Long after money changes hands, what endures are the values we stand for. In this week’s video Caitie shares what historic libraries can teach us about passing down a legacy that could guide your family for decades.
Want content like this in your inbox each week? Leave your email here.
Money you accumulate can work like an orchard, and the income—the fruit crop—helps run retirement life. Some in the industry would call clients taking out their own money “attrition.” Attrition, per the dictionary: “loss or destruction, corrosion, waste.” But to us, it’s simply investing wisely, spending well. Attrition, shmattrition.
Want content like this in your inbox each week? Leave your email here.
We’ve got Roth IRAs on the brain. Why? How would you like to never, ever pay income tax on investment gains and dividends and interest on some fraction of your money? Oh—and your beneficiaries never would either. Well?
That’s the magic of the Roth IRA, properly used.
Every single person may convert existing IRA or rollover balances into a Roth IRA, by paying income tax on the converted amount. Many believe income taxes will rise in the years ahead, above the scheduled increases in the current law.
Anyone may do a conversion of the amount they choose from existing IRA or rollover accounts, although other factors determine whether you are also eligible to contribute: those limits vary year to year, so be sure to check on your particular situation.
Here are some reasons that people are using this conversion technique:
Like so much of life, we cannot know the future, so we simply do the best with what we do know. “A little of this, a little of that” may be a prudent way to deal with uncertainty. Future tax rates, future investment results, and your future cash flow needs are all unknown. So it might make sense to take a middle-of-the road approach—and build more flexibility into your retirement situation.
Roth conversions go by calendar year, so if you would like to talk about your options, please call or email us in the next few weeks.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
This material is for informational purposes only and does not constitute tax, legal, or investment advice. Please consult a qualified tax professional regarding your individual circumstances.
Want content like this in your inbox each week? Leave your email here.
Play the audio version of this post below:
An RMD at 73? It’s not the catchiest IRS rule we’ve ever heard… And you’re not alone if you’ve ever been confused by an IRS rule. 😅 In this week’s video Mark’s talking about “Required Minimum Distributions.” Stop by or give us a call if you’re wondering what it might mean for you.
Want content like this in your inbox each week? Leave your email here.
Our spending habits matter, but it’s not just about investing our money. How do we get our time to pay us dividends?
Want content like this in your inbox each week? Leave your email here.
People or companies may confer benefits on third parties without cost, as a side effect or byproduct of their actions. Planting a tree improves the neighborhood and provides shade to a neighbor. Keeping bees results in the pollination of nearby crops. Providing first-aid training to workers may save lives outside of work. A video or blog post created for clients might contain an idea that helps people who are not clients.
These are examples of what economists call positive externalities. These things are all good. They make the world a better place.
I believe the concept applies in our interactions with others, as well. Have you ever had your day brightened by the laughter of a group of passersby? Watched someone hold a door for someone with an armload of packages? Overheard a “thank you” being given for an otherwise thankless task?
All of these things are benefits that they produced for free and you enjoyed at no extra cost. They are positive externalities, on the small scale of daily life.
Having a tree planted improves our home as well as the neighborhood, but generating positive externalities can also help us beyond business transactions. Friends and family members respond to the empathy, kindness, and thoughtfulness embedded in any of those little actions we can take. If employed, those in our network are likely to sense the intangibles we add to the workplace environment. Our teammates across the community likely enjoy our interactions more.
Generating positive externalities is not charity. There are no costs involved, only benefits for giver, recipient, and neighbors and passersby. Win-win-win.
The general concept has been around for a long time, and is often expressed more simply. Be kind. Fill up the buckets of others. Do unto others.
Clients, if you would like to talk about this or anything else, please email us or call.
Want content like this in your inbox each week? Leave your email here.
Play the audio version of this post below:
No matter how beautiful, some flowers still have thorns. And no matter how flashy, some salespeople will have them too. Remember that not every person you meet will have your best interest at heart. Don’t let any peddlers dazzle you with diamonds! It never hurts to ask for a second opinion.
Want content like this in your inbox each week? Leave your email here.
In the United States, as in most places in the world, we are governed by the Gregorian calendar. But as we flipped the page and entered the “-ber” months, many of us are facing once again the power of the all-important academic calendar.
Children, grandchildren, and neighbors are back to school. Summer is over for most of the country, and it’s got us reflecting. Without school, summer for many families can include more sleepovers or late nights and long chats on the porch. It could mean hours at the city pool or a big vacation.
For some of us, summers have also meant more leisure and more work.
It’s possible that you earned your very first dollar—and then some, hopefully—one summer long ago. Teens are more likely to be employed during June, July, and August than any other time of year. And it makes sense: teens are more likely to have the time and opportunity then, as jobs like lawnmowing, babysitting, and lifeguarding peak each summer.
Clients, if anyone in your household age 18 or under was out making money this summer, consider talking with them about the “Swiss Army Knife of finance”: the Roth IRA.
As long as someone has earned income (and doesn’t make more than the cap), they can contribute to a Roth IRA (up to the maximum amount).
Say your child or grandchild earns $3,000 in the summer: they could contribute up to $3,000 to a Roth. Of course, they may not want to forfeit all their earnings, but if they’re able to, this may be a prime opportunity to impart the value of saving. If you’re feeling nice, you could “gift” them the $3,000 to replace what they saved.
Roth contributions are taxable now and enjoy tax-free future gains. Beyond the magic of compounding, starting a Roth account early has other benefits:
As children near college age, investors may have questions: the government does not include retirement accounts as assets in the calculation for student aid, so this type of savings vehicle should not impact the availability of federal financial aid.
Withdrawals would be counted in the calculation, but be aware: the FAFSA uses a “prior-prior year” income picture to avoid having to base their decisions on estimations. So, for example, even withdrawals made in a 4-year graduate’s junior year shouldn’t affect their aid eligibility.
The process of getting something like this set up isn’t terribly complicated. It is not necessary for the working person have a W-2, though we do recommend keeping records (think: basic invoices or even simple receipts from the neighbors for those lawnmowing or babysitting services).
Clients, could this be a way to help your children or grandchildren preserve a piece of summer? Call or write, anytime.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Want content like this in your inbox each week? Leave your email here.
Play the audio version of this post below:
“Well begun is half done,” the proverb says. And we tend to agree. Since it’s your journey, we don’t like to sweat the particulars: it’s never too early to start, but it’s also never too late.
Want content like this in your inbox each week? Leave your email here.
What would I have to learn if I could talk to my past self? Or my future self?
There are some mental exercises that might help us reflect on our goals, but here’s what I’m wondering: What do truck stop chili dogs have to teach me?
Want content like this in your inbox each week? Leave your email here.
You must be logged in to post a comment.