Understanding Required Minimum Distributions - Part I

If you have an account in a qualified retirement plan, you need to understand that one day you will be forced to take withdrawals from your account whether you want to or not. For many this is not a significant concern as these accounts were designed to provide their income in retirement and they are or will withdraw more than enough from them to satisfy the rules. Either way, we will cover some of the basics about Required Minimum Distribution (RMD) along with some key considerations.

Required Minimum Distributions, as already stated, apply to employer sponsored retirement plans including 401(k), 403(b), 457(b), and profit-sharing plans. RMD also applies to traditional IRAs and IRA-based plans such as SEPs, SARSEPs and SIMPLE IRAs.

College Savings – 529 Plans and UTMAs

In previous posts we’ve discussed considerations for college planning. In this post we are going to discuss saving for college and, specifically, two of the more common accounts for college savings: Uniform Transfer to Minor Account (UTMA) and Section 529 Plans.

The Uniform Transfer to Minor Account (UTMA) was an early popular choice for many families to save for college education as it offered a few advantages over traditional savings accounts. First, the transfer of assets was treated as a completed gift which removed the assets from the donor’s gross estate. As a gift, it was subject to the current annual gift exclusion ($14,000 in 2014). Second, any unearned income received favorable tax treatment, albeit lessened with the advent of the “kiddie tax.” Unearned income is generally investment income including interest, dividends and capital gains. Under the current tax code, the first $1,000 of unearned income is exempt using the standard deduction for dependents; and the next $1,000 of unearned income is taxed at the child’s income tax rate. However, any unearned income in excess of $2,000 is taxed at the parent’s marginal tax rate. One drawback to the UTMA is it is considered an irrevocable gift. When the recipient reached the age of maturity – 21 in Pennsylvania and most other states – the custodianship ends, meaning the recipient now has full control and can dispense with the assets however they choose.

3 Retirement Blogs You Have to Read (& Might Even Make You Start Your Own!)

It’s no shock that retirement brings about a lot of free time. Some fill it to the brim, while others enjoy a slower pace. No matter where you fall on the spectrum, blogging is a hobby that can keep up with whatever speed you decide to take.

Whether you decide to start your own blog, or just browse through the musings of fellow retirees, here’s three retirement blogs that we think you’ll love!

1.   Home Free Adventures

      Couple Tim & Lynne Martin sell their home, live out of suitcases, and spend their days touring the world with the money they would have spent on their Californian lifestyle. Lynne writes about their travels, gives advice to others who may choose to follow in their footsteps, and maintains a nationally recognized blog all the while. Read Tim’s take on how they found themselves traveling full-time here!

Long Term Care: What You Need to Know

With Baby Boomers beginning to reach age 65, the topic of long term care is drawing increasing attention. Unfortunately, long term care is often misunderstood and, as a result, is poorly planned for, if at all.

Long term care refers to a range of services from home health care, to assisted living, to skilled nursing homes. These nursing homes provide assistance and support to manage and meet personal and health needs. Long term care does not always refer to medical care, it may simply be to provide assistance with “Activities for Daily Living”, or ADLs, including eating, bathing, dressing, toileting, transferring, or continence. Long term care may be needed for weeks, months or years.

Recent estimates predict that 50% of Americans will need some type of long term care during their lifetime. For couples over age 65, the statistics indicate there is a 70% chance one partner will need long term care.*

Major Purchases and the "Cool Off Period"

Whenever my family goes to the Jersey shore for summer vacation, two things always happen.  First, when we arrive I always say, I wish we had a beach house.  I always say maybe someday we'll get a place at the shore -- maybe once all the kids are off to college.  Second and without fail, after we’re there for a week, as much as I’ve enjoyed it, I can’t wait to go home and my kids all howl with laughter because I say, I don’t need to have a beach house.  It’s become the running joke of our family vacations.