Mullooly Asset Management

Time Stamps: 1:25 – “Will I have to pay back a 401(k) loan with post-tax dollars?” 5:00 – “How cautious should I be of retiring when I still have substantial debt on my plate?” 8:45 – “Is it better to hold a REIT in a taxable account or a Roth IRA?” 11:40 – “What documents do I need to […]

Time Stamps:

1:25 – “Will I have to pay back a 401(k) loan with post-tax dollars?”

5:00 – “How cautious should I be of retiring when I still have substantial debt on my plate?”

8:45 – “Is it better to hold a REIT in a taxable account or a Roth IRA?”

11:40 – “What documents do I need to bring to a consultation with a financial advisor, and what should I expect to get out of a consultation?”

Mullooly Asset Podcast #191: Tim & Tom Take Your Questions – Transcript

Tom Mullooly: Welcome back to the Mullooly Asset Management podcast. This is episode number 191.

Tim Mullooly: This is Tim Mullooly.

Tom Mullooly: And Tom Mullooly.

Tim Mullooly: We’re going to keep on going answering those questions that we’ve been getting from you guys on a weekly basis. Some really great, unique, interesting scenarios and questions about financial planning and investments and pretty much anything that falls under our umbrella of expertise, you could say.

Tom Mullooly: Another podcast that we both listen to would say, “These are all fascinating.”

Tim Mullooly: Yes. So, let’s jump right into the questions. We have a couple good ones for you today. Yeah.

Tom Mullooly: The first question is about a 401(k) and getting a loan from a 401(k).

Tim Mullooly: Right. The question is, “Will I have to pay back a 401(k) loan with post-tax dollars?”

Tom Mullooly: The short answer is yes, you will have to pay back a 401(k) loan with post-tax dollars. Think about it. If you could pay back a 401(k) loan with pre-tax dollars, why wouldn’t everyone have the maximum loan all the time?

Tim Mullooly: Right.

Tom Mullooly: Because they’d just be shoveling pre-tax dollars into their 401(k) plan, as much as they could. So you’re always going to be paying back a loan from a 401(k) with post-tax dollars. I think the real question, though, is, he said, “When I retire and start withdrawing the money, will I again be paying taxes on it?”

Tim Mullooly: And that answer is no. Most 401(k)s, when you take a loan and you pay it back with post-tax dollars, that money is tracked. They can tell which money was used to pay back a loan, which is post-tax, which is pre-tax. They should be able to keep track of that so that you’re not taxed on the money twice.

Tom Mullooly: Right.

Tim Mullooly: Because otherwise, it would seem very foolish, even more foolish to take a loan from your 401(k) if you have to pay taxes on it twice.

Tom Mullooly: Right. Not every 401(k) plan in the United States has the ability for participants to take loans. Understand that if you happen to be in a plan that permits loans, you’re in a pretty sophisticated plan and they have the accounting software to keep track of your pre-tax and your post-tax additions. Paying back a loan will definitely be a post-tax addition to your plan balance. Now, understand that post-tax additions like the money you use to pay back a loan cannot be rolled over into an IRA after you retire. You’re just going to get a check for that money.

Tim Mullooly: Right.

Tom Mullooly: Yeah, that’s not going anywhere.

Tim Mullooly: I think if your plan offers you the ability to take a loan and you’re unsure, a good thing to do would just be to ask the plan if they keep track of that, because they should, and if they’re not, you really should think twice about whether or not to take the loan.

Tom Mullooly: One other follow-up question that I think I would say. If you’re calling your 401(k) plan administrator, like Tim just mentioned, ask them what happens to the contributions. Do they go into the money market? Do they go into some kind of stable value fund? What happens to the actual dollars that you send in?

Time stamps: 1:10 – “How wary should I be of 401(k) fees through my company’s plan?” 4:50 – “How should I invest a large sum of my savings towards my kids future expenses?” 7:28 – “Is now a good time to put money into a Roth IRA?” 13:20 – “Should I max out my Roth IRA contributions before investing […]

Time stamps:

1:10 – “How wary should I be of 401(k) fees through my company’s plan?”

4:50 – “How should I invest a large sum of my savings towards my kids future expenses?”

7:28 – “Is now a good time to put money into a Roth IRA?”

13:20 – “Should I max out my Roth IRA contributions before investing in another vehicle?”

17:10 – “Is a fiduciary or a broker better for planning and investing assets?”

19:00 – “Is it possible to spread out the taxes after closing out a guaranteed annuity?”

24:00 – “Should I stay with a 403(b) annuity or roll it back into my 401(k)?”

28:43 – “How can I dig myself out of debt after losing my job?”

Show Notes

*Modified Adjust Gross Income – Investopedia

MAM Podcast 190: Financial Questions with Tim & Tom – Transcript

Tom Mullooly: Welcome back to the podcast. This is episode 190 of the Mullooly Asset Management podcast.

Tim Mullooly: We’re getting close to 200 now. That’s a lot.

Tom Mullooly: That’s right. Well, we appreciate everybody tuning in. I’m Tom Mullooly.

Tim Mullooly: This is Tim Mullooly.

Tom Mullooly: Together, we answer your questions that come in. We happen to have a slew of interesting questions that have come in, and we want to tackle them, so let’s jump right in.

Tim Mullooly: Right on. First question is, “How wary should I be of 401(k) fees through my company’s plan?” It goes on to say, “I have been working for a company for over six months and have been offered a 401(k). The vesting period is surprisingly six months and 100% matching. After recently becoming more aware of the hidden fees that these financial companies charge their employees, I asked both my employer and the 401(k) financial company about the fees. They both stated that my employer pays for all the fees. This sounds too good to be true. Is there something I should be aware of or concerned about?”

Tom Mullooly: Well, when it comes to 401(k) fees, should you be wary? I think you should be aware.

Tim Mullooly: Right.

Tom Mullooly: The fees are pretty much negotiated between the company, the employer, and the administrator on the plan. It may sound surprising in 2017 that the vesting period is six months. I’m not surprised. When I worked at a particular brokerage firm, I was not permitted to join the 401(k) plan for the first year that I worked there, and then I was invited to join the 401(k) plan.

Tim Mullooly: Lucky you.

Tom Mullooly: Yeah. The 100% matching, make sure you understand what the terms are with the 100% matching. I can’t imagine an employer, if you maxed out your $18,000 contribution that they’re going to match it 100%, so I would check the fine print on that. Since it sounds like you’ve been checking the fine print anyway on hidden fees, there’s nothing really hidden too much anymore. It’s all out in broad daylight.

Tim Mullooly: Right.

Tom Mullooly: The statement that kind of jumped off the page at me is that the employer and the plan administrator both said that the employer pays for all of the fees. Now, let’s just pump the brakes a little bit on this.

They may pay transaction costs and they may pay for any kind of maintenance fees that go on in the plan, but if there are embedded fees in the investments that you own, for instance, if you’re going to own a bond ETF in your 401(k) and there’s nine basis points built into that, I really doubt that the employer is going to pick that up because there’s no way to really bill it.

I wouldn’t be very,

Time stamps: 2:00 – “Which bond ETF should I invest in?” 6:00 – “How can I recover from losses in my IRA?” 9:25 –  “Where should we invest a profit sharing distribution to minimize the taxes?” 11:50 – “Should I start managing my own retirement account?” 14:45 – “Can I move funds from a retirement account, from a […]

Time stamps:

2:00 – “Which bond ETF should I invest in?”

6:00 – “How can I recover from losses in my IRA?”

9:25 –  “Where should we invest a profit sharing distribution to minimize the taxes?”

11:50 – “Should I start managing my own retirement account?”

14:45 – “Can I move funds from a retirement account, from a former employer, into an individual 401(k)?”

21:55 – “How should I invest my 401(k) savings after I retire?”

 

Mullooly Asset Podcast #189: Tim & Tom Answer Your Questions

Tom Mullooly: Welcome back to the Mullooly Asset Management podcast. This is episode number 189, 189. My name is Tom Mullooly. I am the CEO and President of Mullooly Asset Management, and with me this afternoon-

Tim Mullooly: Is Tim Mullooly. I am an Investment Advisor here at Mullooly Asset Management. Today, we’re gonna continue to answer some questions that we get on a weekly basis. We’ve been doing this for a couple podcasts now, and it seems to be working out. We’re getting some good feedback from people, so we’re gonna keep rolling with it.

Tom Mullooly: Yeah. What we’re finding is that when people take the time to write these questions in … they send them in to a website … and we can view them and pick out ones that we think are worth talking about or worth discussing on this podcast. What we’re finding is that some of our listeners have similar questions or off-shoots on the same topic, so if you hear a topic that interests you or you have a question about, definitely get in touch with us and we’d be happy to feature your question or discuss your topic on a future podcast. Tim, why don’t we jump right in with some of the questions that we’ve got today.

Tim Mullooly: Sure, let’s get started. First up, “which bond ETF should I invest?”

Tom Mullooly: Oh, that’s easy. The one that goes up the most.

Tim Mullooly: In a perfect world, yeah.

Tom Mullooly: Can we predict the future?

Tim Mullooly: Unfortunately, not yet.

Tom Mullooly: No. So we can’t predict the future. We can’t tell you which one is going to be the best. It’s a tough question for advisors to answer, because we don’t know who’s asking the question.

Tim Mullooly: Right. Everyone’s situation is different, so to properly answer this question we would need to have this person come in, and learn a little bit about them and their situation, and what they need and what they’re looking for from these types of investments. Otherwise, without that information, it’s kind of impossible to answer a question like this.

Tom Mullooly: It’s like asking, “What do you like better, chocolate or vanilla? What’s better, chocolate or vanilla?” Well, it really depends on your taste.

Tim Mullooly: Well, do you like chocolate or vanilla?

Tom Mullooly: Right. So if you go to episode 51 of our videos, you’re going to see that I got into a discussion about “know your client.”

Tim Mullooly: Right.

Tom Mullooly: And it’s hard for an advisor to make a blanket recommendation, that “This bond ETF is better than that bond ETF.” We can’t make a suggestion or a recommendation to someone until we know more about your situation. It’s not like we’re trying to dodge the answer. The answer is there’s lots of good bond ETFs out there. We have to find what your situation’s about, and then determine which is best for you.

Tim Mullooly: Right.

Tom Mullooly: And a lot of times, it’s not a decision about good or good versus bad.

Mullooly Asset Podcast #188 – Tim & Tom’s Mailbag Questions – Transcript Tom Mullooly: Welcome back to the podcast. This is episode number 188. 188 podcasts. That’s pretty good. Tim Mullooly: That’s a lot. Tom Mullooly: Yeah. I’m Tom Mullooly. Tim Mullooly: And this is Tim Mullooly. Tom Mullooly: Together we’re going to be answering […]

Mullooly Asset Podcast #188 – Tim & Tom’s Mailbag Questions – Transcript

Tom Mullooly: Welcome back to the podcast. This is episode number 188. 188 podcasts. That’s pretty good.

Tim Mullooly: That’s a lot.

Tom Mullooly: Yeah. I’m Tom Mullooly.

Tim Mullooly: And this is Tim Mullooly.

Tom Mullooly: Together we’re going to be answering your questions.

Tom Mullooly: This will be a pretty different podcast than we’ve done this week and last week in the sense that we are answering questions that we are getting in our mailbox.

Tim Mullooly: Right.

Tom Mullooly: And they’re pretty unique.

Tim Mullooly: Yeah, some of them are pretty interesting, so we figured, someone’s asking it, so other people are probably wondering the same thing. Might as well answer it for you in one big podcast for you.

Tom Mullooly: Right. Why don’t we jump in with the first one.

Tim Mullooly: Sure. The question is, “Should I be listing my brokerage firm as a primary beneficiary?”

Tom Mullooly: Okay, big sigh. Holy moly.

Tim Mullooly: In a word, no.

Tom Mullooly: No, don’t do it. “My broker had me designate his firm as the primary beneficiary to my variable annuity account,” okay so I just wanted to find out who this broker is. I have a real problem with this. I’m sure there’s a reason why. Either he didn’t know … I don’t know.

Tim Mullooly: I hope that’s the case.

Tom Mullooly: I just don’t understand why he would ever do that. “I was told that,” we’re reading here the letter, “I was told that upon death a payment would be made to an IRA account that my spouse is the primary beneficiary of as opposed to a direct payment to her. The firm is claiming that this is necessary because they’re custodians of my account. Everything I’ve read says ‘never list your brokerage house as the primary beneficiary for anything.'”

Okay, I’m not going to get into whether your broker is right or wrong, but I think naming a brokerage firm as a beneficiary anywhere is a terrible idea.

Tim Mullooly: I agree. Yeah. If the money’s going to go to an IRA account that your spouse is the beneficiary on, why wouldn’t you just make your spouse the primary beneficiary of the annuity?

Tom Mullooly: Right. I’m sensing that … This is all the information we have. I’m sensing that this is an annuity that is inside an IRA.

Tim Mullooly: That’s a whole other thing.

Tom Mullooly: Yeah. I have some real issues with this, but a pre Department of Labor law … We’ll find out what the numbers are this year, but before the Department of Labor Law was enacted for the last couple of years billions, with a B, billions of dollars inside retirement accounts have been placed annuities. So, we’re going to ask the question. I know I sound like a broken record, but I’m going to ask it again. Why? Just call up your advisor and ask them. Why would I ever invest in a tax-deferred investment, like an annuity, inside of a tax-deferred account, like an IRA? Or a 403(B) teacher’s annuity. Like, what?

Tim Mullooly: It doesn’t make any sense.

Tom Mullooly: I don’t understand. To me, there is little to no economic benefit to owning something like that inside of a tax-deferred account.

Tim Mullooly: It’s like tax-deferred inception. A dream inside a dream. tax-deferred account inside a tax-deferred account.

Tom Mullooly: I have reasons I’m not going to get into in this podcast that I think may be behind those kind of sales practices, but I just would love to get a straight answer why someone would own a tax-deferred investment inside of a tax-deferred account.

Tim Mullooly: Yeah.

Mullooly Asset Podcast #187: Tim & Tom Answer Investopedia Questions – Transcript Tim: Welcome back to the podcast. This is episode number 187. Today we’re going to do something a little different. This is Tim. I’m here with Tom. Tom Mullooly: Hello, everyone. Tim: That’s the same, but today we’re going to do something a little […]

Mullooly Asset Podcast #187: Tim & Tom Answer Investopedia Questions – Transcript

Tim: Welcome back to the podcast. This is episode number 187. Today we’re going to do something a little different. This is Tim. I’m here with Tom.

Tom Mullooly: Hello, everyone.

Tim: That’s the same, but today we’re going to do something a little different. We have some questions that come in on usually a weekly basis from Investopedia looking for advisors to answer them. We decided to pick out some of the good questions that we got over the last week and answer them for you.

Tom Mullooly: Right. What we’re doing now is we’re really just kicking around the answers. These are not the formal answers that we would post online, but this is just two people talking. If you were here in our office instead of listening on a podcast, this is the immediate response that you would get, not something that’s been picked over and polished up for a letter or a blog post, but really, it’s just two advisors sitting around talking to someone who’s got some basic investing questions.

Tim: Right. Just answering them off the top of our head. Not getting too bogged down in researching the answer and making sure they’re perfect.

Tom Mullooly: Right, right. We’ve got a handful of questions. I think we’ve got five or six, so let’s …

Tim: We’ll dive right in.

Tom Mullooly: … see how far we can get.

Tim: Sure. First question. “Where can I check the most active stocks during pre-market?” It goes on to say, “I recently learned about pre-market trading. Is there a commonly used resource for how to check trading volume during pre-market, and how can this be interpreted as a potential tool for investment strategy?”

Tom Mullooly: Okay. The first thing I would tell you is if you’re going to be really serious about doing a lot of trading, like the person who wrote this question might be, is invest the money. Spend $2,700 a month and get a Bloomberg terminal.

Tim: Right.

Tom Mullooly: You’re going to get all the information you need. Other than that, there are some … You can go to a lot of these free financial websites or you can get a subscription to the Wall Street Journal or MarketWatch, some of these other sites that you’re going to find online. But just be aware that the volume that is posted is usually stale. It’s not always reported. We find the same thing with exchange traded funds, in that the volume that’s reported may not be the actual traded volume that particular day.

Some of the stuff gets posted late. Some of the stuff doesn’t get posted at all. You have to be a little skeptical of these numbers that you see, especially in pre-market trades. One of the things that I used to caution to clients when they would … When the internet and CNBC really started taking off in the late ’90s, they would talk about how xyz.com, whatever the company was, reported earnings after the market closed, and it’s trading up 15%. I actually had clients that would call me and they’re like, “Can we buy shares of that in the after market?”

At the time … I’m not talking about presently, but at the time, a lot of trades that took place in the after market or pre-market were considered matched sales. Think about that. Matched sales. So you want to sell 1,000 shares of XYZ at $71.25. No such thing as a market order. You want to sell your shares at $71.25. There has to be a buyer at that price, and if it doesn’t happen, no match. No sale. I’m not sure if that’s the way things are posted now, but that’s how the Wild West began. Think about if you had someone on the other end who you knew who was interested in buying what you were selling.