Up-to-date info on retirement saving options:
Just after tax time is the perfect time for you to review your retirement plans and investment portfolio. First and foremost, review the contributions you make to your company’s retirement plan and be sure to defer enough salary to qualify for the full company match. Also, the contribution limits on 401(k), 403(b) and SIMPLE IRA Plans have increased by $500.
Are you turning 50 this year? If so, you’re in luck, because you now qualify for the Catch Up Provision. This provision allows you to defer an additional $5,000 of salary into your 401(k) or 403(b) plan or $2,500 into your SIMPLE IRA Plan. A Catch Up of $1,000 is also allowed on your individual retirement account.
Use this time of year to review your overall portfolio. Check your risk profile, time horizon and asset allocation, and consider rebalancing your portfolio as necessary. Most important, make sure your portfolio is diversified among the different asset classes to fit your risk profile.
Contributed by: John M. Butler, a financial consultant practicing in Hyannis. He offers wealth-management services focusing in the areas of investment, retirement and college planning. He is a registered representative of Commonwealth Financial Network – a member firm of the NASD/SIPC. He can be reached at 508-790-7100 or at john@capitalportfolios.net.
A great new way to give (and save taxes):
The Pension Protection Act of 2006 includes a new way to make sizeable charitable gifts and can help the donor avoid taxation on withdrawals from their IRA. The new law allows IRA owners to make up to $100,000 in tax-free distributions from their IRAs when the distribution is made for charitable purposes. The rule applies only for 2006 and 2007. Since the distribution will not be included in taxable income, individuals will not be able to claim a tax deduction for the charitable contribution, but it will satisfy the annual minimum distribution requirement. This opportunity is available to IRA owners who are age 70-1/2 or older and is most applicable for individuals with other sources of retirement income. For more information, contact your financial advisor or tax professional.
Contributed by: Joseph E. Hawley, CFP®, Vice President, Cape Cod Five Wealth Management Services. 800-678-1855, ext. 8392. jhawley@capecodfive.com.
Lasting decisions shouldn’t be made last:
A lasting decision that people will make comes at the dawn of their retirement years. This very important decision is “where” and “how” to roll over your 401(k) or corporate pension plan into a plan that you will oversee for life.
Your first investment decision may be the most important. For many retirees, this decision is so overwhelming, they decide to do nothing and keep the roll-over oney in the same investments, under the same manager. Other retirees, fearful of the wrong decision, invest all of their money in CDs or annuities, seeking to reduce uncertainty while possibly sacrificing growth.
In some cases, your first investment decision may have a long-lasting impact on your ability to change or modify your retirement plan in the next five to 10 years. Some decisions, such as choosing fixed, immediate or variable annuities, which offer guarantees, can significantly reduce flexibility for many years.
We create flexible retirement plans that will be able to adapt to changes in your life. We believe in a core portfolio of stocks and bonds that will be complemented by alternative investments such as real estate, commodities and private equity, to achieve better growth and yield potential.
Contributed by: Jamie R. Harmon, President, CapeTrust Financial Services, Inc., 901 Main St., Osterville, MA (508)-420-0990. Registered Representative of and securities offered through Berthel Fisher & Co. Financial Services, Inc. (BFCFS). Member NASD/SIPC. CapeTrust Financial Services, Inc. is independent of BFCFS.
Achieve peace of mind with a reverse mortgage:
A case study: John, 69, and Mary Delaney, 65, are retired on Cape Cod. They used proceeds from the sale of their former home to buy a small condo in Florida and put aside a modest retirement income plan to supplement their social security for travel—as well as rising medical and living expenses.
After a difficult and expensive experience caring for Mary’s mother through five years of failing health, John and Mary have decided they do not want to put their own children through this possibility. They want to buy long-term care insurance. Unfortunately, their limited income barely covers living expenses along with $75,000 in mortgage payments remaining on their primary home.
Using a reverse mortgage, John and Mary were able to secure an excellent long-term care insurance policy. They also have the option of self-insuring the cost. Since the remaining balance of the original mortgage was paid off using the proceeds from the reverse mortgage, they have also freed up another $600 a month for other needs. Here are the Delaneys’ results:
Estimated Home Value: $525,000
Maximum Loan Amount: $182,295
Less Mortgage Payoff: $75,000
Net Available to the Delaney’s: $107,207*
*in a lump sum, line of credit or income stream payout
Contributed by: Brian N. Drake, Drake, Saunders & Diwinsky. 866-842-7722. info@retirementmoney.biz
Getting the most out of
your highly appreciated assets:
Recent studies indicate that high-net-worth individuals intend to direct more than one-third of their estates to nonprofit institutions. It does not diminish the gifts, or the givers, if the donors also receive economic benefits in the form of income, gift and estate tax deductions.
Gift and estate tax charitable deductions are unlimited, meaning that one could eliminate all gift and estate tax by giving to charity everything one owned. Most individuals want their families to receive a more significant portion of what they have accumulated, so charitable gifting forms only part of an overall estate plan.
One of many popular planning strategies is called a Charitable Remainder Trust. A donor with a concentrated equity position, for example, may donate the stock to a CRT. For making the donation, the donor may receive a charitable income tax deduction (for lifetime gifts). Once inside the trust, the stock may be sold with no immediate capital gains tax due upon the sale and the proceeds reinvested in a diversified portfolio. The capital gains tax can be deferred until the donor receives payments from the trust. Additionally, the donor receives an annual payment stream from the trust, minimally at a rate of 5 percent of the trust’s value. The donor may receive these payments for life or a term of years not to exceed 20. Various methods of disbursement are available.
Contributed by: Donna M. Driscoll, Vice President and Senior Wealth Advisor, TD Banknorth, N.A. 495 Station Ave. South Yarmouth, MA 02664. 508-760-1733. donna.driscoll@tdbanknorth.
Are you turning 50 this year? If so, you’re in luck, because you now qualify for the Catch Up Provision. This provision allows you to defer an additional $5,000 of salary into your 401(k) or 403(b) plan or $2,500 into your SIMPLE IRA Plan. A Catch Up of $1,000 is also allowed on your individual retirement account.
decision is so overwhelming, they decide to do nothing and keep the roll-over oney in the same investments, under the same manager. Other retirees, fearful of the wrong decision, invest all of their money in CDs or annuities, seeking to reduce uncertainty while possibly sacrificing growth.