“I have a 401(k) at work that’s not doing anything for me. I don’t know what to do with it. I would like to retire some day before I die.”
You do not have to suffer with a poorly performing 401(k). Work with a financial advisor who can review your investment options and advise you on the ones best suited to you and your retirement. If you are over age 55 you may even be able to roll your funds into an IRA and take even more control over the investments.
“We both just turned 70. We don’t have to take RMDs from our IRAs. We heard you talk about Qualified Charitable Distributions (QCDs) on your radio show. You said we could send our RMDs directly to our church and not pay income taxes. Do we have to wait until we turn 72?”
No. The QCD rules allow taxpayers who are age 70 and above to send as much as $100,000 a year directly from their IRAs to their church (or other qualified charities) without paying income or having their Medicare premiums affected. And you still get your full standard deduction. This could end up being a significant tax savings to you.
“Does my IRA need to be included in my will?”
No. In fact, in nearly all cases, the best way to pass your IRA is by designating the people you wish to receive the funds as beneficiaries of your IRA. As named beneficiaries they receive the funds without going through probate. This saves time and often expense. It also gives your beneficiaries some nice options for what they wish to do when they receive these funds. You need to pay attention to your beneficiary options on IRAs, 401(k)s, life insurance policies, annuities, and other assets. See your financial advisor to insure these work well with your estate planning goals.
“I’m at least 18 years from retirement. Should I be working with a financial advisor now or would they think it was a waste of their time until I get closer?”
Start today. Please don’t confuse investment advisors with financial advisors. Investment advisors are only interested in taking charge of your investments. They want you to show up on their doors the day you retire and hand them a big check to manage. Quality financial advisors work with you on many parts of your financial life – investments, income taxes, estate planning, and many more. Financial advisors are very interested in assisting you with these issues as early as they can. They can assist you in making important decisions long before your last day of work. If you wish a referral to one of our More than Money advisors, all you need do is ask.
“I set up a 529 plan for my granddaughter. She is graduating in May and there will be about $19,000 left in the account. Does it belong to her? Is it taxable? Can she do whatever she wants with it?”
You are the owner of the 529 plan. Your granddaughter was the beneficiary. She has no rights to the $19,000 remaining in the plan – unless you decide to give them to her. Should you decide to close the account the gains will be taxable – to you. You will also likely face a 10% penalty since the funds would not be used for educational expenses. You do not have to close the account. There is no age limit at which the account ‘matures’. You have many other options. Please consult with a financial advisor who can outline your options and assist you in selecting the one that best fits you and your goals.
“My wife and I have a current mortgage on our home. Would we qualify to get a reverse mortgage if we still have a regular mortgage?”
Maybe. Reverse mortgages are often used to pay off existing ‘regular’ mortgages. We recently saw a client use a reverse mortgage to pay off their existing mortgage. The end result was they are no longer paying $970.00 a month to lender. Very helpful indeed. There are requirements and restrictions that must be met (for example, you and your wife must both be at least 62 to qualify for the HECM program). You will want to spend time with a reverse mortgage expert to explore your options and determine what actions best fit you and your goals. Should you need a referral, please contact our More than Money World Headquarters. We can certainly help.
“What is the best way to determine when to take our Social Security benefits? Some people say the program will be strapped for cash by 2035 and the benefits will be cut by 20%. How are we to know what to do?”
Put aside any thoughts that you, I or anyone is psychic and can know what will happen in 2035 (or next Thursday for that matter). What we then must do is play the probabilities and make the best decision we can based on the information we have now and the rules as we now know them. The key factor in determining when to take your Social Security benefits is – when will you need the income? If you need it at age 62 (or 65, 67, or 70) take it. Take your benefits at the earliest age that you need them. If you are healthy with a normal (or better than normal) life expectancy, and don’t need the monthly benefits to meet your budget, then taking them at 70 will likely give you the best probability of ‘success’.
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