Author Archives: Nancy Hecht

Another question about Required Minimum distributions.

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Q: If I make my 45yr. old son joint on my IRA can I stretch out the required distribution?

A: First off, it is an Individual Retirement Account, there can only be one owner. Your required minimum distributions are based on your age as the owner. The “stretch” provision for withdrawals refers to the required minimum distributions taken by a non-spousal beneficiary. This allows your son to stretch the withdrawals out over his life expectancy when he inherits your IRA.

disclosures:http://www.hechteffect.net/?page_id=31

A RMD (Required Minimum Distribution) Question

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Q: My Wife & I will both be 70.5 this year; can we take our combined RMD from my IRA versus taking some from both of our IRA accounts?
A: Oh if it that were only a choice, but sadly, no. Each taxpayer has to take their RMD from their own accounts. If you do not take the required withdrawal, you will pay a 50% under distribution penalty.

disclosures:http://www.hechteffect.net/?page_id=31

Kill the messenger.

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The following is real conversations with clients.

Recently I was called by the Daughter of an 80.5 yr. old Widow. She had an Index Annuity that was finally going to be past its 10yr. surrender charge next year. This annuity was sold to her after her Husband passed. She was getting a lot of calls from her agent telling her she needed to change it now to a new annuity. He told her it would not be a taxable event because they could just exchange it. In order for her to get the big bonus, she had to do it now. Reality is, when her current annuity matures past the surrender charge, she will be too old by the insurance company’s rule to buy a new one. Not only would she pay a 6% charge to surrender the current annuity, she would be locking herself into a new 7 yr. surrender time frame. She wants liquidity and safety. An annuity, in any form other than a 1yr fixed, would not give her liquidity.
This recommendation would not benefit the Widow, only the agent. I received a similar call last week from a 78yr. old woman who put $500,000 into an annuity with similar features as mentioned and feels this was the worst decision for her. The agent made it all sound so good. Now she feels her hands are tied. Not all representative that sell annuities are like this but this is a story I hear too often. Annuities can be a great addition to many investment portfolios but it is truly a “buyers beware” investment. Make sure that you totally understand all of the features and restrictions of an annuity, no matter how great an agent can make it sound.

disclosures:http://www.hechteffect.net/?page_id=31

What living in farm country can teach us about financial planning.

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I just spent four days in the farm country of Ohio visiting my Sister. Here is what living there can teach us about financial planning.
Planning is everything. Everything is an hour away by car. You do not go anywhere without a list. Just like your financial planning, you have to know what you will need and how long it has to last.
Make sure you have a nest egg. We talk about making sure you have enough in an emergency fund, this is the “emergency fund” planning I learned. Because everything is an hour away, you have to make sure the there is plenty of food in your freezer and pantry. You do not let your car run low on gas.
The early bird does catch the worm. I walked in the morning past huge corn and soybean fields. The farmers that planted early had large, healthy looking fields. If you take all of the time you have to prepare for your financial future, you will also have a large harvest.

disclosures:http://www.hechteffect.net/?page_id=31

Your benefits from completing the spending freeze challenge.

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Congratulations! You made it through your spending freeze challenge. Of course, I am patting you on the back early as two weeks have not passed yet.
Here are a few points that you may have realized after the freeze:
You have jump-started your savings. Did you realize how much money you spent on unnecessary stuff? Now it is in your bank account, shoring up your emergency fund.
You have built up your “anti impulse spending” muscles. Now you can really look at an item and decide if it is a need or a want. Once that money is spent, there is no getting it back. Keep these new muscles in good shape.
Hopefully, you have gotten your budget back on track. You have been able to live without a daily premium coffee or that extra lunch out. When you are not spending money on “stuff”, you tend to focus more on what is truly important.

Take this new knowledge of how and why you spend forward to a successful life of saving.

disclosures:http://www.hechteffect.net/?page_id=31

Will you take the spending freeze challenge?

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Can you stop spending for a two week period? That is the challenge. Today, I will tell you how to prepare for your challenge. Later, I will tell you the benefits you will reap.
First, you need to decide when you will start and where the money you will save will go. I hope you have an emergency fund set up – that is a great place to stash the cash you will save.
Second, you need to inventory your freezer and refrigerator. Stock up before the freeze. Fill up your car with gas and maybe get a 5 gallon gas can so you can stash some surplus gas.
Third, check your essentials. Medications and personal care items are very important to stock pile.
Now that you are prepared, no discretionary spending is allowed for your two week period. I realize that household bills will need to be paid; those are exempt from the challenge. Keep a diary of what you wanted to spend so you know exactly how much you now can add to your savings.
Good luck!

Disclosures:http://www.hechteffect.net/?page_id=31

Your dead ex-spouse is truly a deadbeat.

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You have been divorced for a long time and have moved on, or so you thought. Now that your ex has truly moved on, you find that creditors do not care what your divorce decree stated in regard to paying your pre-divorce debts.
In many states, whatever is acquired after the marriage and before the legal separation is treated as belonging to both spouses equally.
This situation is yet another reason to be thoughtful when accumulating debt. It may come back to you even after the headstone has been raised.

disclosures:http://www.hechteffect.net/?page_id=31

Can I combine retirement plans from multiple employers when I retire?

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The short answer is yes. It takes a bit of work to do this though. You would need to contact the H.R. department from your previous employers and get their Rollover paperwork. Often, you can find out who to contact online. You will want to set up a Rollover IRA account into which to transfer these funds. Many companies will just issue a check to your new IRA custodian and mail it to your home address. This set up of a Rollover IRA is a service that we provide to many of our clients when planning for retirement. It is usually much easier to manage your retirement cash flow when all of the retirement assets are in one account.

disclosures:http://www.hechteffect.net/?page_id=31

Probate me – please!

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Many people that I meet with for the first time feel happy that they have a will and have taken care of their beneficiaries. If your only estate plan is to have a will, you are, in my opinion, doing it all wrong. By only having a will as your estate plan, you are saying – probate my assets, charge me at least 3% for the honor, and while you are at it, tell the whole world what I have. I have a better solution for you.
Make sure that you have listed not just primary, but also contingent beneficiaries on your retirement plan and life insurance.
Any accounts that you have that are not retirement accounts can have a designation such as Pay on death, Transfer on death, or I.T.F. These designations will allow you to avoid probate.

disclosures:http://www.hechteffect.net/?page_id=31

Happy Birthday USA! Catch “On The Money” on Saturday!

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Enjoy your weekend
and be sure to tune in for “On The Money”
on Saturday at 9:00 a.m.
Nancy Hecht CFP® and Gary Abely CFP®
co-host this weekend and
they’ll be discussing . . .
• We always help our client plan for retirement – 5 tips to help reach financial independence.

• It’s just a cup of coffee – what’s the big deal?

Listener Question: If I convert part of my IRA to a ROTH, will that count as part of my Required Minimum Distribution?

Call or eMail
Your Questions:
407-290-0058 OR
1-800-328-5858
Nancy@FinancialGroup.com
Gary@FinancialGroup.com