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Monday, September 29, 2014

Thoughts on Leaving a Roth to Your Heirs and Roth Conversions

I recently read an article in the Wall Street Journal about some potential changes in the Roth IRA. President Obama’s 2015 budget would require a Roth distribution at age 70.5 and also not allow beneficiaries to stretch out their inherited IRAs. Click here to read the article. As always it is best to discuss these types of planning items with your advisor.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual, nor be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Withdrawals from the Roth IRA account may be tax free, as long as they are considered qualified. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

Monday, September 22, 2014

How Do I Optimize My College Financial Aid Chances?

We've written previously about the college financial aid process and what EFC (expected financial contribution) means in the eyes of financial aid offices and colleges and universities. The question of trying to optimize the chance of qualifying for financial aid has come up quite a bit recently in my client conversations. The topic will only continue to become more popular as college costs continue to rise at a faster rate than inflation. A common piece of advice is that you cannot wait too long to start planning. Start now even if you have young children. As your children get older and closer to the application process every decision can be an important one. As you can read in the recent Wall Street Journal Article the way you finance or do not finance your car could affect your financial aid position.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Thursday, September 4, 2014

Back to School Lessons

Many of our clients have been sending their kids to college in the past month. This can be an emotional, stressful, and exciting time. In addition to learning Medieval Art History and Global Food Ethics, they will also be learning a lot about being independent adults. One of the hardest things for some of them to learn will be to get themselves up in the morning and go to class.

Skipping class can be a big problem for new students. Studies show that class performance and degree completion are directly related to attendance. How do we encourage our students to attend when we can’t drag them out of bed ourselves? 
 
Maybe it would help a little to calculate how much you or the student is paying for each class. For example, if their classes meet 15 times per week for 14 weeks they would have a total of 210 classes to attend. If the tuition for the semester is $10,000, they would be spending/borrowing about $48 per class. Every time they skip a class, they waste $48. To some, this may help them get a firmer grasp on what this education costs. The more they value each class, the more likely they are to attend.