Your Money, Your Wealth

Will a financial advisor give you an unbiased opinion? What's the difference between a TSP and a Roth IRA? Joe Anderson, CFP® and Alan Clopine, CPA answer these questions and more in YMYW podcast episode 91. Original publish date December 17, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.

00:54 "A stretch IRA is a way for your children, when they inherit your IRA, to stretch it over their lifetime…this may go away…if it goes away, we will go back to old rules which means all money in the IRAs needs to be withdrawn within five years, which could put your kids and grandkids in much higher tax brackets."

05:17 "A Roth IRA will grow 100% tax-free. There is no required minimum distribution in a Roth IRA. If you pass with a Roth IRA, then your kids can take those dollars out tax-free. So, it grows tax-free you're your life, your spouse's life and the kids' lives. It's very powerful if you do this right."

06:54 "This is one of the most important times ever to be doing conversions; the unfortunate thing is you have to do it before December 31st for this year."

13:52 "If you're broke, you can always pull out your Roth contribution regardless of what age you are – no tax, no penalty."

15:08 - "I'm in a 30 year fixed mortgage with Wells Fargo. There have been several financial criminal incidents regarding Wells Fargo this past year. Could my mortgage be negatively affected by this as well as the interest rate hike?"

23:03 - "I recently changed my job. My new employer offers a 401(k) plan, but only after I have worked a certain number of hours. So technically, I cannot contribute towards any retirement account. So as to reduce the tax, can I contribute towards my spouse's 401(k), and max out his contributions? We file taxes jointly."

25:09 - "Will a financial advisor provide an unbiased assessment of a financial plan I already have in place? I already have an Investment Advisor connected with an insurance company who handles our investments. I would like to have an independent financial advisor who can provide an unbiased assessment of our financial plan and investments. Is it possible that an advisor would provide this service and what fee might be expected?"

33:33 - "Can I move money from a retirement account to a Roth IRA and what is the process like? Tax ramifications? Do I have to move all of it?

34:36 - "I am a government employee and have a TSP. What is the difference between that and a Roth IRA? A civilian Roth IRA and TSP?"

It's your last chance to lower your tax bill – find out some last-minute moves to save on taxes before year-end. Plus, how are your assets titled? Joe Anderson, CFP® and Alan Clopine, CPA explain why making the wrong move could cost you big time in YMYW podcast episode 90. Original publish date December 17, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.

13:52 "The market magnet has begun to pull the long dormant mutual fund investors, so domestic stock funds have seen an estimate net flows of $35.8 billion in the past four weeks (Investment Company Institute)."

14:40 "History tells us that money tends to flow near market peaks…it's interesting how that tends to happen."

15:12 "Now is a really good time to take a look at your overall portfolio, and look at a rebalance strategy. There are a lot of people who set it and forget it, and then the other side of the spectrum is people who day-trade the heck out of their 401(k) plans."

20:44 "I've got five ways to lower your tax bill now, this is from Nerd Wallet and came out on December 14…when it comes to tax planning, a majority of strategies need to be accomplished by December 31st for that tax year."

23:30 "There's a special account called a donor advised fund, where you can set up the account, put your own money into it, and that money will ultimately go to charity, not necessarily this year. Here's the key – the year that you put the money into the account is the year you get the tax deduction."

24:15 "It's a great way to take a deduction when your tax bill is higher."

27:26 "Offset your capital gains with losses."

28:21 "When you tax-loss harvest, here's how you do it properly: you sell the position that's down to create that loss, and then you buy something that's very similar so you're still in the market because the market because the market may come zooming right back."

29:37 "It's important to realize how things are titled when it comes to your assets, especially your retirement assets."

29:55 "A lot of you have named your living trust as the beneficiary of that retirement account…there are pros and cons to this. There's so much misinformation on what people should do. I would say the majority of you who are married should not name your trust the beneficiary of your retirement account unless a) it's a second marriage and you want to preserve those assets if you had kids from a previous marriage; b) second of all, if you're not married and have children and those children might not be able to handle the type of wealth that is inside your retirement account."

34:59 "If I just named my spouse as the beneficiary, she could keep it in my name and take a required distribution if she wanted to, or she could roll it into her own and avoid any type of income coming out of it and being taxed on it and let it grow tax-deferred until her retirement date."

36:54 "A retirement account is completely different than say your brokerage account or checking or savings account. A retirement account has to have a required distribution from it…so be careful with how you name your beneficiaries."

37:12 "The death of the stretch IRA could happen as early as next year."

Would contributions to a traditional IRA reduce your tax burden? How do you start saving money at a young age and what are the benefits of a Roth IRA? Joe Anderson, CFP® and Alan Clopine, CPA answer your email questions in YMYW podcast episode 89. Original publish date December 11, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.

02:31 - "Would contributions to our traditional IRAs reduce our tax burden? My wife and I currently have no tax write-offs and our mortgage is paid off on our home. I contribute the maximum to my 403(b), but I also have a traditional IRA and a Roth IRA, as does my wife. We have been contributing to our Roth IRAs over the years to the neglect of the traditional IRAs. I was wondering if it would make sense to start contributing to the traditional IRAs so we can start to decrease our tax burden every year. Of course, the benefit of the Roth would have tax advantages years from now when I retire. My wife and I are both in our late 40s and I have about 10 to 11 years before I think I can retire."

10:52 - "How should I start saving? I just started my first job and they don't provide 401(k)s. What should I do to prepare for life, and to start saving? I've heard a Roth IRA is the way to go. Is this something I want? Other than tax benefits, does it grow?"

15:24 - "What are the tax implications of removing part of my IRA to give to my ex-wife? My ex-wife and I had separate IRAs. We divorced in 2014, but I kept the house. I owe her money in several months as a first payment on the value of the home. What are the income tax issues I will face by removing a large portion of my IRA to hand over to her?"

19:09 - "Will a loss on our sold home off-set taxes on a 401(k) withdrawal? My wife is 65 years old and I will be turning 65 in May 2017. We are planning to move out of California to Las Vegas for good. I will have to withdraw 100% of my 401(k) to put as a down payment to purchase a home in Las Vegas. Then, we plan to sell our house in California which is paid-off. We believe that after the sale, we will have a loss. Would we be able to use that loss to reduce taxes on the 401(k) or IRA withdrawal?"

24:38 - "Will a Trump presidency reduce the tax and regulatory burdens placed on my small business? I own a small business in the New York area and have recently started to work on our 2017 financial projections. I have spoken to a number of friends, family and other small business owners about the ramifications of a Trump Presidency. Although I do not agree with many of his polices, I am hopeful that he will be able to reduce the tax and regulatory burdens of operating a business. When creating my forecast, what should assume and what should I ignore?"

27:35 - "Will I be thrown into a higher tax bracket due to a high ordinary income tax? I reach age 66 in July, full retirement age, and will continue working. I'm considering taking Social Security retirement at 66 and contributing to a 403(b) account to increase the balance. Is the entire amount, Social Security and wages, taxed as ordinary income, so that I will be thrown into a higher tax bracket? Is Social Security income counted dollar for dollar? Would it pay me to invest the max amount in my 403(b)?"

Joe Anderson, CFP® and Alan Clopine, CPA start off YMYW podcast episode 88 with a quick discussion on potential tax changes under Trump. Plus, 12 ways you could go broke in retirement and put yourself at financial risk. Original publish date December 11, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.

00:00 - Intro

08:28 "There are things that you want to make sure that you take a look at in regards to your overall retirement planning and tax planning, [including] Roth IRA conversions."

09:00 "Most tax planning strategies have to be finished before December 31st, so now is the season for tax planning."

10:03 "There's a lot of confusion about taxes and what may be coming in the next year with the Trump proposals and GOP proposals."

13:59 "In terms of the Trump proposal – this is also true of the GOP proposal – it would only be three tax brackets, 12%, 25% and 33%."

14:44 "Under the Trump plan, if you're married and your taxable income is below $75,000 you'd be in a 12% bracket – if it's above $75,000 then you're going to move into the 25% bracket and by the time you hit $225,000 you get to 33%."

15:00 "When you look at single taxpayers, it's the same exact thing but cut in half."

17:12 "One of the biggest things I [would consider] from a planning perspective at the end of this year would be if I'm charitably inclined."

17:46 "Charitable donations are really important and big right now because if you are in a higher tax bracket this year or next year or in the next couple of years, you want to take that deduction in a year where you get more tax benefit. There is a way to take future year contributions in the current year and that's by setting up a special account called a donor advised fund."

23:49 "The amount of money that you have in stocks versus bonds has nothing to do with your age…it all depends on when you cash flow, how much income you need and how much it needs to last."

27:08 "Multiple streams of income are better than one."

33:53 "Long-term care – that's going to be a big deal. Most of these companies are totally getting out of the business."

Joe Anderson, CFP® and Alan Clopine, CPA discuss a brief history of the tax code and where it might be headed in YMYW podcast episode 87. Find out some possible tax exemptions and deductions under Trump's presidency; plus, key tax strategies to take advantage of now before the tax code could change. Original publish date December 3, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.

02:35 "Over the decades, Congress simply amended the tax system by adjusting and assessing new taxes in a series of 17 internal revenue acts. By 1939, the series of tax rules became the first formal internal revenue code. 15 years later was the first real tax reform….tax rates got as high as 91%."

03:51 "It was in the Fifties that the alternative minimum tax came into play, and that was really designed for the wealthiest of people."

05:50 "There's Trump's plan, and then there's the GOP plan – there are similarities but [also] some pretty big differences."

08:02 "Tax reform is not a slam dunk, even though we have a Republican president and a Republican majority in the House and Senate."

09:50 "Here's a quick nutshell on the ordinary income tax basis; this is what the proposal is. Right now we have seven brackets. They (GOP) wants to break it down to three. We have a 10%, 15%, 25%, 28%, 33%, 35% and 39.6% bracket. They want to combine the 10% and 15% bracket and call it 12%. Then they'll combine the 25% and 28% tax bracket and call it 25%. Anything over the 25% tax bracket they're calling it 33%."

11:19 "Under Trump, he would like the standard deduction to be $15,000 for an individual and $30,000 for a married couple."

15:01 "Capital gain rates right now are 0%, 15% and 20% depending on what your income levels are."

18:07 "If you are in the 10% or 15% tax bracket today, if you sell that asset there is no tax up to the top of the bracket. Here's a simple example…"

21:48 "You have to understand that things might be changing here, for the good or for the worst depending on what your overall situation is. Get an grasp on your overall situation before the end of the year to make sure you can take advantage of anything you should be taking advantage of this year and set yourself up appropriately for whichever changes may or may not happen."

26:50 "There are two main proposals on the table right now: the Trump plan and the House GOP plan. They both want to change the way we deduct itemized deductions." 27:50 "A donor advised fund is kind of like a mini private foundation..."

30:09 "One of the real benefits of the Roth conversion is for you and potentially your beneficiaries will potentially get all of that money tax-free."

33:48 "Net unrealized appreciation is another one that's probably on the chopping block. That's taking stock out of your retirement account, moving it into a brokerage account to enjoy capital gains tax."