Thursday, December 16, 2010

Lesson Learned, or Not

In the global Economics arena, we have seen how in 2001 the country of Argentina defaulted on a $95 Billion debt, as it remains one of the biggest sovereign defaults in history. We have seen how Ireland and Greece, Portugal and Spain struggle to restructure their debts and perhaps leave the euro. Things to account for are inflation, devaluation of a currency, budget deficit and loosing trading partners. Sounds familiar? A break up of the Euro will have ripple effects if it is allowed. Stronger economies are paying for the weaker ones and infuriate its citizens. In order, to maintain social, economic and even political ties, Europe seems to head this way. In the US, this is not good news for our outlook to recovery. Many steps ought to happen. I venture to say the EU, IMF, the US and China will do what it takes to avoid a default and breakup of the euro.

Keep your savings and prepare for turbulence.

Sunday, December 12, 2010


Sunday, December 12, 2010

Assumptions vs. Facts

By Hannibal Chinchilla

Financial plans are mostly based on assumptions. These assumptions can be about taxation, health, income streams, inflation, buying power of the dollar, what the stock market will do in the near future, when you are thinking to retire, how much you will need to retire, etc. One thing is for certain, the plan will change as the assumptions will also change, so why do we spend time planning on assumptions?

We need to start somewhere, to have a road map or a course of action; otherwise it will be like driving a car just to drive it and no destination in sight. Airplane pilots often have a flight plan, but often this plan changes; there are too many variables to consider, too many unforeseen events. But with a basic flight plan the pilot can make minor and consistent changes to make it to the destination. The financial plan works the same. Make minor and consistent corrections to ultimately get what you envisioned.

Nowadays there are too many variables to considered, economic, political, unthinkable variables, like losing existing benefits that were thought to be there for life; but with a steady oversight and consistency and discipline one can make it there. Unfortunately, many people spend more time planning on other things, like a yearly vacation or watching TV, statistically the average American on average watches approximately 30 days of television if you put all the hours’ non-stop. Additionally we tend to take action when it’s too late to take action, procrastination is a common fact.

Once you have a general idea of your desired destination, write it down on paper, and make small corrections over the short term to get there, stage it for a year, two year, five year and 10 year horizons. Make a list of items and things you always wanted to get accomplished; but never made past the first few months of the year. This year take a moment to think what you would like to attain. Make an action list. Make it short, with what I call the “SMART” concept; S for Specific, M for measurable, A for attainable, R for Realistic and the most important T for Time. If you are tired of broken New Year Resolutions and are stuck on that vicious cycle year after year, the only way to break the cycle is to change your mindset of how you view things, make a paradigm adjustment; and stay away from negative people.

If we accept the fact that even the best plan will be wrong, we can shift our energies on the “process” of getting there; the small things that can make an assumption become a fact.

Happy Holidays

From Hannibal Chinchilla

Barca Financial Group,

For similar topics visit our blog and website:

Wednesday, December 1, 2010

The Psyche behind Christmas shopping

It seems that we never learn, the economy, the legislature, trying to fix things and still coming short. We all got a good taste of a major Recession like the 1930's. Yet, we remain committed to help, our grandparents learned it. They saved and prepared for the worst. Yet, we remain unchanged.
The toughest time is during the holidays and the euphoria of the holidays; no one can escape it. It's tradition, right?
Seen from afar, on an early cold hard light of January, holiday shopping can seem a bit insane. I do not have a TV, although I can imagine the news talking about Black Friday and depicting mobs streaming into department stores and rampaging among the shelves, their overload cart piled high with televisions and video game consoles and expresso machines. It seems like preparing for 2012 already....WTF.
Neverthlesess, is it a social obligation? the National Retail Association has it to a science, many retailers depend on this to survive and supposedly help the economy, the feel good about helping our recovery. In a macro level does it really help? well it depends on who you ask. The retailers, yes it does, it keeps people employed. The consumers, it depends. The psyche of shopping is more scientific than that. Studies have been performed to figure out how to tap into your buyer's surplus, an economist term to see how retailers tap into your wallet and what you do not plan to spend but still spend it anyways. Yes, we have prepare for this season, but once you open your wallet for the first time you tend to feel what marketers call the guilt sensation. A guilt that I should not spend this money on nice to have items. Once you have opened your wallet once, the second time it hurts less and less and so on. Then you get the relieve that you are buying something for someone; the feeling of giving, yes it is the time for giving, but did you notice this is an excuse to buy more for oneself? This is what researchers called "the shopping momentum effect", so we buy,we have earned, it has been a tough year; I work hard for this, I should buy a Porsche or a nice hot tub. The psyche of shopping continues. It is a license to buy...
As the holidays approach, this phenomenon can feed on itself in a steady loop of spending events. We are humans after all. We never learn.
Happy Holidays

Monday, November 29, 2010

How to Make Holiday Entertaining Tax Deductible

I found this interesting article please read

By Bonnie Lee

Published November 26, 2010

Holiday season is here and what better way to establish goodwill with employees and customers than throwing a rip-roaring holiday party? Besides, you can write it off, right? There is a classification on the tax return for meals and entertainment expense--so why not? Not so fast.

Smug IRS agents love nothing better than quizzing you about your holiday party then joyfully proclaiming, “disallowed!” There are rules. And essentially, the rules say, “If you’re having way too much fun, it’s not a deductible expense.” But let me quit mincing words here and give you the real lowdown.

Rule No.1 Any entertaining you provide must be directly related to the active conduct of your business or associated with a directly-related discussion that preceded or followed the meal or entertainment. This means that giving a party for the sake of establishing goodwill is not enough to make the transaction deductible.

In order to deduct the cost of the party, you must conduct business before, during, or after the party. So we’re talking product demonstration, the debut of a new product or service, or a sales pitch. And the environment must be conducive to conducting business; the IRS believes it is impossible to convince a table-dancing drunk with a lampshade on his head to try your new product.

The IRS once disallowed the write-off of tickets to a baseball game because the loud atmosphere at a ball park does not allow for a comprehensive business discussion.

Rule No. 2 The guest list determines the extent to which you can write off the party. So if you are following Rule No. 1, you have a 100% write off if:

1. The party is open to the general public, or
2. The party is for employees and their spouses

You follow the 50% limitation rules that apply in general to meals and entertainment and write off half the cost if:
1. The party is for customers and prospective customers and/or
2. Independent contractors associated with your firm (they cannot be classified as employees for this purpose).
There is no write off for attendance by family members, even if they are employees or owners. The expense is considered personal and no deduction is allowed. If there is a mix of employees, customers, and family members, allocate the expense and deduct accordingly. For example, if 10 employees and 30 customers attend, and the party costs $400, you may deduct 100% of 25% of the cost (employees) and 50% of the remaining cost (customers). Your deduction works out to $100 (cost allocated to employees) + $150 (cost allocated to customers) for a total write off of $250.

Rule No. 3 The entertainment may not be “lavish or extravagant.” That’s another one of those subjective, gray areas that can be argued all the way up to tax court. But why go there? Keep it simple. If your company grosses $100,000 a year, you likely shouldn’t be helicoptering in your guests.

It’s fine that you follow the rules, but proving you did is another matter. You want to have documentation to prove your case in the event of audit. Here are some tips:

1. Make sure the invitation announces a business purpose. For example: “Come drink in the holiday season and test drive our new cholesterol-free egg beater omelets.”

2. Keep a guest list. Have attendees sign a guest book or track RSVPs so you can prove an accurate allocation of the expense.

3. Take pictures of guests looking at your new products or a video clip of your product demonstration--anything that proves the business purpose.

4. Keep all receipts for all expenses incurred.

5. Maintain all of the above documentation in your tax file.

One final tip: When providing the expenses to your bookkeeper, separate the cost of the party that is 100% deductible to a different category from “Meals and Entertainment.” Track it under “Promotion” or “100% Entertainment” to ensure the full write-off at tax time. Otherwise, your accountant will likely apply the 50% rule to everything under “meals and entertainment” and you will have lost a valuable write-off.

Let’s party!

Friday, November 26, 2010

Black or Red Friday?

It Depends.....

This day after Thanksgiving has two theories of its meaning, I venture to say it has also two outcomes. Consummerism and its behavior will play out as usual on this day. The masses are driven by a media chaotic and frenzy way to boost sales. This is very good for the economy, but as we have learned it is really bad for consumers that spend beyond their means and place these purchases TODAY on a high interest bearing Credit Card. So, is it Black or Red?, it may help retailers go from red to black today-a good thing; but it will certainly will take many consumers into the red. Usually into many years to come. Shopping is an experience and a thrill containing euphoria and excitement. An art actually; to shop for the best bargain and the smell of new; Yes we deserve it this year.... we have gone thorugh a lot, yes we deserve to treat ourselves and buy something we want...

But consumers seldom have the big picture in mind during shopping and or a clear budget analysis. Black Friday depends on consumer behavior and impulse buying. Yes, today you can get really great deals today and you should. But ask this question: "Do I need it or is it nice to have? or Am I paying it so I can own it today or am I going to pay premium prices if I put it with a credit card?" Basic math: look at your credit card's interest rate you will owe. Consider if you can pay it before 30 days. Consider your bank's interest rate of your account. So if you still want to use your credit card you should have that money in the bank at the very least. One more question to ask oneself: "How safe is my job? what would I do if I get laid off? Do I have one year of savings to cover my expenses; btw, a year is what is taking someone to find a comparable job.

Here are the two theories of Black Friday:

The first theory about the meaning behind "Black Friday" relates to accounting and the practice of recording losses in red and profits in black. Since the sales extravaganza is often considered one of the busiest shopping days of the year, stores go from being in the red to being in the black.

The second theory about the meaning behind "Black Friday" is a much more simple, and a much more likely origin. In terms of history, a day is referred to as black if a great disaster occurred, such as the black day in the 1920s when the stock market crashed. However black doesn't always have to be a negative term and can also refer to a basically chaotic day. As shoppers mob stores on the big sale day, it is definitely a chaotic time.

For more information or to request a BUDGET CASH FLOW ANALYSIS PROGRAM visit our website and send for a quote.

Happy Holidays Everyone

Tuesday, November 16, 2010

TAX Calendar

Below is the Tax calendar

15 – Fourth quarter 2009 estimated tax due. Use Form 1040-ES.
1 – Deadline for employers to provide copies of Forms W-2 and 1099 for 2009 to employees.
16 – If you claimed exemption from income tax withholding last year on the Form W-4 you gave your employer, you must file a new Form W-4 by February 15 to continue your exemption for another year.
1 – Deadline for farmers and fishermen who have a balance due on their taxes to file their 2009 individual income tax returns and pay the balance due without penalties.
15 – Deadline for 2009 corporate tax returns (Forms 1120, 1120-A, and 1120-S) or to request an extension using Form 7004.
15 – Deadline to file 2009 individual income tax returns (Form 1040, 1040A, or 1040EZ) and any taxes owed, or to file for an automatic 6-month extension.
15 – Last day to contribute to a traditional IRA, Roth IRA, or SEP-IRA for the 2009 tax year.
15 – First quarter 2010 estimated tax due. Use Form 1040-ES.
15 – Deadline to file 2009 trust tax returns (Form 1041) or to request an automatic extension.
15 – Deadline to file 2009 partnership tax returns (Form 1065) or to request an automatic extension.
15 – Deadline for U.S. citizens living abroad to file individual tax returns and pay any tax, interest, and penalties due, or to request a 4-month extension (Form 4868).
15 – Second quarter 2010 estimated tax due. Use Form 1040-ES.
15 – Third quarter 2010 estimated tax due. Use Form 1040-ES.
1 – Deadline for existing employers to establish a SIMPLE IRA plan.
15 – If you were given a 6-month extension to file your income tax return for 2009, file Form 1040, 1040A, or 1040EZ and pay any tax, interest, and penalties due.
15 – Final deadline to file 2009 partnership tax return if you were given a 6-month extension.

Wednesday, September 1, 2010

Happy mid week everyone:)

Saturday, May 1, 2010

At Club Level. Sponsoring the Boys Scouts event!

Thursday, April 29, 2010

FA News: How Much Leverage Is Optimal?
FA News: Inappropriate Annuity Sales Still An Issue
FA News: Cracking Down On Arbitration-Award Evaders

Tuesday, April 27, 2010

FA News: Ameriprise's Financial Advisor Unit Drives Strong First Quarter
FA News: Catering To The Hispanic Market

Monday, April 26, 2010

FA News: How Boomers Who Haven't Saved Can Still Build A Nest Egg

Friday, April 23, 2010

FA News: When Clients Want 'Bad" investments
FA News: Affluent Buying More LTC Insurance

Wednesday, April 21, 2010

FA News: SEC Inspections To Focus On Risk
FA News: Retirement Quandry Affects All Ages
FA News: Roth IRA Rollovers Could Affect College Financial Aid

Tuesday, April 20, 2010

FA News: Mutual Fund Ads Called Misleading

Monday, April 19, 2010

FA News: Finra Alleges $89M Private Placement Scam

Saturday, April 17, 2010

If going to pima county fair, take rita road, instead of Houghton rd.
5 Tips for a successful social media marketing campaign
1. The 90-9-1 rule
2. Publish everywhere
3. Graying of the Web
4. Finding it
5. Investment outlook
for definitions contact me

Friday, April 16, 2010

FA News: Dow Jones Offers Advisor News Service
FA News: Alleged Bonus Theft Shows Firms' Hiring Soft Spot
FA News: William Sharpe: Do 4% Withdrawal Rates Make Sense?

Thursday, April 15, 2010

FA News: SEC Alleges $3M Investment Scam
FA News: Schwab Sees1Q Profit Drop; Numbers Of New Advisors Rise
FA News: Pimco Launches Its First Active Stock Fund

Wednesday, April 14, 2010

FA News: Former Morgan Stanley Broker Must Pay $1.6M In Bonus Case

Tuesday, April 13, 2010

FA News: Some Wealthy Say: Go Ahead, Tax Me More
FA News: Spring Brings New Tools From Custodians

Monday, April 12, 2010

FA News: SEC Studies Financial Reform To Death

Saturday, April 10, 2010

At the fiesta grande fair supporting the community

Friday, April 9, 2010

FA News: Social Security May Be Rescued By Baby Boomers

Thursday, April 8, 2010

FA News: CFP Board Posts Anonymous Case Histories
FA News: Roth IRA Conversions Fraught With Mistakes

Wednesday, April 7, 2010

FA News: Retirement Planning Not A High Priority For Many

Tuesday, April 6, 2010

FA News: Ameriprise Financial Still Battling Over Fund Fees
FA News: Retirement Funds Drawing Scrutiny

Monday, April 5, 2010

FA News: LPL Recognizes Advisor

Friday, April 2, 2010

FA News: Keeping Family In A Multi-Family Firm

Thursday, April 1, 2010

FA News: As Crisis Fades, Clients Remain Needy
FA News: Americans Still Neglecting Retirement, Survey Says
FA News: Court Restores Status Quo On Fund Fees

Wednesday, March 31, 2010

FA News: Medicare Tax Impact May Creep Like AMT
FA News: New UBS Layoffs Are Good Sign For Advisors

Tuesday, March 30, 2010

FA News: Advisors Plan Move Back To Stocks

Monday, March 29, 2010

FA News: Proposed SEC Public Advocate Debated
FA News: Dividend ETFs Beckon Income-Starved Investors
FA News: Morningstar Launches Major Upgrade of Advisor Workstation
FA News: The GRAT Rush Of 2010

Sunday, March 28, 2010

Did you know?
DISTRIBUTIONS - If you turned age 70 ½ during 2009, then you are not required to begin taking annual withdrawals from your pre-tax accounts by 4/01/10 (because of the “2009 RMD waiver”) but you must take your 2010 withdrawal by 12/31/10. See a qualified tax consultant for details (source: IRS).

Friday, March 26, 2010

At Sir vezas
At Tucson Old Pueblo Studios. TGIF
FA News: History Says Small-Cap Rally May Be Ending
FA News: Institutional Approach May Work For Your Wealthy Clients

Thursday, March 25, 2010

FA News: Giving More To Both Kids And Charities

Wednesday, March 24, 2010

FA News: Money Managers Less Bullish, Study Says
FA News: Advisors Quell Client Health-Care Fears

Tuesday, March 23, 2010

FA News: ETFs Buoyed By Health-Care Bill's Passage

Monday, March 22, 2010

FA News: Investors Cast Closer Eye On Their Money
FA News: Insurers Show Clout In Advisor Standards Fight

Sunday, March 21, 2010

Tucson Hispanic Hispanic Chamber of Commerce Scholarship applications are due Friday March 26th, 2010. Good luck to everyone applying this year.

Saturday, March 20, 2010

Beautiful day at the DMAFB Air show today

Friday, March 19, 2010

FA News: Investment Income Tax Would Help Pay For Health Care

Thursday, March 18, 2010

FA News: Active ETFs A Slow-Moving Stampede
FA News: FINRA’s CEO Expects Eventual Move To Fiduciary Standard
FA News: FINRA’s Enforcement Chief Resigns

Wednesday, March 17, 2010

FA News: Advisors Seek Simpler Annuities, Education

Tuesday, March 16, 2010

FA News: Move To Independence Puts Focus On Supervision

Monday, March 15, 2010

FA News: Fidelity Unveils New Client Service Program For Advisors
FA News: Independents Gain Steam Over Wirehouses
FA News: Fund Investors Shun Stocks Despite Rally

Friday, March 12, 2010

FA News: J.P. Morgan Plans Actively Managed ETFs

Thursday, March 11, 2010

FA News: Direxion Launches ETFs
FA News: Harry Markopolos, SEC Chairman?
FA News: 'Build America Bonds' A Big Win For Wall Street

Wednesday, March 10, 2010

FA News: Home Equity Fall Threatens Retirement Goals
FA News: New Regs Needed For Financial Planners, Coalition Says

Tuesday, March 9, 2010

FA News: Schwab Told To Pay $1.8M To Employee

Monday, March 8, 2010

FA News: Eaton Vance Plans Active ETFs
FA News: Complying As Your Brother's Keeper

Sunday, March 7, 2010

A Roth conversion is not an investment issue it is a tax planning issue

New Plan, Story please read

(Dow Jones) The 2008 market crash focused many investors' attention on the need for guaranteed retirement income. Take a client who came to Clifford Michaels, president of New York-based Institutional Investment Advisors Corp., in early 2009."She was a 64-year-old semi-retired divorcee with $500,000 in her retirement accounts—down from nearly $900,000 at the beginning of 2008—and she had an adult child and an aging mother," says Michaels. "Her portfolio had lost quite a bit due to mismanagement and its failure to reflect her risk tolerance. She was pretty panicked."In addition to her depleted retirement funds, the client had a pension of around $18,000 per year, along with $12,000 from some part-time work with a charity and $15,000 in Social Security payments. All told, her annual income was $45,000, in addition to the $13,000 she was earning in dividends. Still, she had serious, legitimate concerns that she'd outlive her savings.Michaels saw that the client's growth-heavy investments prior to the crash had yielded only 1.5%. "Someone had looked at her age and at the mortality tables and decided that she had almost a 30-year timeline, so why not put her into growth stocks," he says.Michaels set about changing his new client's asset allocation. He shifted some money from stocks to bonds and bond funds. He also made her equity portfolio more conservative by focusing it on stocks with healthy dividends.But Michaels didn't want to sell all the client's stock with the market down so much, so he waited for the market to rebound before implementing a second major shift to his client's investments, which he performed in the fourth quarter of 2009. Now that the portfolio had recouped some of its losses, he took an IRA worth $250,000 and used it to purchase an annuity. "For each year she didn't make any withdrawals, she was guaranteed a 10% increase in payments," says Michaels. "For most of my clients, their number one concern is to take their money today and transfer it to the future, so they receive an income they can't outlive."The changes Michaels made boosted his client's annual dividend income to $20,000, taking her overall income from $58,000 to $65,000. And she'll get a further boost when she's 71 and has to start taking required minimum distributions from the Internal Revenue Service; at that point the annuity in it is guaranteed to be worth $425,000, resulting in RMDs of $21,250."We were able to make up some of her capital loss with a guaranteed annuity. She now has less risk, more diversification, a tax write-off from some of her losses, guaranteed income for life and the ability to meet her RMDs each year," says Michaels. "But the biggest change is that she no longer feels like the glass is three-quarters empty."
FA News: New Rules Likely To Shake Up IRA Advice

Friday, March 5, 2010

FA News: IRA Investors Stick With Stocks

Thursday, March 4, 2010

FA News: When To Fess Up About Compliance Miscues
I read this quote at hotel congress, to start the day: a positive attitude makes all the difference in the world.

Wednesday, March 3, 2010

FA News: IRS Eyes Wall Street Deferred Comp
FA News: Building Value For An Eventual Sale
FA News: Study Sees Clients Saving More

Tuesday, March 2, 2010

FA News: Bentley Entrusts Part Of Endowment With Students
FA News: Proposed 401(k) Reforms Stir Debate
FA News: Taking The Emotion Out Of Philanthropy

Monday, March 1, 2010

FA News: New Law Could Mean Added Security Burden For Advisors
FA News: Advisors Confused By New Custody Rules
FA News: Bond ETFs Have Hidden Risks

Friday, February 26, 2010

Changing Jobs? Take Your 401 (k) and.....Roll It!

If you've lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan account. It's important to understand your options.
What will I be entitled to?
If you leave your job (voluntarily or involuntarily), you'll be entitled to a distribution of your vested balance. Your vested balance always includes your own contributions (pretax, after-tax, and Roth) and typically any investment earnings on those amounts. It also includes employer contributions (and earnings) that have satisfied your plan's vesting schedule.
In general, you must be 100% vested in your employer's contributions after 3 years of service ("cliff vesting"), or you must vest gradually, 20% per year until you're fully vested after 6 years ("graded vesting"). Plans can have faster vesting schedules, and some even have 100% immediate vesting. You'll also be 100% vested once you've reached your plan's normal retirement age.
It's important for you to understand how your particular plan's vesting schedule works, because you'll forfeit any employer contributions that haven't vested by the time you leave your job. Your summary plan description (SPD) will spell out how the vesting schedule for your particular plan works. If you don't have one, ask your plan administrator for it. If you're on the cusp of vesting, it may make sense to wait a bit before leaving, if you have that luxury.
Don't spend it, roll it!
While this pool of dollars may look attractive, don't spend it unless you absolutely need to. If you take a distribution you'll be taxed, at ordinary income tax rates, on the entire value of your account except for any after-tax or Roth 401(k) contributions you've made. And, if you're not yet age 55, an additional 10% penalty may apply to the taxable portion of your payout. (There won't be any tax-free qualified distributions of earnings from Roth 401(k) accounts until 2011 at the earliest, because there's a 5-year holding requirement, and Roth 401(k)s first became available in 2006. And special rules may apply if you receive a lump-sum distribution and you were born before 1936, or if the lump-sum includes employer stock.)
If your vested balance is more than $5,000, you can leave your money in your employer's plan until you reach normal retirement age. But your employer must also allow you to make a direct rollover to an IRA or to another employer's 401(k) plan. As the name suggests, in a direct rollover the money passes directly from your 401(k) plan account to the IRA or other plan. This is preferable to a "60-day rollover," where you get the check and then roll the money over yourself, because your employer has to withhold 20% of the taxable portion of a 60-day rollover. You can still roll over the entire amount of your distribution, but you'll need to come up with the 20% that's been withheld until you recapture that amount when you file your income tax return.
Should I roll over to my new employer's 401(k) plan or to an IRA?
Assuming both options are available to you, there's no right or wrong answer to this question. There are strong arguments to be made on both sides. You need to weigh all of the factors, and make a decision based on your own needs and priorities. It's best to have a professional assist you with this, since the decision you make may have significant consequences--both now and in the future.
Reasons to roll over to an IRA:
You generally have more investment choices with an IRA than with an employer's 401(k) plan. You typically may freely move your money around to the various investments offered by your IRA trustee, and you may divide up your balance among as many of those investments as you want. By contrast, employer-sponsored plans typically give you a limited menu of investments (usually mutual funds) from which to choose.
You can freely allocate your IRA dollars among different IRA trustees/custodians. There's no limit on how many direct, trustee-to-trustee IRA transfers you can do in a year. This gives you flexibility to change trustees often if you are dissatisfied with investment performance or customer service. It can also allow you to have IRA accounts with more than one institution for added diversification. With an employer's plan, you can't move the funds to a different trustee unless you leave your job and roll over the funds.
An IRA may give you more flexibility with distributions. Your distribution options in a 401(k) plan depend on the terms of that particular plan, and your options may be limited. However, with an IRA, the timing and amount of distributions is generally at your discretion (until you reach age 70½ and must start taking required minimum distributions in the case of a traditional IRA).
You can roll over (essentially "convert") your 401(k) plan distribution to a Roth IRA. You'll have to pay taxes on the amount you roll over (minus any after-tax contributions you've made), but any qualified distributions from the Roth IRA in the future will be tax free.
Reasons to roll over to your new employer's 401(k) plan:
Many employer-sponsored plans have loan provisions. If you roll over your retirement funds to a new employer's plan that permits loans, you may be able to borrow up to 50% of the amount you roll over if you need the money. You can't borrow from an IRA--you can only access the money in an IRA by taking a distribution, which may be subject to income tax and penalties. (You can, however, give yourself a short-term loan from an IRA by taking a distribution, and then rolling the dollars back to an IRA within 60 days.)
A rollover to your new employer's 401(k) plan may provide greater creditor protection than a rollover to an IRA. Most 401(k) plans receive unlimited protection from your creditors under federal law. Your creditors (with certain exceptions) cannot attach your plan funds to satisfy any of your debts and obligations, regardless of whether you've declared bankruptcy. In contrast, any amounts you roll over to a traditional or Roth IRA are generally protected under federal law only if you declare bankruptcy. Any creditor protection your IRA may receive in cases outside of bankruptcy will generally depend on the laws of your particular state. If you are concerned about asset protection, be sure to seek the assistance of a qualified professional.
You may be able to postpone required minimum distributions. For IRAs, these distributions must begin by April 1 following the year you reach age 70½. However, if you work past that age and are still participating in your employer's 401(k) plan, you can delay your first distribution from that plan until April 1 following the year of your retirement. (You also must own no more than 5% of the company.)
If your distribution includes Roth 401(k) contributions and earnings, you can roll those amounts over to either a Roth IRA or your new employer's Roth 401(k) plan (if it accepts rollovers). If you roll the funds over to a Roth IRA, the Roth IRA holding period will determine when you can begin receiving tax-free qualified distributions from the IRA. So if you're establishing a Roth IRA for the first time, your Roth 401(k) dollars will be subject to a brand new 5-year holding period. On the other hand, if you roll the dollars over to your new employer's Roth 401 (k) plan, your existing 5-year holding period will carry over to the new plan. This may enable you to receive tax-free qualified distributions sooner.
When evaluating whether to initiate a rollover always be sure to (1) ask about possible surrender charges that may be imposed by your employer plan, or new surrender charges that your IRA may impose, (2) compare investment fees and expenses charged by your IRA (and investment funds) with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of your employer plan.
What if I really do need to use the money?
In some cases, you have no choice--you need to use the funds. If so, try to minimize the tax impact. For example, if you have nontaxable after-tax contributions in your account, keep in mind that you can roll over just the taxable portion of your distribution and keep the nontaxable portion for yourself. For example, if you're entitled to a distribution of $50,000 that includes $10,000 of your own nontaxable after-tax contributions, you can roll the $40,000 of taxable dollars into a traditional IRA, and keep the rest for yourself. You'll have $10,000 to use, and you'll pay no current income taxes.
What about outstanding plan loans?
In general, if you have an outstanding plan loan, you'll need to pay it back, or the outstanding balance will be taxed as if it had been distributed to you in cash. If you can't pay the loan back before you leave, you'll still have 60 days to roll over the amount that's been treated as a distribution to your IRA. Of course, you'll need to come up with the dollars from other sources.
Forefield Inc. does not provide legal, tax, or investment advice. All content provided by Forefield is protected by copyright. Forefield is not responsible for any modifications made to its materials, or for the accuracy of information provided by other sources.
FA News: Morgan Stanley Sends Message With Broker Suit

Thursday, February 25, 2010

FA News: Former Advisor A Fugitive After Ponzi Scheme Indictment
FA News: Frustrated Investors Move From Big Banks
FA News: LPL Reports Earnings Increase

Wednesday, February 24, 2010

FA News: Legg Mason Plans Active ETF

Tuesday, February 23, 2010

FA News: Independent Brokers May Count As Employees

Monday, February 22, 2010

FA News: Should Clients Take Less Now So Kids Get More Later?
FA News: Finra Panel Orders Morgan Keegan To Pay Investor $2.5M
FA News: Technology Conference Addresses Advisor Needs

Friday, February 19, 2010

FA News: Former Merrill Advisor Pleads Guilty To Stealing From Clients
FA News: Public May Get More Access To Broker Records

Thursday, February 18, 2010

FA News: Exercising Options Ahead Of Tax Hikes
FA News: Finra Cracks Down On Arbitrator Credentials

Wednesday, February 17, 2010

Gender And Retirement Plans
By Dorothy Hinchcliff
How does gender affect the likelihood of participating in a retirement plan?

Although overall women have participated in retirement plan at lower levels than males have, among full-time workers women have participated at higher rates, according to the Employee Benefit Research Institute.

According to EBRI's November report on employment-based retirement plan participation in 2008, female wage and salary workers between 21 and 64 had a higher level of participation: 56.2% for women, compared with 53.7% for men.

Also, the proportion of females participating in a retirement plan was higher than it was for males at each earnings level.

Female workers’ lower probability of participation in the aggregate results from their overall lower earnings and lower rates of full-time work in comparison with males, EBRI says.
FA News: Target-Date Fund Transparency Scrutinized
FA News: Vanguard Brand Gains Luster

Tuesday, February 16, 2010

FA News: Guggenheim Agrees To Buy Security Benefit
FA News: Even The Rich Worry About Social Security

Sunday, February 14, 2010

Happy valentine's day everyone. Have a wonderful Day with that special person in your life.

Friday, February 12, 2010

FA News: Low Producers Still Leaving Wirehouses

Thursday, February 11, 2010

FA News: States Gear Up To Examine More Advisors

Wednesday, February 10, 2010

FA News: Five Independent Advisory Firms Join Fusion, NFP Network

Tuesday, February 9, 2010

FA News: Alternative Investments Playing Bigger Role
FA News: Risk, Regulation Hot Topics at TD Conference
FA News: Merrill Lynch Building Up Broker-Training Program
FA News: Surprise Audits Concern Advisor Trustees

Monday, February 8, 2010

FA News: RIA M&A Activity Down In ’09
FA News: Wells Fargo Sticks With Simple Broker Payout

Friday, February 5, 2010

FA News: Raymond James Ordered To Pay $12M
FA News: Knowing When To Throw Out A Plan

Thursday, February 4, 2010

FA News: Window Closing On Estate-Planning Perks

Wednesday, February 3, 2010

FA News: Investors Target Former Lehman Brokers

Tuesday, February 2, 2010

FA News: Fidelity Offers Free iShare ETF Trades
FA News: Aggregators Attract Renewed Interest

Monday, February 1, 2010

FA News: Hot Mutual Funds Often Fizzle

Friday, January 29, 2010

FA News: Top Futures Regulator Wants ‘Eddie Murphy’ Rule

Thursday, January 28, 2010

FA News: Obama's Retirement Savings Plans Aren't Enough
FA News: Securities America Denies Charges
FA News: Top Advisors Reveal Keys to Success

Wednesday, January 27, 2010

FA News: Goldman To Leave Fidelity
FA News: Americans Insecure About Retirement, Surveys Say
FA News: More Colleges Ready To Lend To Students

Tuesday, January 26, 2010

FA News: Securities America Charged With Misleading Investors
FA News: Advice To Advisors: Get To Know Your Regulator

Monday, January 25, 2010

FA News: Wells Fargo Advisors Hit With Payroll Crisis
FA News: More Advisors Focusing On 401(k) Business

Saturday, January 23, 2010

Going to Mount Lemmon tomorrow yeahhh

Friday, January 22, 2010

FA News: Increasing Referrals By Making Referrals

Thursday, January 21, 2010

FA News: Finra Lays Off Five Enforcement Officials
FA News: ETF Fees Can Make A Difference

Wednesday, January 20, 2010

FA News: Career Job, Interrupted

Tuesday, January 19, 2010

FA News: Bridgewater Wealth Joins Focus Financial
FA News: Changes Coming To U.S. Retirement System
FA News: Fidelity Recruits 191 Brokers In '09
FA News: Wealthy Weigh Retirement Goals

Monday, January 18, 2010

Today is flying, 4 appts. 3 to go
FA News: College Savings Market Poised For Growth
FA News: What Transaction Tax Foes Don't Say

Sunday, January 17, 2010

Go Charges.
Great job Vikings. Bye Bye Cowboys

Friday, January 15, 2010

FA News: EISI Updates Profiles
FA News: Retirees Give Nod To “Life Goals” Rather Than “The Numbers”

Thursday, January 14, 2010

FA News: Goldman CEO Supports Fiduciary Standard

Wednesday, January 13, 2010

FA News: Independent Contractor Status Under Review
FA News: Morningstar’s Fund Managers Of The Decade

Tuesday, January 12, 2010

FA News: HighTower Gets $100 Million Cash Infusion
FA News: 552 ETFs Currently In Registration
FA News: IMCA Hires New Executive Director

Monday, January 11, 2010

FA News: Groups Fight Fiduciary Standard 'Myths'
FA News: Charlie Cook: GOP Might Regain The House

Saturday, January 9, 2010

Thursday, January 7, 2010

FA News: Money Managers Ignore Climate Issues

Wednesday, January 6, 2010

FA News: Wells Fargo Offers New Asset Reward

Tuesday, January 5, 2010

FA News: Gender And Retirement Plans

Monday, January 4, 2010

FA News: IRA Charitable Rollover Comes With Risks