Articles Tagged with IRAs

8.16.16The old adage is right—a second marriage is indeed the triumph of hope over experience. Add estate planning to keep that hope—and peace in the family—intact.

It’s a delicate balance to hold: preserving assets for children from a first marriage and—at the same time—ensuring that your new spouse will have the assets needed to maintain his or her life in comfort. Balancing the two often requires coming to terms with realistic expectations for all.

CNBC’s article, “Getting remarried? Protect your assets and your interests,” recommends looking ahead and addressing questions about your goals, how your existing family and new spouse will relate to one another when you're gone and who will be in charge of the money. The big issue that heirs of a remarrying couple need to worry about more than federal estate tax is the new spouse.

6.9.16The double nickel year has potential for allowing you to tap your 401(k) without an early withdrawal penalty, but you have to know exactly how it works to avoid problems.

There's one exception to the rule that you must be at least 59 ½ to tap your 401(k) without incurring a 10% early-withdrawal penalty, but you have to tread carefully. If it is the year you turn 55 or older and you leave your job, there's no penalty. You will still owe tax on the withdrawal—a $10,000 payout at a 25% tax rate will still cost you $2,500. There's no free lunch, even here. But, the good news is you don't get hit with a $1,000 early withdrawal penalty.

It doesn't matter how you separate from service. In fact, retiring, being laid-off or even termination will spare you the penalty. Provided you're 55 by the end of the year you leave the job, the rule applies, says the Kiplinger's article, "When You Can Tap a 401(k) Early With No Penalty."

5.23.16Privacy and a faster resolution to settling estates are just two good reasons to create an estate plan.

You really don't have to be a millionaire or famous to create an estate plan, as noted in an article appearing on the Forbes' website, "Prince and Estate Planning: What We Can Learn from the Late Musician's Financial Picture." All you have to do is make sure that you have six basic estate planning documents in place to protect your loved ones from additional stress and worry when you pass away.

Here are the six key documents you should have to protect your assets and your family in the event of your passing:

B&w couple pic 5.5.2016People think that Medicaid will solve all financial problems if they or a spouse will need expensive medical care late in life. It's not that simple.

Concerns about outliving assets or having all their wealth spent on nursing home care has led many Houstonians in different economic brackets to take steps to qualify for Medicaid as part of their estate planning. But Medicaid was not designed to be the first source for health care costs.

Remember that your income and assets have to be at a very low level to qualify for Medicaid. This program isn't a right or an entitlement—even if your tax dollars paid for it. Medicaid provides assistance for ongoing living needs and services provided by home care or, in advanced cases, at a nursing facility.

Old man on bench 5.4.2016Houston families with an Alzheimer's patient must address the issue of financial planning as well as care and treatment. A number of planning tools should be discussed once a diagnosis has been made.

Any family faced with helping a loved one who has been diagnosed with Alzheimer's disease has a number of challenges ahead. In The Wall Street Journal's "Voices: Consider Trusteed IRAs for Clients With Alzheimer's," the article suggests that frank discussions must begin to address a number of concerns for the present and the future. Issues include care and treatment, wishes for care when the person can no longer speak for themselves, determining who will manage finances, estate planning and how a spouse will be supported during the loved one's illness—however long it may last.

Many of those with an Alzheimer's diagnosis really are concerned with not becoming a financial or practical burden on their family. Loved ones can encourage them to see an elder law attorney to help them organize and designate their assets early, so that they will ensure appropriate distribution before they're not able to manage their money directly.

Wedding cake topperNaming a beneficiary for your IRA, 401(k) or any other retirement plan and then making sure that the name is right as you go through the many stages of life could be one of the most important financial decisions you make, according to The (Crystal Lake, IL) Northwest Herald in "Rectifying the retirement minefield."

Of course, if you want to give your retirement savings to your first husband, he won't mind. But your second husband might!

If you're married, you'll want to designate your spouse as the primary beneficiary. Federal law requires your surviving spouse to be the primary beneficiary in employer-sponsored retirement plans, like a 401(k), unless your spouse signs a written waiver letting you name someone else as the primary beneficiary. In most cases, spouses will name each other as the primary beneficiaries to their retirement plans. Those funds help maintain the lifestyle they've enjoyed in their marriage.

Piggy bankuilding a nest egg is an important goal for Americans, yet most Americans lag behind in their retirement planning goals.  Many families are still recovering from economic downturns, and saving is a struggle, even for people who are over 50 and know they should do more. There are certain tax breaks and, if you are lucky enough to work for a great company, employer contributions that can help grow your retirement savings in 2016.

US News explains how to take full advantage of the 401(k) and individual retirement account perks you're eligible for in 2016 in "How to Maximize Your Retirement Accounts in 2016."

Max out your 401(k). You can contribute up to $18,000 to your 401(k) plan in 2016, which means saving $1,500 per month. Income tax isn't due on this money until it is withdrawn from the account.

Money with watchIf you inherit a portfolio or a large amount of money, proceed with caution, according to "What to Do When You Get an Inheritance," in US News & World Report. Every situation is different, but a few basics need to be kept in mind for heirs who are thinking about investing their inheritance in stocks, bonds, hedge funds or any other investment vehicles.

First, get good information and consider assistance from an expert: speak with an experienced estate planning attorney, one who worked with those giving the inheritance. Heirs should find a CERTIFIED FINANCIAL PLANNER™ practitioner who works for a registered investment advisor with a fiduciary duty to their clients. They aren't commissioned salespeople.

If the inheritance involves a larger sum, it can be administered via a trust that needs to be funded properly due to tax ramifications and expenses.

5104095BD6The one thing that all 401(k) millionaires have in common, according to a Forbes' article "Nine Ways To Be A Millionaire In Retirement," it is saving at a much higher amount than others. Whatever your career path may be and whatever your earnings level is, start saving early.

While millennials often have a competing priority with paying student loan debt, it's still important to make sure some of your money is going into retirement.

Live like a college student. Even if you are making very little, you should "mind the gap" – that is, the gap between what you spend and what you earn. Make sure there is a gap and keep your expenses low. Try to live like a college student when you're earning your first salary. Maybe have Ramen noodles and hot dogs on at least some evenings.

Arm wrestling over moneySavvy individuals, estate planning lawyers and financial advisors are not averse to finding unintended benefits when Congress makes changes to laws regarding retirement accounts and Social Security payments. Unfortunately, when too many of these techniques are discovered and shared widely, the government sees revenue slipping away. Three of these loopholes have drawn the attention of various government agencies and may be changed in the near future.

A recent Reuters article, titled “3 Retirement Loopholes That Are Likely to Close,” discusses some of the loopholes that can be found, as an unintended result, due to changes in law.

Back-Door Roth IRA Conversions. Congress created this loophole by lifting income restrictions from conversions from a traditional IRA to a Roth IRA, but not placing such restrictions from the contributions to the accounts. As a result, those whose incomes are too high to put after-tax money directly into a Roth IRA so it can grow tax-free, instead are able to fund a traditional IRA with a non-deductible contribution then convert it to a Roth. Taxes are usually expected in a Roth conversion, but this work-around doesn’t cause much liability, the article explains, provided the contributor doesn’t have other money in an IRA.

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