Q: We thought we were done paying for college. Our child was accepted into a 1 year Post Baccalaureate program. Do we sell some investments or take an equity line to pay for this one year?
A: Look at your investments to see if you can match up some long term losses to long term gains so you can pull from that account with little or no tax. If that does not provide enough, an equity line right now would charge a relatively low rate and the interest may be deductible if you itemize.

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Stretching your IRA, that is. We all can name anyone we wish as a beneficiary to our IRA accounts. Under current law, a beneficiary may stretch mandatory withdrawals from an inherited IRA over their life time, thus, spreading out the tax liability over their lifetime.
In his 2016 budget, President Obama wants to do away with this withdrawal option. What he wants to revert to is the old law that stated a non-spousal beneficiary had to withdraw all assets from the IRA in 5 years or less. This forces the beneficiary to pay a much larger tax over a much shorter time period.

I like stretching; I hope this option stays as it is.

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I have a number of clients that want to save every dollar they can for their retirement. I don’t see anything wrong with this. Most of my clients also try to manage their tax bill to the best of what the law allows. These two desires often take the form of Nondeductible IRA contributions that are then converted to a Roth IRA. By combining these two practices, my clients are saving more for their retirement, then picking when they pay tax on those dollars.
When you convert Tradition IRA money, be it deductible or not, you pay tax on the amount you convert in that year. Currently, Roth accounts grow with tax free withdrawals. Along comes the Presidential budget for 2017. The President has proposed that Nondeductible IRA contributions be blocked from conversion to a Roth IRA. This is being called a “loophole closer.” This can be a profitable retirement savings plan, so if you are considering this tactic, do it now.

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Most people I know grew up playing Monopoly. We all learned valuable lessons about money playing that game. We learned how to count, save, and spend wisely. Having those dollars in your hand gave you some respect for the dollar, made the money tangible. No more – the game will now have debit cards.
My contention for a number of years has been that money is becoming less real. My Daughter and her peers do not see that value of having actual cash in their wallets. Money to them is a number on the screen and something that pops out of a magic box attached to a building. The idea of actually having to deposit a pay check is like speaking a foreign language. I am not against technology by any means. I am against the irresponsible behavior that the lack of respect for money brings.
As I beat the drum to teach respect for money, I may just be beating my head against an old game board.

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My husband and I are in our 70’s, retired and in good health. We have three grandchildren age 5 and under. We want to set up a trust for them which will hopefully help with their college tuition. Our plan is to contribute to it periodically as we are able. What would be the best way to set this trust up so the funds will grow – an investment account, money market account or savings account? Or is there something else we may not have considered?

I like to use the 529 College Savings accounts for this type of request. You can fund a 529 with a small amount and add as you wish. The account will be owned by one Grandparent with the other as the successor owner. This will allow for tax free withdrawals if the funds are used for qualified higher education costs. Another benefit is; if any of your Grandchildren want to apply for loans or grants, because you own the accounts, they do not have to be reported on financial statements. They are lucky Grandkids.

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Most of us know that at age 70.5 you have to start taking mandatory withdrawals from your qualified retirement accounts. But, what if you still want to make a Traditional IRA contribution in the year you turn 70.5? Can you still do this? Perhaps. Let me explain.
If you turn 70.5 on or after July 1st, you cannot make a Traditional IRA contribution. If your birthday is before that date, you can. Even if your birthday is after July 1st, you can still fund your 2015 Traditional IRA if you have not as of yet. If you still want to be able to save for your retirement and your birthday is after July 1st, you can still make a Roth IRA contribution.

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Opposites often attract but when it comes to saving money for the future, this may not be a good thing. Here are three things to look at to help you get on the same page.
Try to understand why he is not committed to saving.
How did your husband’s parents handle money? Bad modeling with saving and spending may have been passed down. Does your husband feel he is entitled because he works so hard? Is there an underlying problem such as illness or drugs? If you can get to the root of the problem in a constructive, nonjudgemental way, you can move past it.
Have shared savings goals.
Talk about what you would like to accomplish together. Once you have outlined some shared goals and dreams, you can work on a budget and savings plan together.
Make it automatic.
Any time you can take advantage of direct deposit or systematic deposits – do it. We take advantage of automatic withdrawal to your retirement plans; we can set up the same program into your savings account to accomplish your shared goals.

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Have you noticed more people at your gym this month? Many New Year’s resolutions include diet and exercise. Gyms love this because a lot of people take out memberships, then a few months in, stop showing up. This is a nice gain for the gym, not so much for the members. Resolutions are often about stopping a bad habit or making a change. I would like to challenge you to make a financial change.
I am going to give to two money resolutions for the New Year.
First, put yourself on a “money diet”. This term first became popular in the 1980’s. Here is how it works:
For one week each month, you do not spend money on something that is not an essential. Buy your groceries, gas, medicine, pay your normal bills, but that is it. The idea here is to gain – not lose.
Second, don’t spend your singles.
Every time you buy something with cash, then receive singles as change, your bank those singles. Here’s an example; you stop at the local coffee house and buy a drink. Your drink cost $3.50; you only have a $5 in your wallet. Of the $1.50 change, you can now spend only the .50. You will be surprised how fast the savings add up when you can’t spend your singles.

Resolve to save more this year – put yourself on a money diet.

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We hate dealing with taxes – there is no other word to use. If you want to avoid some problems, pay attention to these important tax dates.
January 19th: The IRS will begin accepting individual returns filed electronically.
February 1st: Companies have until 2/1/16 to get your 1099’s and W-2 forms in the mail. This date also applies to banks, investment firms, and any place providing non-employee compensation.
February 16th: Financial firms must mail out 1099-B, 1099-S, and 1099-Misc forms to investors.
April 18th: This is the tax submission deadline for your 2015 individual return, or if you need an extension, the date this must be submitted. Remember, if you are filing for an extension but owe tax, your must pay it by April 18, 2016.
October 17th: That absolute last day to file your 2015 return. You’ve had an extra 6 months, the time to file is now.

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