Dear Clients and Friends

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1 T C LAIR Soltions Professionally Speaking Welcome! St. Clair CPA Soltions is expanding its staff in both offices to meet the demands of tax season and beyond. Please join s in welcoming new Senior Accontants Frank A. Anastasi, MBA and Kara R. Atkinson Frank will work in Merchantville and Kara will be based in Conshohocken. We also welcome Joseph Valenza, who joins affiliate CPA Financial Grop, LLC as a Financial Services Associate on November 16, REGISTER NOW St. Clair CPA Soltions is a prod sponsor of the Montgomery Conty Chamber of Commerce Women s Resorce Concil Lncheon & Holiday Expo on December 9 at the Barren Hill Tavern in Lafayette Hill, PA. Focsed on the Lncheon s theme of Getting Organized in varying areas of life and home, or Principal, Frances Sperling Feldbam, CPA, MBA, will serve as a panelist discssing how to organize yor finances and financial docments. Advance tickets reqired; learn more and register at Presented by St. Clair CPA Soltions and its sbsidiaries St. Clair CPAs, P.C. CPA Financial Grop, LLC Plan To Bild Wealth SM PERSONAL BUSINESS ESTATE An independent member of BKR International Dear Clients and Friends St. Clair CPA Soltions Welcomes the Clients and Staff of Woodworth and St. John, LLC On October 16, 2015, the partners of St. Clair CPA Soltions and Woodworth and St. John, LLC completed a transaction in which Woodworth and St. John merged into St. Clair CPA Soltions. Woodworth and St. John, LLC was fonded in 1980 in Moorestown, New Jersey, where it maintained an office for 35 years and served closely-held bsinesses in the greater Philadelphia region and New Jersey. Like St. Clair CPA Soltions, fonding partners Stanley Woodworth, CPA, and Edward St. John, CPA, bilt their firm on strong relationships with clients. Commenting on the merger, Ed St. John says, After my partner retired in 2013, I soght a strategic soltion that wold enable s to contine providing or clients with the best possible service in a complex and ever-changing world. St. Clair CPA Soltions proved to be the ideal partner, as it shares or commitment to sperior personal service. Together with my staff members Ralph S. DeBlasi, CPA, Margaret J. Landolt and Debra Beech, who will be joining me in the Merchantville office of St. Clair CPA Soltions, we are delighted to become part of a firm that is eqally committed to or core vales of integrity and qality service. Bill St. Clair adds, The partners and principals of St. Clair CPA Soltions welcome Ed St. John and his staff and clients, who we are looking forward to meeting personally. Along with enjoying or client-focsed philosophy, or newly-merged clients now have access to the benefits of or global capabilities in acconting, aditing and bsiness conslting, provided throgh or association with BKR International, as well as the wealth management and employee benefits services that we offer throgh or affiliates, CPA Financial Grop, LLC and EBA Conslting, respectively. We believe Ed and his team are synergistic with or mission and vision, and we look forward to working with them and serving their clients. Is Yor Bsiness Ready for Blizzards? Bsiness Interrption Insrance: A Lifeline When Disaster Strikes In recent years, many bsinesses have been ponded by a wide variety of disasters, natral and man-made. From coast to coast, some bsinesses have foght to keep their doors open despite floods, wildfires, hrricanes, mdslides, vandalism, riots and more. These disasters serve as sobering reminders to expect the nexpected. As we get ready for what cold be another nforgiving winter season, it s a good time to remember that yor bsiness cold become a victim of Mother Natre or other external forces withot warning. After a disaster, Contined on page 4 In This Isse St. Clair CPA Soltions Welcomes the Clients and Staff of Woodworth and St. John, LLC...1 Is Yor Bsiness Ready for Blizzards?...1 Answering FAQs abot Reqired Minimm Distribtions...2 In Or Commnity Soth Centre Street Merchantville, NJ (P) (F) West Elm Street, Site 500 Conshohocken, PA (P) (F) The financial professionals of CPA Financial Grop are Registered Representatives and Investment Adviser Representatives with/and offer secrities and advisory services throgh Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Tax and acconting services offered by St. Clair CPA Soltions are separate and nrelated to Commonwealth.

2 2 ST CLAIR Soltions Answering FAQs abot Reqired Minimm Distribtions The rles for reqired minimm distribtions (RMDs) can be confsing, frstrating and potentially expensive for retirement savers and their beneficiaries. Taking or not taking RMDs can have a sbstantial impact on yor tax liability. Distribtions generally are taxable at yor ordinary-income rate (not the lower long-term capital gains rate) nless they re from a Roth accont. And the penalty for not taking yor fll RMD on time is severe: 50% of the amont yo shold have withdrawn bt didn t. These answers to Freqently Asked Qestions (FAQs) may help yo navigate the mandatory distribtion rles and minimize any negative tax conseqences What s an RMD? An RMD is the amont yo re legally reqired to withdraw from yor qalified retirement plans and traditional IRAs after reaching age 70 1/2. Essentially, the tax law reqires yo to tap into yor retirement assets and begin paying taxes on them whether yo want to or not. Which qalified plans do the RMD rles apply to? When mst I start taking RMDs? The reqired beginning date for RMDs is generally April 1 of the year after the year in which yo trn age 70 1/2. For example, if yo trn 70 on Jne 1, 2015, yo mst begin taking RMDs no later than April 1, The first year is the only year yo can take an RMD after the close of the year for which it applies. When do I have to take RMDs in scceeding years? The deadline for taking sbseqent RMDs is December 31 of the year for which the RMD applies. Therefore, if yo trn 70 1/2 in 2015, yo mst take yor RMD for the 2016 tax year by December 31, 2016, in addition to taking yor 2015 RMD by April 18, To redce overall tax liability, yo might take the first RMD in 2015 instead of taking two RMDs in How do I calclate the annal RMD? Generally, all yo have to do is divide the balance in the plan or IRA on December 31 of the prior year by the appropriate life expectancy factor. The IRS provides three life expectancy tables for taxpayers to se to calclate RMDs: The RMD rles apply to all employer-sponsored retirement plans, inclding: 401(k) plans; 403(b) plans (althogh slightly different rles may apply to pre-1987 contribtions); 457(b) plans; Profit sharing plans; and Other defined contribtion plans. Joint Life and Last Srvivor Expectancy Table. This applies if the sole beneficiary of the accont is yor spose and he or she is more than 10 years yonger than yo. Uniform Lifetime Table. This applies if yor spose isn t yor sole beneficiary or yor spose isn t more than 10 years yonger than yo. Single Life Expectancy Table. This applies if yo re the beneficiary of the accont. The rles also cover traditional IRAs and IRA-based plans, sch as SEPs, SARSEPs and SIMPLE-IRAs. There are exceptions in certain, limited circmstances. Do the RMD rles apply to Roth acconts? The RMD rles also apply to Roth 401(k) acconts. However, they don t apply to Roth IRAs while the original owner is alive. So one way to avoid RMDs on yor Roth 401(k) is to roll over the accont assets to a Roth IRA. After yor death, however, beneficiaries of yor Roth IRA mst take RMDs nder the same rles that apply to traditional IRAs. Becase it is a Roth IRA, however, the distribtions are tax-free. To illstrate, sppose yo re a single 80-year-old with an accont balance of $100,000 at the end of the previos year. Using the Uniform Lifetime Table, the distribtion period for an nmarried, 80-year-old accont owner is Ths, yo wold divide $100,000 by 18.7, reslting in an RMD of $5, Can I withdraw more than the reqired amont? Yes, there s no restriction against larger distribtions. Yo can take ot as mch as yo want as long as yo satisfy the minimm standard. Can I apply an excess RMD to a ftre year? No, an RMD is calclated based on the accont balance and life expectancy factor for that particlar year. Contined on page 3 28 Soth Centre Street Merchantville, NJ (P) (F) West Elm Street, Site 500 Conshohocken, PA (P) (F) The financial professionals of CPA Financial Grop are Registered Representatives and Investment Adviser Representatives with/and offer secrities and advisory services throgh Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Tax and acconting services offered by St. Clair CPA Soltions are separate and nrelated to Commonwealth.

3 3 ST CLAIR Soltions Answering FAQs abot Reqired Minimm Distribtions, cont. Mst I take RMDs from all qalified plans and IRAs? Althogh yo mst calclate the RMD separately for each IRA yo own, yo can withdraw the total amont from jst one IRA or any combination of IRAs that yo choose. The same rle applies to 403(b) plans. However, for all other qalified plans, the RMD mst be taken separately from each plan accont. Will my plan or IRA administrator ensre my RMD is made on time? Althogh a plan or IRA administrator may provide the information or do the calclation for yo, it s ltimately yor responsibility to take the RMD for the applicable tax year. How do I estimate the RMD penalty? The penalty is eqal to 50% of the amont that shold have been withdrawn, redced by any amont yo withdrew for the year. For example, if yo were reqired to withdraw $10,000 and took ot only $2,500, the penalty is $3,750 (50% of $7,500). In addition, yo mst still take the RMD. The penalty is in addition to any other tax yo owe on the RMD. How do I estimate the income tax on an RMD? Generally, distribtions are taxed at ordinary income rates. Bt any amont attribtable to a retrn of basis from a traditional or Roth accont or a qalified distribtion from a Roth accont is tax free. Are there any exceptions to the RMD penalty? The penalty may be waived if yo can show that the shortfall was de to reasonable error and yo re taking steps to remedy it. To qalify for this relief, yo file an IRS form and attach an explanation. Yor tax adviser can help demonstrate why yo qalify for an exception. Are RMDs sbject to the NIIT? Distribtions from qalified retirement plans aren t inclded in net investment income for prposes of the 3.8% net investment income tax (NIIT). However, RMDs will drive p yor modified adjsted gross income, which cold trigger or increase NIIT liability on yor net investment income. Can I still contribte to a qalified employer plan or IRA if I take distribtions? RMDs don t affect yor eligibility for retirement plan contribtions. So, if an 80-year-old employee is still working and participating in a qalified employer plan, his or her employer mst make contribtions on the individal s behalf and give the employee the option to contine making salary deferrals if the plan permits them. However, yo can t contribte to a traditional IRA after age 70 1/2 nder any circmstances. Do I have to take RMDs If I m still working? Generally, yo mst take RMDs from all qalified plans and traditional IRAs. However, if yor employer s qalified plan allows it, yo don t have to take RMDs if yo still work flltime for the employer and don t own 5% or more of the company. There s no similar exception for IRAs. Yo mst still take RMDs from qalified plans that remain at former employers (that is, the plans that haven t been rolled over to yor crrent employer s plan). Can I roll over an RMD to another IRA or tax-deferred retirement plan? No, rollovers are strictly prohibited. Allowing retirees to roll over RMDs to another retirement accont wold defeat the intention of the mandatory distribtion rles. Can I donate RMDs to charities? In the past, yo cold transfer p to $100,000 directly from an IRA to a charity withot paying tax on the distribtion. Bt this tax law provision expired December 31, Under the crrent rles, if yo wish to donate yor RMD to a charity, yo re taxed on the distribtion at ordinary income tax rates, and then yo may dedct it as a charitable contribtion. There s been some discssion in Congress lately abot possibly reinstating the rle. If yo re interested in donating yor RMD to charity, contact s to discss any recent developments later this year. What happens if I die before RMDs begin? No distribtion is reqired for the year of death. For sbseqent years, RMDs mst be taken from inherited acconts. A sposal beneficiary has greater flexibility than a non-sposal beneficiary, inclding being able to treat the accont as his or her own. Generally, the entire amont of the owner s benefit mst be distribted to the beneficiary who is an individal either (1) within five years of the owner s death, or (2) over the life of the beneficiary starting no later than one year following the owner s death. What happens if I die after RMDs begin? The beneficiaries of the acconts mst contine to take RMDs nder a complex set of rles. Again, sposal beneficiaries have greater flexibility than non-sposal beneficiaries. Important Note: The beneficiary of a deceased owner of a retirement accont can be sbject to tax penalties if he or she fails to comply with the post-death distribtion rles. If a retirement accont owner dies mid-year, the beneficiary may be naware that the owner has passed away before taking his Contined on page 5 28 Soth Centre Street Merchantville, NJ (P) (F) West Elm Street, Site 500 Conshohocken, PA (P) (F) The financial professionals of CPA Financial Grop are Registered Representatives and Investment Adviser Representatives with/and offer secrities and advisory services throgh Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Tax and acconting services offered by St. Clair CPA Soltions are separate and nrelated to Commonwealth.

4 4 ST CLAIR Soltions Is Yor Bsiness Ready for Blizzards? Bsiness Interrption Insrance: A Lifeline When Disaster Strikes, cont. an estimated 25% of companies are nable to reopen. Depending on yor bsiness and its financial stability, a few weeks of lost income can be enogh to close yor doors indefinitely. Proactive Disaster Planning Commercial property insrance doesn t typically pay the cost of disrpted operations. What can help yo srvive is bsiness interrption coverage. This insrance allows yo to relocate or temporarily close so yo can make the necessary repairs and still be provided with cash flow to cover lost revene and expenses incrred while normal operations are sspended. Before the next disaster strikes, conslt with yor insrance agent abot bsiness interrption coverage. To determine the proper amont of coverage, yor financial adviser can help forecast a worst-case scenario and ask "what-if" qestions to cover all possibilities. Yo don t want to over insre, bt yo also don t want to overlook critical risks, sch as a long power otage. Bsiness interrption insrance isn t sold as a separate policy. Instead, it s added to yor existing property insrance policy. There are two basic types of coverage: 1. Named perils policies cover only specific occrrences that are listed, sch as fire, water damage and vandalism. 2. All-risk policies cover all disasters nless they re specifically exclded. Most all-risk policies specifically exclde damage from earthqakes and floods, bt sch coverage is generally available for an additional fee. What s covered? Bsiness interrption insrance sally pays for income that is lost while operations are sspended. It also covers contining expenses, inclding salaries, payroll costs and other costs reqired to restart a bsiness. Depending on the policy, additional expenses might inclde: Relocation to a temporary bilding (or permanent relocation if necessary); Replacement of inventory, machinery and parts; Overtime wages to make p for lost prodction time; and Advertising to annonce yor bsiness is still operating. Bsiness interrption coverage that insres yo against 100% of losses can be costly. Policies typically cover 80% of losses while yo sholder the remaining 20%. After yor bsiness selects coverage to sit yor needs, make sre yo have a copy of the policy offsite so yo can access it qickly if a disaster occrs. Disaster Control The key to continity after a disaster is to file the proper insrance claims as soon as possible. Bt be warned: This type of insrance is complicated. Sbmitting a claim can be time consming and reqires carefl consideration. Follow these steps as soon as it s feasible: 1. Notify the insrer abot the damage. If yor actal policy has been water damaged or destroyed, ask the company to send yo another copy. 2. Review the policy. Read yor policy in its entirety to determine how to best present yor claim. It s important to nderstand the policy s limits and dedctibles before spending time docmenting losses that may not be covered. 3. Minimize losses. Make temporary repairs if possible and hire secrity gards if necessary to protect property. Then: Reopen as soon as practical, even if it s only for a limited nmber of hors. Block off nsable parts of the bilding and operate from less-damaged areas. Post pdates on yor website and social media annoncing when yo ll reopen. Consider taking ot newspaper, radio or television ads to make annoncements. Consider layoffs of nonessential spport staff to limit contining operating expenses. 4. Record losses. Maintain accrate records to spport yor claim. Reorganize yor bookkeeping to segregate costs related to the bsiness interrption. Among the necessary docments are: Pre-disaster financial statements and income tax retrns; Copies of crrent tility bills, employee wage and benefit statements, and other records showing contining operating expenses; Post-disaster bsiness records; Contined on page 5 28 Soth Centre Street Merchantville, NJ (P) (F) West Elm Street, Site 500 Conshohocken, PA (P) (F) The financial professionals of CPA Financial Grop are Registered Representatives and Investment Adviser Representatives with/and offer secrities and advisory services throgh Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Tax and acconting services offered by St. Clair CPA Soltions are separate and nrelated to Commonwealth.

5 5 ST CLAIR Soltions Is Yor Bsiness Ready for Blizzards? Bsiness Interrption Insrance: A Lifeline When Disaster Strikes, cont. Receipts for bilding materials, a generator and other spplies needed for immediate repairs; Paid invoices from contractors, secrity personnel, media otlets and other service providers; and Receipts for rental payments, if yo move yor bsiness to a temporary location. Be as precise as possible, or yor claim may be delayed or denied. Yor accontant can review the records yo plan to sbmit and organize them in anticipation of litigation if the insrer is relctant to pay yor claim. Taking the time to prepare for that possibility even if it s remote can save effort later. Professional Assistance The calclation of losses in bsiness interrption insrance claims is complex and potentially contentios. Yor accontant can be the primary contact with the insrer. Depending on the scope of a loss, the insrance company may enlist its own specialists to adit yor claim. So yo also may want to conslt with or accontants who are experienced in bsiness valation and litigation spport to help prepare yor claim, qantify losses and anticipate qestions from yor insrer. Are Bsiness Interrption Proceeds Taxable? Insrance proceeds received for the loss of property generally aren t taxable if yo se the money to prchase replacement property. Bt bsiness interrption proceeds are flly taxable to the extent that they re sed to replace lost income. Cash basis entities that file an ndispted claim with an insrance carrier mst pay tax when they receive payment. For accral basis taxpayers, the general rle of thmb is: Where liability is ndispted by the insrer and the amont of the recovery can be reasonably approximated, income accres in the year of the loss, despite the fact that the amont of the recovery may not be known at the time of accral. For accral basis entities, the timing of the tax liability is less straightforward if a bsiness interrption claim is in dispte. To determine whether the proceeds shold be recognized in the year the claim is filed, the IRS considers two main isses: Has the insrer recognized a liability for yor claim? Can yor proceeds be reasonably approximated? The timing of tax liability hinges on the facts and circmstances. Sometimes, claims aren t incldible in taxable income ntil the litigation between the parties is settled and the amont is set. Conslt with yor tax adviser. Be a Srvivor It s impossible to know when natral and man-made disasters will case sbstantial damage. Bsiness interrption insrance obviosly won t solve all yor problems if disaster strikes, bt it can improve yor odds of srvival. We can help yo qickly and efficiently assemble the information and calclations needed for a viable claim. Filing a well-crafted claim can reslt in a faster, easier resoltion and provide mch-needed cash to get yor bsiness p and rnning again. Answering FAQs abot Reqired Minimm Distribtions, cont. or her fll RMD for the year. Other complex rles may apply if there are mltiple non-sposal beneficiaries or if a trst is the beneficiary of a retirement accont. Contact s for gidance if yo inherit an IRA or other retirement accont assets. For More Detailed Answers The mandatory distribtion rles for qalified retirement plans and IRAs are complex and may change nder Congressional tax reform measres. In the meantime, yo can minimize yor tax liabilities and preserve more assets for yor heirs with carefl planning. Contact s to cstomize the optimal plan based on yor individal retirement and estate planning goals. Avoid the Year-End Crsh Taxpayers sbject to reqired minimm distribtions (RMDs) have ntil December to calclate and schedle RMDs from qalified plans and IRAs. It s not nsal for people to wait ntil the last moment to take RMDs. So long as the proper RMD is taken prior to the end of the year, yo re in compliance with the rles. However, to minimize the possibility of error by missing the deadline, it may be safer to take yor RMDs in advance of December 31. This will give yo plenty of time to make any necessary corrections before the end of the year. 28 Soth Centre Street Merchantville, NJ (P) (F) West Elm Street, Site 500 Conshohocken, PA (P) (F) The financial professionals of CPA Financial Grop are Registered Representatives and Investment Adviser Representatives with/and offer secrities and advisory services throgh Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Tax and acconting services offered by St. Clair CPA Soltions are separate and nrelated to Commonwealth.

6 6 ST CLAIRSoltions In Or Commnity St. Clair CPA Soltions Spports People Helping People at Stenton Family Manor St. Clair CPA Soltions employees volnteering with the People Helping People Fondation in Agst 2015 helped trn this space into a new cozy living room for homeless families residing at Stenton Family Manor in Philadelphia. St. Clair CPA Soltions was a co-sponsor of Stenton s 2015 Smmer Improvement Project. In Agst employees of St. Clair CPA Soltions donated their time to volnteer at the Stenton Family Manor 2015 Smmer Improvement Project, sponsored by The Goldenberg Grop s People Helping People Fondation. Trading spreadsheets for paintbrshes, St. Clair CPA Soltions staff helped transform a space into a cozy living room at Stenton Family Manor, a residence for homeless families in Philadelphia that provides shelter, secrity and the promise of a ftre. Stenton Family Manor offers emergency hosing, parenting classes, job and life skills training, emotional spport and a warm family environment. Many of Stenton Family Manor s staff are former residents who overcame tremendos obstacles, now live on their own and are committed to giving back to help others achieve the same sccess. Or firm was also prod to be a sponsor of this worthwhile The after photo at Stenton Family Manor, Agst 2015 commnity event. To learn more abot how yo can help Stenton Family Manor spport homeless families, call or info@stentonfm.org. The People Helping People Fondation welcomes volnteers in Philadelphia, Kenya and Ivory Coast: learn abot their activities at A Sweet Event: St. Clair CPA Soltions Sponsors the MCCC Women s Resorce Concil Lncheon featring Sweet Ashley s Chocolates On September 17, 2015, St. Clair CPA Soltions sponsored a bsiness networking lncheon for the Montgomery Conty Chamber of Commerce Women s Resorce Colleen E. Levin, CPA (left) and Cheryl Post, Concil at Rth s Chris Steak Hose in King of Prssia, CPA (right) represent sponsor St. Clair CPA PA. Gest speaker Connie Lawson, owner of Sweet Soltions at the Montgomery Conty Chamber of Commerce (MCCC) Women s Ashley s Chocolates in Royersford, Pennsylvania, gave Resorce Concil Lncheon on September 17, an informative and entertaining presentation and 2015, featring gest speaker Connie Lawson chocolate tasting which inclded tips on sing chocolate (center), owner of Sweet Ashley s Chocolates. for marketing and client-appreciation gifts. The 40 women in attendance, representing a wide variety of bsinesses and professions, were delighted to leave with gift bags and complimentary chocolate making this a very sweet event, indeed! Join s on December 9 for the next Women s Resorce Concil Lncheon & Holiday Expo! See or Professionally Speaking colmn in this isse for details or visit the Calendar of Events at Stdents Can Win Cash Prizes in the PICPA High School Essay Contest Is yor high school stdent participating in the Pennsylvania Institte of Certified Pblic Accontants (PICPA) High School Essay Contest? Or Controller and Hman Resorces Manager Stephanie S. Sommers, CPA, is working with the PICPA Greater Philadelphia Chapter Relations with Schools and Colleges Committee to promote the 24th annal Essay Contest, which awards cash prizes of $1,000, $750 and $500 to the top three entries, pls two $200 honorable mention awards. The deadline for entry is March 16, Learn abot the Contest reqirements and find an official entry sbmission form at or contact Stephanie at ssommers@stclaircpa.com for information. 28 Soth Centre Street Merchantville, NJ ( P) ( F) West Elm Street, Site 500 Conshohocken, PA ( P) ( F) The financial professionals of CPA Financial Grop are Registered Representatives and Investment Adviser Representatives with/and offer secrities and advisory services throgh Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Tax and acconting services offered by St. Clair CPA Soltions are separate and nrelated to Commonwealth.