Shielding Retirement Assets From Taxes

For many investors, a large portion of their investments are held in 401(k)s, IRAs, or other tax-favored retirement vehicles. While these accounts can be ideal for sheltering retirement savings from taxes both preretirement and post-retirement, they can also be highly vulnerable to tax losses in an estate, if they are not bequeathed properly. For instance, a $1 million IRA inheritance could be whittled to almost nothing under worst-possible circumstances, such as a combination of estate taxes, top income tax brackets, and missed withdrawal deadlines. Avoiding these pitfalls means knowing the...

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What Is the Difference Between a Traditional IRA and a Roth IRA?

There are some key differences between these two types of individual retirement accounts (IRAs). While the contribution limits are the same for both, each has its own specific rules and potential benefits (see table below). It’s important to review both types of vehicles and plan your IRA strategy carefully. No matter which type you choose, make the most of your IRA by contributing to it regularly.   Traditional IRA Roth IRA Contribution limits? For 2015, the maximum contribution is $5,500 ($6,500 for those aged 50 and older). Amounts are indexed annually for inflation. For 2015,...

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Can You Afford Early Retirement?

Early retirement is a phrase many Americans wish they could turn into a reality. While retiring in your 50s or early 60s sounds enticing, it typically requires years of planning to make sure you’ve accumulated enough retirement assets to last for 20 or 30 years or more. It’s important to factor in how an early retirement could affect your Social Security benefits, options for health insurance, and the nest egg you plan to rely on for ongoing living expenses. Social Security and Medicare Those who collect Social Security at age 62, the earliest age when most retirees are eligible,...

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Give a Gift With Meaning and Worth

Gifts of cash, investments, and other assets can offer benefits to you as well as your recipients. The IRS allows you to give up to $14,000 in 2015 ($28,000 for married couples) to as many people as you like — adults or children — without triggering mandatory filing of IRS Gift Tax Form 706 and possible payment of gift taxes. This can be especially beneficial for people looking to minimize their estate taxes. The Uniform Gifts to Minors Act or Uniform Transfers to Minors Act (UGMA/UTMA) allows you to set up an investment account in a child’s name with an adult named as a...

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A MARKET CORRECTION

The Standard & Poor’s (S&P) 500 Index more than tripled from its low of 676.53 on 3/9/2009 to 2,130.82 on 5/21/2015.  Add dividends to the price rise and you have an annualized total return of over 22% a year for more than 6 years.  But the Index stumbled out of the gate this year.  By 2/08/2016, it had dropped 13.0% from its 2015 peak.1 In the language of Wall Street, we are now in a stock market “correction”, broadly defined as a decline of 10% to 19% from its previous peak.  Should the drop reach 20% or more, it would be labeled as a “bear market”. Why the sudden rush to sell? ...

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The Interest Rate Cycle

After keeping the federal funds rate 1 at 0 % -0.25% for the past 7 years to help the economy recover from its worst recession since the 1930’s, the Federal Reserve (FED) on 12/16/2015 raised the rate by 0.25% points, to 0.25%-0.50%. This is still 3.0% points more below the 3.50% -4.0% rates that has historically been considered “normal”. None the less, in her news conference following the rate increase, Janet Yellen, FED chairwomen, was asked if, in light of the fact that the economy has been expanding and stocks have been in a bull (rising) market for the past 6 ½ years, she was concerned...

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