Oppenheimer & Co. Inc.McCann & Ward Private Client GroupWilliam J. McCann, Director - InvestmentsMary E. Ward, CFP®, CFSAssociate Director - Investments325 North Old Woodward AvenueSuite 370Birmingham, MI 48009248-593-3729248-593-3716william.mccann@opco.commary.ward@opco.com

March 2018College Saving: How Does a 529 PlanCompare to a Roth IRA?

Four Tips for Downsizing in Retirement

How does working affect Social Securityretirement benefits?

Will a government pension reduce my SocialSecurity benefits?

The Big PictureEssential Wealth Strategies

Due Date Approaches for 2017 Federal Income Tax Returns

See disclaimer on final page

We are moving to a new office onMarch 17, 2018!

Our phone numbers, fax number andemails will remain the same.

Our new address is:

Oppenheimer & Co. Inc.

385 S. Eton

Birmingham MI 48009

Tax filing season ishere again. If youhaven't done soalready, you'll wantto start pulling thingstogether — thatincludes getting yourhands on a copy ofyour 2016 tax returnand gathering W-2s,1099s, and

deduction records. You'll need these recordswhether you're preparing your own return orpaying someone else to prepare your tax returnfor you.

Don't procrastinateThe filing deadline for most individuals isTuesday, April 17, 2018. That's because April15 falls on a Sunday, and Emancipation Day, alegal holiday in Washington, D.C., is celebratedon Monday, April 16. Unlike in some years,there's no extra time for residents ofMassachusetts or Maine to file becausePatriots' Day (a holiday in those two states) fallson April 16 — the same day that EmancipationDay is being celebrated.

Filing for an extensionIf you don't think you're going to be able to fileyour federal income tax return by the due date,you can file for and obtain an extension usingIRS Form 4868, Application for AutomaticExtension of Time to File U.S. IndividualIncome Tax Return. Filing this extension givesyou an additional six months (to October 15,2018) to file your federal income tax return. Youcan also file for an extension electronically —instructions on how to do so can be found in theForm 4868 instructions.

Filing for an automatic extension does notprovide any additional time to pay your tax.When you file for an extension, you have toestimate the amount of tax you will owe andpay this amount by the April filing due date. Ifyou don't pay the amount you've estimated, youmay owe interest and penalties. In fact, if the

IRS believes that your estimate was notreasonable, it may void your extension.

Note: Special rules apply if you're living outsidethe country or serving in the military and onduty outside the United States. In thesecircumstances you are generally allowed anautomatic two-month extension (to June 15,2018) without filing Form 4868, though interestwill be owed on any taxes due that are paidafter April 17. If you served in a combat zone orqualified hazardous duty area, you may beeligible for a longer extension of time to file.

What if you owe?One of the biggest mistakes you can make isnot filing your return because you owe money.If your return shows a balance due, file and paythe amount due in full by the due date ifpossible. If there's no way that you can paywhat you owe, file the return and pay as muchas you can afford. You'll owe interest andpossibly penalties on the unpaid tax, but you'lllimit the penalties assessed by filing your returnon time, and you may be able to work with theIRS to pay the remaining balance (options caninclude paying the unpaid balance ininstallments).

Expecting a refund?The IRS is stepping up efforts to combatidentity theft and tax refund fraud. New, moreaggressive filters that are intended to curtailfraudulent refunds may inadvertently delaysome legitimate refund requests. In fact, sincelast year's tax filing season, the IRS has beenrequired to hold refunds on all tax returnsclaiming the earned income tax credit or therefundable portion of the child tax credit until atleast February 15.1

Most filers, though, can expect a refund checkto be issued within 21 days of the IRS receivinga return.1 IRS.gov (IR-2017-181, IRS Encourages Taxpayersto Check Their Withholding; Checking Now HelpsAvoid Surprises at Tax Time, October 30, 2017)

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College Saving: How Does a 529 Plan Compare to a Roth IRA?529 plans were created 22 years ago, in 1996,to give people a tax-advantaged way to savefor college. Roth IRAs were created a yearlater, in 1997, to give people a tax-advantagedway to save for retirement. But a funny thinghappened along the way — some parentsadapted the Roth IRA as a college savings tool.

Tax benefits and use of fundsRoth IRAs and 529 plans have a similar taxmodus operandi. Both are funded with after-taxdollars, contributions accumulate tax deferred,and qualified distributions are tax-free. But inorder for a 529 plan distribution to be tax-free,the funds must be used for college or K-12education expenses. By contrast, a qualifiedRoth distribution can be used for anything —retirement, college, travel, home remodeling,and so on.

In order for a distribution from a Roth IRA to betax-free (i.e., a qualified distribution), a five-yearholding period must be met and one of thefollowing must be satisfied: The distributionmust be made (1) after age 59½, (2) due to aqualifying disability, (3) to pay certain first-timehomebuyer expenses, or (4) by your beneficiaryafter your death.

For purposes of this discussion, it's the firstcondition that matters: whether you will be 59½or older when your child is in college. If theanswer is yes (and you've met the five-yearholding requirement), then your distribution willbe qualified and you can use your Roth dollarsto pay for college with no tax implications orpenalties. If your child ends up getting a grantor scholarship, or if overall college costs areless than you expected, you can put those Rothdollars toward something else.

But what if you'll be younger than 59½ whenyour child is in college? Can you still use Rothdollars? You can, but your distribution will notbe qualified. This means that the earningsportion of your distribution (but not thecontributions portion) will be subject to incometax. (Note: Just because the earnings portion issubject to income tax, however, doesn't meanyou'll necessarily have to pay it. Nonqualifieddistributions from a Roth IRA draw outcontributions first and then earnings, so youcould theoretically withdraw up to the amount ofyour contributions and not owe income tax.)

Also, if you use Roth dollars to pay for college,the 10% early withdrawal penalty that normallyapplies to distributions before age 59½ iswaived. So the bottom line is, if you'll beyounger than 59½ when your child is in collegeand you use Roth dollars to pay collegeexpenses, you might owe income tax (on theearnings portion of the distribution), but you

won't owe a penalty.

If 529 plan funds are used for any otherpurpose besides the beneficiary's qualifiededucation expenses, the earnings portion of thedistribution is subject to income tax and a 10%federal tax penalty.

Financial aid treatmentAt college time, retirement assets aren'tcounted by the federal or college financial aidformulas. So Roth IRA balances will not affectfinancial aid in any way. (Note: Though the aidformulas don't ask for retirement plan balances,they typically do ask how much you contributedto your retirement accounts in the past year,and colleges may expect you to apply some ofthose funds to college.)

By contrast, 529 plans do count as an assetunder both federal and college aid formulas.(Note: Only parent-owned 529 accounts countas an asset. Grandparent-owned 529 accountsdo not, but withdrawals from these accountsare counted as student income.)

Investment choicesWith a Roth IRA, your investment choices arevirtually unlimited — you can hold mutual funds,individual stocks and bonds, exchange-tradedfunds, and REITs, to name a few.

With a 529 plan, you are limited to theinvestment options offered by the plan, whichare typically a range of static and age-basedmutual fund portfolios that vary in their level ofrisk. If you're unhappy with the marketperformance of the options you've chosen,under federal law you can change theinvestment options for your existingcontributions only twice per calendar year(though you can generally change theinvestment options on your future contributionsat any time).

Eligibility and contribution amountsUnfortunately, not everyone is eligible tocontribute to a Roth IRA. For example, yourincome must be below a certain threshold tomake the maximum annual contribution of$5,500 (or $6,500 for individuals age 50 andolder).

By contrast, anyone can contribute to a 529plan; there are no restrictions based on income.Another significant advantage is that lifetimecontribution limits are high, typically $300,000and up. And 529 plan rules allow for largelump-sum, tax-free gifts if certain conditions aremet — $75,000 for single filers and $150,000 formarried joint filers in 2018, which is equal tofive years' worth of the $15,000 annual gift taxexclusion.

529 plan assets surpass$300 billion mark

As of September 2017, assetsin 529 plans totaled $306billion.

Source: Strategic Insight, 529College Savings & ABLE, 3Q2017 529 Data Highlights

Note

Investors should carefullyconsider the investmentobjectives, risks, charges, andexpenses associated with 529plans before investing. Specificinformation is available in eachplan's official statement. Keepin mind that there is the riskthat 529 plan investments maynot perform well enough tocover costs as anticipated.Also consider whether yourstate offers any 529 plan statetax benefits and whether theyare contingent on joining yourown state's 529 plan. Otherstate benefits may includefinancial aid, scholarship funds,and protection from creditors.

Page 2 of 4, see disclaimer on final page

Four Tips for Downsizing in RetirementGoing through years of accumulatedpossessions and memories is probably not howyou envisioned spending part of yourretirement. It may sound like a daunting andemotionally draining task, but downsizing couldbe a savvy financial move, especially if youhaven't reached your retirement savings goals.

1. Set goals for downsizingBefore you make any decisions, think aboutwhy you might want to downsize in the firstplace. Is it because you want to save onmortgage payments or other monthlyexpenses? Or are you looking to free up somecash to help pursue your lifestyle goals inretirement?

No matter what your specific goals may be,understanding the connection between themand downsizing can help motivate you to followthrough with it.

2. Determine the best time to downsizeIt's said that timing is everything, so choosingwhen to downsize will be an important decisionto make. One benefit of downsizing early inretirement is that mortgage payments and otherrelated expenses (such as utilities and realestate taxes) could decrease, presuming thatyou are downsizing to a less expensiveresidence. This could mean you have extrafunds to pursue new hobbies and activities rightaway in retirement. You might even befortunate enough to have sufficient funds fromthe sale of a larger home to pay for a smallerhome with cash, thus eliminating or decreasingyour mortgage payment, or significantlyincreasing cash flow.

But there may be advantages to delayingdownsizing. If you wait to do it later inretirement, you might have a better sense ofjust how much you need to downsize to supportyour current lifestyle. Plus, timing yourdownsizing plans with a stronger real estatemarket could mean that you sell and/orpurchase a new home at a more opportunetime.

3. Be realistic about costsThere are several costs to think about if you aredownsizing your home: the worth of yourcurrent home, the cost of a new home, and thefees and expenses associated with relocating.Before you start boxing up your belongings, runthe numbers. Start by contacting local realestate agents to receive estimates of yourhome's value. Compare the estimates so youcan develop an idea of how much you might beable to get for your home. Research online tosee what homes in your neighborhood have

sold for recently — this can also help youdetermine your home's potential selling price.

Take similar steps when you look for your newhome. One option that might be available is torent a new house or apartment for a length oftime before buying it. That way, you'll learnwhether the home and the location suit you,helping you avoid buyer's remorse.

If you're buying a new home, don't forget toaccount for the down payment, homeinspection, closing costs, and other associatedcharges. Factoring all of the numbers into theequation may reveal whether downsizingmakes the most sense for you and yourfinancial situation.

4. Consider downsizing yourbelongings, not just your homeFor some people, downsizing might simplymean cutting down on clutter rather thanrelocating. It's easier said than done,particularly if you've amassed many belongingsover time. When purging your home, considerthe following:

• Take your time. Don't feel pressured to clearout your entire home in one fell swoop.Instead, make a plan to do one room orsection of your home at a time.

• Involve your children. If you have kids,consider asking them for their help. Manyhands make light work, and your childrenmay end up expressing interest in items theywould like to have.

• Sell valuables. Maybe you can't find a newhome for that antique necklace you neverwear or the rare baseball cards collectingdust in your attic. Consider having thoseitems appraised and selling them to anauction house or online. Depending on howmany items you're selling and their worth, youcould wind up with quite a bit of money thatyou can use to help cushion your retirementfund.

• Donate gently used items. Find out if thereare any local organizations in your communitythat could benefit from furniture, clothing, orany other possessions in good condition thatyou want to get rid of. Some donation outletsmay even offer free pickup of certain items,saving you time and hassle.

• Clear out junk. Chances are you'veaccumulated items that you simply won't beable to give away or sell. Discard belongingsthat serve no purpose other than taking upspace in your home. You might be surprisedby how much room you could free up.

Have you considereddownsizing in retirement?

Page 3 of 4, see disclaimer on final page

Oppenheimer & Co. Inc.McCann & Ward Private Client GroupWilliam J. McCann, Director - InvestmentsMary E. Ward, CFP®, CFSAssociate Director - Investments325 North Old Woodward AvenueSuite 370Birmingham, MI 48009248-593-3729248-593-3716

william.mccann@opco.commary.ward@opco.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018

The content herein should not beconstrued as an offer to sell or thesolicitation of an offer to buy anysecurity. The information enclosedherewith has been obtained fromoutside sources and is not theproduct of Oppenheimer & Co. Inc.("Oppenheimer") or its affiliates.Oppenheimer has not verified theinformation and does notguarantee its accuracy orcompleteness. Additionalinformation is available uponrequest. Oppenheimer, nor any ofits employees or affiliates, does notprovide legal or tax advice.However, your OppenheimerFinancial Advisor will work withclients, their attorneys and their taxprofessionals to help ensure all oftheir needs are met and properlyexecuted. Oppenheimer & Co. Inc.Transacts Business on all PrincipalExchanges and is a member ofSIPC.

Will a government pension reduce my Social Securitybenefits?If you earned a governmentpension from a job not subjectto Social Security taxwithholding ("noncovered

employment") and are also eligible for SocialSecurity benefits through a job where SocialSecurity taxes were withheld, two provisionsmight reduce your benefits: the windfallelimination provision (WEP) and thegovernment pension offset (GPO).

The WEP affects how a worker's SocialSecurity benefit is calculated. If you're subjectto the WEP, your benefit is calculated using amodified formula, possibly resulting in a benefitreduction. The amount of the reductiondepends on the year you turn 62 and thenumber of years in which you had substantialearnings and paid into Social Security (noreduction applies to those with 30 years ormore of substantial earnings). The reductioncannot be more than one-half of your pensionfrom noncovered employment. Spousal anddependent benefits may also be reduced, butnot survivor benefits.

The GPO may affect spousal or survivorbenefits if the spouse or survivor earned a

government pension from noncoveredemployment. In this case, the GPO may reduceSocial Security benefits by up to two-thirds ofthe amount of the pension.

For example, if you receive a $900 monthlygovernment pension and are eligible for a$1,000 monthly Social Security spousal benefit,you would receive only $400 per month fromSocial Security [$1,000 minus $600 (2/3 times$900) equals $400]. You would still receiveyour $900 pension, so your combined benefitwould be $1,300.

Not all government employees are subject tothese provisions. For example, federalemployees under the Federal EmployeesRetirement System are exempt because theypay Social Security taxes on earnings.However, public-sector employees in somestates do not pay Social Security taxes, andthus could be subject to the WEP. The GPOaffects pensions from noncovered federal,state, or local government employment.

Rules and calculations for the WEP and theGPO are complex. Visit the Social Securitywebsite, ssa.gov, for more information.

How does working affect Social Security retirementbenefits?If you're thinking aboutworking as long as possible toincrease your retirementsavings, you may be

wondering whether you can receive SocialSecurity retirement benefits while you're stillemployed. The answer is yes. But dependingon your age, earnings from work may affect theamount of your Social Security benefit.

If you're younger than full retirement age andmake more than the annual earnings limit($17,040 in 2018), part of your benefits will bewithheld, reducing the amount you receive fromSocial Security. If you're under full retirementage for the entire year, $1 is deducted fromyour benefit for every $2 you earn above theannual limit.

In the year you reach full retirement age, $1 isdeducted from your benefit for every $3 youearn above a different limit ($45,360 in 2018).

Starting with the month you reach fullretirement age, your benefit won't be reduced,no matter how much you earn.

Earnings that count toward these limits arewages from a job or net earnings from

self-employment. Pensions, annuities,investment income, interest, and veterans orother government benefits do not count.Employee contributions to a pension or aretirement plan do count if the amount isincluded in your gross wages.

The Social Security Administration (SSA) maybegin to withhold the required amount, up toyour whole monthly benefit, as soon as itdetermines you are on track to surpass theannual limit. However, even if your benefits arereduced, you'll receive a higher monthly benefitat full retirement age, because the SSA willrecalculate your benefit and give you credit forany earnings withheld earlier. So the effect thatworking has on your benefits is only temporary,and your earnings may actually increase yourbenefit later.

These are just the basics, and other rules mayapply. The Retirement Earnings TestCalculator, available at the Social Securitywebsite, ssa.gov, can help you estimate howearnings before full retirement age might affectyour benefit.

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