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Jill on Money: Medicaid, tax deadline, stocks vs. funds

Sat, 14 Apr 2012 16:00:12 +0000

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Larry from California bolted from an insurance agent, only to find a commission-based broker that intends to charge him a stiff 3.5 percent to manage two IRA accounts, valued at $90,000 each. what are his alternatives? Plenty! I often talk about an excellent organization called the National Association of Personal Financial Advisors (NAPFA.org), which is a good resource to find qualified advice-givers.

Tess may also want to check out NAPFA, since she asked about buying stocks to boost her retirement nest egg. I think she meant individual stocks, which I am dead-set against. the problem is individual stocks is that most people don’t know what the heck they are doing! and if actively managed mutual funds, which are filled with lots of well-paid analysts, can’t beat the indexes, why should we expect that mere mortals like us could?

According to research, over the 23 years ending in 2009, actively managed funds trailed their benchmarks by an average of one percentage point a year AND another report from S&P found that most actively managed funds waged a losing battle over the five years through Dec. 31, 2010.

Richard from Washington sold his home and has been renting for four years. should he continue to rent or is it time to buy? Meanwhile, Cathy and her husband are considering spending a chunk of their ample retirement funds to build a new home – can they afford to do so?

When I receive an angry listener e-mail that takes issue with something that I said on a previous show, I invite the e-mailer to come on the program to argue his or her point. I find it especially upsetting when someone uses inflammatory language, but then doesn’t have the guts to back it up with a conversation. That was the situation with Tom from Seattle, who was upset about my conversation with Lenore, CA about how her 86-year old mother might (or might not) qualify for Medicaid. I thought I provided a measured response, but Tom really went after me, which is why I devoted the 4th segment of hour 1 to Tom–I hope he was listening!

Throughout the show, I sprinkled in some last minute tax tips. If you need to get going, check out this quick TV segment:

Here are some tax resources:

– Tax tips for late filers

– Form 9465, Installment Agreement Request

– Form 1040-V, Payment Voucher

– Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return

– Official Payments Corporation

– Link2Gov

– PayUSATax

Maggie and her husband are just starting out, but they’re well on their way to completing one of their big goals: paying down student debt. with loans at 7.9 and 6.8 percent, its hard to argue for doing anything but locking in those kind of after-tax returns!

Peter brought up a topic “pension maximization,” which is a strategy for choosing a pension payout option alongside the purchase of a life insurance policy. While it can be beneficial to many, Peter would be wise to get a second opinion before making this decision.

Finally, both Stefanie and Linda have run into some financial problems. sometimes, the financial and the legal intersect, so I recommended that each of them talk to a lawyer for help.

Here are web sites and resources mentioned in this week’s show:

– Jill’s Blog

– How to Choose a Financial Advisor: 10 questions

– NAPFA: National Association of Personal Financial Advisors (fee-only advisors)

– Long-term Care – US government web site

– Long term care conundrum

– NYT Rent vs. Buy Calculator

– National Foundation for Credit Counseling

– Financial documents: what to shred, what to keep

– Estate Planning: the Documents you Need

thanks to everyone who participated and to mark, the BEST producer in the world and our new intern, Sehar. If you have a financial question, there are lots of ways to contact us:

Call 855-411-JILL and we’ll schedule time to get you on the show LIVE

Send an email: askjill@moneywatch.com

Tweet me: @jillonmoney

Contributing to more than one IRA

Sat, 21 Jan 2012 17:00:18 +0000

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You happen to be approaching your pension or have arrived. what do you need to do with all individuals contributions you as well as your employer have produced in your 401(k)? do you need to do a 401k rollover? you essentially have two possibilities. it is possible to maintain it aided by the employer or decide for that 401k rollover. But very first, contemplate some with the ramifications on the 401k rollover. Less than an IRA, it is possible to make investments your proceeds in a assortment of alternatives. it puts you solidly in handle of one’s expense. nevertheless, funds that can come out of an IRA is taxed at unusual salary tax premiums which is often as large as 35% instead of in the reduce capital gains prices.

Therefore you will pay out an additional 10% penalty tax for using distributions just before you turn 59½, except you qualify for your hardship withdrawal or other exception. or, you’ll be able to forego the 401k rollover and abandon your retirement life funds together with your firm and bring out your yearly total and shell out tax on it. But unless of course you will be fifty five or older, you will compensate a penalty on what you choose too. But there may be a different way which could be advantageous in your own situation. All details taken from IRS Publication 575 pertaining to 401k rollovers and internet unrealized appreciation. it utilizes each these possibilities, but that has a tax gain if you might have a good deal within your company’s commodity in your 401(k) along with other contributions. if so, you can carry gain of paying out the reduce money gains fee on the internet unrealized appreciation (NUA) of that stock. to try and do this, you should split the 401(k) into an organization stock element and almost everything else. Now carry the ‘anything else’ component and do your 401k rollover. have your company transfer that funds directly with your IRA – instead of for you very first. if you’ve got the company spend it to you, 20% of it will likely be withheld for tax purposes. after which if you want to preserve a no tax transfer, you will must bodily finish the 401k rollover within 60 days and contain that 20% withheld volume, but now paid out out of your respective pocket. it is possible to get that 20% that was withheld for Uncle Sam whenever you do your taxes for that season.

Certainly, that’s the challenging technique to consummate the 401k IRA roll over. Now with all the aspect in the 401(k) that may be all firm stock, you are able to consider all of it being a lump sum distribution within just that tax season. on the quantity initially invested in people shares, you will compensate normal income tax currently. But after, you may spend tax around the unrealized appreciation, however it will be in the cash gains charge (presently 15% federal).

Tagged as: 401 k, assortment, hardship withdrawal, proceeds, salary

Mistake in converting 401k to IRA

IRA Step 4: Fund Your IRA

Thu, 06 Jan 2011 11:00:07 +0000

Now that you have opened an IRA, you should start funding it. Read here to learn more.

IRA Step 4: Fund Your IRA

THE SAVINGS GAME: Good retirements depend on long-term money-management

Wed, 15 Dec 2010 03:00:17 +0000

It’s time for my annual surefire predictions for the New Year. As usual, I won’t waste your time predicting what the stock market will do, since nobody knows. Instead, I’ll concentrate on predictions you can do something about:

Saving `solutions’ sought

with millions of baby boomers lacking the means to retire, we’ll see a growing national debate on how to encourage if not force

Americans to save, along with calls to simplify the tortuous maze of workplace and individual retirement plans.

But you don’t need to wait. If you’re not sure if it’s better to save in a 401(k) plan or an IRA, for example, just pick one — or better yet, both.

Don’t use the excuse that markets are treacherous not to save. You can pick stable investments rather than stocks.

And don’t agonize so much that you become paralyzed. If you can’t decide between paying down debt or adding to your savings, do a little bit of both. But do something.

Fuming over fees

Despite threats of additional government regulation — or maybe because regulations have slowed profits — banks will continue to increase fees, drawing ire from consumer groups.

Whether these fees are justified goes beyond the scope of this column. I just want consumers to be smart as well as irate.

Consider: An annual survey by Bankrate.com, a consumer education website, found that average ATM fees jumped 5 percent to an all-time high

of $2.33 in 2010, and average overdraft fees increased 3 percent to a record $30.47.

“Consumers can find themselves wasting several hundred dollars a year by not taking simple steps to avoid those fees,” said Greg McBride, senior financial analyst for Bankrate.com. Among those steps are keeping track of their bank balances to avoid overdrafts and staying away from out-of-network ATMs, which charge $1.41 more per transaction on average.

Bubble trouble?

Just as investors piled into tech stocks in late 1999 and early 2000, and went into hock to flip condos in 2005-2006, they will flock to whatever investment is “hot” in 2011, increasing the risk of getting burned. through the years, this self-destructing investor behavior has never changed.

I don’t know whether we’ll have any “bubble” burst in 2011, and if so, where. I do know that with interest rates near historic lows, long-term bond mutual funds pose particular danger now.

That’s because interest rates can rise much more than they have room to fall, and bond prices go down when rates rise, with longer-term bonds falling the most. Most Americans are not aware of this inverse relationship between bond prices and yields, according to numerous surveys.

A better strategy: put together, and periodically rebalance, a diversified portfolio of stocks and bonds suitable to your goals and risk tolerance.

It’s time to say goodbye

After writing this weekly column for 20 years, I will leave you with a final thought next week and “fully” retire by the end of the year.

This is a natural progression from my decision to retire from full-time work in 2000 at age 55 and write this column from home. Doing so cut my pay but gave me more time for family, hobbies and travel. Having turned 65, I want to devote still more time to newly discovered passions, including playing and writing music and learning about art and other fields. That’s why I saved, and why you should, too, to be able to fulfill your passions and dreams.

Send questions or comments to Humberto Cruz or c/o Tribune Media Services, 2225 Kenmore Ave., Buffalo, NY. 14207. Personal replies are not possible.

Now that you have opened an IRA, you should start funding it. Read here to learn more.

IRA Step 4: Fund Your IRA

Gold IRA and Gold 401K | tianyutrade.com

Thu, 18 Nov 2010 01:00:12 +0000

Generally, The US Government allows anyone under age 70 1/2 who earns income from employment, including self-employment, to make yearly contributions to an IRA as a “gold bullion IRA. a gold IRA is a smart investment decision that can offset loose from the stock market. There are ways in which IRA gold can be invested depending on each individual’s preference. It can be added as paper representation of gold, mutual shares, mining stocks or annuities. What most people seems to be unaware is that even physical gold can be used for investment in the IRA. With the price of gold rising sky high lately, this method has caught on and created a new wave of interest around.

For the beginner investor in precious metals, an obvious question is “Can I buy gold for retirement for an IRA?” And the answer is yes. Not only create a new IRA, you can also transfer contributions from another IRA or rollover a gold 401k to your new IRA. New IRAs can only be funded with cash or cash equivalents, for example money market funds or treasury bills. The IRA then acquires the investment. Transfers and rollovers between existing IRAs and other retirement accounts can be of any asset class. Generally, you can only rollover funds from your 401k after you’ve left the employer funding your 401k gold. To be sure of the requirements of gold IRA transfer, just contact your fund manager .

The best part of a gold IRA focus is that gold is guaranteed to hold most of its value. while it will always rise and fall in accordance with various factors at play in the marketplace, the fact is that gold also has a certain range below which it can be expected not to fall. that makes it far safer than the average stock purchase, while still allowing room for ample growth when gold prices rise. a gold-backed IRA account is therefore one of the best and most secure forms of retirement planning that people can use.

Gold IRA and Gold 401K | tianyutrade.com

Reasons to Rollover Your 401k to IRA | 401k Rollover

Fri, 05 Nov 2010 22:00:10 +0000

Image : http://www.flickr.com

When you are in a job transition, it’s important that you rollover your 401k. otherwise you may be charged by your former employer for maintaining your account when you no longer work there.

But there are some options for 401k rollover when it comes to the destination. you don’t have to move your old 401k account to a new 401k account. instead, you can choose to convert it to IRA.

Why should someone choose to convert a 401k account to IRA?

First of all, with IRA you have more options for investing. if you learn a lot about investing and want to have more control on how your retirement fund is invested then IRA is good for you. With IRA, you have the freedom to choose the investment instrument that best matches your situation and preferences. On the other hand, with 401k you have limited options and you may not be able to find what you want.

Second, there are increasingly more employers nowadays who no longer offer employer match. Employer match is arguably the biggest reason why you should choose 401k. so if your employer doesn’t offer it you might not have enough reason to use 401k.

In case you choose to rollover your 401k to IRA, there are two kinds of IRA you can choose: traditional IRA and Roth IRA. you can choose any of them for your retirement fund. the advantage of traditional IRA is your contributions are tax deductible which is not the case with Roth IRA. On the other hand, the benefits of Roth IRA is the distributions are not taxed. so after growing your retirement fund for years you can enjoy the results without tax burden.

Which one you choose is up to you. Find more information about them, look at your situation and preferences, and pick the one that’s best for you.

Alex writes about retirement planning at 401k Rollover How To. Read his article on 401k rollover to IRA.

Tags: Reasons, Rollover

This entry was posted on Monday, October 18th, 2010 at 9:15 pm and is filed under 401K Rollover. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

Reasons to Rollover Your 401k to IRA | 401k Rollover

What is the procedure to use my 401k funds to pay for my college expenses ?

Sat, 23 Oct 2010 04:00:16 +0000

chemist asked: I am planning to work in my current position for two years and then go to school for a full time MBA graduate degree. can I contribute to my company’s 401k plan now and then withdraw the amount after 2 years to fund my college expenses without being subjected to the additional 10% penalty ? for this to happen, do I have to roll over the 401k savings to an IRA first, and then make the withdrawal for college expenses ? are there any expenses involved in this process ?
Question posted courtesy of: Pauline

What is the procedure to use my 401k funds to pay for my college expenses ?