Financial Education Resources

Recent ACP Member Blogs

  • Recent changes signed into law at the end of 2019 through the Secure Act regarding 401(k) and IRA distributions may not only affect your retirement planning, these changes may create a need to review your estate planning as well. Barron’s (New Rules for Stretch IRAs and RMDs Have Raised Many Questions. Barron’s’ Found Answers) and [] ©Bring Clarity to Your Finances™. The Secure Act May Alter Your Retirement and Estate Planning is a post from Bring Clarity to Your Finances™
  • Vision proves that all things are possible. Thousands of concepts that are common today were once considered utterly impossible, completely absurd, and unattainable. Imagine the laughter and mockery that you would have experienced 150 years ago if you discussed the idea of carrying multitudes of people across the globe in a metal shell with wings, traveling thousands of miles in only hours, or talking to someone from a great distance with a handheld wireless device. There are so many great discoveries and inventions that are not that impressive today, because we have learned to look beyond. Those are just glimpses of what vision is capable of achieving. Clearly the successes that are going to exist tomorrow are not seen today, but someone’s vision will bring them into play. Why not yours? Joining us for our discussion You Can Achieve Anything is Thomas W. Jones who is calling in from his Stamford, CT office. Thomas W. Jones is founder and senior partner of venture capital investment firm TWJ Capital LLC. He previously served as Chief Executive Officer of Global Investment Management at Citigroup; Vice Chairman, President and Chief Operating Officer at TIAA-CREF; and Senior Vice President and Treasurer at John Hancock Insurance Company. Jones received masters degrees from Cornell University and Boston University, and holds honorary doctoral degrees from Howard University, Pepperdine University, and College of New Rochelle. His latest book is From Willard Straight to Wall Street: A Memoir Welcome to Mastering Your Money, is Thomas W. Jones
  • Essential Financial Strategies is pleased to announce a new service–The Strategic College Plan.   This service helps families figure out how to pay for college while minimizing  the future burden of college student loans.   Using a sophisticated knowledge base, Rorik Larson assists families to predict their Expected Family Contribution.  Then they can select colleges that fit… [Continue] (Feed generated with FetchRSS )
  • Evaluate your current situation and determine how well prepared you are for retirement. Calculate the value of your retirement nest egg and develop a retirement budget.
  • There are so many things that change when someone retires and one of the factors that new retirees have a tough time managing is their changing cash flow. For so many years, they have been dedicated to putting money into their retirement accounts, but what happens when they have to take it out? Today we are going to look at required minimum distributions: what they are, how they work, and the many ways they can impact you. Let’s dive in. Understanding RMDsRequired minimum distributions are annual IRS mandated withdraws from qualifying retirement accounts. This system was created so that the IRS can collect taxes from your accounts that have previously remained tax-free. RMDs apply to accounts that have been contributed to and growing tax-free for many years and act as a way to get those taxes back. An RMD, in essence, is an amount of money you have to take out of your retirement accounts, on or before December 31, each year once you turn 72. Your first RMD is the only time when you don’t have to withdraw the funds by December 31. The first year you begin your RMDs, you can wait until April 1 of the following year to take them. Say, for example, your 72nd birthday was in March 2019, by September 2019 you will have turned 72. According to the rules, you don’t have to take your first RMD until April 1st of 2020. By waiting until April, you would then have to take a second RMD at the end of December to account for both the current and previous years. Since waiting would cause two distributions in the same year, many people choose to take their first RMD in the year that they turn 72. All distributions from your qualifying retirement accounts are taxed as ordinary income, which can play an important part in your tax planning strategy. By taking two distributions in one year, you could raise your income enough to bump you into a higher tax bracket that comes with a heftier tax bill. Be sure you work with your financial planner and tax professional to help you make smart, tax-efficient choices with your RMDs. Should you forget or not withdraw enough money from your qualified accounts, the IRS will issue a 50% penalty on the money that was supposed to have been withdrawn, making RMDs a crucial part of your financial plan in retirement. Knowing your qualified accountsEarlier we said that RMDs were tied to qualified retirement accounts so it is important to know which accounts you’ll need to be aware of. Here are the accounts that have an RMD from the IRS: 401(k) 403(b) 457(b) Traditional IRA SEP IRA SIMPLE IRA SARSAP IRA Roth 401(k) For RMDs it is important to note that each account is viewed independently. So if you have two IRAs and a 401(k), you will need to take a separate RMD for each account to avoid the penalty. The only account that does not have an RMD is a Roth IRA. A Roth IRA is free from RMDs because Roth IRAs are funded with after-tax dollars. Since you paid taxes on the money upon contribution, you don’t need to pay taxes at distribution. It is important to note that a Roth IRA remains free from RMDs as long as the account owner is alive. If the account owner passes away, the beneficiary who inherited the IRA will have to take RMDs. The IRS has a table to help you determine how to handle your inherited IRA. Calculating your RMDsYour RMD will change each year and is determined by two factors Your account balance Your age Calculating your RMD may seem daunting, but the process is really simple. First, you start with your account balance on the previous December 31. Next, you will use the IRS table detailing a life expectancy factor based on your age. You then divide those two numbers (account balance from prior Dec. 31 and life expectancy number) to get your RMD. In order to plan for your future RMDs, use an online calculator to help you estimate your RMDs from your qualified accounts. Remember, you have to take out the required amount by December 31 to avoid the penalty. It is also important to note that if you withdraw more money than you need to, that extra money isn’t credited for future RMDs. Each RMD is separate year to year and no money can be rolled over. Using your RMDsRMDs are attached to many of the saving vehicles you have used for most of your working career. Many retirees rely on those distributions to help fund their living expenses or retirement lifestyle. But there are other options such as donating some or all of your RMDs to charity though a process called qualified charitable distributions (QCDs). RMDs can be difficult to get used to, especially for new retirees. But by understanding the process and working with a detailed professional at your side, you can make the most of them and use them to enhance your life in retirement. Are you interested in exploring new options for your RMDs this year? Give us a call and we would love to help you.