Insights: The C&J Blog

We offer clients educational insights that help them make sense of the current market & economic environment.  Each monthly investment letter is written by our investment analyst and contains candid insight and perspective that facilitates a clearer and deeper understanding of our views.  Alongside our monthly investment letters, we also maintain a blog that touches on a variety of topics relating to financial planning and investing.  If there is a question or topic on your mind that you’d like for us to discuss in a future investment letter, feel free to let us know at ssmith@cjwealth.com.

Five Considerations When Researching Retirement Questions on the Internet

The internet is a great place to do research on most any topic. You have to be cautious that the information you find is current and accurate. Here are five things to consider when researching retirement questions.

 

Check the Dateresearching retirement questions

The tax code and rules change often. Check the date of the article to see when it was written. What was true three years or five years ago may not still be relevant. Often, brackets or income limits are adjusted for inflation each year. Those numbers need to be checked to see if they are the most recent limits.

 

Check out the Website

Is the website reputable? Who controls the content on the website? Are they creditable? Are they unbiased or are they selling a product or strategy? Do a search on the company to see if you come up with reviews. Look for unbiased information.

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C&J Wealth Advisors’ Campaign Raises Money for ADFAC

Money for ADFACC&J Wealth Advisors engaged their client base in a fundraising campaign that generated over $4,800 for Aid to Distressed Families of Appalachian Counties’ (ADFAC) School Supplies Program. For every client donation, C&J Wealth Advisors made a financial pledge and volunteer efforts. This will help to purchase approximately 96 backpacks and supplies.

ADFAC’s 2017 goal is to provide 3,500 backpacks filled with school supplies to underprivileged Anderson and Morgan County children. In 2016, ADFAC helped 3,060 children in 30 area schools to have the necessary supplies. According to ADFAC, this was only 34% of the children that could have benefited from the 2016 program and the need grows.

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Is a Roth conversion right for you?

Roth ConversionAre you considering a Roth conversion, but you’re unsure whether or not it’s the right move for you? A Roth IRA provides a great way to help reduce the taxes you’ll pay during retirement, but it can also increase your income during the year that you convert, which could bump you into a higher tax bracket.

When you convert funds to a Roth IRA, your pre-tax funds will be included in your income in the year of the conversion. This will increase your income for the year of the conversion, which may impact deductions, credits, exemptions, phase-outs AMT (alternative minimum tax), the taxation of your Social Security benefits and more.

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Once-Per-Year IRA Rollover Scenarios

What’s Ok and What’s NOT Ok  with an IRA Rollover

IRA Rollover - ok or not okThe once-per-year IRA rollover rule sounds easy to understand. You may only do one IRA-to-IRA (or Roth IRA-to-Roth IRA rollover) per year (365 days). However, there are many ways it can go wrong. Consider the following two scenarios. One involves multiple distributions and the other involves multiple rollover deposits. One is ok and the other is not.

One Distribution and Multiple Rollover Deposits – That’s Ok!

If you take one distribution from your IRA, you may split the funds and roll them over to multiple IRAs. The rollovers could be done on different days and that would not be a problem. This works for purposes of the once-per-year rollover rule because only one distribution is received even though there is more than one rollover deposit.

Example: Sophie receives a $100,000 distribution from her IRA on June 15. On June 20, Sophie rolls over $75,000 to her IRA. On June 25, she decides to roll over the remaining $25,000 to another IRA. This is not a violation of the once-per year rollover rule because Sophie received only one distribution even though she did two rollovers on two different dates.

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Six Options for Retirement Plan Funds

Retirement plan fundsKnow all options available for your company retirement plan funds.

Accepting a new job or transitioning into retirement can be both exciting and overwhelming. Figuring out how to handle your current employer’s retirement plan funds may not be at the top of your priority list, but with several options to consider, it’s crucial that you take the time to think through your next financial move.

6 Options for a distribution from a company plan

  1. Rollover to an IRA
  2. Convert to a Roth IRA
  3. Direct Transfer to an Inherited IRA or Inherited Roth IRA (Only for employer plan beneficiaries)
  4. Lump sum distribution
  5. Leave it in the current plan
  6. Convert from plan assets to a plan Roth account (in-plan Roth conversion)

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Protecting an IRA from Prohibited Transactions

What is a prohibited transaction?

prohibited transactionA prohibited transaction occurs when an IRA owner uses IRA assets in a self-serving or self-dealing manner that improperly benefits the IRA owner.

It may be a prohibited transaction anytime an IRA owner or beneficiary has a self-directed IRA account invested in a business in which the account owner also engages outside of the IRA, has unexplained large deposits or balances in the IRA, or funnels business expenses or income through a Roth IRA.

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To Convert or NOT To Convert – Roth IRA Conversion

What is a Roth IRA conversion?

Roth IRA ConversionA Roth IRA conversion is the process of moving IRA or employer plan assets to a Roth IRA.

1.  When will you need the money? If you have an immediate need for the funds or need them to continue your current standard of living, then a Roth IRA conversion is probably not for you. However, if you have no immediate need for the funds, a Roth IRA conversion is potentially a great way for the funds to grow tax-free over your lifetime.

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13 Retirement Planning Mistakes

Retirement planning mistakes can be costly. Seek the help of a financial planner Retirement Planning Mistakesor tax attorney to achieve the goals for a comfortable and stress free retirement.

1. Not Having a Plan

Do you know how to achieve the retirement lifestyle you want? Consider these three things.

  • When do you want to retire?
  • How much income will you need?
  • What steps can you take not to help you achieve your goals?

When you have defined your goals, we can develop a financial plan to reach them.

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Use Your Tax Refund to Fund an IRA

What does the basic process entail?

Tax refundAn income tax refund can be directly deposited to an IRA up to the annual contribution limit. The contribution limit is $5,500 ($6,500 for individuals age 50 or older) for 2016 and 2017. It can also be split among multiple accounts.

— Determine the tax refund amount.  Once you know how big your refund will be, decide how much, if any, you would like to contribute to your IRA or Roth IRA up to the maximum annual contribution allowed.

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Sometimes It Pays to Treat Your Kids Unequally

Treat Your Kids UnequallyAs the father of more than one child, I understand the desire to try and treat children as equally as possible. You certainly don’t want one child to think you love him/her any less, or more, than your other children (though children will inevitably feel that way at one time or another), and you want the best for all of your children. But while children may share the same parents, may grow up in the same house and may be raised in the same manner, they are very much like snowflakes. Each one is truly unique. However, when dividing your estate, it may be beneficial to treat your kids unequally.

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