Sterk Financial ServicesMARY STERK, CFP®350 Oak Tree Ln Ste 150Dakota Dunes, SD 57049Phone: 605-217-3555Fax: 605-217-3535marysterk@sterkfinancialservices.comwww.sterkfinancialservices.com

December 2017It's Time for Baby Boomer RMDs!

What Is Cyber Insurance and Should YourBusiness Have It?

I still have money left in my FSA that I have touse by December 31st. How should I spendit?

Cartoon: 21st Century Shopping Strategy

Questions to Ask Before Buying That Thing You've Always Wanted

See disclaimer on final page

Thank you for connecting with us -we look forward to bringing furthervalue to your financial future. Take aminute to catch up on this month'seconomic news, more in deptharticles are available on our websitewww.sterkfinancialservices.com.

Even if you're generallycomfortable with yourfinances, you mayoccasionally worry abouthow much you'respending, especially ifyou consistently havetrouble saving for short-or long-term goals. Here

are a few questions to ask that might help youdecide whether a purchase is really worth it.

Why do I want it?Maybe you've worked hard and think youdeserve to buy something you've alwayswanted. That may be true, but are you certainyou're not being unduly influenced by otherfactors such as stress or boredom?

Take a moment to think about what's importantto you. Comfort? Security? Safety? Status?Quality? Thriftiness? Does your purchase alignwith your values, or are you unconsciouslyallowing other people (advertisers, friends,family, neighbors, for example) to influenceyour spending?

How will buying this now affect melater?When you're deciding whether to buysomething, you usually focus on the featuresand benefits of what you're getting, but whatare you potentially forgoing? When you factorthis into your decision, what you're weighing isknown as the opportunity cost. For example,let's say you're trying to decide whether to buya new car. If you buy the car, will you have togive up this year's family vacation to DisneyWorld? Considering the opportunity cost mayhelp you evaluate both the direct and indirectcosts of a purchase. Ask yourself how you willfeel about your purchase later. Tomorrow? Nextmonth? Next year?

Will this purchase affect your family?Couples often fight about money because theyhave conflicting money values. Will yourspouse or partner object to your purchasing

decision? And what about your children?Children learn from what they observe. Are youcomfortable with the example you might besetting?

Do I really need it today?Buying something can be instantly and tangiblygratifying. After all, which sounds more exciting:spending $1,500 on the ultra-light laptop you'vehad your eye on or putting that money into aretirement account? Consistently prioritizing animmediate reward over a longer-term goal isone of the biggest obstacles to saving andinvesting for the future. The smaller purchasesyou make today could be getting in the way ofaccumulating what you'll need 10, 20, or 30years down the road.

Be especially wary if you're buying somethingnow because "it's such a good deal." Take timeto find out whether that's really true. Shoparound to see that you're getting the best price,and weigh alternatives. You may discover alower-cost product that will meet your needsjust as well. If you think before you spendmoney, you may be less likely to make impulsepurchases and more certain that you're makingappropriate financial choices.

Can I really afford it?Whether you can afford something depends onboth your income and your expenses. Youshould know how these two things measure upbefore making a purchase. Are you consistentlycharging purchases to your credit card andcarrying that debt from month to month? If so,this may be a warning sign that you'reoverspending. Reexamining your budget andfinancial priorities may help you get yourspending back on track.

Page 1 of 4

It's Time for Baby Boomer RMDs!In 2016, the first wave of baby boomers turned70½, and many more reach that milestone in2017 and 2018. What's so special about 70½?That's the age when you must begin takingrequired minimum distributions (RMDs) fromtax-deferred retirement accounts, includingtraditional IRAs, SIMPLE IRAs, SEP IRAs,SARSEPs, and 401(k), 403(b), and 457(b)plans. Original owners of Roth IRAs are notrequired to take RMDs.

If you're still employed (and not a 5% owner),you may be able to delay minimum distributionsfrom your current employer's plan until after youretire, but you still must take RMDs from othertax-deferred accounts (except Roth IRAs). TheRMD is the smallest amount you must withdraweach year, but you can always take more thanthe minimum amount.

Failure to take the appropriate RMD can triggera 50% penalty on the amount that should havebeen withdrawn — one of the most severepenalties in the U.S. tax code.

Distribution deadlinesEven though you must take an RMD for the taxyear in which you turn 70½, you have aone-time opportunity to wait until April 1 (notApril 15) of the following year to take your firstdistribution. For example:

• If your 70th birthday was in May 2017, youturned 70½ in November and must take anRMD for 2017 no later than April 1, 2018.

• You must take your 2018 distribution byDecember 31, 2018, your 2019 distribution byDecember 31, 2019, and so on.

IRS tablesAnnual RMDs are based on the accountbalances of all your traditional IRAs andemployer plans as of December 31 of theprevious year, your current age, and your lifeexpectancy as defined in IRS tables.

Most people use the Uniform Lifetime Table(Table III). If your spouse is more than 10 yearsyounger than you and the sole beneficiary ofyour IRA, you must use the Joint Life and LastSurvivor Expectancy Table (Table II). Table I isfor account beneficiaries, who have differentRMD requirements than original accountowners. To calculate your RMD, divide thevalue of each retirement account balance as ofDecember 31 of the previous year by thedistribution period in the IRS table.

Aggregating accountsIf you own multiple IRAs (traditional, SEP, orSIMPLE), you must calculate your RMDseparately for each IRA, but you can actuallywithdraw the required amount from any of youraccounts. For example, if you own twotraditional IRAs and the RMDs are $5,000 and$10,000, respectively, you can withdraw that$15,000 from either (or both) of your accounts.

Similar rules apply if you participate in multiple403(b) plans. You must calculate your RMDseparately for each 403(b) account, but you cantake the resulting amount (in whole or in part)from any of your 403(b) accounts. But RMDsfrom 401(k) and 457(b) accounts cannot beaggregated. They must be calculated for eachindividual plan and taken only from that plan.

Also keep in mind that RMDs for one type ofaccount can never be taken from a differenttype of account. So, for example, a 401(k)required distribution cannot be taken from anIRA. In addition, RMDs from different accountowners may never be aggregated, so onespouse's RMD cannot be taken from the otherspouse's account, even if they file a joint taxreturn. Similarly, RMDs from an inheritedretirement account may never be taken fromaccounts you personally own.

Birthday Guide: This chart providessample RMD deadlines for older babyboomers.

Month &year ofbirth

Year youturn 70½

First RMDdue

SecondRMD due

Jan. 1946to June1946

2016 April 1,2017

Dec. 31,2017

July 1946to June1947

2017 April 1,2018

Dec. 31,2018

July 1947to June1948

2018 April 1,2019

Dec. 31,2019

July 1948to June1949

2019 April 1,2020

Dec. 31,2020

July 1949to June1950

2020 April 1,2021

Dec. 31,2021

In 2016, the first wave ofbaby boomers turned 70½,and many more reach thatmilestone in 2017 and 2018.What's so special about70½? That's the age whenyou must begin takingrequired minimumdistributions (RMDs) fromtax-deferred retirementaccounts, includingtraditional IRAs, SIMPLEIRAs, SEP IRAs, SARSEPs,and 401(k), 403(b), and457(b) plans.

Page 2 of 4, see disclaimer on final page

What Is Cyber Insurance and Should Your Business Have It?Does your company use electronic data? Doesit store or communicate potentially sensitiveinformation about customers, employees, orcompetitors? If so, then a breach of that datacould cost your company plenty. Somewell-known organizations have experienceddata breaches, including WalMart, JP MorganChase, Yahoo, eBay, Target, the IRS, and,more recently, Equifax. Unfortunately, justabout any size company or organization thatretains personal information can be hit with acyber attack. One way to transfer some of therisk and costs associated with a data breach ornetwork security failure is through cyberinsurance.

What is cyber insurance?Cyber insurance provides protection againstpotential costs and financial losses resultingfrom data breaches caused by cyber attacks,viruses, and other threats. It also helps coverthird-party lawsuits filed against your companyresulting from data breaches or your failure toadequately protect sensitive or confidentialinformation.

What does cyber insurance cover?While individual policies may differ, cyberinsurance can help cover:

• Loss of data: Cyber insurance may helpcover the cost of restoring or reconstructingdata that was lost, stolen, or damaged.

• Losses from data breach or security failure:Cyber insurance assists in covering some ofthe costs of investigating how and where thebreach occurred; expenses associated withregulatory fines; legal costs of defendingagainst lawsuits and settlement of claimsbrought by victims whose information wasinappropriately accessed, shared, or lost;expenses related to notifying victims of thedata breach, such as customers andemployees.

• Costs associated with extortion or ransomdemands: That's right, often a cyber criminalwill demand a ransom or try to extort moneyfrom your company in exchange for yourdata. Cyber insurance covers some of thecosts of paying the ransom for the data or forthe restitution to victims whose informationwas captured.

• Losses from business interruption: If yourcompany must close while the data breach isinvestigated and resolved, cyber insurancecan help offset the ordinary costs andexpenses of your business during its downtime.

Who needs cyber insurance?Your company or organization may be acandidate for cyber insurance if it does any ofthe following:

• Sends or receives documents electronically• Communicates with customers or third parties

via email, text messages, or social media• Stores third-party information on a computer

network that may be considered sensitive orprivate, such as an individual's identity, taxinformation, income, address, Social Securityand/or credit card numbers

• Stores confidential company information ordata (e.g., tax documents, sales or marketingfigures or projections, trade secrets) on acomputer network

• Advertises company services or products viaa website or social media

Aren't these risks covered by businessinsurance?Unfortunately, most of the risks and lossesresulting from data breaches or losses are notcovered by standard commercial generalliability insurance. In fact, many policies containa specific electronic data exclusion. In addition,loss or damage to electronic data isn'tconsidered property damage under a businesspolicy, so coverage wouldn't apply.

Questions to think aboutCyber insurance has policy exclusions, terms,and conditions. When thinking about thepurchase of cyber insurance, here are somequestions to consider:

• What specific risks are covered, and whatrisks are not covered?

• What deductibles or coverage limits apply?• Will the insurer require your company to

undergo a security risk review?• Are there security controls your company can

adopt that will decrease the premium?• Will the insurer identify security risks and

offer alternatives to minimize or eliminatethose risks?

Plan aheadCyber attacks and loss of data can bedevastating to a business. Plan ahead before acyber attack occurs. Evaluate your businessand determine areas of particular vulnerability.Then create cybersecurity policies andprocedures for company employees to follow.Finally, consider the purchase of cyberinsurance to help cover at least some of therisks associated with a cyber attack.

Forty-eight states and theDistrict of Columbia havelaws requiring private orgovernmental entities tonotify individuals of securitybreaches of personallyidentifiable information. Inaddition, the HealthInsurance Portability andAccountability Act (HIPPA)requires HIPAA-coveredentities and their businessassociates to providenotification following abreach of unsecuredprotected healthinformation.

Page 3 of 4, see disclaimer on final page

Sterk Financial ServicesMARY STERK, CFP®350 Oak Tree Ln Ste 150Dakota Dunes, SD 57049Phone: 605-217-3555Fax: 605-217-3535marysterk@sterkfinancialservices.comwww.sterkfinancialservices.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

Securities and Investment AdvisoryServices are offered through WoodburyFinancial Services, Inc., MemberFINRA/SIPC. Insurance offered throughSterk Financial Services which is notaffiliated with Woodbury FinancialServices, Inc.

Broadridge Investor CommunicationSolutions, Inc. does not provideinvestment, tax, or legal advice. Theinformation presented here is not specificto any individual's personal circumstances.

To the extent that this material concernstax matters, it is not intended or written tobe used, and cannot be used, by ataxpayer for the purpose of avoidingpenalties that may be imposed by law.Each taxpayer should seek independentadvice from a tax professional based onhis or her individual circumstances.

These materials are provided for generalinformation and educational purposesbased upon publicly available informationfrom sources believed to be reliable—wecannot assure the accuracy orcompleteness of these materials. Theinformation in these materials may changeat any time and without notice.

Cartoon: 21st Century Shopping Strategy

I still have money left in my FSA that I have to use byDecember 31st. How should I spend it?Health flexible spendingaccounts (FSAs) are a greatway for individuals to payqualified medical and dental

expenses using pre-tax dollars. While IRS rulesdo allow employers to offer either a carryover orgrace period option for money left over inflexible spending accounts, many employerFSA plans still have provisions that don't allowfor funds contributed to an FSA to carry overfrom one plan year to the next. In other words,if you don't use it, you lose it. If you find thatyou still have money left over in your FSA asthe end of the year approaches, there are anumber of ways to spend down your accountbalance.

FSA funds can be used to pay for a variety ofout-of-pocket health-care expenses, such asdeductibles and copayments. You can also useyour FSA funds to pay for uncovered dentaland vision care expenses. So now might be agood time to schedule any medical and dentalappointments that you may have been puttingoff, stock up on contact lenses, or even replacean old pair of eyeglasses.

FSA funds can also be used to pay for bothprescription drugs and many over-the-counterproducts, including:

• Athletic braces and supports• Bandages• First-aid kits• Blood-pressure monitors• Shoe insoles and inserts

Keep in mind that certain over-the-countermedicines (e.g., pain relievers and allergymedication) require a doctor's prescription inorder for you to obtain reimbursement fromyour FSA.

If you continue to participate in your employer'sFSA, remember to choose your contributionamount carefully so that you don't risk losingany contributions going forward. Many FSAplan administrators offer user-friendly websitesthat allow you to inquire about eligibleexpenses and keep track of your FSApurchases and account balances throughoutthe plan year.

Page 4 of 4