cuts and Jobs Act (TCJA)

The Tax Cuts and Jobs Act of 2017 represented a significant shift in the landscape of American economic policy, particularly affecting small businesses and self-employed individuals who form the backbone of the economy. Among its many changes, Section 199A stands out as a pivotal element of the legislation, offering a substantial deduction of up to 20% on qualified business income for eligible business owners. This crucial provision not only eases the tax burden for these vital contributors to the national economy but also influences their financial strategies and growth plans, touching every facet of their business operations. As the political climate continues to ebb and flow with discussions of amendments and overhauls, the relevance and necessity of the 199A deduction remain topics of critical importance. Preserving this deduction is not just about maintaining a tax break; it’s about fostering an environment where small businesses and entrepreneurs can thrive. In this article, we will explore the integral role that this deduction plays in promoting a healthy, dynamic, and equitable economic landscape. Stimulating Small Business Growth Small businesses are the undeniable powerhouse behind the U.S. economy, playing a critical role in driving employment, innovation, and community development. According to the U.S. Small Business Administration, small enterprises are responsible for creating two-thirds of new jobs annually and account for 44% of U.S. economic activity. This impact is not just in numbers; small businesses contribute uniquely to the innovation landscape, often pioneering technologies and services that reshape the market. The vibrancy they bring to local economies is vital, helping to revitalize communities and stimulate economic development at a grassroots level. Recognizing the pivotal role of these enterprises, the Section 199A deduction under the Tax Cuts and Jobs Act of 2017 was designed as a strategic tool to lessen their tax burden. By allowing eligible business owners to deduct up to 20% of their qualified business income, this policy enables small businesses to retain a greater share of their earnings. This retention of capital is crucial for small businesses, providing them with the financial flexibility needed to expand, hire additional staff, raise wages, and improve their products and services. Such investments have a multiplier effect, not only on the businesses themselves but also on the economy at large, enhancing the overall service and product offerings available to consumers. However, the future of this deduction is under scrutiny, with ongoing debates about its potential curtailment or elimination. Should such changes occur, the additional financial strain imposed on small businesses could significantly dampen their ability to contribute to economic diversity and job creation. The National Federation of Independent Business has highlighted that changes to this deduction could reverse the gains made since its introduction, potentially stifling the entrepreneurial spirit that is crucial for continued economic growth and innovation. Maintaining this deduction is therefore not just a matter of tax policy but a fundamental component of fostering a robust and dynamic economic environment where small businesses can thrive and continue to drive the U.S. economy forward. Enhancing Competitiveness Small businesses face a myriad of challenges in today’s economy, especially when pitted against larger corporations with more substantial resources and sophisticated tax strategies. One crucial measure that has sought to mitigate these challenges is Section 199A of the Tax Cuts and Jobs Act. This provision grants small businesses the ability to deduct up to 20% of their qualified business income, significantly reducing their tax burden. Such measures are not merely fiscal benefits but are strategic tools designed to level the playing field, offering small businesses a viable chance to compete and succeed alongside their larger counterparts. The importance of fostering a competitive environment cannot be overstated. A healthy business ecosystem, marked by robust competition, drives innovation, enhances product quality, and keeps prices in check, ultimately benefiting consumers. Section 199A plays a vital role in this process by enabling small businesses to reinvest their tax savings back into their operations—funding research and development, expanding service offerings, and improving product quality. This ongoing reinvestment not only supports the businesses themselves but also promotes a diverse market landscape where innovation can flourish. However, the potential reduction or elimination of this deduction poses a significant threat to the competitive balance within the market. Without the financial relief provided by Section 199A, small businesses may struggle to maintain their market share against larger corporations, which could lead to a reduction in market diversity and consumer choices. According to a study by the Brookings Institution, the absence of such tax incentives could lead to increased market consolidation, thereby stifling competition and innovation. Preserving Section 199A is therefore critical, not just for the survival of small businesses but for the preservation of a dynamic and competitive marketplace that fosters continual growth and innovation. Encouraging Innovation Innovation serves as the driving force behind economic and technological progress, and small businesses are often at the forefront of this movement. Due to their size and structure, small enterprises possess an inherent agility that allows them to swiftly adapt to new technologies and shifting consumer demands—capabilities that their larger counterparts typically cannot match with the same speed. This responsiveness is crucial in today’s fast-paced market environments where being first can mean the difference between leading the market and lagging behind. The introduction of the Section 199A deduction by the Tax Cuts and Jobs Act has been a significant boon for these nimble entities, providing them with much-needed financial relief. This tax relief allows small businesses to channel more of their resources into research and development without the overarching pressure to deliver immediate financial returns. This kind of investment is vital for fostering an innovative environment where creative ideas and technologies can be tested and developed, ultimately leading to industry advancements and enhancements in product offerings and services that enrich the consumer experience. Preserving the 199A deduction is therefore critical not just for the health of small businesses but for the broader landscape of industry and innovation. According to research from the National Bureau of Economic Research, small businesses contribute

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May 9, 2024 No Comments
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Articles
Kate Palone

Retirement Account Rollovers

Land a new job? Don’t forget about your 401k! What’s great about a 401(k) retirement savings plan is that your assets are often portable when you leave a job. But what should you do with them? Rolling over your 401(k) to an IRA (Individual Retirement Account) or Roth IRA is one way to go, but you should consider your options before making a decision.  This information should help you decide. Option 1 – Leave your money in your former employer’s plan, if your former employer permits it:                                  Benefits: Any earnings remain tax-deferred until you withdraw them.  Under federal law, assets in a 401(k) are typically protected from claims by creditors.  Required minimum distributions (RMDs) may be delayed beyond age 73 if you’re still working. You’re age 55-59.5 and might need withdrawals – (Age 55 Rule intact) You want maximum creditor protection – ERISA protection stays. Examples of Protection: Sued for personal injury? Assets in your 401k cannot be touched. Filed for bankruptcy? 100% of your 401k assets are exempt. Divorce? It’s subject to division by qualified domestic relations order (QDRO), but otherwise protected.                           Things to Consider: You can no longer contribute to a former employer’s 401(k). Managing savings left in multiple plans can be complicated. Fees once paid by the employer for account management, hosting, management, etc. can now be assessed directly from the account.  Inaccessibility – You may need to contact the former plan administrator or employer to manage funds and make requests.  Must conform to the investment standards and practices of the existing plan and any future changes the plan makes. Option 2 – Roll over your money to a new 401(k) plan:                                  Benefits: The new 401(k) may have lower or higher administrative and/or investment fees and expenses than your former employer’s 401(k) or an IRA. Any earnings accrue tax-deferred. This keeps the Rule of 55 intact (last employer).                           Things to Consider: Rolling over company stock may have negative tax implications due to the potential loss of Net Unrealized Appreciation (NUA). Option 3 – Roll over your 401(k) to a Traditional IRA:                                  Benefits: Your money can continue to grow tax-deferred. You have access to investment choices that are not available in your former employer’s 401(k) or a new employer’s plan. You can consolidate multiple retirement accounts into a single Traditional or Rollover IRA to simplify management.                           Things to Consider: A Traditional IRA may have reduced protection from creditors and lawsuits, depending on your state. (Non-ERISA Account) Protection Level: Good in bankruptcy, weaker outside of it in which  Whether or not you’re still working at age 73, RMDs are required from Traditional IRAs. Rolling over company stock may have negative tax implications due to the potential loss of Net Unrealized Appreciation (NUA) Some IRA providers have annual fees for management and holding assets. Backdoor Roth Issues: Having pre-tax dollars in a Traditional IRA complicates the Backdoor Roth strategy. By keeping your pre-tax dollars in a 401(k) this avoids the pro-rata rule that can cause a tax hit. Option 4 – Roll over your Roth 401(k) to a Roth IRA:                                  Benefits: You can likely roll Roth 401(k) contributions and earnings directly into a Roth IRA tax-free. You can consolidate multiple retirement accounts into a single Roth IRA to simplify management.                           Things to Consider: A Roth IRA may have reduced protection from creditors and lawsuits, depending on your state. (Non-ERISA Account) Any Traditional 401(k) assets that are rolled into a Roth IRA are subject to taxes at the time of conversion. Some investments offered in a 401(k) plan may not be offered in a Roth IRA. Option 5 – Take a cash distribution:                                  Benefits: If you find yourself in extraordinary need, having cash could be helpful.                           Things to Consider: Taxes and penalties may be substantial. Withdrawals before age 59½ may be subject to a 10% early withdrawal penalty and will be taxed as ordinary income. Cannot “make up” those contribution years. Reach out to us for assistance in selecting the best option for your retirement plan- everyone’s situation is unique!

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November 20, 2024 No Comments

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