Tag Archives: IRA

I am so outraged!

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The thought that because you worked hard, lived within your means, saved money for your retirement, and hired someone like myself to help manage your retirement savings is now something to be penalized for – outrages me. We live in a country where opportunity is there for the taking. We are free to pursue the professions we choose and help others along the way. Limiting how much you can accumulate in your retirement account just so more tax dollars can go to offset the deficit is just plain wrong.

Call your congressmen, call your Senators, find websites that are against this proposal and make your voice heard.

http://www.bloomberg.com/news/2013-04-05/obama-budget-calls-for-cap-on-romney-sized-iras.html

 

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

A taxing question.

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Q: My sister passed away and I have inherited her IRA – I am not 70.5 yrs. old yet. When do I have to take money out of her IRA?

A: As a non-spouse, you have to take a withdrawal not later than the year following the year she passed away. You can either completely liquidate the IRA, or take annual payments over your lifetime. Please keep in mind that everything that is paid out from her IRA will be taxable to you as ordinary income.

 

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

Plan your exit – the last chapter.

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To roll or not to roll, that is the question. Many people leave their 401k with their company when they retire vs. rolling it to an individual IRA; there are pros and cons to this approach.

In the past, 401k accounts have been cheaper. With the new regulations to disclose all fees, this may not be the case. If you roll your 401k into an IRA account, you will generally have much more investment freedom. If you have changed jobs throughout your working life, make sure to track down all of your old 401k accounts and consolidate them into a single IRA for easier accounting and reporting.

 

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

Strategies to lower your tax bill

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Unless Congress acts, your tax bill will be higher next year. Top income tax rates will go from 35% to 39.6%. On top of that, a piece of the health-care reform law goes into effect: For higher-income taxpayers, the provision means an additional 3.8% Medicare tax on investment income that most people are not aware of yet. That brings the highest marginal tax rate to about 43.4% before state and local taxes, if they apply to you. So what can you do?

One solution available to most of us is our retirement accounts. Many employees are only funding their 401k accounts to the company match. If you increase that by just 3%, you will lower your tax bill but make little or no difference in your spendable income.

Another solution is to take advantage of the tax rates we are under now and look into converting part of your Traditional IRA to a Roth IRA. You will pay tax on the amount that you convert but it will be at today’s lower tax rate vs. next years’ increased rates. Converting part of your Traditional IRA to a Roth may also help with tax management in the future. When calculating your Required Minimum Distribution, the Roth balances are not included.

A comprehensive review of your retirement accounts, cash flow, and taxes should be done annually. Contact your Certified Financial Planner Professional® today.

 

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

I am 55 yrs old and have lost my job. I need to use the money in my 401k to survive. What is the penalty for doing this?

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Anything you withdraw from your 401k will be fully taxable at your ordinary income tax rate plus a 10% penalty. You may be able to avoide the penalty under these circumstances:

If your plan allows you to take a loan

If you can replace the funds within 60 days

If you roll the 401k into an IRA then use Rule 72T to take the withdrawal.

Retirement Account questions.

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Q: I am unemployed. Is it better for me to make an IRA deposit with a bank or brokerage company?

A: It does not matter which you choose, but you must have earned income to make an IRA deposit.

Q: I was recently laid off and am not sure what options I have with my 401k.

A: You generally have 4 options: leave your 401k with your former employer, roll your 401k over to an IRA, roll your old 401k into your new, future employers’ 401k, or cash it out. All choices should be considered carefully.