Whether you celebrate Passover or Easter, I hope you have a solemn and happy holiday weekend.

For the second time in a year, I have received a call from a client stating that
they want to liquidate all of their accounts and move the assets to long term annuities. This does not happen often – in 32 year in business, you come to expect to lose a client or two, but these cases were different. Both clients are married and in their late 70’s or early 80’s, one member in each couple has been diagnosed with dementia. Each couple has more than one child listed as their contingent beneficiaries. Here is where it becomes messy.
In each case, a child that sees themselves as not being as lucky or successful as their siblings steps in to take over. These children, all adults, have convinced their parent that they can no longer make sound decisions for themselves and must allow them to take over. In each case, the movement of the assets have been to a place that offers less liquidity, more expense, and most important to this child, sole contingent beneficiary status.
The couples in these cases had listed all of their children as equal contingent beneficiary on their account; now all of the other siblings have been cut out and may not even know this. Confidentiality and fiduciary responsibilities only allow me to do little or nothing to notify the other siblings. It breaks my heart to see this happen more and more.
Families need to have open communications frequently to make sure that everyone is on the same page. These are the things that tear families apart forever.

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As you know, at age 70.5 you have to start withdrawing from your retirement accounts. We all have the choice to defer the first withdrawal. If you defer, you have to take that first withdrawal out by no later than April 1st of the following year. This is a mere 9 days away. If you miss this date you will pay a 50% under-distribution penalty. Please remember that you will also have to take another distribution for this year too.

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Q: Sadly, our Mother passed and there are 4 of us kids listed as equal beneficiaries. My sisters want to take their ¼ share in cash. Do I have to take my portion in cash also?

A: No, you do not. If you wish to open an Inherited IRA, you may do so. Each beneficiary may do as they wish with their own inherited portion.

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‘Tis the season for tax scams! I received a call from Joseph Smith, as have many other tax payers this year. Joseph had a very heavy accent and not good command of the English language. Needless to say, he does not work for the IRS. The IRS does not call people at home, they send registered letters. If you get one of these phone calls, here is what you need to do:
If you get an unsolicited email that seems to be from the IRS or a related agency, such as the Electronic Federal Tax Payment System (EFTPS), don’t reply, don’t open attachments and don’t click on links. Doing so can enable scammers to collect your personal information or infect your computer with malicious code.
Instead, report the phishing email by sending it to phishing@irs.gov.

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Many of my clients start serious retirement planning around the age of 57, with plans to work about 10 years beyond that age. But will you control the choice? Will you be forced to retire earlier than you have planned? Did either you or your partner fall ill and have to leave the work force? These are topics we worry about, maybe even talk about, but generally do not plan for. Beefing up your skills at your job and maybe even your muscles can help in these two examples, but you have to take a good hard look at your income and expenses to be able to overcome the choice of when to quit work being made for you.

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That is the average number of years we are living as retirees. As many as 43% of current retirees think they can pull 10% a year from their retirement accounts annually. That is a great plan only if you know you will live less than 10 years into retirement. If your family history dictates a longer life than that, you might want to check out your son’s guest room if this is your withdrawal plan. You need to look at a lower withdrawal annually so you do not outlive your retirement nest egg.
Another notion that has not proven to be correct is that you will spend less in retirement. When I am running a retirement plan for my clients, I look at their current living expenses and add 3% annually for inflation. I do not cut their expenses back. After 32 yrs. in business, I have learned that retirees generally do not spend less than in their working years.

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I have the worst handwriting ever. One main reason my office got software to fill in applications is due to my poor printing. I have resorted to typing as much as possible when I have to correspond, especially with the US Treasury Department. I no longer do my taxes by hand – neither should you.
By typing my return, my name is easy to read and clearly matches my social security number.
Like my name, my address is now easy to read. Both of these challenges cause tax returns to be booted back to the taxpayer.
If you are typing in the information on your tax return, the opportunity for math errors decreases. One tends to double check numbers and punch the keys slower when typing vs. doing long math by hand.

I do sign actually sign my tax return but this is the only place I do not type. Tax returns can be scary things to complete – common errors from bad writing should not add to the drama.

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All of your working life you have been told to save for your retirement. You have taken advantage of your corporate plan, and IRA, a Roth IRA, and any other retirement savings plan that has come your way. You have also done all of this under the appropriate tax laws now and in the past. Well, Uncle Sam thinks you have now done too much. Here are some proposals directed towards retirement savings:
Cap retirement account savings. Granted, the cap is large, it can always be lowered once you open that door. The proposal is to cap accounts at $3.4 million through either contributions or growth of the accounts.
Eliminate the ability to do a Roth rollover. Currently, if your AGI is too high, you cannot contribute to a Roth IRA. You can rollover a Traditional IRA to a Roth, manage when you pay the tax through the rollover, and then allow the funds to grow with Tax-free withdrawals. This would be eliminated under the current proposal.

Eliminate the Stretch provision for IRA accounts. Currently, when one inherits an IRA from someone other than their spouse, you can choose to cash the account out at once or tax payments over your lifetime. Stretching out the payments also stretches out the tax you owe, not good in the eyes of the government.

Pay attention to these proposals. They can have a great impact on your retirement planning.

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Money management between loved ones does not always go smoothly. Here are a couple of money myths that often cause problems between loved ones that, hopefully, you can avoid.

He who makes more – knows more.
Earnings are not a measure of financial smarts. Taking time to learn about investing plus some plain old common sense often makes for the better investor. Often, the partner with better intuitive skills, not the higher wage earner, has a better BS detector when making investment decisions.
You have to always agree.
Sometimes, a different point of view is better. Disagreement leads to discussions- not just arguments. That can help flesh out an investment decision and may lead to a totally different, yet more successful, investment path in the end.

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