1.
ACCOUNTABLE
ADVICE
M a y / J u n e + 2 0 1 4
Profits and the Economy + PG2
A Tweak to the Rollover Rules + PG4
F i n a n c i a l P l a n n i n g
I n v e s t m e n t M a n a g e m e n t
Tr u s t & E s t a t e S e r v i c e s
P r i v a t e B a n k i n g
R e t i re m e n t P l a n S e r v i c e s
Estate Planning
for Your Digital Assets
B Y C A T H Y S C H O T T
In the past, important papers were
kept in a safe deposit box. But in today’s
world, many of the records once kept
locked up in a safe are now locked up in
the digital world. How would your agent
or personal representative gain access to
digital information they need to manage
your affairs or estate? Are these assets
personal, financial or business?
These online assets may include
websites (domain names), personal
and business email or similar accounts,
Facebook and Twitter accounts, other
social networks, blogs, creative works,
digital photographs, music, playlists,
videos, games, medical records, tax
returns, online bank accounts and bro-
ker accounts, eBay accounts or stores,
PayPal, Amazon accounts, online bill
paying, loyalty programs, entertain-
ment accounts, customer information
or client files. In addition, there is
the actual hardware, such as comput-
ers, backup drives, or other devices
and commercial digital storage sites.
Each account or computer may have
different usernames, passwords, and
security questions.
With current privacy laws, it is
understandable why many web com-
panies don’t share their clients’ infor-
mation with others. Some websites
may have policies that allow a per-
sonal representative access in the
event of incapacity or death, but many
expressly prohibit access or have no
stated policy in their user agreement.
Websites might prohibit assigning or
transferring accounts or allowing oth-
ers users to access your account, and
some even state that the account ter-
minates upon the clients death and
they have the right to permanently
delete all contents.
Creating an inventory of your digi-
tal assets is the first step of including
them in your estate plan. Selecting
your digital asset agent or person-
al representative and communicat-
ing where and how they access your
inventory is very important. The
information can be stored on a CD
or USB flash drive or other electronic
storage device that is password pro-
tected. If the digital assets are sub-
stantial in value, you could consider
creating a trust just for digital assets.
Keep in mind the skills the fiduciary
you name for the trust will need to
manage your digital assets.
Contact your advisor for more
information related to the digital asset
planning process.
Ask a Trust Officer + PG3

2.
April 2—In late March, the Commerce Department report-
ed that after-tax corporate profits were up 4.8% in the last
quarter of 2013. Profits as a share of our gross domestic product
(GDP) reached a record 11.1%, double the average of the 1990s.
This is welcome news for stock investors, as strong earnings
should boost prices and support additional dividend payouts.
According to The Wall Street Journal, analysts project that prof-
its for the S&P 500 will grow 7.4% this year, even though sales
are projected to increase by only 3.8%.
How can profits grow faster than sales? Cost control.
Companies have been slow to hire and slow to raise wages,
and capital expenditures have been relatively flat as well. Taxes
have been down at many companies as they use up losses from
the recession years to offset current earnings. Reportedly, the
aggregate effective corporate tax rate, including state and local
taxes, was 29% in 2012, compared to 32% in 2007.
Reluctance to hire translates to continued disappoint-
ment in the job market. The unemployment rate has fallen,
but that statistic masks the fact that the labor force par-
ticipation rate has fallen to levels not seen in decades. Fewer
people working means lower national income, reduced pros-
perity, less taxes paid, and shortfalls in tax collections.
Some observers have suggested we need to become accus-
tomed to a permanently lower rate of economic growth,
that the maximum potential GDP is not what it once was.
Productivity growth has slowed, technology has displaced
many jobs, and the baby boomers are leaving the work force.
Washington Post columnist Robert Samuelson reported on
respected economists who have cut their estimate of GDP
growth from 2.5% down to 2% annually in the intermediate
term. That’s well below the Congressional Budget Office’s
estimates, and far below the 3.2% annual growth that the
economy produced from 1991 to 2001.
A permanent reduction in GDP growth of this magnitude
would have enormous consequences for funding govern-
ment spending, as total wages, salaries and dividends would
fall short of projections by trillions of dollars over time. Tax
collections would fall short as well. Either taxes would have
to be raised, spending reduced, or deficits enlarged.
Profits and the Economy
Readings
Economic indicators as the quarter closed were generally
benign, showing gradual improvement. For example:
• The Conference Board’s index of consumer sentiment
rose to its highest level in six years.
• Personal income and spending increased by 0.3% in
February.
• Industrial production rose 0.6% in February.
• Inflation has been tame. The Producer Price Index fell
0.1% in February, while the Consumer Price Index rose
0.1% that month.
Comments from Chairwoman Yellen
In early March, investors thought that they heard Federal
Reserve Chairwoman Yellen suggest that interest rates might
be headed higher sooner than expected. Not at all, she clari-
fied by the end of the month. “While there has been steady
progress, there is also no doubt that the economy and the job
market are not back to normal health. The recovery still feels
like a recession to many Americans, and it also looks that
way in some economic statistics.” The comments came in a
speech in Chicago, her first outside Washington, DC, since
she took the top job at the Fed in February.
The Fed is tapering off its buying of long-term bonds,
but apparently expects to keep short-term rates near zero
through this year and into next year. That’s not great news for
savers, who’ve struggled to avoid principal invasions to make
ends meet. On the other hand, according to Chairwoman
Yellen, “By keeping interest rates low, we are trying to make
homes more affordable and revive the housing market. We
are trying to make it cheaper for businesses to build, expand
and hire. We are trying to lower the costs of buying a car that
can carry a worker to a new job and kids to school, and our
policies are also spurring the revival of the auto industry.”
Sounds just like that old-time religion.
(April 2014) © 2014 M.A. Co. All rights reserved.
2
Cathy started her career with First National Bank in 1967, and has been with First
National Wealth Management since 1984. She currently manages personal and
institutional accounts, providing comprehensive financial services to individuals,
business clients and Colorado public entities in the areas of retirement plans,
corporate trusts and investment accounts. She holds credentials as a Certified
Financial PlannerTM
and Certified Retirement Services Professional. Cathy is a gradu-
ate of the University of Washington Pacific Coast Banking School. Her community
involvement includes serving on the Community Foundation of Northern Colorado
Board of Directors and the Respite Care Board of Directors. She is a member of
Respite Care’s Sustainable Funding Committee and Finance Committee.
A B O U T C A T H Y S C H O T T

3.
A S K A T R U S T O F F I C E R :
S O C I A L N E T W O R K
I N V E S T I N G ?
DEAR SOCIAL: Maybe. The rules for advertising invest-
ment solicitations were overhauled in the Jumpstart Our
Business Startups Act of 2012. The goal was to make it easier
for young companies to raise capital. In theory, yes, com-
panies now can use social media in their efforts to attract
investment capital.
In practice, few companies have taken the plunge as yet.
The SEC remains concerned about fraud, and issued a 180-
page memo last year proposing additional requirements to
be met by such investor outreach. Perhaps most significantly,
these investments are not open to everyone. Investors need
to have $1 million in liquid assets or $200,000 in annual
income, and the companies seeking funding need to take
reasonable steps to learn these details about their investors.
Still, it is worth remembering, should you see an invest-
ment offering on social media, that it may not be just a scam
after all.
Do you have a question concerning wealth management or
trusts? Send your inquiry to wealthmanagement@fnni.com.
(April 2014) © 2014 M.A. Co. All rights reserved.
3
DEAR TRUST OFFICER:
I’ve heard that soon we’ll be seeing legitimate
investment offerings on LinkedIn and Facebook.
Is that true?
—SOCIAL NETWORK SKEPTIC

4.
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First National Bank of Omaha.
A Tweak to
the Rollover Rules
Taxpayers are allowed to make one tax-free IRA rollover
per year. IRS Publication 590 states that the rule applies per
IRA. An example will make this clear. Assume that a tax-
payer owns IRA 1 and IRA 2. He takes a distribution from
IRA 1 and rolls it into IRA 3. According to Publication 590,
the taxpayer is not permitted another tax-free rollover from
either IRA 1 or IRA 3 for one year. However, the taxpayer is
permitted to roll a distribution from IRA 2 into IRA 3.
As it turns out, Publication 590 is wrong. The Tax Court
recently decided that the rule applies on a per taxpayer basis,
not a per IRA basis. The issue came up when a couple tried
to tack a series of IRA rollovers together to create a six-
month loan for themselves. The husband withdrew $65,064
from his traditional IRA on April 14, 2008, and another
$65,064 from his rollover IRA on June 6, 2008. On June 10,
2008, $65,064 was returned to the traditional IRA. The wife
withdrew $65,064 from her IRA on July 31, 2008. On August
4, within 60 days of the husband’s June 6 withdrawal, the
$65,064 was redeposited in the rollover IRA. The wife made
a partial redeposit of $40,000 to her IRA on September 30.
The couple treated all of these transactions as nontaxable
rollovers, and they reported no taxable IRA distributions.
The plan failed on several fronts, according to the Tax
Court. Although the couple assumed that the rollover restric-
tions apply on a per account basis, instead they apply per tax-
payer. The tax code is not ambiguous on the question. So only
the husband’s first rollover was tax free; the second was not.
The wife is entitled to her own rollover, but here the mistake
was more prosaic. One might assume that September 30 is
within 60 days of July 31, but it is not. In fact, that is the 61st
day, so the wife’s partial redeposit did not reduce the taxes on
her withdrawal either. These were premature distributions,
subject to the 10% penalty tax. Failure to
report the distributions as taxable led to a sig-
nificant understatement of tax liability, triggering
another 20% penalty. All in all, perhaps the “short-term
loan” from the IRAs wasn’t such a good idea.
IRS response
The taxpayers in this case did not assert that they had
relied upon Publication 590 or upon the Proposed IRS
Regulations that are consistent with it. Their case would
have been stronger had they made that point, but it might
have made little difference. The language of IRS Publications
for the public is not binding upon the tax agency in litiga-
tion. The words of the statute control, and the Tax Court
found those words to be unambiguous. Still, it seems rather
harsh for the couple to pay such large penalties when they
interpreted the Tax Code the same way that the IRS profes-
sionals did.
The IRS acknowledged in a recent announcement the
error in Publication 590 and in the Regulations. Changes will
be made, consistent with the Court’s ruling. However, the
changes won’t take effect until 2015. The comments that the
IRS received indicated that IRA trustees will have to change
their procedures and processing, and these changes will take
time to implement.
Taxpayers do have a better alternative for consolidating
several IRAs into one. A trustee-to-trustee transfer is not
considered a “rollover,” even though it accomplishes the same
thing. The 60-day rule and the once-a-year rule only are trig-
gered if the IRA owner receives a check as part of the process.
(April 2014) © 2014 M.A. Co. All rights reserved.
(May, 2014) © 2013 M.A. Co. All rights reserved.
The general information in this publication is not intended to be nor should it be treated as tax, legal or accounting advice.
Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek
advice from an independent tax advisor based on their particular circumstances before acting on any information presented.
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