Tracey and Griff discuss things that you should think about to try to avoid becoming a victim of a financial scam.

Griffin:

Hello, my name is Griffin Baker, Financial Adviser here at CJM Wealth Advisers. I am joined here today by Tracey Baker who is not only the President and Chief Compliance Officer of CJM Wealth Advisers, but also happens to be my mother. We, along with the rest of the planning team, often get phone calls and emails from clients and how they recently were scammed and we want to try to have a discussion here today to hopefully empower individuals to avoid being scammed in the future. Recently, the Social Security Administration and Federal Trade Commission declared March 9th Slam the Scam Day in an effort to increase financial scam awareness and what to do in the event that you are scammed. With that being said, I want to turn it over to Tracey to share some ways to determine if a communication is in fact a scam.

Tracey:

Thanks, Griff. Yeah, we get almost inundated with stories from clients of contacts that they’ve had that from sometimes government authorities, social security, or they go and file their taxes and find that in fact, someone has filed their taxes for them and already received their refund. There are four basic things that all scams share. And so, just remember the four Ps. The first P is pretend. They’ll pretend to be an authority, either it’s social security, it’s the IRS. It can be a medical thing, or it can be a group that gives a prize, publishers clearing house, those kind of things, the lottery. So, the first thing is they’re pretending to be something else. Second P is kind of a combination. They’ll either put pressure on you to pay something or to win a prize. They’ll tell you you’ve won something, but you’ve got to give information so they can send you money and they want to get your bank account information.

The third is that they pressure you, and that’s probably the most important thing. If someone contacts you and puts pressure on you to act immediately regarding something, you can’t get off the phone, you can’t call them back, you can’t reach out to your family members, that is often a sign that it’s a scam. And lastly, it’s they’ll ask for payment. Even some of the ones with prizes will say, “You need to send us money so we can verify your account and then we’ll send your money back.” Or they’ll ask you to pay them in the form of a gift card. No government agency is asking you to send them gift cards, but that’s an unregulated way for them to receive money. So if you can remember those Ps, you should be in good shape with avoiding that.

Griffin:

That’s good to have four kind of main types of scams to look out for and hopefully recognize in future communications. With that, are there preventative ways that you can kind of get ahead so that you aren’t scammed to begin with?

Tracey:

Well, it’s a good question. One of the things that we always tell people is to be very mindful of when someone reaches out to you. If there’s a link or it’s something that you don’t recognize, just don’t open it. There are programs that if you open a link will allow the scam artists to get into your computer and even access your emails. So, when they do that, then they can then email other people saying they’re you. That’s one important way to avoid it. And then also, just catch a breath. Take a minute. Government agencies are not just going to dial you up and start telling you that your social security has been compromised or you owe money to the IRS. That’s not how it works.

Government agencies reach out via letter usually if there’s an issue or a question or problem. So, I would say if you receive a call, just take a minute. You don’t give them any information, just even hang up on them. You can turn around the call, you won’t get in trouble. That’s probably the most important thing. And then lastly, you can’t rely on your caller ID because these folks are so smart. They are able to log in and mimic through caller ID, government agencies or the FBI or those kind of things. So, be mindful of that. You can hang up, don’t worry. You’re not going to get in trouble.

Griffin:

Now, for email communications, something I recommend to folks is to go to the website directly rather than clicking on any links that are embedded in the email to hopefully avoid any kind of malware being downloaded or anything like that.

Tracey:

Right. That’s great advice. That’s great advice. Yeah. You just want to be very mindful of that and only open things from people that you actually know.

Griffin:

Well, I hope all of you listening are taking notes and want to partner with us to slam the scam. Hopefully, some of these tools can be used for future communications and stuff like, to hopefully give you peace of mind that you’re not actually getting some terrible things from the IRS or whatever it may be.

Tracey:

And one of the smartest things that you know can do is go out and change your password on your email address. That’s-

Griffin:

That’s right.

Tracey:

…the one of the easiest things and you do a complicated password. It can be a sentence, just something that you’ll remember. And then that is the best way. I know I did mine last week, and I think everybody is trying to be very mindful of protecting your data and your information.

Griffin:

Very true. With that, I hope you all stay safe and take care.

Tracey:

Thank you, Griff.

Griffin:

Thank you.

As Financial Advisers, it is easy to get overly excited about financial changes that are made by the IRS. With that being said, the recent updates to Required Minimum Distributions (or RMD) affects anyone and everyone with retirement assets eventually. Prior to hitting the meat and potatoes, lets divulge into the vegetables.

To start, you may be asking what is an RMD? A Required Minimum Distribution or RMD is the amount that needs to be distributed annually from tax-deferred or retirement accounts once you have reached a certain age. Essentially these assets have yet to be taxed when the accounts are contributed to and grow tax deferred. You may be asking deferred till when? Well, upon distribution, these assets are taxed at ordinary income levels. The idea being these retirement assets grow and hopefully, when they are taxed during your retirement, you have a lower income tax-bracket than when you were working. Much like a tip for a lingering bellhop, the RMD makes sure that eventually, the IRS gets a piece of the action. This is calculated with a factor based on life expectancy being applied to your 12/31 retirement account value from the year prior.

Now for the mains. In November 2020, the IRA released new life expectancy tables containing new factors to be applied to RMDs beginning in 2022 and beyond. Fortunately, the new tables have a slight reduction to the factor used for calculating the RMD each year. This reduction in factor means a reduced RMD year over year thus allowing for the assets to continue to grow tax deferred within the retirement account. But wait… there’s more! Formally, the age RMDs began was 70 ½, however, the IRS has moved this date now to age 72. This is not to say if you need to take money from your retirement accounts you can’t prior to age 72, but it is not a requirement to do so. As long as you are 59 ½, retirement accounts are fair game.

The reasons these changes to the RMD benefit you, the investor, is that as mentioned before, retirement assets grow tax deferred. By reducing the factor applied during calculation of the RMD or deferring it till 72, more of those assets get to stay in that tax deferred bucket longer. As many savvy investors know, small incremental changes are incredibly helpful over the long run when striving for financial security or independence. Much like putting a small amount of money away for a rainy day (or retirement), it is nice that you won’t get completely soaked when you need to reach for that umbrella.