- IRS Aduits
- 401 K
- And More
- And More
401(k) nightmares: What NOT to do with retirement-plan cash
Life can bring huge expenses, planned and unplanned. Many look to their retirement accounts as a handy lifesaver to get out of an unexpected, tough financial spot — but they do so at an enormous cost.
A 2015 research study conducted by Boston Research Technologies in collaboration with Retirement Clearinghouse found that 34 percent of millennials, 34 percent of Gen Xers and 24 percent of baby boomers have cashed out at least one retirement account during their careers and that "a majority of retirement-plan cash-outs are unnecessary — a product of convenience rather than need."
Elders and equities: How much stock should retirees own?
How old are you, and how much stock do you have in your investment portfolio?
Conventional wisdom has it that investors should reduce their equity holdings as they get near and into retirement and shift toward safer, fixed-income investments. That strategy is the basis for target-date funds, which follow a "glide path" of decreasing allocations to stocks and increasing allocations to bonds as a target retirement date approaches.
Why you should ditch your mutual funds now
Mutual funds have helped introduce the masses to stocks and have played a big role in portfolios for individual investors. However, they appear to be well past prime time.
In 2015 the S&P 500 Index posted a meager total return of 1.4 percent, including dividends. And yet 66 percent of actively managed large-company stock funds were unable to exceed even that low bar, according to the SPIVA U.S. Scorecard.
How to use trusts to save big-time on state income taxes
Most tax strategies center on minimizing federal income taxes, since they account for the lion's share of taxes a person might owe. But in some states, income-tax rates are themselves in the double digits and can add mightily to tax bills.
Over the last decade or so, one strategy has been gaining in popularity among wealthy individuals and families and their tax advisors. They use trusts to limit their exposure to state income-tax rates. ING trusts, which stands for incomplete gift non-grantor trusts, can shift the tax exposure out of a high-tax state, such as California, to a state with no state income tax, such as Delaware, Nevada and Wyoming.
Older boomers face IRA withdrawals or a 50% tax
he first baby boomers are turning 70 this year. That means they soon will have to take a required minimum distribution from their traditional IRAs and 401(k) plans.
The stakes are high for getting RMDs right. If you don't make the appropriate withdrawals, you may have to pay a 50 percent tax on the amount that was not taken out as required.
Getting remarried? Protect your assets and your interests
"Getting remarried ... Oh, what fun when it comes to estate planning," said certified financial planner Mark LaSpisa, president and managing advisor of Vermillion Financial Advisors.
"The biggest challenge is, how does anyone reconcile preserving assets for children from a prior marriage while taking care of one's commitment to a new spouse?" he said.
It's key to factor in health costs when saving for retirement
As if retirement planning weren't difficult enough, things get even more complicated when you factor in the cost of health care.
"Health care is one of the most underemphasized things in retirement," said certified financial planner Brian Fenstermaker, founder of Envision Financial Consulting.
Even Fenstermaker's high-net-worth clients worry. "A lot of my clients have millions of dollars in savings, but they are still concerned about health care," he said.
Make finances in 'multi-gen' household a family affair
Today's different generations are getting cozier when it comes to sharing living space.
But before you sign on to the growing trend of living in a multi-generational household, financial advisors say, you should give money matters as much scrutiny as you would a household chore chart.
"The key to making these household structures work is to make sure no one rides for free," said certified financial planner Hank Mulvihill, principal of Mulvihill Asset Management. "And the more that the reality of all things financial is discussed, the healthier the relationships in the home will be."