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Mid-Life Money Errors

 

0003-259x172Mid-Life Money Errors

If you are between 40 & 60, beware of these financial blunders & assumptions.

Between the ages of 40 and 60, many people increase their commitment to investing and retirement saving. At the same time, many fall prey to some common money blunders and harbor financial assumptions that may be inaccurate.

These errors and suppositions are worth examining, as you do not want to succumb to them. See if you notice any of these behaviors or assumptions creeping into your financial life.

Do you think you need to invest with more risk? If you are behind on retirement saving, you may find yourself wishing for a “silver bullet” investment or wishing you could allocate more of your portfolio to today’s hottest sectors or asset classes so you can catch up. This impulse could backfire. The closer you get to retirement age, the fewer years you have to recoup investment losses. As you age, the argument for diversification and dialing down risk in your portfolio gets stronger and stronger. In the long run, the consistency of your retirement saving effort should help your nest egg grow more than any other factor.

Are you only focusing on building wealth rather than protecting it? Many people begin investing in their twenties or thirties with the idea of making money and a tendency to play the market in one direction – up. As taxes lurk and markets suffer occasional downturns, moving from mere investing to an actual strategy is crucial. At this point, you need to play defense as well as offense.

Have you made saving for retirement a secondary priority? It should be a top priority, even if it becomes secondary for a while due to fate or bad luck. Some families put saving for college first, saving for mom and dad’s retirement second. Remember that college students can apply for financial aid, but retirees cannot. Building college savings ahead of your own retirement savings may leave your young adult children well-funded for the near future, but they may end up taking you in later in life if you outlive your money.

Has paying off your home loan taken precedence over paying off other debts? Owning your home free and clear is a great goal, but if that is what being debt-free means to you, you may end up saddled with crippling consumer debt on the way toward that long-term objective. In June 2015, the average American household carried more than $15,000 in credit card debt alone. It is usually better to attack credit card debt first, thereby freeing up money you can use to invest, save for retirement, build a rainy day fund – and yes, pay the mortgage.1

Have you taken a loan from your workplace retirement plan? Hopefully not, for this is a bad idea for several reasons. One, you are drawing down your retirement savings – invested assets that would otherwise have the capability to grow and compound. Two, you will probably repay the loan via deductions from your paycheck, cutting into your take-home pay. Three, you will probably have to repay the full amount within five years – a term that may not be long as you would like. Four, if you are fired or quit the entire loan amount will likely have to be paid back within 90 days. Five, if you cannot pay the entire amount back and you are younger than 59½, the IRS will characterize the unsettled portion of the loan as a premature distribution from a qualified retirement plan – fully taxable income subject to early withdrawal penalties.2

Do you assume that your peak earning years are straight ahead? Conventional wisdom says that your yearly earnings reach a peak sometime in your mid-fifties or late fifties, but this is not always the case. Those who work in physically rigorous occupations may see their earnings plateau after age 50 – or even age 40. In addition, some industries are shrinking and offer middle-aged workers much less job security than other career fields.

Is your emergency fund now too small? It should be growing gradually to suit your household, and your household may need much greater cash reserves today in a crisis than it once did. If you have no real emergency fund, do what you can now to build one so you don’t have to turn to some predatory lender for expensive money.

Insurance could also give your household some financial stability in an emergency. Disability insurance can help you out if you find yourself unable to work. Life insurance – all the way from a simple final expense policy to a permanent policy that builds cash value – offers another form of financial support in trying times.

Watch out for these mid-life money errors & assumptions. Some are all too casually made. A review of your investment and retirement savings effort may help you recognize or steer clear of them.

Citations.
1 – nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/ [6/25/15]
2 – tinyurl.com/oalk4fx [9/14/14]
This material was prepared by MarketingPro, Inc.

A Roth IRA’s Many Benefits

A Roth IRA’s Many Benefits

Why do so many people choose them over traditional IRAs?

The IRA that changed the whole retirement savings perspective. Since the Roth IRA was introduced, it has become a fixture in many retirement planning strategies.

The key argument for going Roth can be summed up in a sentence: Paying taxes on your retirement contributions today is better than paying taxes on your retirement savings tomorrow.

Here is a closer look at the trade-off you make when you open and contribute to a Roth IRA – a trade-off many savers are happy to make.

You contribute after-tax dollars. You have already paid federal income tax on the dollars going into the account. But in exchange for paying taxes on your retirement savings contributions today, you could potentially realize great benefits tomorrow.1

You position the money for tax-deferred growth. Roth IRA earnings aren’t taxed as they grow and compound. If, say, your account grows 6% a year, that growth will be even greater when you factor in compounding. The earlier in life that you open a Roth IRA, the greater compounding potential you have.1

You can arrange tax-free retirement income. Roth IRA earnings can be withdrawn tax-free as long as you are age 59½ or older and have owned the IRA for at least 5 years. (That 5-year clock starts on January 1 of the tax year in which you make your initial Roth IRA contribution.)2

The IRS calls such tax-free withdrawals qualified distributions. They may be made to you, to your estate after you are deceased, and/or to a beneficiary. (If you die before the Roth IRA meets the 5-year rule, your IRA beneficiary will see the IRA earnings taxed until it is met.)3

If you withdraw money from a Roth IRA before you reach age 59½, it is called a nonqualified distribution. If you do this, you can still withdraw an amount equivalent to your total IRA contributions to that point tax-free and penalty-free. If you withdraw more than that amount, though, the rest of the withdrawal may be fully taxable and subject to a 10% IRS penalty as well.1

Withdrawals don’t affect taxation of Social Security benefits. If your total taxable income exceeds a certain threshold – $25,000 for single filers, $32,000 for joint filers – then your Social Security benefits may be taxed. An RMD from a traditional IRA represents taxable income, and may push retirees over the threshold – but a qualified distribution from a Roth IRA isn’t taxable income, and doesn’t count toward it.4

You can direct Roth IRA assets into many different kinds of investments. Invest them as aggressively or as conservatively as you wish – but remember to practice diversification. The range of investment choices is often broader than that offered in a typical workplace retirement plan.1

Inheriting a Roth IRA means you don’t pay taxes on distributions. While you will need to take distributions within 5 years of the original owner’s passing, you won’t pay taxes on the distributions you take from the Inherited Roth IRA.5

You have 16 months to make a Roth IRA contribution for a given tax year. For example, IRA contributions for the tax year that has passed may be made up until April 15 of the succeeding year. While April 15 is the annual deadline, many IRA owners who make lump sum contributions for a given tax year make them as soon as that year begins, not in the following year. Making your Roth IRA contributions earlier gives the funds in the account more time to grow and compound with tax deferral.1

How much can you contribute to a Roth IRA annually? The 2015 contribution limit is $5,500, with an additional $1,000 “catch-up” contribution allowed for those 50 and older. (The annual contribution limit is adjusted periodically for inflation.)6

You can keep making annual Roth IRA contributions all your life. You can’t make annual contributions to a traditional IRA once you reach age 70½.6

Does a Roth IRA have any drawbacks? Actually, yes. One, you will generally be hit with a 10% penalty by the IRS if you withdraw Roth IRA funds before age 59½ or you haven’t owned the IRA for at least five years. (This is in addition to the regular income tax you will pay on funds withdrawn prior to age 59 1/2, of course.) Two, you can’t deduct Roth IRA contributions on your 1040 form as you can do with contributions to a traditional IRA or the typical workplace retirement plan. Three, you might not be able to contribute to a Roth IRA as a consequence of your filing status and income; if you earn a great deal of money, you may be able to make only a partial contribution or none at all.1,3,6

Rollovers are permitted. Since 2010, any individual, regardless of marital status and income level, can roll eligible IRA assets into a Roth IRA. Previously, rollovers were dependent upon the account holder’s income. If you are required to take an RMD from your traditional IRA the year you make the rollover, you must take it before converting it to Roth.3

All this may have you thinking about opening up a Roth IRA or creating one from existing IRA assets. A chat with the financial professional you know and trust will help you evaluate whether a Roth IRA is right for you given your particular tax situation and retirement horizon.

Citations.
1 – kiplinger.com/article/retirement/T046-C006-S001-why-you-need-a-roth-ira.html [1/15]
2 – fidelity.com/retirement-planning/learn-about-iras/convert-to-roth [2/25/15]
3 – hrblock.com/free-tax-tips-calculators/tax-help-articles/Retirement-Plans/Early-Withdrawal-Penalties-Traditional-and-Roth-IRAs.html?action=ga&aid=27104&out=vm [2/25/15]
4 – fool.com/retirement/general/2014/08/24/social-security-will-a-roth-ira-make-your-benefits.aspx [8/24/14]
5 – schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/inherited_ira/withdrawal_rules [2/25/15]
6 – irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits [1/22/15]
This material was prepared by MarketingPro, Inc.

Smart Financial Moves in Your 20s, 30s, 40s & 50s

Smart Financial Moves in Your 20s, 30s, 40s & 50s

What might you think of doing when?

If you had a timeline of the financial steps you should probably take in life, what would it look like? Answers to that question will vary, but certain times of life do call for certain financial moves. Some should be made out of caution, others out of opportunity.

What might you want to do in your twenties? First and foremost, you should start saving for retirement – preferably using tax-advantaged retirement accounts that let you direct money into equities. Through equity investing, your money may grow and compound profoundly with time – and you have time on your side.

As a hypothetical example, suppose you are 25 and direct $5,000 annually for 10 years into a retirement account earning a consistent 7%. You stop contributing to the account at age 35 – in fact, you never contribute a dollar to it again. Under such conditions, that $50,000 you have directed into that account over ten years grows to $562,683 by the time you are age 65 with no further action from you. If you contribute $5,000 annually to the account for 40 years starting at 25, you end up with $1,068,048 at 65.1

Aside from equity investment, you will want to try and build your savings – an emergency fund equal to six months of salary. That may seem unnecessarily large, or just too grand a goal, but it is worth pursuing, particularly if you are married or a parent. You could suffer a disability – not necessarily a permanent one, but an illness or injury that might prevent you from earning income. About 25% of people will contend with such an episode during their working lives, the Council for Disability Awareness notes, and less than 5% of disabling illnesses and accidents are job-related, so workers’ comp will not cover them. As Money notes, just 13% of millennials have disability insurance.2,3

What moves make sense in your thirties? You may have married and started a family at this point, so your spending has probably increased quite a bit from when you were single. As you save and invest in pursuit of long-range financial objectives, remember also to play a little defense.

You should think about creating a will and a financial power of attorney in case something unforeseen happens. Another estate planning/asset protection move that becomes essential at this point is life insurance. Right now a 20-year, $250,000 term life policy for a 35-year-old can cost less than $30 a month. It will not build cash value like a permanent life policy, but it can easily be renewed (and in some cases, converted into permanent life insurance).4

What considerations emerge between 40 and 50? This is where you may be “sandwiched” between taking care of your kids and your elderly parents or relatives. Your spending may reach a new peak; hopefully, your salary is rising as well.

Try to maintain your retirement planning effort in the face of these financial stresses – your pace and level of retirement account contributions. You may have teens or pre-teens at home, and if you have not yet considered creating a college fund that can grow and compound over time, now is the right time. You should not dip into your retirement fund to pay for their college educations, no matter how onerous college loans may seem.

You may want to look into long term care insurance. If you are wealthy, or soon will be, it may not be worth buying; you may have the money on hand to pay for years of nursing home care (or other forms of eldercare) that might be needed as you age. If you find yourself in the middle class, LTC insurance may be worth the expense depending on your health history and health outlook. Buying it before age 50 and while you are in good health is a wise move, if you are interested in such coverage.

Between 50 and 60, you are in the “red zone” before retirement. If you can, accelerate your retirement saving through greater contribution levels and/or the catch-up contributions allowed for many retirement accounts after age 50. You may want to tolerate less risk in your portfolio as retirement nears; you may not. Some investment professionals contend that in this era of low interest rates and low inflation, it makes much more sense to tilt a portfolio toward equities than toward fixed-income investments – provided you can put up with the inevitable volatility. Other investment professionals feel that is simply too risky a decision, even with some boomers needing much larger retirement nest eggs.

If possible, think about (and plan for) an approximate retirement date. Aim to reduce your debt as much as possible by that time or earlier. Retiring with multiple major debts can be stressful to say the least. Lastly, check in with a financial professional to gauge how close you are to realizing your long-term financial objectives.

Citations.
1 – businessinsider.com/compound-interest-and-retirement-savings-2015-3 [3/12/15]
2 – disabilitycanhappen.org/chances_disability/disability_stats.asp [7/3/13]
3 – time.com/money/3178364/millennials-insurance-why-resist-coverage/ [8/27/14]
4 – valuepenguin.com/average-cost-life-insurance [12/23/15]
This material was prepared by MarketingPro, Inc.

2016 Retirement Plan Contribution Limits

2016 Retirement Plan Contribution Limits

Tame yearly inflation means very little change.

Over the past 12 months, consumer prices have increased very little. The latest Consumer Price Index (September) shows 0.0% yearly inflation and only 1.9% core yearly inflation. That means no cost-of-living adjustment for Social Security, and very few IRS adjustments to retirement plan contribution limits.1

Roth IRA & traditional IRA contribution limits stay the same for 2016. Those 49 and younger in 2016 can contribute up to $5,500 to their IRAs, while those 50 and older will be able to contribute $6,500.2

401(k), 403(b), 457 & TSP annual contribution limits are also unchanged. Savers will be able to defer up to $18,000 into these plans in 2016 with an additional catch-up contribution of up to $6,000 permitted for those 50 or older.3

SIMPLE IRAs? No COLA for those accounts either. The base contribution limit for a SIMPLE IRA stays at $12,500 next year, the catch-up contribution limit at $3,000.2

The same goes for SEP-IRAs & Solo 401(k)s. Small business owners have a maximum deferral amount of $53,000 for 2016. As for the compensation limit factored into the savings calculation, that limit will remain at $265,000. The compensation threshold for an employee to be included in a SEP plan stays at $600 (i.e., that worker has to receive $600 or more in compensation from your business in 2016).2,3

The phase-out range for Roth IRA contributions has been adjusted a bit. In 2016, you will be unable to make a Roth IRA contribution if your AGI exceeds $194,000 as a married couple filing jointly, or $132,000 should you be a single filer or head of household. Those figures are $1,000 higher than in 2015. Joint filers with AGI of $184,001-194,000 and singles and heads of household with AGI of $117,001-132,000 will be able to make a partial rather than full Roth IRA contribution next year. If you really want a Roth IRA but your AGI is too high, you can always open a traditional IRA and then convert it to a Roth.2

As for deducting regular IRA contributions, one phase-out range change has been made. The change is slight. If you contribute to a traditional IRA and your employer doesn’t sponsor a retirement plan, yet your spouse contributes to a workplace retirement plan, the AGI phase-out on deductions of traditional IRA contributions strikes when your combined AGI ranges from $184,001-194,000. That is a $1,000 increase from the 2015 phase-out range.2

If you are a single filer or file as a head of household contributing to a traditional IRA and you are also covered by a workplace retirement plan, the AGI phase-out range for you remains at $61,001-71,000. If you file jointly, contribute to a traditional IRA and are also covered by a workplace retirement plan, your AGI phase-out range is the same in 2016 – $98,001-118,000. Above the high end of those phase-out ranges, you can’t claim a deduction for traditional IRA contributions.2

If you are married, filing separately and covered by a workplace retirement plan, the phase-out range on deductions of traditional IRA contributions is $0-$10,000 (this never gets a COLA).2

AGI limits for the Saver’s Credit will rise slightly. Americans saving for retirement on modest incomes will be eligible for the credit next year if their AGI falls underneath certain thresholds: single filers and marrieds filing separately, adjusted gross income of $30,750 or less; heads of household, AGI of $46,125 or less; joint filers, $61,500 or less.2

ESOP dollar amounts are unchanged next year. The dollar amount used to figure out the maximum account balance in an ESOP subject to a 5-year distribution period will still be $1,070,000 in 2016, while the dollar amount used to determine the lengthening of the 5‑year distribution period will remain at $210,000.3

Contribution limits for profit-sharing plans rise as per limits for 401(k)s. A participant in such a plan is looking at a 2016 elective deferral limit of $18,000 ($24,000 if she or he is old enough to make catch-up contributions). The yearly compensation limit on such plans stays at $265,000.4

Lastly, maximum yearly benefits for a defined benefit plan will remain at $210,000. The dollar limitation defining key employees within a top-heavy plan again stays at $170,000.3

Citations.
1 – usatoday.com/story/money/2015/10/15/cpi-for-september/73957022/ [10/15/15]
2 – forbes.com/sites/ashleaebeling/2015/10/21/irs-announces-2016-retirement-plans-contribution-limits-for-401ks-and-more/ [10/21/15]
3 – irs.gov/uac/Newsroom/IRS-Announces-2016-Pension-Plan-Limitations%3B-401%28k%29-Contribution-Limit-Remains-Unchanged-at-$18,000-for-2016 [10/21/15]
4 – shrm.org/hrdisciplines/benefits/articles/pages/2016-irs-401k-contribution-limits.aspx [10/22/15]
This material was prepared by MarketingPro, Inc.

Your Annual Financial To-Do List

Your Annual Financial To-Do List

Things you can do before & for 2016.

What financial, business or life priorities do you need to address for 2016? Now is a good time to think about the investing, saving or budgeting methods you could employ toward specific objectives. Some year-end financial moves may help you pursue those goals as well.

What can you do to lower your 2016 taxes? Before the year fades away, you have plenty of options. Here are a few that may prove convenient:

*Make a charitable gift before New Year’s Day. You can claim the deduction on your tax return, provided you itemize your 2015 tax year deductions with Schedule A. The paper trail is important here.1

If you give cash, you need to document it. Even small contributions need to be demonstrated by a bank record, payroll deduction record, credit card statement, or written communication from the charity with the date and amount. Incidentally, the IRS does not equate a pledge with a donation. If you pledge $2,000 to a charity in December but only end up gifting $500 before 2015 ends, you can only deduct $500.1

Are you gifting appreciated securities? If you have owned them for more than a year, you will be in line to take a deduction for 100% of their fair market value and avoid capital gains tax that would have resulted from simply selling the investment and then donating the proceeds. (Of course, if your investment is a loser, it might be better to sell it and donate the money so you can claim a loss on the sale and deduct a charitable contribution equal to the proceeds.)2

Does the value of your gift exceed $250? It may, and if you gift that amount or larger to a qualified charitable organization, you will need a receipt or a detailed verification form from the charity. You also have to file Form 8283 when your total deduction for non-cash contributions or property in a year exceeds $500.1

If you aren’t sure if an organization is eligible to receive charitable gifts, check it out at irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check.

*Contribute more to your retirement plan. If you haven’t turned 70½ this year and you participate in a traditional (i.e., non-Roth) qualified retirement plan or have a traditional IRA, you can cut your 2015 taxable income through a contribution. Should you be in the 35% federal tax bracket, you can save $1,925 in taxes as a byproduct of a $5,500 regular IRA contribution.3,4

If you are self-employed and don’t have a solo 401(k) or something similar, look into whether you can still establish and fund such a plan before the end of the year. For TY 2015, you can contribute up to $18,000 to any kind of 401(k), 403(b), or 457 plan, with a $6,000 catch-up contribution allowed if you are age 50 or older. Your TY 2015 contribution to a Roth or traditional IRA may be made as late as April 15, 2016. There is no merit in waiting, however, since delaying your contribution only delays tax-advantaged compounding of those dollars.4,5

*See if you can take a home office deduction. If your income is high and you find yourself in one of the upper tax brackets, look into this. You may be able to legitimately write off expenses linked to the portion of your home used to exclusively conduct your business. (The percentage of costs you may deduct depends on the percentage of the square footage of your residence you devote to your business activities.) If you qualify for this tax break, part of your rent, insurance, utilities and repairs may be deductible.6

*Open an HSA. If you are enrolled in a high-deductible health plan, you may set up and fund a Health Savings Account in 2016. You can make fully tax-deductible HSA contributions of up to $3,350 (singles) or $6,750 (families); catch-up contributions of up to $1,000 are permitted for those 55 or older who aren’t yet enrolled in Medicare. Moreover, HSA assets grow untaxed and withdrawals from these accounts are tax-free if used to pay for qualified health care expenses. HSAs are sometimes referred to as “backdoor IRAs,” because once you reach age 65, you may use withdrawals out of them for any purpose, although withdrawals will be taxed if they aren’t used to pay for qualified medical expenses.7

*Practice tax loss harvesting. You could sell underperforming stocks in your portfolio – enough to rack up at least $3,000 in capital losses. In fact, you can use this tactic to offset all of your total capital gains for a given tax year. Losses that exceed the $3,000 yearly limit may be rolled over into 2016 (and future tax years) to offset ordinary income or capital gains again.8

Are there other moves that you should consider? Here are some additional ideas with merit.

*Pay attention to asset location. Tax-efficient asset location is an ignored fundamental of investing. Broadly speaking, your least tax-efficient securities should go in pre-tax accounts and your most tax-efficient securities should be held in taxable accounts.

 *Can you contribute the maximum to your IRA on January 1, 2016? The rationale behind this is that the sooner you make your contribution, the more interest those assets will earn. In 2016 the contribution limit for a Roth or traditional IRA remains at up to $5,500 ($6,500 for those making “catch-up” contributions). Your modified adjusted gross income (MAGI) may affect how much you can put into a Roth IRA, though: singles and heads of household with MAGI above $132,000 and joint filers with MAGI above $194,000 cannot make 2016 Roth contributions.5

What are the income limits on deducting traditional IRA contributions? If you participate in a workplace retirement plan, the 2016 MAGI phase-out ranges are $61,000-71,000 for singles and heads of households, $98,000-118,000 for joint filers when the spouse making IRA contributions is covered by a workplace retirement plan, and $184,000-194,000 for an IRA contributor not covered by a workplace retirement plan but married to someone who is.5

*Should you go Roth before 2016 gets here? You might be considering that. If you are a high earner, you should know that MAGI phase-out limits affect Roth IRA contributions. For 2015, phase-outs kick in at $183,000 for joint filers and $116,000 for single filers (those thresholds move north by $1,000 in 2016). Should your MAGI prevent you from contributing to a Roth IRA at all, you still have the chance to contribute to a traditional IRA in 2015 and then go Roth.5

Incidentally, a footnote: distributions from Roth IRAs, traditional IRAs, and qualified retirement plans such as 401(k)s are not subject to the 3.8% Medicare surtax affecting single/joint filers with AGIs over $200,000/$250,000. Dividends, net investment income from taxable interest, passive rental income, annuity income, short-term and long-term capital gains, and royalties are subject to that surtax if your AGI surpasses the aforementioned MAGI thresholds.9

Consult a tax or financial professional before you make any IRA moves to see how they may affect your overall financial picture. If you have a large traditional IRA, the projected tax resulting from a Roth conversion may make you think twice.

What else should you consider as 2016 approaches? There are some other things to note…

*Review your withholding status. Should it be adjusted due to any of the following factors?

>> You tend to pay a great deal of income tax each year.

>> You tend to get a big federal tax refund each year.

>> You recently married or divorced.

>> A family member recently passed away.

>> You have a new job at a much greater salary.

>> You started a business venture or became self-employed.

*If you are retired and older than 70½, remember your RMD. Retirees over age 70½ must begin taking Required Minimum Distributions from traditional IRAs and 401(k), 403(b), and profit-sharing plans by December 31. The IRS penalty for failing to take an RMD equals 50% of the RMD amount.10

If you have turned 70½ in 2015, you can postpone your initial RMD from an account until April 1, 2016. The downside of that is that you will have to take two RMDs next year, both taxable events – you will have to make your 2015 tax year withdrawal by April 1, 2016 and your 2016 tax year withdrawal by December 31, 2016.10

Plan your RMDs wisely. If you do so, you may end up limiting or avoiding possible taxes on your Social Security income. Some Social Security recipients don’t know about the “provisional income” rule – if your MAGI plus 50% of your Social Security benefits surpasses a certain level, then some Social Security benefits become taxable. Social Security benefits start to be taxed at provisional income levels of $32,000 for joint filers and $25,000 for single filers.11

*Consider the tax impact of 2015 transactions. Did you sell real property this year? Did you start a business? Have you exercised a stock option? Could any large commissions or bonuses come your way before January? Did you sell an investment held outside of a tax-deferred account? Any of this might significantly affect your 2015 taxes.

*Would it be worth making a 13th mortgage payment this year? If your house is underwater, it makes no sense – and you could argue that those dollars might be better off invested or put in your emergency fund. Those factors aside, however, there may be some merit to making a January mortgage payment in December. If you have a fixed-rate loan, a lump sum payment can reduce the principal and the total interest paid on it by that much more.

*Are you marrying in 2016? If so, why not review the beneficiaries of your workplace retirement plan account, your IRA, and other assets? In light of your marriage, you may want to make changes to the relevant beneficiary forms. The same goes for your insurance coverage. If you will have a new last name in 2016, you will need a new Social Security card. Additionally, you and your spouse no doubt have individually particular retirement saving and investment strategies. Will they need to be revised or adjusted with marriage?

*Are you coming home from active duty? If so, go ahead and check the status of your credit, and the state of any tax and legal proceedings that might have been preempted by your orders. Make sure your employee health insurance is still there, and revoke any power of attorney you may have granted to another person.

Talk with a qualified financial or tax professional today. Vow to focus on being healthy and wealthy in the New Year.

Citations.
1 – irs.gov/uac/Newsroom/Six-Tips-for-Charitable-Taxpayers [5/19/15]
2 – philanthropy.com/article/Donors-Often-Overlook-Benefits/148561/ [8/29/14]
3 – irs.gov/Retirement-Plans/Traditional-and-Roth-IRAs [3/18/15]
4 – turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/4-Last-Minute-Ways-to-Reduce-Your-Taxes/INF22115.html [10/20/15]
5 – forbes.com/sites/ashleaebeling/2015/10/21/irs-announces-2016-retirement-plans-contribution-limits-for-401ks-and-more/ [10/21/15]
6 – irs.gov/Businesses/Small-Businesses-&-Self-Employed/Home-Office-Deduction [10/16/15]
7 – bankrate.com/finance/insurance/health-savings-account-rules-and-regulations.aspx [10/7/15]
8 – fidelity.com/viewpoints/personal-finance/tax-loss-harvesting [9/9/15]
9 – kitces.com/blog/how-ira-withdrawals-in-the-crossover-zone-can-trigger-the-3-8-medicare-surtax-on-net-investment-income/ [12/2/14]
10 – fool.com/investing/general/2015/09/29/mrd-requirements-for-your-retirement-accounts.aspx [9/29/15]
11 – ssa.gov/planners/taxes.html [10/20/15]
This material was prepared by MarketingPro, Inc.
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