skip navigation Menu PRINCIPAL PLANNING, INC. Phillip Q. Shrotman Articles Welcome to our research center! We've put together a library of information on important financial topics that we believe you'll find helpful. Simply click on one of the general financial topics below and you'll find a selection of easy-to-understand information sheets about related financial concepts and strategies. This information is updated regularly to reflect the latest facts, figures, legislation, and economic trends. Estates & Trusts What Key Estate Planning Tools Should I Know About? Wills and trusts allow you to spell out how you would like your property distributed, but they also go beyond that. How Can a Living Trust Help Me Control My Estate? A living trust can help control the distribution of your estate upon death. What Are the Pitfalls of Probate? The probate process can be lengthy and complex. There are strategies you can use to help avoid the probate process. How Can My Gift Benefit Me and the Charity? To retain the tax advantages associated with charitable giving, your gift must be made to a qualified organization. How Can I Control the Distribution of My Estate? If you haven't taken steps already, consider planning now for the distribution of the assets of your estate. How Will I Pay Estate Taxes? If you believe your estate will be subject to estate taxes, consider how your heirs will pay the bill. Can I Benefit from an A-B Trust? An A-B trust can be an effective way to help reduce estate taxes and preserve family assets for heirs. What Gifting Strategies Are Available to Me? Compare the advantages and disadvantages of different gifting strategies available for planned giving. How Can I Benefit from a Charitable Lead Trust? Charitable lead trusts are designed for people who would like to benefit a charity now rather than later. How Can I Benefit from a Charitable Remainder Trust? A designated income beneficiary could receive payment of a specified amount from a charitable remainder trust. How Can I Benefit from a Wealth Replacement Trust? A wealth replacement trust could be used to gift appreciated assets to a charity as well as provide for heirs. What Is the Best Form of Property Ownership for Me? Sole ownership, joint tenancy, tenancy in common, and community property have special benefits for property owners. History of the Federal Estate Tax Careful estate planning is still one of the most important ways to manage and protect your assets for your heirs. Retirement What Is a SEP IRA? A SEP IRA is a type of plan under which the employer contributes (up to a certain limit) to an employee’s IRA. What Is a SIMPLE? The SIMPLE plan may appeal to small business owners as it is easy to set up, administer, and allows for a tax deduction. What Is an IRA Rollover? If you leave a job or retire, you should consider your options regarding your employer retirement plan assets. What Is a Roth 401(k)? A Roth 401(k) is funded with after-tax money, and allows for tax- and penalty-free withdrawal of earnings if requirements are met. What Is a Profit-Sharing Plan? Profit-sharing plans give employees a share in the profits of a company and can help to fund their retirements. What Is a Money Purchase Pension Plan? A money purchase plan is a retirement plan where employer contributions are based on a fixed percentage of compensation. What Is a 403(b) Plan? A 403(b) plan is a tax-deferred retirement savings plan that can only be offered by a 501(c)(3) tax-exempt entity. Why Do People Buy Annuities? Annuities, an insurance-based financial vehicle, can provide many benefits that retirement investors might want. What Are Annuity Living Benefits? Living benefits can help protect variable annuity owners from running out of money in retirement. How Much Do I Need to Save? Many realize it’s important to save for retirement, but knowing exactly how much to save is another issue altogether. A New Chapter for Retirement With the changing pension landscape, it is important to take charge of your own retirement security. What Is a 1035 Exchange? A Section 1035 exchange is a tax-free exchange of an existing annuity contract or life insurance policy for a new one. What Are My Retirement Planning Options? There are a variety of retirement planning options that could help meet your needs. Here are some of the most popular. Will Social Security Retire Before You Do? Greater demand is being placed on the Social Security system as the baby boom generation has begun to retire. Social Security Income The Social Security Administration’s retirement estimator gives estimates of your future benefits based on your actual Social Security earnings record. What Is a Self-Employed Retirement Plan? Tax-deferred retirement plans for self-employed individuals have higher contribution limits than IRAs. Retirement Plan Distributions When receiving money accumulated in your employer-sponsored retirement plan, you have two options: lump sum or annuity. What Is a Traditional IRA? If you do not participate in an employer-sponsored retirement plan, you might consider a traditional IRA. What Is a 401(k) Plan? 401(k) employer-sponsored retirement plans have many benefits, including that the funds accumulate tax-deferred. How Should I Manage My Retirement Plan? Employer-sponsored retirement plans are more important than ever, but managing the assets can be confusing. Save Now or Save Later? If you start saving for retirement sooner, the more money you are likely to accumulate and possibly retire sooner. What Is a Roth IRA? Qualified Roth IRA distributions in retirement are free of federal income tax and aren’t included in gross income. Tax Planning What Is the Capital Gain Tax? Capital gains are profits realized from the sale of assets; a tax is triggered only when an asset is sold, not held. What Is the Estate Tax? Everything you own, whatever the form of ownership, is subject to federal, and possibly state, estate taxes. What Is the Gift Tax? The federal gift tax applies to gifts of property or money while the donor is living. How Much Money Can I Put Into My IRA or Employer-Sponsored Retirement Plan? IRAs and employer-sponsored retirement plans are subject to annual contribution limits set by the federal government. What Is a Required Minimum Distribution? Required minimum distribution is the annual amount that must be withdrawn from a qualified retirement plan/account. What Are the Tax Benefits of Charitable Trusts? For the grantor, there are a few potential tax benefits that can come with setting up a charitable trust. When Must Taxes Be Paid on IRA and Employer-Sponsored Retirement Funds? With traditional IRAs and most employer-sponsored retirement plans, taxes are not payable until funds are withdrawn. What Happens If I Withdraw Money from My Tax-Deferred Investments Before Age 59½ Tax-deferred retirement account withdrawals before age 59½ generally triggers a 10% federal income tax penalty. What Is Tax Deferral? There can be a substantial benefit to deferring taxes as long as possible. How Can I Benefit from Tax-Advantaged Investments? Many traditional tax-advantaged investment strategies have gone away, but there are still some alternatives. What Tax Deductions Are Still Available to Me? Changes to the tax code have left a few key deductions for itemizers, like medical, dental and some business expenses. What Tax-Advantaged Alternatives Do I Have? While stable, CDs can create an income tax bill. Fixed annuities and municipal bonds can offer tax advantages. What Is the Most Tax-Efficient Way to Take a Distribution From a Retirement Plan Consider a trustee-to-trustee transfer to an IRA versus a lump-sum distribution from a workplace retirement plan. Is There Such a Thing as a Tax-Free Investment? It's important to understand tax-exempt vehicles when establishing a comprehensive tax planning strategy. How Can I Keep More of My Mutual Fund Profits? Want to keep more of your mutual fund profits? You may be interested in strategies to help lower your tax liability. How Can I Upgrade My Insurance — Tax-Free? A 1035 exchange allows you to exchange your life insurance policy for one from another company without tax liability. Investing What Are Dividends? It is important to understand how dividends (taxable payments to shareholders) fit with your long-term goals. What Is an Exchange-Traded Fund? ETFs have unique attributes and attempt to track all types of indexes, industries, or commodities. Growth Stocks vs. Value Stocks The labels growth and value reflect different approaches that can be used when making investment decisions. How Are Mutual Funds Taxed? Mutual fund taxes can be cumbersome, but there are ways to help mitigate the amount of taxes you may owe. What Is Stock? Before investing in stocks, it is important to understand some of the basics and the risks involved in owning stocks. What Is Diversification? An important element to successful investing is to manage investment risk while maintaining the potential for growth. What Types of Bonds Are Available? Bonds are issued by many entities and share many characteristics, each type of bond has certain benefits and risks. What Is a Bond? A bond is simply evidence of a debt from a government entity or a corporation and represents a long-term IOU. What Do Bond Ratings Mean? Bond ratings gauge a bond issuer’s financial ability to repay its promised principal and interest payments. What Is a Stock Index? Stock market indexes can be useful benchmarks for gauging the performance of an investment portfolio over time. How Do Mutual Funds and Stocks Differ? The difference between purchasing an individual stock versus shares in a mutual fund to potentially earn dividends. What Is a Mutual Fund? A mutual fund is a collection of stocks, bonds, and other securities with certain benefits and risks. What Is a Closed-End Fund? With closed-end funds, investors pool their money together to purchase a professionally managed portfolio of stocks and/or bonds. What Is a Mutual Fund Load? It’s important to understand mutual fund loads, or sales charges, and exactly what they entail so you can make informed investing decisions. What Is an Annuity? An annuity is a flexible financial vehicle that can help protect against the risk of living a long time because it provides an option for a lifetime income. What Is the Difference Between a Fixed Annuity and a Variable Annuity? Both fixed and variable annuities could be appropriate options for an individual interested in purchasing an annuity. What Investment Risks Should I Know About? Understanding different types of investment risk can help investors manage their money more effectively. What Are the Different Classes of Assets? There are five broad asset classes that you should take into consideration when constructing your investment portfolio. What Is Asset Allocation? Asset allocation is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss. How Can I Save for My Child’s College Education? There are several funding methods for a child's college education including mutual funds and Section 529 plans. What College Investment Options Do I Have? Starting to invest early for college and remaining consistent can help investors reach their goals. What Stock and Bond Investing Alternatives Do I Have? There are other ways to invest in stocks and bonds besides owning individual shares or bonds. What Is Dollar-Cost Averaging? Dollar-cost averaging involves investing a set amount of money on a regular basis, regardless of market conditions. 529 Lesson Plan: High Scores for 529 Plans 529 plans are tax-advantaged savings plans that generally allow people of any income level to contribute. Cash Management What Are Some Tips for Managing My Money? A sound cash management program uses a disciplined approach: accounting, analysis, allocation, and adjustment. How Long Will It Take to Double My Money? Before making investment decisions, it is helpful to determine the real rate of return on the investment. What Cash Management Tools Are Available? Short-term cash management instruments can help you establish a sound cash management program. How Do Money Market Mutual Funds Work? Money market funds can be a highly liquid and effective cash management tool. How Can I Better Manage My Short-Term Cash? There are numerous investment alternatives available to help provide liquidity. What About Financial Aid for College? It's important to understand the options, such as financial aid grant programs, when having to pay for college. How Does Inflation Affect Me? Historically, one of the best ways to fight the effects of inflation has been to utilize growth-oriented investments. Risk Management Why Purchase Life Insurance? If you have a family who relies on your income, it is important to have life insurance protection. Why Are Annuities Considered an Insurance Product? An annuity is a contract between you and an insurance company to pay you future income in exchange for premiums you pay. Life Insurance for Business Owners Company-owned life insurance is one way to help protect a business from financial problems caused by the death of a key employee. What Is Term Life Insurance? Term life insurance differs from permanent forms of life insurance in that it offers temporary protection. What Is Whole Life Insurance? Some of the pros and cons of whole life insurance. What Is Universal Life Insurance? Consider a universal life insurance policy if you want the flexibility to change your premium or death benefit. What Is Variable Life Insurance? Variable life insurance gives you the control to allocate your account value among a variety of investment options. What Are the Basic Types of Life Insurance? When selecting a life insurance policy, examine all your options, as well as the positives and negatives of each type. Contact Us 194 Marina Drive,, #202 Long Beach, CA 90803 Phone: 562/ 598-3700 Fax: 562/598-7333 “Securities offered through BB Graham & Co. a Registered Broker/Dealer, member FINRA/SIPC. Principal Planning Service Inc. is not affiliated with BB Graham & Co.” Site Map Check the background of this financial professional on FINRA's BrokerCheck