Hello, this is Lon Jefferies, CFP with Net Worth Advisory Group in Salt Lake City, Utah, signing in. Thanks for joining us.
Hi Lon, great to see you again!
Let's give everyone another minute to get logged in.
Welcome back to this August edition of Jump-Start Your Financial Plan with NAPFA. We have a great panel of expert NAPFA advisers on hand to answer your burning money questions: Matthew Illian, Martha Kapouch, Phil Hogg, Ara Oghoorian, Deb Frazier, and Lon Jefferies.
Hi, Phil Hogg here as well. I am a CERTIFIED FINANCIAL PLANNER (TM) with Hogg-Murnighan Financial Planning, LLC and hope to answer many of your questions today.
Greetings, Matthew Illian, CFP, with Marotta Wealth Management from Richmond, Virginia but working remotely from Dalton, Georgia today. Glad to be with you.
Happy Thursday! It's great to have you all here.
Let's jump in with a question from SimpleSteve:
Hi Martha! We just took our first question from Steve, below.
John, you are fortunate to have relative contribute to your childrens' education funds. This should free some of your own resources to continue to contribute to your retirement funds.
Here's one from Brenda coming in:
If my memory serves me correctly, grandparents as the owner of the 529 plan count more heavily in financial aid than parent established on. They can contribute to the funds you already have established. If the do not gift to you outside of this, you could certainly have them send the funds to you, then it s a matter of trust that you will put it in the 529. We have clients doing it both ways.
You can bring they to your local bank or you may work thoug TreasuryDirect .gov. Martha
You can cash them in at your bank. Did you keep serial numbers on the lost ones? The treasury department has a list of all savings bonds issued in your social security number lots of info on these at treasurydirect.gov
Brenda, you can't open a 401k for your son. Your son's ability to open a 401k account would depend on whether his employer offers a plan. You could potentially help your older son contribute to a Roth IRA account (which is probably the best option for him), but he would need to have income that he earned during the year in order for you to do this. Assuming he has income, be aware that you can't contribute more to a Roth IRA account than what he makes during the course of the year. Of course, Roth IRA contributions are currently limited to $5,500 per year for people under age 50.
Brenda, a question: Is you son working at a company that offers a 401(k) and you want to supplement his income so that he can open one?
Brenda, your may earn a little higher return by using on-line bank such as Everbank. Your son cannot open a 401(K) unless he is self -employed. If he is employed, his employer probably offers a plan. Martha
Sorry Brenda, if your son doesn't have income, he can't contribute to a tax-advantaged plan. However, you can still open a taxable investment account and make contributions to that.
Well then, you can't establish a 401(k) and if he doesn't have income, you can't do a ROTH IRA.
Brenda, an IRA or ROTH can be opened at any age however, your son would have to have taxable compensation. The IRS defines compensation as: "Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. It also includes commissions, self-employment income, nontaxable combat pay, military differential pay, and taxable alimony and separate maintenance payments."
Brenda, according to a recent Fidelity study, people should have 1x their salary saved by age 35, and 2x their salary by age 40.
Brenda, I wouldn't worry about how much money you should have in your 401(k) at this point. You need to focus on what you can control and that means finding the vocation that will allow your most productive natural talents to shine.
Except in the case of major natural disasters, Savings Bonds can’t be redeemed for one year after purchase. In addition, there is a three-month interest penalty for redemption before five years.
If you go to TreasuryDirect.gov you may enter you holdings and safe the file. This will provide the rate earning by the bond, the current value, when it reaches maturity (the face amount) and fill maturity when the interest payments stop. Martha
Brenda, if your son ends up working part-time during college, just remember that he may be eligible to contribute to a ROTH and he would need to file an income tax return in order to contribute.
Brenda, you're not alone! But it's never too late to start.
Hi Dickerson, thanks for popping in! We'll get to your question in just a second.