Meet Our Clients

Meet Col (ret) Sarah Smith.* Sarah completed a successful Army career and spent about a decade in the Civil Service. Shortly before contacting us, she decided it was time to take her experience and start her own consulting business. At that point she decided it might be a good time to build a team of advisor and she started with C.L. Sheldon & Company. We took a look at her situation and determined that our Wealth Management level of service would be appropriate for her.

Business Formation

Our first step was to help Sarah determine how she should form her business. We explained the differences between different business entities, and she decided to form an LLC. We had previously explained to her that an LLC is a disregarded entity in the eyes of the IRS, so she would have to decide how she wanted the LLC taxed. After consulting with us and her accountant she elected to be taxed as an S Corporation.

Setting Up a Retirement Plan

As an employer and employee of the LLC, Sarah had several options for her retirement plan. We explained SEP-IRA, SIMPLE Plans and 401(k)s and based on her expected income determined that a 401(k) would allow her to sock away the highest percentage of her company’s income.

Tax Planning

As a single taxpayer Sarah is in a pretty high tax bracket. We looked at ways to reduce her tax burden including setting up a Pension on top of her 401(k). We’re still examining that and when the time is right, we’ll help Sarah set up the Pension as well.

Estate Planning

Like a lot of retired Senior Military Officers and NCOs, Sarah has a build up a portfolio of rental real estate scattered across the country. That subjects her estate to probate in each of those states. We advised that she set up a trust to hold her real estate portfolio and other assets to avoid probate. She’s currently working with an estate planning attorney to get the trust set up and funded.

_{Not an actual client, but typical of the many clients we work with}

Bull and Colleen became our clients* about 7 years ago. Bull was within one year of retirement from the military and they thought some financial guidance might be a good idea as they made the transition from a military family to becoming civilians again. Bull and Colleen signed up for our Financial Planning service. Over the years we’ve worked with Bull and Colleen on several issues.

Risk Management

Like a lot of military spouses, Colleen had limited career opportunities and was not employed when Bull retired. As Bull approached retirement, we helped them understand the plusses and minuses of the Survivor Benefit Program (SBP) and ultimately, they selected SBP even though Bull had heard gouge that SBP was a “rip-off”.

 Analysis of Job Offers

Bull had job offers from 3 different defense contractors. All offered different benefits packages and slightly different salaries. We analyzed the different offers, adjusted for tax differences, and gave Bull information in an apples-to-apples comparison of the offers.

Tax Planning

We helped Bull and Colleen avoid two errors common for retiring Senior Military Officers. Bull and Colleen had been contributing to Roth IRAs for most of their marriage. The contributions were set-up on autopilot. We pointed out to them that with Bull’s combined income (salary and military pension), their income was above the limit for Roth Contributions. We helped them avoid the pain of having to reverse those contributions. We also ran calculations to make sure that their tax withholding was correct. Many in Bull and Colleen’s scenario get rudely awakened to a large tax bill due when they file their tax return. We didn’t limit our advice to paying taxes though. We also helped them plan to minimize their future taxes.

Bull was planning on contributing to his Roth 401(k) to make sure he didn’t have to pay taxes on the withdrawals in retirement. We pointed out to Bull that while working in VA he would save on Federal and State taxes if he contributed to a pre-tax 401(k). Since Bull and Colleen are planning on moving to Florida in retirement, he’ll never have to pay state tax on those contributions and his Federal Taxes would have to increase by about 17% to erase that savings.

A Changing Life

When starting with us Bull and Colleen were planning on staying in Virginia and Bull would work in Business Development (BD) for a defense contractor until he reached age 65. When he retired from his second career, they would move to Florida. With Bull’s significant income, of which they were investing a large percentage, this goal was easily attainable. After about 5 years in his relatively high-stress BD career, Bull was ready to scale back a little bit. Bull had always thought that he might like to teach high school but wasn’t sure if he could and still meet their goals. We ran the scenario and determined that if Bull worked one more year in BD and worked as a teacher until 67, they could still live the lifestyle they wanted. Bull is now happily teaching Physics at a private school, and he’ll retire from teaching in 7 years. After that, they’re off to a happy retirement in Florida (they’ve already started living there part-time in the summer…which Bull now has off). They’re also thinking of moving to Florida permanently and finishing out Bull’s teaching career there.

_{*Not an actual client, but typical of the many clients we work with}

Meet Brig Gen (ret) John Tron Jones and his wife Jennifer*. Tron started out in the USAF as an EF-111 EWO. When the plane was retired, he moved out of aviation and was a plank holder in the USAF's original Cyber Operations domain.

 After retiring from the USAF, Tron start a management career in a cyber security company. He quickly rose to executive levels. Tron is well compensated for his efforts and he and Jennifer have built a nest-egg in excess of $1.5M.

But that isn’t what brought him to our door. A few years ago, Tron was offered equity compensation and access to a deferred compensation plan. He knew it was too much for a DIY approach. He contacted us to see if we could help. After some discovery we agreed that we could help them and that our Wealth Management service level would be appropriate for them.

Non-Qualified Retirement Plan and Equity Compensation Advice

We helped Tron understand how his Incentive Stock Options would be taxed. We also advised him that with the amount of equity compensation he was receiving he would soon have too much company stock. We helped him develop a tax-smart plan to divest of the equity and keep his portfolio diversified. After reviewing the deferred compensation plan, we explained to Tron that for it to be tax-deferred, he was in essence, becoming a lender to his employer. Even with that limitation, we recommended that he participate in the plan.

Advanced Charitable Giving Strategies

John and Jennifer feel they have been blessed and they actively support charity. After reviewing their portfolio, we realized that they had significant capital gains and at some point, they’d have a significant tax burden. It appeared to us that they could significantly reduce their current tax bill and avoid taxation of the capital gains by contributing some of the assets in their portfolio to a Donor Advised Fund (DAF). We helped them set one up and fund it. Now they and their adult children meet annually to determine which charities will receive donations from their DAF. They hope this tradition will continue when they're gone.

Estate Tax Avoidance

Based on their current net worth and their future earning potential, John and Jennifer are likely to be subject to estate tax. We worked with them and their attorney to set up a plan that allows them to transfer their assets to their children with little to know estate tax ramifications.

_{*Not an actual client, but typical of the many clients we work with}

Meet Joe and Jill Bagadonuts*. Joe is a Captain in the Marine Corps and Jill is employed as a teacher. Joe and Jill were married about 3 years ago and have one child. After a free initial consultation with us, they decided to enter into a Financial Coaching Agreement.

Spending Plans

Since they’ve started working with us, we’ve helped them set up a spending plan and determine efficient ways to pay off Jill’s student loan debt. We pointed out the advantages of Joe contributing to Roth TSP and getting the government match, since he is covered by the Blended Retirement System (BRS).

Income Taxes

We also helped them understand the options that Jill has for residency for state income taxes under Servicemembers Civil Relief Act (SCRA) as amended. Since Joe is a Texas resident it makes sense for Jill to claim it as well in order to avoid the high income taxes she’d be subject to where they’re stationed.

Increased Investments

After working on their cash flow, they realized they could increase their savings by about 7% which will allow them to put money away for retirement and college for baby. We provided them instruction on how different investments work and places where they could invest. We also provided them information on the differences between different retirement accounts.

Joe and Jill will probably work with us a few more months and then they’ll be off and running. If they continue on the path they’re on, we’re pretty confident they’ll be back as Financial Planning or maybe Wealth Management clients.

_{*Not actual clients, but typical of the clients we work with.}