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June 25th, 2012 by

Reverse Mortgage During RetirementSince the start of this recession period, home values have continued to decline. Even though it is said that the recession ended in 2009, the values of properties have not increased. Many home owners who borrowed against their home equity are now finding themselves owing more than their homes are actually worth. Home owners with 2nd mortgages are more likely to be the ones who are considered “under water” rather than home owners with just one mortgage. Yes, many times home values recover after a recession period, but it is not a wise idea to count on your home value when doing your retirement planning.

What about using a Reverse Mortgage?
Age 62 or older, you can take a reverse mortgage to borrow against the value of your home. You’re not required to pay back the principle during your lifetime for as long as you continue to live in the home. This retirement planning strategy might be appropriate for some retirees but there are substantial fees involved. Usually, the settlement fees are higher than a regular mortgage and the amount that you can borrow is a lot less than the value of the home. The reverse mortgage must be paid back 1 year after you stop living in the home. So, it’s likely that you or your heirs will have to sell the home and therefore be at risk to the uncertainty of the housing market. It might be better, because it has sentimental value, to leave the value of your house out of your retirement planning completely.

Your Safe Money Kit Navigating retirement planning options can be complex if you trying to do it alone. Let me help you keep your money safe and use financial strategies that right for your financial situation. Don’t forget to download your FREE safe money kit. Then, let’s talk 833-313-7233. It’s a free consultation.

June 21st, 2012 by

Questions about retirement planning

Your questions are a great way to start the conversation about retirement planning. Retirement planning and early solutions give you the power to control how financially secure you’ll be in your retirement years.  And, early preparation in retirement planning is essential to your success! Here are some common questions and answer regarding IRAs and how to manage them well.

When Must Taxes Be Paid on IRAs and Employee Sponsored Retirement Funds ?
Traditional IRA and most employer sponsored retirement funds are tax deferred accounts, which means they are typically funded with pre-taxed or tax deductible dollars. Therefore, funds are not taxable until they are withdrawn which is usually during retirement years.

How are withdrawals treated for tax purposes?
When withdrawn, they are subject to taxation at your current tax rate. Any funds withdrawn before age 59 1/2, you’re also subject to a 10% federal income tax penalty. If you made non-deductible contributions to a traditional IRA, you have a “cost basis” in the IRA. That means your cost basis is the total of the non deductible contributions you made to your IRA, minus any previous withdrawals and distributions of non deductible contributions. And, the recovery basis is not seen as taxable income.

The Exceptions:
Roth IRA, Roth 403B, Roth 401K — Roth accounts are funded with after-tax dollars and thus, qualified distributions are not subject to federal income tax if they have met the 5 year holding period and are taken after age 59 1/2.

Trust a qualified and experienced financial consultant to help you keep your money safe. Contact me at 833-313-7233 for a free consultation today!

June 20th, 2012 by

Retirment Planning: Protect Your Estate From TaxationThe estate tax is tax on property that transfers to others upon your death. Estate taxes are due on the total value of the estate: home, stocks, bonds, life insurance and any other assets you own. This is also referred to as the “death tax”. The estate tax was first enacted with the Stamp Act of 1797 to help pay for naval re-armaments and after several repeals and re-reinstatement, the Revenue Act of 1917 put the current estate tax in place. Despite its long history, this tax still remains quite controversial. The IRS calculates your required estate tax by adding the value of your assets and subtracting any applicable exemptions.

So, what’s the most common applicable exemption? It’s called the “Unlimited Marital Deduction”. The government exempts all transfers of wealth between husband and wife from federal estate and gift tax, regardless of the size of the estate. The surviving spouse must be an US citizen to qualify for this exemption. Of course, when the surviving spouse dies, the estate will be subject to estate taxes.

Call Freeman Owen Jr For Retirment Saving AdviceI’d recommend having an holistic review of your retirement portfolio with a financial planner that specializes in retirement planning. Plan now to have a lifetime stream of income that you can never out live.

Contact me at 833-313-7233 for a free consultation so we can keep your money SAFE!

June 12th, 2012 by

You are free to make withdrawals at anytime from your Roth IRA. But only qualified distributions receive tax free treatment. Tax free treatment means it isn’t subject to federal and state taxation nor the 10% premature distribution tax.

A withdrawal from your IRA is qualified if :

1) It is made at least 5 years after you’ve established any Roth IRA

2) Plus any one of the following:

  • you’ve reached age 59 1/2  by time of withdrawal
  • your withdrawal is made because of a qualifying disability
  • you’re using it for first time home buyer expenses ($10,000 lifetime limit)
  • the withdrawal is made by your beneficiary or a state after the time of your death

Qualified Distributions from Roth IRAThe 5 year holding period begins January 1st of the tax year in which you make your first contribution, regardless of whether it’s regular or a rollover Roth IRA.  Therefore, it is highly advisable to setup a Roth IRA as soon as possible, even if you can only afford a minimum contribution. So, the earlier you set up your Roth IRA, the earlier you’ll be able to receive tax free, qualified distributions from the Roth IRA.

Trust a qualified and experienced financial consultant to help you keep your money safe. Contact me at 833-313-7233 for a free consultation today!