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Peter J. McKenna, CFP®, MBA

Senior Financial Advisor

Peter J. McKenna CFP®
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Peter’s main responsibilities include helping clients develop their financial plans, implementing wealth management strategies and managing client investment portfolios.

Professional Designations

CERTIFIED FINANCIAL PLANNER™, Master of Business Administration

Education

Baruch College of the City University of New York, M.B.A.

State University of New York, College at Oswego, B.S., Accounting

Read more about Pete

What sparked your interest in financial planning? What fuels you every day in your work?

When I began my career in financial services I noticed there were very few people in the office over the age of 60.  Those folks that were in that age group appeared to fall into two camps, workaholics or people who had not planned well for their future.  I didn’t want to be in either of those camps, so my wife and I set out to live below our means and prepare for an uncertain future. While we made some good and bad decisions along the way we were in a reasonably good position when my employer of 20 years, Lehman Brothers, went bankrupt in 2008. While that was a devastating blow to the plan we had in mind, it presented an opportunity to leave that career path and embark on this one. I love helping people make better-informed, decisions so that they can live their best possible lives. 

What’s a particularly rewarding example of how you helped to create impact for a client?

I worked with a couple who were about to experience incremental career success. They had positioned themselves well, but were not sure if they were okay. We created a plan to assist with college funding, diversify a concentrated stock position, and plan for retirement.  With college expenses and the stock exposure under control, we were able to take advantage of some generous corporate benefits without putting them unduly at risk.

What do you enjoy most about working at Modera?

I love the depth of thought that goes into our client advice at Modera.  The firm is staffed with passionate people from many different disciplines.  For example when I have a tax or estate planning question there are a number of qualified individuals that can and do freely share their perspectives and expertise so that I can bring our best thinking to the client. 

When you retire you’re going to…?

In my previous career I was shooting for a mid 50’s exit from the rat race into some form of semi-retirement. Having found this calling and transitioning into this career over the past ten years I don’t see myself fully retiring. I feel invested in the plans I’m creating with clients and selfishly, I want to see them come to fruition. I want to see the lives that our work together has helped to create for them and their families. 

Pete’s Insights

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Hi. I’m Pete McKenna from Modera Wealth Management.
Hope you’re doing well today. Today we’re going to be talking about tax planning for 2020 and it’s important to acknowledge that this isn’t tax advice the only person who can give you really good tax advice is your tax professional. We’re talking about planning out things that need to happen for you and understanding your tax situation to see if this might be an opportunity for you. Your tax professional will know the laws better than us and they’ll know what your personal tax situation is and put it all together into the right plan for you.

So, why is this important in 2020? Well, for one thing our federal deficit is big and growing. There are planned deficits due to the tax cuts and jobs act and there’s a ton of spending going on because of the pandemic and eventually these bills will have to be paid by someone. Unfortunately, our clients are some of the ones who are going to be asked to pay this bill in the future.

Right now, another reason why it’s important is your 2020 income maybe lower than it was in year’s past or maybe in the years ahead and it could be because you didn’t have to take your Required Minimum Distributions from your retirement accounts this year. Maybe your business income is off or maybe your compensation from your employer is off. That’s another reason why 2020 maybe low and its good to pull money into or income into 2020.

The third reason is we have these historically low tax rates from the tax cuts act from a few years ago. They’re all scheduled to revert in 2026 if nothing else is done but we also have an election coming up. There’s a really good chance that in November, if things change, the tax regime in Washington could be very different as soon as next January.

So, Whats the standard practice for taxes? We typically look to delay taxes and defer the gains as long as possible because a dollar paid in taxes today is more expensive than a dollar paid in taxes at a date in the future. Right now the tax rate savings could be enough to compensate you for paying that tax earlier than you really have to. So the range of rates are pretty significant from 0-37% and the high end has been higher in the past and maybe in the future. So if your tax situation is such that you are paying 24% or less on your ordinary income or 15% less on your capital gains certainly in a place where you may want and try to fill those brackets and make sure you take advantage of those lower rates.

So, how can you do that? Things you can do are you can accelerate income in 2020 or delay deductions until 2021.

So things you can do, if you’re a business owner you may want to delay some of your business expenses until 2021. If you’re an individual, you may want to consider doing Roth conversions or even Roth contributions to get more tax free assets in your mix and that may have advantages for estate planning as well. Then the third thing is you may be sitting on assets that have appreciated in value over time and maybe this is a good time to consider selling them, recognizing the gain and paying the tax at a lower rate. All food for thought for you. What is it that you should do right now? I recommend you reach out to your Modera Advisor, talk to them about your situation, talk to them about this tax situation and see if there’s a way you guys can plan to create a conversation or start a conversation with your tax professional.

I hope all is well and that you have a good day. Thank you and Thanks for you time Bye-Bye.

Disclosure: Modera is an SEC registered investment adviser which does not imply any level of skill or training. For additional information see our Form ADV available at www.adviserinfo.sec.gov which contains a full description of our business, operations and service offerings including fees. Statements made in the podcast are not to be construed as personalized investment or financial planning advice, may not be suitable for everyone and should not be considered a solicitation to engage in any particular investment or planning strategy. Statements made are subject to change without notice.

Market Downturns: How Safe is Your Deferred Compensation Plan?

Your employer’s traditional 401(k) plan and deferred comp plan may look similar. They may be visible from the same website and they may appear to have the same investments, but they are different in one very critical way. The deferred comp plan is not protected if your employer goes bankrupt, while the 401(k) plan is protected. With the recent downturn in the markets and volatility likely to continue, it’s important that you understand the differences between the two types of employer plans and review if any adjustments need to be made to your participation or allocation strategy.

COVID 19 Planning Topic – School Refunds and Student Loan Relief

With so much information being shared at this time, we wanted to make sure you did not miss two very important issues related to educational funding that apply to anyone who 1) paid tuition for the spring 2020 semester out of a 529 account or 2) has student loan debt. Feel free to forward this to others in your life whom it may apply to.

Getting the Most Value from College

The price of a college education has risen dramatically over the last few decades – in many cases far beyond the rate of inflation. For example, a $3,000-per-year tuition in the early ‘70s translates to just over $18,000 in today’s dollars. But when I researched a well-known college that cost $3,000 a year back then, I found it now charges between $31,864 and $35,086 a year. And that’s far from the most expensive one.

2020-09-22T14:35:50+00:00
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