Tapping an IRA Early with No Penalty – by Kimberly Lankford.
Many people are familiar with the fact that if they take a distribution from a traditional IRA before 59 1/2, they will incur a 10% federal penalty.
Few people are familiar with a rule called 72+. This often referred to as a series of substantially equal periodic payments. This rule states that if you take a series of equal payments for the greater of 5 years, or until you turn 59 ½, you will not have to pay the 10% penalty. This article outlines in excellent detail, this little known strategy.
June 2016 Kiplinger Retirement Report
Create a Plan for Disabled Adult Child by Susan B. Garland
In our practice here at Hill and Hill Financial, we often deal with the subject mentioned in this article- how to create a plan for a disabled adult child. Medical advances have not only helped all of us live longer but have also greatly helped those children living with disabilities. In the above mentioned article, the author points out several key points in creating a successful plan: 1. Parents should make sure to write a letter of intent outlining all of the details needed for their child to live a fulfilled life- things such as favorite foods and activities, key people to have in their life, etc. 2. The author recommends working with an attorney that specializes in special needs to ensure that all aspects of care are covered. 3. The article talks about the fact that some parents forego a trust and leave the entire estate to their other siblings to oversee and care for the disabled adult child. While this is a growing trend, Susan warns that there could be some possible familial and legal issues with this approach. 4. Finally, Susan advocates that in addition to getting great legal help, parents should also seek out advocacy groups for their child- such as the United Cerebral Palsy group, Autism Speaks, among many others.
Kiplinger Retirement Report Volume 22, Number 12, December 2015
Head Off Squabbles Among Your Heirs
I just got finished reviewing a great article from Kiplinger’s Report regarding effective estate planning. The article highlights the growing conflicts about inheritance that can develop after the funeral of a loved one. The sluggish economy is one of the factors that has contributed to a rise in conflicts- it can make families more prone to fights over money. Poor communication was mentioned as the primary cause of inheritance conflicts and at the heart of a number of issues with estate planning. Other strategies discussed were about dividing “non-monetary” assets. It sounds silly, but some of the biggest fights that break out among heirs have to do with small personal items of little monetary value but have huge sentimental value. The article goes on to discuss how to deal with blended families as well as items of large value- what was referred to as “big ticket” items. I believe this is information worth reading, so check it out when you get some time!
Kiplinger’s Retirement Report Volume 22, Number 11 November 2015
Siblings Fight Over a Parent’s Care
There was an excellent but somewhat difficult article recently in Kiplinger Retirement Report. It was entitled “Siblings Fight Over a Parent’s Care”. The article discussed the somewhat uncomfortable topic of how siblings divide up duties and ultimately decide on how to care for an ailing parent. This scenario is becoming more and more common as the generation of baby boomers begins to age and develop physical, health, and mental challenges. Marsha Swiss, an estate planning lawyer in Washington, D.C. is quoted in the article as encouraging parents and children to discuss these difficult topics and to discuss the parents’ health, housing, and end-of-life preferences so all parties are on the same page. The key conclusion of the article is that parents should draw up very specific legal and other health care documents that outline roles and responsibilities of each child as it relates to the parents’ care. All children and parties involved should be informed of whatever choices are made to avoid confusion and conflict, and most importantly the key is listening to one another and showing gratitude for all those involved.
Kiplinger’s Retirement Report Volume 22, Number 8, August 2015
“Resist the urge to put kids first”
I know that this article’s title runs against the grain of every parent, but it’s very thought provoking and worth reading. As many parents are having children later in life, they are often struggling with saving for retirement or tuition. As the article states, pensions for many future retirees are disappearing. In addition, people are living longer- so savings in retirement is critical. Yet, a survey was done that shows that 52% of parents would be willing to assume $25,000 in debt to cover a child’s tuition. Even more concerning, 53% of parents would dip into retirement savings to prevent their children from taking college loans.
The article discusses ways that parents can still make their children’s’ education costs a priority without sacrificing their retirement funds such as utilizing 529 accounts, offering children a tuition down payment instead of footing the whole bill, or even encouraging children to attend community college first- which still means they can get a quality education.
The question is no longer whether to help children get a good education “OR” save for retirement; rather it’s a question of how today’s future retiree can do both successfully.
March 18, 2015
Retirement: Tuition vs. Retirement
Resist the urge to put kids first by Charisse Jones
Over the last few months, I’ve had the opportunity to meet with a number of clients who have just recently retired. They all retired for a variety of reasons, but many of them were sharing with me about the challenges they faced with “retirement”. When every day feels like a weekend, they share that they often lacked the structure, community, and sense of purpose associated with working. I found a really great article in the USA Today, “Boomers want to keep working- if they can” that deals with exactly this type of issue. The article talks about the growing trend of people who are at the age of retirement, but love to work and want to continue to work. Others are deciding that although their first career has drawn to a close, they want to begin a brand new venture or finally pursue their life’s passion. Previously, if a person had to return to work after retiring it was seen as a failure; however now it is being seen as more of a personal choice whether to return to work or not. It is a thought provoking article that is worth reading.
Boomers want to keep working- if they can
USA Today, Money 3B
February 18, 2015
“Beat Loneliness by Meeting New People”
There is a great article by Christopher Gearon in the December 2014 issue of Kiplinger’s Retirement Newsletter, The focus of the article is that many people over the age of 65 feel alone even though a relatively small percentage actually lives alone.
The article talks about a number of great websites that help people not only connect to other people, but websites that point out where people can get involved and volunteer. Some of the websites listed include the Silver Sneakers Fitness program (www.silverssneakers.com), an exercise program designed for older adults to connect and exercise together, as well as Eldercare Locater (www.eldercare.gov) which can connect you with local activities through your Area Agency on Aging. As I have had the privilege of helping people prepare for and navigate retirement, I have seen many who struggle. They often go far from feeling a sense of structure, community and purpose to one of random activity, isolation and uselessness. This article has some great thoughts regarding how we can find community and purpose at all stage of life.
Beat Loneliness by Meeting New People, Christopher J. Gearon
Kiplinger’s Retirement Report, Volume 21, Number 12, December 2014
I wanted to update everyone on some important changes that are on the horizon as it relates to IRA Rollovers. Based on information from Susan B. Garland in the August 2014 Kiplinger Retirement Report, there are changes on the horizon. Starting in 2015, the IRA is changing their 60 Day Rollover Rule. The current ruling in IRS Publication 590 is that anyone with an IRA can do a once a year rollover with a 60 day time limit per each IRA Account. Starting in 2015, the once a year rollover will apply to each IRA holder regardless of the number of IRA accounts they hold.
This issue will be especially tricky for individuals with IRAs held in CDs. There are many people who have multiple IRA CDs at multiple banks. When they mature, they often just take the money and put it into the bank offering the best rate. Going forward, it will be important to utilize the direct transfer method when CDs mature (if there are multiple accounts). Please don’t hesitate to call the offices of Hill and Hill Financial at 800-887-9647 to find out more information on this very important topic.
Susan B. Garland, Avoid Rollovers of IRAs Held at Banks, Kiplinger’s Retirement Report Volume 21 Number 8, August, 2014