Your Money, Your Wealth

Joe Anderson, CFP® and Big Al Clopine CPA answer your burning financial questions in episode 61 of the YMYW podcast, ranging from how to avoid gift taxes to why it's worth it to invest in a 401(k). Original publish date September 3, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 04:17 - "When we talk about long-term care planning, a lot of people assume we mean you have to buy insurance and that's one way to solve an issue, but not the only way." 06:20 - "Medicare covers skilled care; they don't necessarily cover custodial care. Custodial care means you're not necessarily going to get better. Skilled care can patch you up and get you out the door." 11:20 - "What type of loan should I use to buy out my sibling for inherited property?" 16:59 - "You may have a will or a trust and that will spell out how the assets will be divvied up, but a letter of instructions and meeting beforehand goes a long way." 20:24 - "Can I avoid paying gift tax? Can a grandparent gift a grandchild money for college and not have to pay a gift tax? Would the grandchild have to pay taxes on it too?" 27:55 - "I think it's really important to take advantage of the tax laws that are given to us. If you are a business owner, you can pay your child do something for your business and it becomes a deduction for you." 28:20 - "If you really understand what the rules and opportunities are, you can take some control over your taxes." 30:45 - "I recently opened an LLC and landed my first client. Is there a limitation to how much income I can make off a single client?" 31:51 - "I withdrew $8,000 from my 401(k). I have retired at 59 and have not cashed the check. If I send it back, what happens? Will I still be penalized?" 34:56 - "How much capital gains tax will I pay on a home I sold after living in it for only 13 months?"

Pensions in lump sum vs monthly payments, 401(k) rules, the fiduciary standard, and more as Joe Anderson, CFP® and Big Al Clopine, CPA answer listeners' investing and personal finance questions on episode 60 of the YMYW podcast. Original publish date August 27, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 02:00 - "Does the early withdrawal penalty on my IRA apply to me?" 04:40 - "Never use your IRA (individual retirement account) for anything other than retirement." 05:23 - "Do 401(k) contributions have any effect on MAGI (modified adjusted growth income)?" 08:40 - "Think of 'above-the-line' as things like income and direct expenses to that income whereas 'below-the-line' is generally personal expenses." 11:14 - "Which should I take, a monthly pension or lump sum buyout?" 16:56 - "Why should I hire a fiduciary advisor?" 20:03 - "Everybody needs a financial plan, but not everybody needs a financial planner." 23:08 - "If you can save money on taxes, your money is going to grow that much further and you can take less risk." 23:51 - "Are high-yield bonds a good investment?" 26:26 - "A high-yield bond is going to be ordinary income, and you have to pay ordinary income taxes at the highest rate." 29:50 - "Do I need to pay capital gains tax on the sale of my retail space?" 33:27 - "Which income option is best for a 70-year-old?" 35:45 - "You have to look at so many different options, you can't look at this stuff in a bubble or you might make big mistakes."

Did you know there are strategies you can use to reduce your required minimum distributions (RMDs) from your individual retirement account? In episode 56 of the YMYW podcast, find out six ways to do this so you can keep more of the money you've earned, saved, and invested through your entire working life. Original publish date August 27, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 01:45 - "Once you turn 70 ½, you have to start pulling money out of an IRA (individual retirement account). If you are 70 ½ and still working, and own less than 5% of the company, you can delay your required minimum distribution until you retire." 04:13 - "Once you turn 59 ½ you can withdraw money from your tax-deferred accounts without paying a 10% penalty." 06:54 - "A lot of people don't realize that you can do these Roth conversions even before 59 ½. You could be any age and do a conversion." 10:45 - "This is a valid way to reduce your RMDs – invest in a QLAC (quality longevity annuity contract)." 12:20 - "You can invest in your IRA up to 20% of your IRA or 401(k) or $125,000 – whichever is less." 13:04 - "Another way to lower your RMDs is to use tax-deferred accounts for bonds and bond funds, and use taxable accounts for stocks and stock funds." 16:30 - "If you invest in stocks outside of your retirement accounts and you hold a stock or stock mutual fund for at least a year and you sell it, it's subject to a special long-term capital gain rate." 23:38 - "(Another option is to) donate your required minimum distributions." 29:42 - "A lot of men and women are living into their nineties and hundreds…if you haven't really thought this through, it sort of messes up your retirement plan." 32:30 - "If we're living a lot longer, how do we adjust our retirement plans to be able to accommodate that?" 34:43 - "The old rule used to be 'save 10% of your income.' A lot of advisors are now saying 15%, that's what we say."

Joe Anderson, CFP® and Big Al Clopine CPA answer personal finance questions about real estate investments, financial planning in your 20s, retirement, and controlling income taxes from Investopedia in episode 58 of the YMYW podcast. Original publish date August 20, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:49 - "I have 2 town home units, 9 & 10. I lived in #10 since 2006 and rented #9. I want to sell both and buy a new larger home using capital gains. I will have approximately $200,000 from #10 and $150,000 from #9 in capital gains. The new home will cost approximately $500,000. If I use these gains as down payment for a new home, do I qualify for capital gain exclusion under Taxpayer Relief Act of 1997?" 07:21 - "If you're in a divorce situation and this applies to you, you want to be careful how you do the property selling." 08:10 - "How do I become financially strong and independent at 22 years old? I have one full time job ($10,800 annually before taxes). I am 22 years old, single, and have no kids. I have no establish credit. I need to buy my first car and get an apartment or trailer before 2016 ends. Where should I start investing with $1,000? Should I put it in savings or look into binary options?" 09:38 - "Try to set aside 15% of your income at any age and keep doing that throughout your career; you'll have plenty of money when you retire." 11:39 - "My mother-in-law is in her 70's. She will live comfortably on her monthly social security check and has 1/3 of her assets in the bank. She will come into the other 2/3 when she sells her home. What do you suggest she does with the money she gets from the sale? Should she get an inflation hedge and some appreciation while being conservative at her age?" 15:52 - "A lot of times, people put investments in front of the planning, and that's where they fall into problems." 16:53 - "My father sold a piece of property that he inherited in order to pay for assisted living expenses. He passed away the year of the sale. His income was less than $15,000. Does his estate pay capital gains on the property, which gained $144,000 in value from the date of inheritance?" 24:05 - "Do I qualify for backdoor Roth IRA?" I own a 403b, 457b, and DCP account. Do these count towards the pro-rata rule?" 27:36 - "How should I manage my extraordinary tax year?" 35:40 - "Unfortunately, tapping your nest egg comes with all sorts of new rules but also opportunities if you understand the strategies."

In episode 57 of the YMYW podcast, Joe Anderson, CFP® and Big Al Clopine, CPA shed light on scary statistics regarding the rise of healthcare costs and share strategies to show how listeners can protect themselves. Plus, how traditional retirement planning has changed over the years. Original publish date August 20, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 01:43 - "The typical inflation rate has been around 3% historically; we use about 3.7% to be conservative. Medically right we do about 5.7% because that's what it's been growing at." 02:55 - "If you want to get an hour full of Medicare [education] go to purefinancial.com and check out our recent webinar." 05:33 - "A lot of people don't realize that Medicare does not cover [all] long-term care stays." 9:00 - "Age 70 ½ is when you have to start taking your required minimum distribution out of your IRA and 401(k)." 15:45 - "When it comes to parents' children and how much they're spending on athletics…how much are they spending?" 25:25 - "A 25% tax bracket means you pull $100,000 out of your IRA and you pay $25,000 in tax." 29:10 - "You have to make sure you understand what's going to come to you as a guaranteed income source." 30:59 - "When we're trying to reduce taxes in retirement, probably one of the first things you have to know is your tax bracket."

Joe Anderson, CFP® and Big Al Clopine CPA answer frequently asked financial planning questions about divorce, tax deductions, business profits, Roth IRAs, IRA rollovers and more from Investopedia in episode 56 of the YMYW podcast. Original publish date August 13, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:32 - "I am paying off a loan for CDL (commercial driver's license) school, and wondering if it is tax deductible. Does it matter if I no longer work in the trucking industry? I'm fairly inexperienced in the area of tax deductions. I understand the interest on loans is the only part that is deductible, right?" 04:11 - "After a divorce, can assets be distributed to into an account that is not in my ex-spouses name?" 06:54 - "Can a company have an extremely high gross margin and negative operating margin at the same time?" 07:58 - "Will I have to pay capital gains tax on the sale of two different homes?" 11:20 - "Can I draw $30,000 out of my ROTH IRA and put it back within a short amount of time? 12:22 - "I am a high income worker (over $250K / year). I would like to do a Roth IRA for my wife using the back door method. What would be the benefits of a Roth IRA going forward? 16:24 - "My late wife and I bought a house 20 years ago for $450,000. My wife passed away 4 years ago to cancer, so for the last 3 years I have been filing my taxes as a widow. I'm planning to sell the house for $900,000 now. How much capital gain tax am I supposed to pay? And how much tax exemption can I get?" 20:42 - "Is a 401(k) QDRO distribution taxed twice?" 28:48 - "You can wait as late as age 70 to collect Social Security, and for many of you that's probably a really good idea because you'll get a lot more benefit doing that." 29:47 - "A lot of you are behind in your planning, but a lot of you have done a great job. Here's a way to do a little self-check; there are really five things that you need to consider when it comes to financial planning." 34:34 - "Part of being successful [in retirement] is saving on taxes because what we see is that a lot of people have the majority of their assets in retirement accounts and when you pull those dollars out, you need to pay ordinary income taxes. Here's the key: people have a lot more control over how much they pay in taxes than they might think."

Presidents can bully the Federal Reserve, but they can't set central bank policy. Joe Anderson, CFP® and Alan Clopine, CPA explain how the Fed impacts overall markets in YMYW podcast 55. They also discuss a recent article covering three reasons why you should ignore Hillary Clinton and Donald Trump's economic promises. Original publish date August 13, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 03:06 - "The president doesn't control the Federal Reserve system. The way the Fed was set up was quasi-independent and answers to Congress on monetary policy." 07:56 - "Stocks are priced based upon future predictions of what we all think the future's going to be." 12:41 - "The moment you turn 50, you can put more into your retirement plans, and then that can give you a better tax benefit via deduction because you can shelter more money via tax or have more money grow tax-free depending on what planning you're doing." 15:36 - "Any time you pull money out of a 401(k) or IRA, you have to pay income taxes – federal and state." 19:32 - "You actually have more control over how much you pay in taxes in retirement, more so than any other time in your life." 22:43 - "There are always crises, whatever they might be, but we get through them." 25:38 - "If there's a lot of inflation and everything has gone up in price, gold will probably go up in price too." 29:58 - "We are a fee-only Registered Investment Advisor; there are no commissions generated to our firm, we act as a fiduciary 100% of the time." 32:55 - "If you don't sign up for Medicare in a timely manner, then when you do sign up you have to pay more for Medicare for the rest of your life." 37:03 - "The more income that you make, the higher the premium you will have to pay."

The IRS changed the rules for IRA rollovers and not everyone is catching on. Taxpayers can only perform one 60-day IRA rollover in a 12-month period, no matter how many IRAs they own. Joe Anderson, CFP® & Alan Clopine, CPA go over this new rule and share how you can avoid getting hit with high tax bills in YMYW podcast 54. Original publish date August 6, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 01:04 - "[We made a] 7-minute video on how to plan your finances in your 20's and 30's. The sooner you start, the better off you'll be." 04:41 - "We've been talking about costly retirement mistakes, and this is a relatively new one [60 day rollover rule]. It's indirectly rolling more than one IRA in a 12-month period - it's no longer allowed." 08:11 - "It's the direct rollover where the IRS won't withhold taxes but if you select rollover, they will." 12:19 - "If you're pulling money out of your retirement account for your own purposes, whatever they might be, how do you expect your retirement accounts to grow with compound rates of return if you're taking money out?" 16:54 - "The truth is, taxes don't stop when your paycheck does – in fact, now you start tapping your retirement accounts and it comes with all new rules and opportunities." 23:19 - "There are ways around the 10% penalty, but it's not nearly as flexible as if you just wait until age 59 ½." 27:10 - "A lot of you who are taking your required minimum distribution or that are going to be taking your distributions might not need to spend it…you don't have to take that money in cash if it's in an IRA. You can take shares and put it in your brokerage account." 31:09 - "There's a potential tax-saving feature called net unrealized appreciation." 33:18 - "If you take money out of an IRA before age 59 ½, you have to pay a 10% penalty. If you don't take your required minimum distribution at 70 ½, the IRS charges you a 50% penalty."

Joe Anderson, CFP® & Alan Clopine, CPA share common retirement mistakes they've seen for years. These mistakes that could cost you thousands, if not more, can easily be avoided if you learn how. Original publish date August 6, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:27 - "What we have found with a lot of you is that potentially you're not going to be in a lower tax bracket." 05:37 - "The people we work with have assets in retirement accounts, and in most cases they will be in the same tax bracket or higher because most people that will come into our office want to at least maintain their same lifestyle." 09:32 - "You have to put a plan together to take a look at a forward-looking strategy." 13:37 - "The first one (mistake) seems so obvious but we see it over and over again – it's not having beneficiaries on your retirement plan or IRA or having the wrong ones on your IRA." 17:34 - "As a CPA (Certified Public Accountant) for over 30 years, it does amaze me how many people fail to get the message about tax planning and strategies until they make a mistake that costs them thousands of dollars." 22:57 - "There are a lot of different requirements to name the trust as the beneficiary." 25:49 - "There is good justification for actually having a separate trust; it's called an IRA trust which has nothing to do with your living trust and you set that trust up in such a way that when you pass away, your beneficiaries become sub-trusts and you can actually have the RMD (required minimum distribution) based upon each individual beneficiary." 28:02 - "This isn't so much a mistake but an underutilized strategy because a lot of people don't really know about it. It's called net unrealized appreciation (NUA)." 30:55 - "If you keep your tax bracket low enough, you can avoid the capital gains tax so you can get those assets out tax-free to you." 34:46 - "Interest rates are at all-time lows, markets are volatile, we're living a lot longer and healthcare costs – the list goes on and on."

Joe Anderson, CFP® & Alan Clopine, CPA answer frequently asked investing questions and explain key factors to look for when choosing a financial advisor on YMYW podcast 52. Should you choose a fee-only or fee-based advisor and does it matter if they follow the fiduciary standard? Find out. Original publish date July 30, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:27 - "I'm currently employed by two employers, which brings my yearly income to $170K. I understand my pre-tax contributions. One of my employers now offers a Roth contribution. Am I eligible to contribute to only one employer's Roth?" 04:54 - "Yes, you can contribute to both plans…can you contribute to a Roth in either or both plans? The answer is yes." 08:15 - "I just purchased a home in January 2015 and I'm now wanting to sell with a potential profit of about $60K. I am newly married as of May 2016, and would like to file Head of Household to avoid paying Capital Gains. My income alone is $44K and married we are at $74K. I would like to be sure that I am under the radar and not having to pay capital gains tax if I sell today." 09:32 - "When you're married, you can't file head of household unless you've been separated for six months and have not lived with your spouse for six months." 15:46 - "You want to work with a fiduciary 100% of the time where there are no other licenses. If they have a broker-dealer affiliation, they sell products." 20:45 - "An overwhelming percentage of retirees are very satisfied or somewhat satisfied with their financial health." 25:39 - "If you look at the average 401(k) or IRA balances of those who are 55-64…it's $100,000. If you look at all people age 55-64, the median retirement account balance is $12,000 (Source: TIAA CREF Survey)." 28:52 - "My wife and I both draw on our Social Security Insurance benefits. We are both 68 years old. We just adopted 3 grandchildren. Does this change our benefits in any way?" 30:38 - "I will be retiring in a month or so and will be about 2 years before the mandatory withdrawal. Where can I park my money so that I have the least management fees and can earn some returns?"