Articles Posted in Financial Planning

10.18.19An IRA is one of the most popular ways to save for retirement. The possibility, however small, does exist that you will pass before using the entire IRA. How do you decide who to leave your IRA to?

In addition to leaving assets, including IRAs and 401(k)s, to heirs, you can also leave assets to a trust. When you first open an IRA, you are asked to designate a beneficiary. However, over time you may find yourself wanting to change that designation. You may also be doing sophisticated estate planning that involves having a trust as the beneficiary for your IRA.

KTVA.com’s recent article, “How to Name a Trust as Beneficiary of an IRA,” discusses some of the important elements of naming a trust as an IRA beneficiary. Naming a trust as a beneficiary requires careful planning, so work with an experienced estate planning attorney.

3.12.18You’d think no one would want to turn down free money. Yet that’s exactly what many working Americans do!

One out of five Americans—20%—don’t take advantage of a terrific benefit: employee sponsored retirement savings accounts that include an employer match of some and sometimes all the employee’s contributions. Most workers do contribute more than enough to enjoy the benefits of their employer’s match, but what’s up with those 20%?

USA Today recently ran an article, “1 in 5 Americans are making a terrible 401(k) mistake” that says this may be one of the worst retirement mistakes you can make. While it may not look like a lot of money to ignore right now, you’d be surprised at the difference it can make when you retire.

10.16.17A large percentage of Americans require assisted living care at some point during their senior years. Their understanding of how that gets paid for is way off base. It’s a hard lesson to learn.

 Approximately one-third of Americans (34%) thought that Medicare would cover their nursing home costs, as reported in a survey from the Associated Press-NORC Center for Public Affairs Research. Another third, 27%, may have been a little smarter to say that they weren’t sure.

That’s not true, says WRAL’s recent post, “Expect Medicare to cover assisted living? Think again.” These results may correlate with the fact that only 37% of Americans think they’ll need any care in their later years, but in reality, about 70% will require this care.

8.4.17New regulations from the Department of Labor may come into play for Americans deciding which type of account is best for their retirement savings.

There are significant differences between 401(k)s and IRAs, and as reported in a recent post on wjbf.com, “Advantages and disadvantages to a 401k and an IRA,” a number of new regulations from the Department of Labor makes this a good time to review the pros and cons of these popular retirement savings plans.

401(k): A 401(k) can potentially be less expensive than other investment vehicles, due to the number of participants. Many also have a loan provision for access to your principal, if you need it in an emergency. If you retire early, qualified plans may have an age 55 withdrawal privilege that gets you around the 10% withdrawal excise tax provision.  However, if you’re still working, you may be able to push back your required minimum distribution (RMD), if you’re over age 70 and still participating in the plan. You’ll also have creditor protection in the typical qualified plans. Those are some of the general positives.

6.23.17Blending a family is not an easy task, but doing so successfully can create a new and strong family unit. Among the challenges are how to blend finances.

Blended families are no longer limited to television sitcoms. The Pew Research Center reports that 41% of all Americans have at least one step-relative of one kind or another. As many as 1,300 new stepfamilies or blended families are created daily, according to the Stepfamily Foundation. But blending families includes decisions about finances, and that includes estate planning issues.

The Miami (OK) New-Record’s recent article, “4 tips to resolve financial concerns in stepfamilies,” provides some tips and answers for issues within stepfamilies.

5.17.17With many tech companies, universities and businesses, North Carolina has become home to many resident aliens who contribute greatly to the state’s growth. Estate planning requires special knowledge of non-citizen tax rules.

More than $1 billion in annual foreign direct investment gives North Carolina’s private sector employment a huge boost, as reported in Trust Advisor’s recent article, Foreign Spouses Need Strong Trust Planning.” That includes hundreds of thousands of workers, individuals who are not U.S. citizens but who establish residence here.

They’re known as “resident aliens” under U.S. tax law. There are also nonresident, non-U.S. citizens (“nonresident aliens”) who will invest in real and personal property situated in the state. This can include a wide variety of real and personal property, from vacation homes to ownership interests in a holding or operating company.

9.9.16If you are working after 70 ½, there are still ways to save money tax-free.

Wage earners are not permitted to put money into a traditional IRA in the year they turn 70 ½ according to the Kiplinger article, “Tax-Smart Ways to Save When You're Too Old for a Traditional IRA.” But you would still be able to contribute to a Roth IRA, as long as your income in 2016 is less than $132,000 if single or $194,000 if married and file taxes jointly. In addition to the money growing tax-free in the Roth IRA with no time limit, you don’t have to take any RMDs (required minimum distributions).

You can contribute up to the amount you earned for the year (your net income from self-employment), with a maximum of $6,500—that’s $5,500 for everyone under age 50, plus $1,000 for people age 50 and older. If your earnings are well over the $6,500 maximum, you can just contribute that amount. However, if your earnings are near or under the maximum, you’ll need to know what is considered compensation and how to calculate your allowed contribution.

6.27.16If you are old enough to drive, work a job and have a bank account, you need to have an estate plan. It’s part of being a responsible adult.

Leaving adolescence behind means a life that includes responsibility for yourself and for those you love. That has traditionally included basics like a paycheck, a bank account and life insurance. But today, we also include an estate plan, which The Huffington Post says in “Why Estate Planning Makes Sense at Any Age” is just as important when you are 20 as it is when you are 64.

It should be noted that an estate plan is essential no matter what your financial situation or age.

5.17.16Financial planning needs to be part of the equation when doing all of the work involved in bringing a new family member into your lives.

The cost of adoption can start at a few hundred dollars or it can easily exceed $40,000, according to the U.S. Department of Health and Human Services. There are many different ways of adopting a child into your home, but however your adoption occurs, you need to do some financial planning.

Biz Times' recent article, "Getting your finances ready for adoption," says that in order to get your finances ready for adoption, you have to do your homework and be certain the price and processing work of adoption won't wipe out your plans for essential financial goals like retirement, saving for your future child's education, and higher daily living expenses with a new family. Begin with these tips:

5.12.2016It is not easy to be a member of a military family. They face many challenges that civilians do not, and—all too often—they do not receive the support in two critical areas that could make a difference.

Risks for Houston military families include accidents during training, battlefield injury and the stress of frequent moves. Service members have a far greater than average chance of becoming disabled or dying prematurely. This makes it especially important for military families to have access to financial and estate planning advice.

The Wall Street Journal article, "How to Serve Military Families," says that in many instances military spouses are young and financially immature. Military families don't settle in one place for very long, so a nonmilitary spouse may have trouble finding a steady job that would provide a second income and a retirement plan. In that situation, if something happens to the service member, and benefits are paid out, they need to be able to access them immediately. It's more likely that young military families will need help getting these estate documents in order and updating their beneficiary designations.

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