Posts by rosemontadvisors

Quarterly Newsletter – Third Quarter 2016

Posted by on Nov 1, 2017 in Quarterly Newsletter

Do you remember playing “20 Questions”? Here are the answers to 20 questions about required minimum distributions (RMDs). Most of this information comes from the frequently asked questions section of the IRS website. Third Quarter 2016 Newsletter

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8 Critical Things to Do Before Buying a Home

Posted by on Apr 21, 2016 in Articles, Uncategorized

So you’re finally ready to get serious and buy a house — chalk it up to the amazing spring weather, or maybe a precious bun baking in the oven, or that much anticipated promotion at work. Whatever the reason, you feel primed to start poring over listings and spending your weekends open-house hopping. Exciting! Yet while you might feel prepared for this next giant step, just remember — there’s a lot of planning and prep work that goes into this purchase, even before you start to look at homes. So make sure you’ve got all your mallards in a row first! Use this checklist to figure out if there are any things you may have missed. Crunch your numbers First, ask yourself not if you’re ready emotionally — because it sounds like you are — but ready financially, says Kristen Robinson, senior vice president at Fidelity Investments. A perfect place to start is at our Home Affordability Calculator, where you can punch in your income, desired location, and other factors to see if your expectations jibe with reality. Good luck! Know your credit score Your mortgage’s interest rate — and, as a result, the size of your monthly payments — will be directly related to your credit or FICO score, essentially a summary of how reliably you’ve been paying off your debts. “If you’ve had too many problems or late payments leading up to the purchase of a home, your score could be lower, and you might get a higher mortgage rate,” says Ali Vafai, president of The Money Source, a national lender and servicer. Many major lenders require a score of at least 620 for a mortgage, but if you find out you’re below that or want to boost your score, now is the time to get started, since it can take months to take effect. Amass a down payment Most mortgage lenders require a cash down payment of 5% to 20% of the price of a home. For the U.S. median home price of $292,700, that’s anywhere from $14,635 to $58,540. If you don’t have this kind of cash lying around, it’s high time to start a saving goal for the next few months. You can start by putting off buying any big-ticket items, fancy vacations or other extravagances. This is a new home we’re talking about, remember? You can also explore other ways to come up with a down payment fast — like borrowing from your IRA or even getting a gift from your parents (lucky you). Get educated The most important aspect of purchasing a home? Understanding the nuts and bolts of how it works. Consider taking advantage of local home-buying seminars, often offered by banks or nonprofits. Such resources will explain aspects of a home loan, like the criteria lenders use to evaluate a borrower, the documentation buyers will need to provide and what each portion of a mortgage payment goes toward. Even better: these seminars are usually free. Interview at least three real estate agents Just about everyone knows a real estate agent or five, which explains why 52% of home buyers find their agent through a friend. But don’t just settle for the first agent to cross your path — remember, a house is a huge purchase, the stakes are high. In the same way you’d want to thoroughly vet a surgeon before upcoming surgery, make sure to do the same here, too. Here are some questions to ask a real estate agent before deciding which one is right for you. A real estate agent can also help in the education department,...

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Considering a New Career in Retirement?

Posted by on Mar 4, 2016 in Articles, Uncategorized

Many retirees look forward to spending their golden years relaxing, socializing and improving their short game. For some, however, all of that R&R is overrated. Working after retirement may be an oxymoron, but it’s a trend that continues to gain steam. A 2013 study found that 60 percent of workers age 60 and older plan to look for a new job after retiring. That’s up 3 percent from the previous year. While financial concerns are often the motivator, for many retirees the decision to pursue an encore career is more about passion than paycheck. Retirement can be an opportunity for people to finally pursue their dreams, said Kimberly Foss, a certified financial planner and founder of Empyrion Wealth Management. It’s “a way for them to do the things they never had time to before,” she said. “Many retirees will likely have already established a decent emergency fund and have settled their debts — kids’ college tuitions, mortgages — so a position’s salary may not be a driving factor,” Foss added. “They might choose to volunteer, consult, start their own business or pursue a brand-new career that fulfills a lifelong passion, skill or hobby.” For example, when one of Foss’ clients was offered an early retirement package for the global IT company where she worked as a data analyst, she used the opportunity to begin a new endeavor: melting down glass and stones to create jewelry. “We reviewed her financials, and she and her husband set off to travel across the country in an RV selling these goods and earning a decent income from it,” Foss said. “Best of all, she loved what she was doing and felt financially secure enough to pursue her passion.” While encore careers can be highly satisfying for retirees, those who go down this path need to make sure they’re doing it for the right reasons and that they don’t make any major mistakes that could derail their happy ending. Here’s a look at some dos and don’ts when it comes to late-in-life second careers: Do find something that excites you. Bryan Franklin, an executive coach and co-author of the book “The Last Safe Investment: Spending Now to Increase Your True Wealth Forever,” said that perhaps you have a pursuit that you’ve always wanted to try but never thought you could. “Maybe there was a childhood dream that you’ve long ago dismissed as not practical or nearly forgotten about,” he said. “Use these as inspiration to find a way to contribute that makes you feel great about yourself.” “Retirement is a time you can pretty much do whatever you want to do. You realize life is shorter, and you value the time you have to a greater extent.” -Len Hayduchok, president of Dedicated Senior Advisors Len Hayduchok, a CFP and president of Dedicated Senior Advisors, agreed that starting a new career in retirement is something you should do only for the love and passion of it. “Retirement is a time you can pretty much do whatever you want to do,” said Hayduchok, adding that as you get older, “you realize life is shorter, and you value the time you have to a greater extent. It becomes more of a focus on how to spend your time in a way you enjoy.” Don’t make it about money. “If your primary objective is income, it’s a mistake,” Hayduchok said. “You’re better off going back [to the job] where you were.” When one of Hayduchok’s clients retired from an insurance company where he was a senior executive, he happily accepted a pay cut in order to follow his...

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4 Ways Getting Married Will Change Your Taxes

Posted by on Feb 25, 2016 in Articles, Uncategorized

When you walk down the aisle, your vows aren’t likely to include the words “Till death—and taxes—do us part.” But including that clause may not be such a bad idea, because once you tie the knot, your tax situation has the potential to go from simple to complex fast—not to mention the fact that you’ll have to reconcile any disparate tax strategies. For instance, Melissa and Lee Bernhoft, Houston–based newlyweds who got married in April, have two very different attitudes toward declaring exemptions: Melissa likes to declare more, while Lee prefers fewer. “My expectation is that I’ll have to pay [the IRS] back, but that’s not her style. She would prefer to give Uncle Sam an interest-free loan,” says Lee, 30, a finance professional. Meanwhile, Melissa looks forward to getting a refund. “It makes me more nervous to have to owe a big lump sum of money,” says the 33-year-old IT audit relationship manager. “And I’m nervous that because my husband under-declares I don’t know if I’m going to get that sweet little check I’m used to.” The one thing they can agree on? For the first time ever, they’re going to use an accountant to help them file and navigate their new tax situation. If you’re newly wed like the Bernhofts, chances are you’re also confused by the uncharted tax territory that lies ahead. And with less than two months to go until the filing deadline, a good place to start would be simply to understand what’s different now that two incomes have become one. So we asked a few tax professionals to outline some of the most significant changes that happen once you go from single to married. Here are four major differences to consider before you file. Your filing status will change You’ve kissed the single life goodbye, which also means kissing goodbye your single filing status—you must now file as either married filing jointly or married filing separately. For most couples’ tax situations, married filing jointly will likely make the most sense. Not only could you enjoy a lower federal tax rate than when you were single, you’ll also be able to take advantage of tax breaks like the earned income credit (EIC) and various educational deductions and credits that aren’t available to couples who file separately, says Lisa Greene-Lewis, a CPA and TurboTax expert based in San Diego. The likeliest reason to choose a married filing separately status would be if you feel one of you is at risk for an audit or has tax “baggage,” like owing a lot in back taxes, says Andrew Poulos, a greater-Atlanta-based tax accountant and principal of Poulos Accounting & Consulting. Filing separately will help provide some protection from tax liability for the other spouse. “If one spouse has a balance owed to the IRS from prior years, filing as ‘married joint’ allows the IRS to offset any refund from their joint return against the prior collection balance owed by one of the spouses,” he says. The overarching rule to remember? “The minute a couple signs a tax return as ‘married joint,’ it doesn’t matter whose share of the money creates any sort of liability—both spouses are equally liable for the full amount even if they are divorced at some point in time,” Poulos adds. You’ll probably change tax brackets For better or for worse, as a newly married couple you’ll likely be entering a new tax bracket together. Whether or not that works in your favor depends on your individual situation, but generally, the more disparate your incomes, the more likely you’ll be able to lower your...

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10 Retirement Saving Strategies You Should Know About

Posted by on Feb 23, 2016 in Articles, Uncategorized

From tax-deferrals to employer contributions, here’s how to save more. We all know that we should be putting aside a portion of each paycheck for retirement. Setting up a direct deposit to a savings or investment account can help make sure that we don’t forget to save every month. However, once you start saving, there are many other things you can do to help grow and protect your nest egg. Here are 10 savings strategies that will help you build wealth for retirement. Tax-deferral on retirement savings. You can defer paying income tax on money you save for retirement in a 401(k) (up to $18,000) and IRA (up to $5,500). Workers age 50 and older can temporarily exclude from tax an additional $1,000 in an IRA and $6,000 in a 401(k). Income tax won’t be due on this money until you withdraw it from the account. And if you will be in a lower tax bracket in retirement, you can reduce your lifetime tax bill by saving in traditional retirement accounts. Set up tax-free retirement income. You have already paid the income tax on money you contribute to a Roth IRA and Roth 401(k). The money will accrue without taxes while in the account, and if you take distributions after age 59 1/2 from an account that is at least 5 years old, you won’t ever have to pay tax on the investment earnings. “If you put the money into a Roth and pay taxes now, then the money that you gain is tax-free,” says Austin Chinn, a certified financial planner for Fountain Strategies in San Jose, California. The myRA. A new type of Roth retirement account, the myRA, guarantees that your savings will never decline in value. The only investment option is a Treasury savings bond that pays a variable interest rate. However, when investors accumulate $15,000 or the account turns 30 years old, your savings will be transferred to a private sector Roth IRA. The saver’s credit. Retirement savers whose adjusted gross income is less than $30,750 for individuals and $61,500 for couples in 2016 could qualify for the saver’s credit. This tax credit is worth between 10 and 50 percent of the amount you contribute to a 401(k), IRA or Roth account up to $2,000 for individuals and $4,000 for couples. Trustee-to-trustee transfers. If you decide to roll over your 401(k) to an IRA or a new 401(k) when you change jobs, take care to transfer your balance directly from one account to another via a trustee-to-trustee transfer. If a check is cut to you, 20 percent of your savings will be withheld for income tax. You only get 60 days to put the distribution, including the withheld 20 percent, in a new retirement account. If you don’t meet the deadline you will owe income tax and potentially an early-withdrawal penalty on any amount that doesn’t make it into another retirement account. A trustee-to-trustee transfer allows you to avoid the tax withholding and the potential to trigger taxes and fees. “You want to do a trustee-to-trustee transfer and have the check going to the new custodian directly, so that way you can avoid that withholding,” says Mary Erl, a certified financial planner for Nest Builder Financial Advisors in Gurnee, Illinois. Tax-free IRA charitable contributions. Withdrawals from traditional IRAs are required after age 70 1/2, and income tax is typically due on each distribution. However, retirees who are 70 1/2 or older can avoid the tax and fulfill their withdrawal requirement by directly transferring amounts of up to $100,000 from their IRA to a qualified charity. Holding tax-preferred investments...

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