In This Issue
Featured Article
Donor Advised Funds
Curt's Quick Comment
Understanding Restricted Stocks
From the Financial Presses
Quick Links
Featured Article
It has been a busy month.
I was recently published in the April edition of Mindful Money Magazine an Apple Store eMagazine (  If you'd like a free 3 month subscription drop me an email. 
I was also recently quoted in the Wall Street Journal ( 
Finally, I've just entered into an arrangement where I will be teaching ETAP courses for at least some USMC bases.  If you know of an organization that could use a presentation on Financial Planning, don't hesitate to contact me.
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Financial Strategies
Planning Techniques, Procedures and Guidance for Military Professionals

Welcome to May and this month's issue of Financial Strategies.  The month sure has started interestingly.  Snow in the Rockies and Midwest and the stock market with big losses and gains.  But just like how the weather changes and the climate stays pretty constant (I know...I know) the stock market fluctuates but generally moves in an upward trajectory.  Something to think about...
In this month's edition I start out with Donor Advised Funds and how you can use them as part of a financial plan.  My quick comment covers 401(k) fees.  It is astounding to me how high fees can be (especially for small businesses).
The third article covers Restricted Stocks.  Something most retiring military officers are unfamiliar with.  If you land yourself a top position in a corporation, Restricted Stocks could become part of your compensation.
The two articles I selected to wrap up this issue cover Wall Street Gurus and Estate Taxes.
It has been a pretty good month for me on the PR front.  I spoke at the Annual Conference on Financial Education, was published in an iTunes Magazine and quoted in the Wall Street Journal.  See the featured article for more information.
Have a great month and enjoy this Spring.
Curtis L. Sheldon, EA
C.L. Sheldon & Company, LLC
(703)542-400 or (800) 928-1820
Should You Consider Donor Advised Funds? 

Most of us like to support Walletcharities.  I think it is because we feel a responsibility to help those less fortunate than us.  However, many of us aren't sophisticated in how we support charities.  We basically give a certain amount each year or when we get something in the mail.  You might be able to improve your tax picture through a more advanced giving strategy - Donor Advised Funds.  I'll talk in this article about what a Donor Advised Fund (DAF) is and how you might be able to use it.


What Is It?


It probably is best to think of a DAF like an IRA.  It is a basket in which you can put investments.  What a DAF allows you to do is take a charitable deduction on your taxes now and contribute to charities in the future.  A DAF can do this because essentially it is a charity itself that then distributes funds based on your recommendation to charities (I chose the word "recommendation" on purpose...a DAF technically doesn't have to distribute proceeds from your account as you direct. Normally this is not a problem if your selected charity is a 503(c) organization).  You can recommend the timing and amount of contributions to a selected charity. 


It is also important to note that there are limits to how much you can deduct as a charitable contribution in a single year.  For most of us this is not an issue.  If you are thinking about contributing in excess of about 20% of your Adjusted Gross Income, do your homework (or get competent advice) before you make the contribution.


How Can You Use It?


First of all the assumption is that you have the cash available to make the contributions.  If you do, you might want to consider a DAF under the following scenarios


Support a Charity For a Long Time.  If you know that you will be supporting a charity for as long as you live it might make sense to make contributions now, while you have the cash (and higher taxes) and then pay the charity over your life-span.


Your Mortgage Will Be Paid Off.  For most of us, we won't be able to itemize our deductions without mortgage interest.  If you can't itemize, you won't be able to deduct your charitable contributions.  By accelerating your contributions through a DAF you'll get to deduct the contributions while you still itemize.


You're Subject to ObamaCare Medicare Surtax.  If your income is such that you'll have to pay the 3.8% Medicare Surtax you can shelter income through a DAF.  The income earned by the DAF will not be taxable to you.


ATRA Is or Will Take Away Deductions.  If the itemized deduction reduction included as part of the American Taxpayer Relief Act (ATRA) will reduce your itemized deductions now or in the future it may make sense to accelerate your charitable contributions.


As with most things that involve the tax code this can be complicated.  But with some planning and follow-through you can use the opportunities the Code offers you.

Curt's Quick Comment
Do you know how much you pay in 401(k) fees?  As you know, I think fees are a big deal.  And, you have the information on your 401(k) fees available to you.  If your fees are too high get out of the 401(k) if you can or talk to your employer about finding a new retirement plan advisor.
Restricted Stocks:
Understanding Your Options  

If you've recently gotten a promotion or new job that grants you access to restricted stock or restricted stock units (RSUs), you'll need to understand how they work.


Restricted stock plans provide employees with the right to obtain shares at one of three price points: fair market value, a discount, or no cost. The use of restricted stock awards to compensate employees is growing in popularity in place of stock options, largely because of a corporation's reduced charge against income provided by restricted stock awards as compared with stock option grants.


The Difference Between Restricted Stock and RSUs


Restricted stock and RSUs are very similar, but they differ in a few important ways that can affect your financial planning. Restricted stock is a grant of company shares made directly to you. Usually, you cannot sell or otherwise transfer the shares until you have satisfied vesting requirements. As long as you continue to work at your company, you will not forfeit your grant and it will not expire.


While the vesting rules are the same with RSUs, no stock is actually issued to you when they are granted. The shares are issued to you at a future time once vesting conditions have been satisfied.


Unlike recipients of restricted stock, holders of RSUs have no shareholder voting rights and do not receive any dividends your company may pay to its shareholders. However, when a company pays dividends on outstanding shares of stock, it can choose to also pay dividend equivalents on RSUs.


How to Obtain Your Shares


Once you are granted a Restricted Stock Award, you must decide whether to accept or decline the grant. After accepting a grant and providing payment (if applicable), you must wait until the grant vests before you take possession of your shares. Vesting periods for Restricted Stock Awards may be time-based or performance-based (often tied to achievement of corporate goals). When a Restricted Stock Award vests, you'll receive the shares of company stock or the cash equivalent (depending on the company's plan rules) without restriction. As stated above, with RSUs, you do not actually receive your shares until the restrictions lapse. 


How It Could Impact Your Taxes


If your company grants you restricted stock, you have the right to make a "Section 83(b)" election. If you make the election, you will be taxed at ordinary income tax rates on the "bargain element" of the award at the time of the grant.


  • If the shares were simply granted to you, then the bargain element is their full value.
  • If some payment is made, then the tax is based on the difference between what is paid and the fair market value at the time of the grant. If full price is paid, there is no tax.


Any future change in the value of the shares between the filing and the sale is then taxed as a capital gain or loss, not ordinary income. If you do not make an 83(b) election, you must pay ordinary income taxes on the difference between the amount paid for the shares and their fair market value when the restrictions lapse. Subsequent changes in value are capital gains or losses. Recipients of RSUs are not allowed to make Section 83(b) elections.


A Section 83(b) election carries some risk. If you make the election and pay the tax, but the restrictions never lapse, you do not get the taxes paid refunded, nor do you get the shares.



This communication is not intended to be tax advice and should not be treated as such. Each individual's tax situation is different. You should contact your tax professional to discuss your personal situation.



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2013 S&P Capital IQ Financial Communications. All rights reserved.

 From the Financial Presses


Wall Street Gurus Miss Again on Sector Predictions

What's the one thing most Wall Street analysts' annual market predictions have in common? They're almost invariably wrong. Yet many investors continue to follow these gurus year after year in hopes of gaining an investing edge....(Read More Here)


Roundup of New Estate Tax Changes

For more than a decade, estate planning has harkened back to the "wild, wild west," a time when even the best hired guns didn't know what would happen next. Now, finally, there's more certainty, thanks to the estate tax provisions in the American Taxpayer Relief Act (ATRA). The new law, signed as the country teetered on the brink of the "fiscal cliff," extends several favorable tax breaks, with a few modifications....(Read More Here)
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC 's current written disclosure statement discussing our advisory services and fees is available for review upon request.
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Military Professionals have unique financial benefits and unique financial needs.  If you think you would like some help developing your Financial Strategy please give us a call at (703) 542-4000 for a free initial consultation or for more information go to our website at .