Hi SA - it does not matter where the dividends end up - reinvested or withdrawn. They will show up on the1099 form from your mutual fund company as income to be reported - split between long term and short term capital gains, and qualified and non qualified dividends. It's the distribution of the dividends and gains that creates the taxable income; where they end up does not change anything. Of course, if the account where the dividends were moved to earns interest, there will be taxable income for that account, but that is independent of the original distribution.
Rome- One big variable to consider... Expenses vs. income. If you need to withdraw from a portfolio consider a safe withdrawal rate at around 4%. However, depending on the use of the funds at death, the amount might be greater if you are not leaving money/asset to anyone. I suggest, take your various income sources subtract expenses and then see the shortfall, if any. If a shortfall, divide the shortfall by your portfolio and determine the withdrawal rate. Please consider tax bracket when calculating. Finally, keep more cash if retired. If the portfolio drops, you can turn off distributions from portfolio, take some from cash and the when the market recovers, you can replenish the cash.
Sandra, speaking as an advisor myself, I think you are being treated pretty fairly, as your advisor "grandfathered" you in under a lower fee. .7% of assets is quite reasonable. And I think the advisor's decisions to work with a larger range of fund companies and to conduct more frequent reviews are reasonable and thoughtful.
KG:I don't know much about them, they are not FDIC insured, fairly new and designed by scientist. If it is not regulated by the SEC or FINRA, I would stay away and see how it does over a year or so.
Hi Cliff. The right answer for you really depends on your particular circumstances, but I can tell you that I strongly reccommend couples do whatever they can to delay taking the higher of the two Social Security benefits until age 70 (unless they're already facing health challenges that suggest a long life for even one of them is unlikely). But doing that takes going back to work, or tapping the nest egg early in retirement. If you can tap the nest egg at a reasonable withdrawal rate, and then ratchet it down when you take Social Security later, then that's probably a viable plan to consider; if not, going back to work if at all possible needs to be on the table.
Rome, the first thing you need to do is to determine how much retirement income you need after taxes. As Robert points out, withdrawing 4% of your investments used for the sole purpose of retirement is a guideline you can use. Based on the information you provided and the rule-of thumb, the maximum amount of your withdrawal from retirement funds should be no more than $56k before taxes. This is a starting point but I would suggest hiring a financial planner before making such a big decision.
DWG: I am confused on where the garage was built: the house you just sold or other home. If it was from the house you just sold, it can be added to cost basis as it is a capital improvement. If it is from the other house, it can only be added to that cost basis when it is sold. You can add to cost basis any improvement or expense you make to improve the home 6 months before sale.
Hi Lee - Please consider the risks. Preferreds are volatile, more than traditions bonds, lower credit quality then Investment grade bonds. However, if you feel that this investment compliments your asset allocation, then approach with an understanding of the risks. Return is nice but volatility hurts the compound rate of return. I hope this helps.
Hi John. Unfortunately, the Qualified Charitable Distribution provision expired last year; unknown if Congress will renew it. The QCD allowed you to send funds directly from your IRA to a charity & count that towards your RMD, without having to declare the amount as taxable income. Only available to those over 70 1/2, of course.
Jeff, generally you should invest in the ROTH if you are younger and have a long time before you need the money. You invest in the ROTH with after tax money and it is never taxed again. Furthermore, any gains in your ROTH are never taxed again. If you have held the account for 5 years or more, you can take out any contributions you have made without penalty. I would start with Vanguard, Fidelity, or any of the low cost brokers. They may only require a small minimum investment to start if you sign up for automatic deposits.
Jeff, the ROTH IRA is the best gift the government ever gave it's citizens and you are a perfect age to take advantage of it. As to finding a company or broker that has a small minimum or no minimum, that is tougher. Try the discount brokers, Scottrade, ETrade, Fidelity. Some, such as Fidelity have no annual fees. All of those companies have good information on investments. There are thousands of books written on choosing investments. My suggestion for those who want to do it themselves is to invest in what you know about, choose funds that have been around for 10 years and a manager that has at least that amount of time managing.
NRodriguez - of course, we will direct you to NAPFA (www.NAPFA.org) to search. Click on the "How To Guide" for a really valuable resource that will help you in your search.
John, for 2014 Congress has not at this time renewed the provision to permit RMDs to be donated, but stay tuned.
Nicole F, if you qualify for a workplace retirement plan, these plans offer one of the best ways to save for retirement. And if they offer an employer matching program, go with that at least up to the match. If you don’t qualify for the employer sponsored plan then I would recommend continuing to invest in your ROTH IRA accounts. The IRA ROTH Contribution is $5,500 per year as long as you have earned income up to that amount. See how much you can afford to save and put the same amount of money in the ROTH account each month. Invest 70% in a low-fee total stock index fund and 30% in a total bond index fund. But please make sure you have a 6-month’s worth of income in an emergency fund first.
SethQue, that is a very ambitious goal and you are wise to begin preparing. There are many good retirement calculators to begin with. IRS has one online. You need to know a couple of things: How much can you contribute in the next 14 years? How much will you need monthly to live on, accounting for inflation? At age 45, will you earn any money? How will stopping work at age 45 impact social security payments, social security website can help? Once all of this is imputed to the retirement calculator, you can play with the numbers.
Hi Tom, can you elaborate a bit more on your question? Does your 401(k) plan allow for after-tax contributions, for starters, or are you talking about a Roth 401(k)?
Thanks for joining, Mary!
Just another reminder to our participants: We are answering questions in the order in which they were received. So, you may not see your question pop up right away. We're working to answer them as quickly as possible. A transcript of this chat will be available when the event's over.