Posts by Eric Reed
Retirement
I Have to Take RMDs, But Don’t Need the Money Yet. What Can I Do With It?
While many retirement accounts offer tax-sheltered ways to save and invest, the IRS mandates accountholders start withdrawing money at a certain point. This takes the form of required minimum distributions (RMDs). Required minimum distributions currently start at age 73 for many retirement accounts. It’s not uncommon to reach an age when the IRS requires you… read more…
Retirement
The Equivalent of One-Third of My Monthly Retirement Contributions Gets Eaten Up by Fees. Am I Getting Ripped Off?
Paying fees is part of being an investor, as everything from mutual fund investing to a personal financial advisor can cost you. However, it’s also important to periodically review the fees you’re paying to ensure you’re not doing any long-term harm to your returns. For instance, depending on the size of your 401(k) or IRA,… read more…
Taxes
I Want to Give My Daughter and Her Husband $50,000 For a Down Payment. Do I Have to Worry About the Gift Tax?
Imagine you have $50,000 to give to your daughter and her husband for a down payment on their new home. The question is, will you owe gift taxes because of your generous gesture? Despite popular framing, the federal gift and estate taxes only apply to very wealthy households. Unless you have approximately $13 million to… read more…
Taxes
How to Reduce Your Tax Liability on a Roth IRA Conversion
Converting your current retirement accounts to a Roth IRA is typically a very tax-efficient strategy. It can help lower your lifetime taxes significantly. However, it does come with a large up-front bill. While there’s no way to avoid conversion taxes completely, you can restructure them to make this much more manageable. By staggering out your… read more…
Investing
How to Value a Startup for Investing
Startup opportunities are everywhere. Far from the common vision of a tech company with some new string of code, the startup world is filled with sandwich-slingers, cardboard salesmen and trial attorneys looking to get off the ground. And these founders are always looking for money, because the one thing an entrepreneur doesn’t typically have is cash. And… read more…
Retirement
Is $500 Per Month Too Much for Long-Term Care Insurance?
How much should you pay for long-term care insurance? Let’s say you’ve been offered a policy for $500 per month, or $6,000 per year. While the results will vary widely based on your health, age, gender and household size, for most individual policies, this would be expensive. However, it really depends on your personal circumstances.… read more…
Retirement
I’m 75 and Still Working. Can I Avoid Taking RMDs?
Required minimum distributions, or “RMDs,” are the government’s way of getting its tax money back on retirement accounts. Starting at age 73, anyone with a pre-tax retirement account such as an IRA or a 401(k), must begin must begin withdrawing a minimum amount from this account each year. This triggers a tax event, generating the income… read more…
Taxes
I’m Selling My Home and Netting $750k to Downsize for Retirement. Do I Have to Pay Capital Gains Taxes?
Suppose you sell your primary home and make a $750,000 profit. Will you owe capital gains tax on that profit? The short answer is yes. Depending on a handful of factors, you may owe tens of thousands of dollars to over a hundred thousand dollars. Your exact tax liability could vary drastically, so knowing what… read more…
Retirement
My Husband and I Are in Our 50s, Have $1 Million in Our 401(k)s and Want to Retire at 65. Should We Switch to Roth Contributions?
Should you make 401(k) or Roth IRA contributions? In a perfect world, the answer would be both. If you have the means, maximizing your traditional 401(k) and Roth contributions is a great way to build a diversified set of retirement savings. But, of course, your paycheck gets a vote. So, if you have to choose,… read more…
Retirement
I Want to Convert $500k in My 401(k) to a Roth IRA. How Do I Avoid Paying Taxes?
You can’t avoid taxes when making a Roth IRA conversion, but there are strategies to reduce your tax burden if the circumstances are right. When you convert money from a pre-tax account, such as a 401(k) or an IRA, to a post-tax Roth IRA, you must pay income taxes on the full value of the… read more…
Retirement
How to Create Your Own Retirement Income Plan
It’s important to plan for your retirement income. One of the most overlooked aspects of retirement planning is that there are two steps to this process. First there’s your savings plan – how you will build wealth and set money aside over time. This is, of course, critical. Then, there’s your income plan, or how you… read more…
Taxes
How Foreign Real Estate Property Is Taxed in the U.S.
One of the most common mistakes made by Americans overseas is the belief that they don’t have to pay taxes. This is particularly common given that very few countries tax money made abroad, leading Americans to believe the same rules apply to them. This is untrue. Whether you are at home or abroad, you will… read more…
Estate Planning
How to Use a 645 Election for Trusts and Estates
It’s easy to forget that income taxes are an important part of estate planning. But for executors and trustees, managing this tax burden is an essential part of handling the transfer of assets. One tool that can significantly streamline this process is the Section 645 Election. This section of the tax code allows you to combine… read more…
Retirement
I Made $400k Last Year and Have $600k in Retirement Savings, But My Spouse Doesn’t Work. How Can I Save More for Retirement?
It’s common for even very high earners to feel squeezed, especially if you live in an expensive area like New York, San Francisco or Boston. Costs of living close to your job will almost certainly be high, particularly since you’re competing with other six-figure earners. Depending on your field, you could easily have $200,000 or… read more…
Investing
How to Trade Options With Schwab
If you would like to trade options, Schwab is a good choice. Since acquiring TD Ameritrade, Schwab has integrated the popular Thinkorswim trading platform into their own online brokerage. Thinkorswim is particularly useful for complicated, highly technical trading, which is exactly what options traders need. So, if you’re a Schwab customer, here’s what you should… read more…
Retirement
What Should I Do With My 401(k) Once I Retire?
Managing your 401(k) in retirement every bit as important as managing it up to that point. There are plenty of reasons for this but the big one is, you’re going to need this money for a long time. With good health and good luck, you could spend almost as much time in retirement as you… read more…
Investing
What’s the Average Return on an All-Bond Portfolio?
Like all markets, bonds fluctuate. Your returns will be based on what you hold, when you buy it, tax treatment and other factors. While many choose to diversify their portfolios across stocks, bonds and other assets, an all-bond portfolio may allow for more predictability and income generation. You can also diversify an all-bond portfolio with different… read more…
Advisor Resources
What Is the Directional Movement Index (DMI) Indicator?
The Directional Movement Index (DMI) is way to project an asset’s price movement by combining a handful of individual metrics, often for the sake of technical analysis in market trading. Using historical price movements and current circumstances, investors may use the DMI to estimate the direction and strength of an asset’s price. While it may… read more…
Retirement
I Have $1 Million in a Roth IRA and Will Receive $2,250 Monthly From Social Security. Can I Retire at 62?
Suppose you have $1 million in a Roth IRA and will receive $2,250 each month from Social Security when you become eligible for benefits. Would this be enough to allow you to retire at age 62? The answer to that question could be yes, but there’s a chance it may require you to live on… read more…
Insurance
I Was Quoted $2,000 Per Year for Long-Term Care Insurance. Is That Too Much?
Long-term care insurance is an important way to mitigate risk in retirement. Unexpected health issues and the related costs can take over a retiree’s financial life if they don’t have a plan to pay for costs of care. The cost of such a policy will depend on a handful of factors – including your age… read more…
Estate Planning
How to Avoid Probate in Alabama
As you make your estate plans, if you are looking to avoid probate in Alabama, the most effective options will be to establish a living trust, hold major assets in joint tenancy, and add a payable-on-death designation to significant financial accounts. This can help you avoid the costs and time of having your estate handled… read more…
Personal Finance
We Have a $500k Brokerage Account and $250k in Retirement Accounts. How Can We Increase Financial Aid to Help Pay for Our Child’s College?
Paying for a college education is a major financial commitment. While much easier said than done, restructuring your finances can help modestly. Student aid is calculated based on a formula called Expected Family Contribution, “EFC.” This is the amount that the government assumes a family can pay for their student to attend college. For a… read more…
Retirement
I Have $500k in a Roth IRA, and Will Receive a Combined $2,000 a Month From a Pension and Social Security. Can I Retire at 62?
Ultimately, whether you have enough to retire depends on your costs and your income. If you can live on a tight budget with the right circumstances, $2,000 a month from a pension and Social Security, combined with the right strategy with $500,000 in your Roth IRA may be enough to sustain you throughout your retirement.… read more…
Advisor Resources
SEC Exam Priorities for 2023 and 2024
The SEC’s Division of Examinations (commonly known as EXAMS) is the oversight branch of the Securities and Exchange Commission. It’s the second largest section of the agency, after the enforcement arm. The Division of Examinations uses a variety of different inspections and examinations to make sure that companies and other market participants are following the… read more…
Estate Planning
How to Avoid Probate in California
Depending on the nature of any given asset, there are ways to avoid probate. Probate is the process of managing and distributing someone’s assets after they have died. For someone who dies with a will, the probate court will establish its validity, oversee distribution of assets, manage disputes, and handle any other necessary matters. For someone… read more…