What To Do When You Inherit An IRA

Feb 2, 2019 Posted by Ted Jenkin @ Your Smart Money Moves In Budgeting, Financial Independence, Gen X & Y Financial Advice, Investments, Retirement, Tax Management Tagged inherit, Ira Comments 0

The other evening as I was checking client e-mails, a client sent me a short note inquiring about something her sister did with an inherited IRA and quickly after hearing the story I knew it was even too late to give advice. The sister had told the IRA custodian to make a check out to her Father’s estate and this would cause tax consequences that are irreversible. Inherited IRA’s can be just like a dozen eggs…once you crack the shell it is impossible to put it back together. When a loved one passes away, there is a wide array of emotions, and this could affect how you make short term financial decisions. Especially when you don’t know all of rules or have various siblings chirping in your ear. It is one of the most important times to seek out financial help from a professional. The overall rules for inherited IRAs are extremely complicated. It really depends if you inherit the ...

What Fantasy Football Can Teach You About Diversification (or Your Financial Plan)

The football season is upon us again here as the fall rolls around and neighborhoods and workplaces are buzzing with Fantasy Football fever. The Fantasy Trade Sports Association commented that the Fantasy Football market is more than a 70 billion dollar industry today and growing. With so many people joining multiple leagues, what can this popular game teach us about how we manage our portfolios and diversify our assets. Do Your Homework? It’s shocking how many people don’t know what they own in their 401(k), IRA, or their brokerage accounts. You may have purchased a target fund or some growth and income fund, but you don’t actually know what you own. Moreover, you may not understand the risks on how much you could gain in one year or how much you could potentially lose in one year. It’s important to read the prospectus before you invest, look at the track record of the investment you will be making, and learn ...

My Roth IRA turned Five

Why is age 5 so important for your Roth IRA. Well, there is a little discussed rule around Roth IRAs. We know that they grow tax free. We know that we can take contributions out at any time without penalty. We also, know that at age 59 ½ we can start taking from either our IRA or our Roth accounts. But what most people miss is the 5 year clock on Roths. The Roth rules say that to take distributions tax-free and penalty-free, your Roth account has to have been open for at least 5 years. That means when you turn 59 ½ your account also has to be at least 5 years old. I’ve been asked by clients if the clock resets each time they make a contribution; or does each contribution have its own 5 year clock. The answer is no. The clock starts when the account is first opened. In 99% of cases, the clock is a ...

Don’t Forget To Protect The Golden Goose

I have delivered insurance checks in my career and nobody has ever told me they have too much life insurance after a loved one dies. It’s really ironic because there are many media pundits who beat up on having unnecessary life insurance, but those writers don’t have to pick up the pieces after a major breadwinner dies in a family. Recent studies still say that the odds of dying are 1 out of 1. LOL. Even though I think that most families are woefully underinsured when it comes to life insurance, the greatest gap I see amongst Generation X and Generation Y is an apathetic amount of disability insurance. Most people who work for companies believe that the amount of disability insurance they get through work will be adequate to cover their situation should they sustain a long term disability. The stark reality is that most Gen X’ers an Gen Y’ers don’t even read the benefits manual to understand the ...

How Does The My RA Work?

Trapped in my office by the Snowpocalypse that hit Atlanta on last Tuesday, I had the opportunity to watch the State of the Union (#sotu) Address delivered by President Obama. There is a whole lot of financial topics we could talk about on Your Smart Money Moves, but I’d like to review the topic around the new proposed investment vehicle called the MyRA. Since we already have the SEP-IRA, SIMPLE-IRA, Rollover IRA, Roth IRA, Traditional IRA, Beneficial IRA, etc., wouldn’t it have just been easier to call it the My IRA instead of the new urban dictionary word called MyRA? The concept behind the MyRA account would be a new type of bond within a Roth IRA-type umbrella. Contributions would not be tax-deductible, but earnings would be tax-free when you withdraw it in the future. It’s unclear about how closely the rules on this account shadow the rules of the current Roth IRA. The investment vehicle would be a new ...

A Good Old Fashioned IRA Contribution

In 1974, Congress enacted the Employee Retirement Income Security Act (today known as ERISA) and Individual Retirement Accounts (IRA’s) were introduced on to the scene where participants at that time could put away as much as $1,500 a year toward their retirement. The legislation went through a few overhauls during the Reagan years in 1981 and 1986, and have had a several transformations over the past twenty years. Most families and small business owners are still unaware on exactly how the rules work when it comes to contributing to a traditional IRA account. So here are a few facts you should know about these accounts almost forty years into the making. You must have earned income to be able to contribute to a traditional IRA. This includes compensation such as commissions, wages, bonuses, self-employment income, etc.- the key is EARNED income. You can’t make a contribution more than the earned income you have in that particular tax year. The maximum ...

VIDEO | Is Your Retirement Plan Full Of Swiss Cheese

Published on: April 25, 2013 @ 11:00 ...

Is Your Retirement Plan Full Of Swiss Cheese

Last year, I did a piece on retirement planning assumptions. As I continue to see more and more plans done by other financial advisory firms, I become more concerned about consumers. Most projections that are done in business or in your personal household need to carry assumptions. These are the variables in the equation that allow to make a reasonable assessment about what needs to be done when you are trying to achieve your goals. When you last did your projections for retirement through the tools offered from your 401(k) plan or the nifty 35 page book your financial advisor put together, are you sure the assumptions that were made were explained to you clearly? You may have left feeling great about yourself only to realize now that your plan is full of gigantic Swiss cheese like holes. Here are ten assumptions you need to consider within your plan. I highly recommend as a smart money move you use conservative ...

The Government Will Tell You What To Do With Your 401(k)?

It’s official. When the Government Accountability Office (if that’s not an oxymoron in itself) tells you that the 401(k) rollover process is just too confusing, you can be sure that mutiny on the bounty is coming soon. Have you all noticed how; now that we are into 2013, the regulation did such a great a job in disclosing fees within your 401(k) plan? I’m being sarcastic if you can’t tell. What should have been a very simple “show me the fees on the front of all my statements” has turned into another cycle of information disclosed on page 36 somewhere in a chapter that you won’t read. According to a story in the USA Today (www.usatoday), The Government Accountability Office found that financial firms often encourage workers to roll over a 401(k) into an individual retirement account, or IRA, even when that might not be the best option. The report said that what the guidance workers currently receive is either ...

VIDEO | The Government Will Tell You What To Do With Your 401(k)?

Published on: Apr 11, 2013 @ 11:00 ...