Raymond James &Associates, Inc.Michael W. ArySenior Vice President, Investments710 S. Thornton Avenue, Ste. BDalton, GA 30720706-913-1967mike.ary@raymondjames.comhttps://www.raymondjames.com/mikeary/

February 2019Tax Scams to Watch Out For

Know Your Mutual Funds

How can you lower the costs of owning avehicle?

Is a vehicle subscription service in yourfuture?

Hidden Gem: HSAs in Retirement

See disclaimer on final page

When saving for retirement,you're probably aware of thebenefits of usingtax-preferred accounts suchas 401(k)s and IRAs. But youmay not be aware of anothertype of tax-preferred accountthat may prove very useful,

not only during your working years but also inretirement: the health savings account (HSA).

HSA in a nutshellAn HSA is a tax-advantaged account that'spaired with a high-deductible health plan(HDHP). You can't establish or contribute to anHSA unless you are enrolled in an HDHP. AnHDHP provides "catastrophic" health coveragethat pays benefits only after you've satisfied ahigh annual deductible. However, you can usefunds from your HSA to pay for healthexpenses not covered by the HDHP.

Contributions to an HSA are generally either taxdeductible if you contribute them directly, orexcluded from income if made by youremployer. HSAs typically offer several savingsand investment options. Your employer willlikely indicate which funds or investmentoptions are available if you get your HSAthrough work. All investments are subject tomarket fluctuation, risk, and loss of principal.When sold, investments may be worth more orless than their original cost.

Withdrawals from the HSA for qualified medicalexpenses are free of federal income tax.However, money you take out of your HSA fornonqualified expenses is subject to ordinaryincome taxes plus a 20% penalty, unless anexception applies.

Benefits of an HSAAn HSA can be a powerful savings tool. First, itmay be the only type of account that allows forfederal income tax-deductible or pre-taxcontributions coupled with tax-free withdrawals.Depending upon the state, HSA contributionsand earnings could be subject to state taxes. Inaddition, because there's no "use it or lose it"provision, funds roll over from year to year. Andthe account is yours, so you can keep it even ifyou change employers or lose your job.

HSA as a retirement toolDuring your working years, if your healthexpenses are relatively low, you may be able tobuild up a significant balance in your HSA overtime. You can even let your money grow untilretirement, when your health expenses arelikely to be greater.

In retirement, medical costs may prove to beone of your biggest expenses. Although youcan't contribute to an HSA once you enroll inMedicare (it's not considered an HDHP), anHSA can help you pay for qualified medicalexpenses, allowing you to preserve yourretirement accounts for other expenses (e.g.,housing, food, entertainment, etc.). And anHSA may provide other benefits as well.

• An HSA can be used to pay for unreimbursedmedical costs on a tax-free basis, includingMedicare premiums (although not Medigappremiums) and long-term care insurancepremiums, up to certain limits.

• You can repay yourself from your HSA forqualified medical expenses you incurred inprior years, as long as the expense wasincurred after you established your HSA, youweren't reimbursed from another source, andyou didn't claim the medical expense as anitemized deduction.

• And once you reach age 65, withdrawals fornonqualified expenses won't be subject to the20% penalty. However, the withdrawal will betaxed as ordinary income, similar to adistribution from a 401(k) or traditional IRA.

• At your death, if your surviving spouse is thedesignated beneficiary of your HSA, it will betreated as your spouse's HSA.

HSAs aren't for everyone. If you have relativelyhigh health expenses, especially within the firstyear or two of opening your account, you coulddeplete your HSA or even face a shortfall. Inany case, be sure to review the features of yourhealth insurance policy carefully. The cost andavailability of an individual health insurancepolicy can depend on factors such as age,health, and the type and amount of insurance.

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Tax Scams to Watch Out ForWhile tax scams are especially prevalent duringtax season, they can take place any time duringthe year. As a result, it's in your best interest toalways be vigilant so you don't end upbecoming the victim of a fraudulent tax scheme.

Here are some of the more common scams towatch out for.

PhishingPhishing scams usually involve unsolicitedemails or fake websites that pose as legitimateIRS sites to convince you to provide personal orfinancial information. Once scam artists obtainthis information, they use it to commit identity orfinancial theft.

It is important to remember that the IRS willnever initiate contact with you by email torequest personal or financial information. Thisincludes any type of electronic communication,such as text messages and social media. If youget an email claiming to be from the IRS, don'trespond or click any of the links; insteadforward it to phishing@irs.gov.

Phone scamsBeware of callers claiming that they're from theIRS. They may be scam artists trying to stealyour money or identity. This type of scamtypically involves a call from someone claimingyou owe money to the IRS or that you'reentitled to a large refund. The calls may alsoshow up as coming from the IRS on your CallerID, be accompanied by fake emails that appearto be from the IRS, or involve follow-up callsfrom individuals saying they are from lawenforcement. Sometimes these callers maythreaten you with arrest, license revocation, oreven deportation.

If you think you might owe back taxes, contactthe IRS for assistance at irs.gov. If you don'towe taxes and believe you have been thetarget of a phone scam, you should contact theTreasury Inspector General and theFederal Trade Commission to report theincident.

Tax return preparer fraudDuring tax season, some individuals and scamartists pose as legitimate tax preparers, oftenpromising unreasonably large or inflatedrefunds. They try to take advantage ofunsuspecting taxpayers by committing refundfraud or identity theft. It is important to choose atax preparer carefully, since you are legallyresponsible for what's on your return, even if it'sprepared by someone else.

A legitimate tax preparer will generally ask forproof of your income and eligibility for creditsand deductions, sign the return as the preparer,enter the Preparer Tax Identification Number,and provide you with a copy of your return.

Fake charitiesScam artists sometimes pose as a charitableorganization in order to solicit donations fromunsuspecting donors. Be wary of charities withnames that are similar to more familiar ornationally known organizations, or thatsuddenly appear after a national disaster ortragedy. Before donating to a charity, makesure that it is legitimate. There are tools atirs.gov to assist you in checking out the statusof a charitable organization, or you can visitcharitynavigator.org to find more informationabout a charity.

Tax-related identity theftTax-related identity theft occurs when someoneuses your Social Security number to claim afraudulent tax refund. You may not even realizeyou've been the victim of identity theft until youfile your tax return and discover that a returnhas already been filed using your SocialSecurity number. Or the IRS may send you aletter indicating it has identified a suspiciousreturn using your Social Security number. If youbelieve you have been the victim of tax-relatedidentity theft, you should contact the IRSIdentity Protection Specialized Unit at800-908-4490 as soon as possible.

Stay one step aheadThe best way to avoid becoming the victim of atax scam is to stay one step ahead of the scamartists. Consider taking the followingprecautions to keep your personal and financialinformation private:

• Maintain strong passwords• Consider using two-step authentication• Keep an eye out for emails containing links or

asking for personal information• Avoid scam websites• Don't answer calls when you don't recognize

the phone number

Finally, if you are ever unsure whether you arethe victim of a scam, remember to trust yourinstincts. If something sounds questionable ortoo good to be true, it probably is.

It is important to remember thatthe IRS will never initiatecontact with you by email torequest personal or financialinformation. This includes anytype of electroniccommunication, such as textmessages and social media.

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Know Your Mutual FundsAlmost 100 million Americans, representingabout 44% of U.S. households, owned mutualfunds in 2018. Saving for retirement was theprimary goal for 73% of investors; other goalsincluded saving for college or a house, buildingan emergency fund, or providing currentincome.1

Mutual funds offer a convenient way toparticipate in a broad range of market activitythat would be difficult for most investors toachieve by purchasing individual securities.With almost 8,000 funds available on the U.S.market, you should be able to find appropriateinvestments to pursue your goals.2 However,it's important to periodically examine the mix offunds you hold.

If you are approaching retirement or alreadyretired, this may be a good time to assess therisk level and growth potential of your funds,along with any other investments in yourportfolio. Keep in mind that even though it isgenerally wise to reduce risk as you nearretirement, you may also need to pursuelong-term growth opportunities.

The following overview describes some basictypes of funds in rough order of risk, fromlowest to highest. Investments seeking toachieve higher returns also carry an increasedlevel of risk.

Money market funds invest in short-term debtinvestments such as commercial paper andcertificates of deposit and are typically used asa cash alternative. Although a money marketfund attempts to maintain a stable $1 shareprice, you can lose money by investing in sucha fund. Money market funds are neither insurednor guaranteed by the FDIC or any othergovernment agency.

Municipal bond funds generally offer incomethat is free of federal income tax and may befree of state income tax if the bonds in the fundwere issued from your state. Although interestincome from municipal bond funds may be taxexempt, any capital gains are subject to tax.Income for some investors may be subject tostate and local taxes and the federal alternativeminimum tax.

Income funds concentrate their portfolios onbonds, Treasury securities, and otherincome-oriented securities, and may alsoinclude stocks that have a history of payinghigh dividends.

Balanced funds, hybrid funds, and growthand income funds seek the middle groundbetween growth funds and income funds. They

include a mix of stocks and bonds and seek tocombine moderate growth potential withmodest income.

Growth funds invest in the stock of companieswith a high potential for appreciation but lowemphasis on income. They are more volatilethan many types of funds.

Global funds invest in a combination ofdomestic and foreign securities. Internationalfunds invest primarily in foreign stock and bondmarkets, sometimes in specific regions orcountries. There are increased risks associatedwith international investing, includingdifferences in financial reporting, currencyexchange risk, economic and political riskunique to a specific country, and greater shareprice volatility.

Sector funds invest almost exclusively in aparticular industry or sector of the economy.Although they offer greater appreciationpotential, the volatility and risk level are alsohigher because they are less diversified.

Aggressive growth funds aim for maximumgrowth. They typically distribute little income,have very high growth potential, tend to bemore volatile, and are considered to be veryhigh risk.

Bond funds (including funds that contain bothstocks and bonds) are subject to the interestrate, inflation, and credit risks associated withthe underlying bonds in the fund. As interestrates rise, bond prices typically fall, which canadversely affect a bond fund's performance.U.S. Treasury securities are guaranteed by thefederal government as to the timely payment ofprincipal and interest. Dividends are notguaranteed.

Asset allocation and diversification are methodsused to help manage investment risk; they donot guarantee a profit or protect againstinvestment loss. Mutual fund shares, whensold, may be worth more or less than theiroriginal cost.

Mutual funds are sold by prospectus. Pleaseconsider the investment objectives, risks,charges, and expenses carefully beforeinvesting. The prospectus, which contains thisand other information about the investmentcompany, can be obtained from your financialprofessional. Be sure to read the prospectuscarefully before deciding whether to invest.

1-2) Investment Company Institute, 2018

At the end of October 2018,there were 7,866 U.S. mutualfunds spread across thefollowing broad categories:

Domestic equity (3,144)

World equity (1,499)

Hybrid (709)

Taxable bond (1,573)

Municipal bond (560)

Taxable money market (297)

Tax-exempt money market(84)

Source: InvestmentCompany Institute, 2018

Page 3 of 4, see disclaimer on final page

Raymond James &Associates, Inc.Michael W. ArySenior Vice President,Investments710 S. Thornton Avenue, Ste. BDalton, GA 30720706-913-1967mike.ary@raymondjames.comhttps://www.raymondjames.com/mikeary/

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

This information was developed byBroadridge, an independent thirdparty. It is general in nature, is nota complete statement of allinformation necessary for makingan investment decision, and is nota recommendation or a solicitationto buy or sell any security.Investments and strategiesmentioned may not be suitable forall investors. Past performancemay not be indicative of futureresults. Raymond James &Associates, Inc. member New YorkStock Exchange/SIPC does notprovide advice on tax, legal ormortgage issues. These mattersshould be discussed with anappropriate professional.

The information contained withinthis commercial email has beenobtained from sources consideredreliable, but we do not guaranteethe foregoing material is accurateor complete.

Is a vehicle subscription service in your future?Automakers and start-upcompanies are betting thattoday's generation of driverswill embrace a new model oftemporary ownership called a

vehicle subscription service.

A vehicle subscription service offers analternative to buying or leasing. You don't haveto sign a long-term contract or commit to justone vehicle. Once you join, you typically pay anall-inclusive monthly or sometimes weekly feethat covers the cost of using the vehicle youchoose, including insurance, routinemaintenance, roadside assistance, and awarranty. You then have the option of swappingout your vehicle periodically, depending on theterms of your subscription.

For example, perhaps you've been temporarilytransferred to a new city and want afuel-efficient car for the six months you're livingthere. Maybe you need a second car onlyduring the summer when your child is homefrom college. Or you might want the flexibility todrive whichever vehicle suits your needs at thetime — a luxury sedan for day-to-day driving,then a minivan for a family trip. If your needschange, you can return your vehicle and get

another, or end your subscription. Plans vary,but many subscription services require only ashort one- to two-month minimum commitment,with the option to renew. Subscription servicesare often app-based, making it easy to find andswap vehicles, and your newest ride may bedelivered to you via a concierge service.

Of course, flexibility and convenience come at acost, which is often substantial, so if you areinterested in subscribing to your next vehicleyou'll need to carefully assess your options.Prices depend on the subscription service, thevehicle selected, and other factors such asmileage and extras. You may also be requiredto pay a sign-up fee.

Vehicle subscription services are evolving andare still not available everywhere. Manyservices are in the testing phase, and mosthave been launched primarily in majormetropolitan markets such as Los Angeles, SanFrancisco, and New York, with a few offered inother cities. But vehicle subscription servicesare gaining traction, increasing the likelihoodthat they will someday be available in mostareas.

How can you lower the costs of owning a vehicle?Vehicle expenses can take abig bite out of your budget.According to a AAA report, theaverage annual total cost ofowning and operating a new

vehicle in 2018 was $8,849. Fortunately, youmay be able to save money by reducing threecosts.

Depreciation: The loss of a vehicle's valueover time was the largest expense associatedwith buying a vehicle, according to the AAAreport. Depreciation accounts for almost 40% ofthe cost of owning a new vehicle — on average,$3,289. Some cars hold their value better thanothers, so it's important to consider resale valuebefore you buy. Because depreciation lessensover time, buying a used vehicle or keeping avehicle longer can help minimize the impact ofdepreciation.

Insurance: The average annual cost offull-coverage auto insurance was $1,189.Premiums are based on many factors, includingthe vehicle make and model, and your location.Some vehicles may cost substantially more toinsure because they are statistically more likelyto be damaged in a crash, stolen, or have highrepair costs. So when you're in the market for a

vehicle, find out how much the insurance willcost before you sign the paperwork.

You can often save money on your insurancepremium if you're willing to accept a higherdeductible. You may also want to review yourpolicy annually with your insurer to make sureyou're receiving all the discounts for which youare eligible, and have only the coverage youneed.

Maintenance and repairs: With an averageannual cost of $1,231, maintaining andrepairing your vehicle is a big line item expensein your budget. So before you buy or lease avehicle, talk to a trusted mechanic who isfamiliar with the cost of parts and general repairissues for the makes and models you'reconsidering, or look for reliability statisticsonline. Get written estimates before you haveany repairs completed, and shop around.Hourly labor rates and parts costs may varywidely. And keep up with regular maintenance.It can pay off in the long term, not only bypreventing costly repairs but by potentiallyincreasing your vehicle's resale value.

Source: AAA Your Driving Costs, 2018 Edition.Average costs are based on driving 15,000 milesannually.

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