Time Stamps: 1:57 – “How do I get a credit card with no current payment history?” 4:53 – “Which portfolio should I choose for my daughter’s 529 plan?” 6:23 – “Is it worth investing in penny stocks?” 9:50 – “Is an irrevocable trust right for my relative that recently lost his wife?” 12:57 – “How can you determine a company’s […]

Time Stamps: 2:57 – “Should I lower my contributions to my 401(k) as I near retirement?” 8:25 – “How do I choose a good index fund to invest in and where should I buy one?” 11:57 – “Should I start investing in a Roth IRA at 70 years old?” 15:03 – “Can I continue to contribute to my Roth […]

Time Stamps: 2:15 – “How should I invest and save right out of college?” 7:16 – “Why is paying off debt always the biggest priority to advisors?” 11:15 – “Which investment strategy should I follow through on?” 17:17 – “What do I do with excess credit cards that I don’t use?” 22:03 – “How has the use of the internet […]

Time Stamps: 1:08 – “Can I defer a required minimum distribution to next year?” 3:28 – “When should you sell a bond?” 8:13 – “What is the impact of the tax deductible nature of a home equity line of credit?” 10:57 – “What can I do with a recovered 401K from a previous employer?” 18:08 – “Is an inherited […]

Mullooly Asset Podcast #195 Time Stamps: 2:27 – “What are some general tips for stocks and investing?” 5:53 –  “Is it a bad time to invest in equities?” 12:02 – “How do I invest with minimal net worth?” 17:46 – “Should I rollover my 401K from my previous employer?” 22:57 – “How can one contribute to a Roth IRA […]

Mullooly Asset Podcast #194 Time Stamps: 2:33 – “what does it mean when you move your investments to cash?” 4:34 – “why do municipal bond funds all seem to lose money for their customers?” 11:28 – “how much do I have to pay in taxes when transferring to a Roth IRA?” 16:26 – “how do I choose an alternative […]

Time Stamps: 1:42 – “Should I withdraw from my retirement accounts?” 6:25 – “How will buying or leasing a car affect my ability to get a mortgage?” 11:40 – “Should we use our 401K funds to pay off a home equity loan?” 16:33 – “Should I use my traditional IRA to pay for my son’s college tuition?” 18:56 – “Has […]

Time Stamps:

1:42 – “Should I withdraw from my retirement accounts?”

6:25 – “How will buying or leasing a car affect my ability to get a mortgage?”

11:40 – “Should we use our 401K funds to pay off a home equity loan?”

16:33 – “Should I use my traditional IRA to pay for my son’s college tuition?”

18:56 – “Has the recommended stock/bond mix changed throughout the years?”

22:35 – “Do I need to have a retirement plan?”

Show Notes:

VIDEO – Managing Cash Flows

Mullooly Asset Podcast 193 – Transcript

Tim Mullooly: Welcome back to the podcast. This is episode number 193. This is Tim Mullooly, and here with me is …

Tom Mullooly: Tom Mullooly. Hello.

Tim Mullooly: Welcome back. We are going to continue answering your questions. People have been sending in some pretty great questions that they have about their finances and financial planning and investing, and we try our best every week to answer them for you. That’s what we’re going to keep doing today.

Tom Mullooly: Please understand that when we do answer these questions, most of them are pretty sketchy. They’re detail-light in terms of what we get. These are questions that come into a website and they get sent to us, so we have very little information. Understand that our response is not baked into an in-depth financial plan or analysis that we’ve done for these clients, nor should anything that we mention on a podcast be considered investment or financial planning advice.

Tim Mullooly: Right.

Tom Mullooly: With that, why don’t we kick it off and start with our first question this week, Tim.

Tim Mullooly: Sure. First up, the question says, “Should I withdraw from my retirement accounts?”

Tom Mullooly: Okay, so let me give you a little bit of background information that we’ve got on this. The person writes in, “We’re finding ourselves afraid to go into debt after our baby, but we need to pay for daycare costs and tuition to renew a specific license.” The total that they estimate would be about $10,000. “It’ll be a few months before I start working and making money again, and we have nothing to spare and are barely able to stay afloat paying for kids and braces and sports, the mortgage, health insurance and all the usual bills. Does it make sense to withdraw from our retirement accounts?”

Tim Mullooly: There’s one things that we often times talk about with questions like this and it’s the importance of having a safety net or some sort of emergency fund. The fact that the bills that they’re estimating is only around $10,000 and they say they have nothing to spare, this isn’t exactly answering directly their question, but it kind of goes back to probably where the problem started, the fact that they don’t have any fallback savings or anything to be able to cover a $10,000 bill.

Tom Mullooly: It’s a tough spot. This is someone that I think a financial planner could have helped a year ago, or a year-and-a-half ago. It’s a tough spot, but you do need to have that safety net. We really discourage people from taking money out of retirement accounts, only because it’s probably the most expensive withdrawal or the most expensive source for money that you can find. When you take money out of a retirement account, assuming that you can, when you do take money out, it becomes taxable just like ordinary income to you, federal and state. So you’re going to get a 1099R for this distribution that you make.

On top of all of that, at the end of your tax return you have to take on...

Time Stamps: 1:21 – “What’s a reasonable suggestion for a company 401K match amount?” 2:58 – “How can I receive distributions from a mutual fund loss?” 10:21 – “Where can I put excess cash so that it can grow and remain accessible?” 17:51 – “When am I charged for an ETF expense ratio?” 21:30 – “How risky is investing in […]

Time Stamps:

1:21 – “What’s a reasonable suggestion for a company 401K match amount?”

2:58 – “How can I receive distributions from a mutual fund loss?”

10:21 – “Where can I put excess cash so that it can grow and remain accessible?”

17:51 – “When am I charged for an ETF expense ratio?”

21:30 – “How risky is investing in treasury bills?”

MAM 192: Tim & Tom Answer Your Questions – Transcript

Tim Mullooly: Welcome back the podcast. This is episode number 192. This is Tim Mullooly and here with me as always is.

Tom Mullooly: Tom Mullooly, welcome.

Tim Mullooly: Happy to be here. We’re going to continue to answer some questions for you.

Tom Mullooly: From our mailbag.

Tim Mullooly: Yep. Our deep mailbag. The questions just keep coming in so we’re going to keep answering them for you.

Tom Mullooly: Now some of these topics may be relevant to you but sometimes we take these questions and we kind of go off a little bit on a tangent because sometimes there’s a bigger issue behind them and I think that’s going to be the case with a few of the questions that we tackle today. So Tim, why don’t we jump right in and go to the first one?

Tim Mullooly: Sure. The first question asks, “what’s a reasonable suggestion for a company 401K match amount?”

Tom Mullooly: That’s what they’re the expecting the company to match?

Tim Mullooly: Right. They say, “My company doesn’t currently match 401K contributions however I’m about to negotiate for a new compensation package and have been asked to include all elements that are important to me. What is a fair contribution for a company to match?”

Tom Mullooly: Well remember if they match for you, they’ve got to match for everybody. If you’re asking the company to match 5% of your salary then, or 10% or 3%, whatever the number is. Remember they have to do that uniformly for everyone that contributes to the plan and they have to be prepared as a business to make that contribution for everyone on the payroll.

Tim Mullooly: Right. For one individual to ask an company to match for everyone’s 401K contributions is a big thing to ask, in my opinion. Not really something that I foresee a company being willing to negotiate with just one employee.

Tom Mullooly: I think you should negotiate for a parking space before you negotiate for a 401K match. There’s other things that you should be negotiating. That’s probably not negotiable.

Tim Mullooly: Agreed. Okay, so moving on, next question is “how can I receive distributions from a mutual fund loss?” There’s some details here to the question. They go on to ask, “I want to sell a mutual fund that will be a long term capital gain loss. The cost basis is 40,000, I will be selling at 25,000 for a $15,000 loss. There will still be $6,000 remaining in the fund. There’s a capital gains distribution/dividend on December 26th. For tax purposes, will it be better to sell after the 26th or before the 26th? Will I still receive the dividend?

Tom Mullooly: Whoa. Okay. There’s a lot to unpack with this question. The first thing I want to address is the question about selling and taking the loss. Are you going to file as a LIFO filer? Meaning L I F O, last in first out? Are you going to be FIFO, first in first out? Are you going to do average cost? What are you going to do? That’s going to determine what your cost basis is when you’re taking the loss in a mutual fund. But there’s more to this as Tim went on. Read that back again, the part about 26th.

Tim Mullooly: Sure. The question says, “There is a capital gains distribution/dividend on December 26th. For tax purposes, will it be better to sell after the 26th or before the 26th? Will I still receive the dividend?