Archive for October, 2015

Using Your IRA to Invest in Precious Metals: Q&A

Thursday, October 29th, 2015

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You most certainly do not have to work on Wall Street to know that things have been rocky the last few months for the U.S stock market. It seems that it’s an everyday occurrence that there’s mass hysteria on whether or not the Fed will raise rates, and if you’re like most Americans with an IRA, pension or 401k, you pay attention, because your retirement could be at stake. When the market crashed in 2008, it was said that retirement savers lost $2 trillion in the stock market, and there was nothing that could be done to get those funds back. It left millions of hard-working Americans with depleted accounts and no answers.

Today, I’d like to think that we’re smarter with our money, that we’ve self-educated, and that we now know how to make the market work for us. The answer is diversification. And today, we’re going to specifically talk about diversification with a gold-backed IRA.

Q: What Type of Precious Metals and Coins are Approved Investments?

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A: Only gold coins that are legal tender with 0.9999 fineness are allowed in an IRA, with the exception of the American Gold Eagle, which has a fineness of 0.9167% fineness. Other gold coins allowed to be put into an IRA include the American Buffalo, Canadian Gold Maple Leaf, and Australian Gold Nugget. The popular South African Krugerrand is not permitted to be included in an American IRA because it’s fineness is only 0.9167%
The regulations that govern gold contributions to IRAs call for a minimum purity of only 0.995%, most gold bullion bars are 0.9999% pure.

Q: Can I Take Distributions of Physical Metal Instead of Cash?

A: Yes, distributions from an IRA can be cash or non-cash. The only issue will be that the distribution will usually be taxable to you (except for a Roth IRA), which would mean that you would either have to liquidate enough metals to pay the taxes, or you would have to use cash from your personal accounts to pay the taxes.

Q: Are There Monthly Storage Fees?

A: Asset value of metals:

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Q: How is the Metal Held and Stored?

A: Here at Accuplan, all precious metals are stored in our secured vault with Brinks in Salt Lake City. Tax laws require that a licensed custodian hold precious metals for your IRA. All metals are counted and verified upon receipt in the Brinks vault, and you will receive an email notification along with a certificate of ownership when the metals are verified at the vault.

There are many ways to help protect yourself in your day-to-day activities, so why not also protect yourself from a financial crisis as well with a gold-backed IRA?

Author: Tanya

When Withdrawing Funds from your IRA are Penalty-Free

Monday, October 26th, 2015

IRA withdrawal

It’s not uncommon that contributions that workers make to their IRA are prematurely withdrawn. An IRA is intended to supplement income in retirement years, but as the future and some circumstances are often out of our control, an IRA is sometimes used in other ways than retirement.

Should workers need to take funds from their IRA, the money that’s withdrawn may be subject to federal and state taxes, and if the person withdrawing the money is under age 59.5 when this occurs, another early-distribution penalty of 10% may be incurred. The reason the IRS imposes these fees is to deter workers from taking distributions from their IRA early, but there are situations where the IRS will waive early-distribution penalty fees.

Health Insurance

If you lose your job, and subsequently your health insurance (unless your insurance is purchased through HealthCare.gov, or have a private plan outside of the market) and are unemployed for 12 weeks or more, you may use your IRA to pay for purchasing health insurance for yourself, your spouse, or your dependents.

Medical Expenses

If you do not have health insurance and something like an accident or medical emergency should happen, the expenses that go along with a hospital can be financially devastating. You’re able to take distributions from your IRA if your medical expenses are more than your insurance will cover for the year, or if you have no insurance at all.
You’re also eligible to pull money out of your IRA and have medical expenses covered if you have unreimbursed medical expenses that are more than 7.5 percent of your adjusted gross income. These exemptions allow you to pull the money out of your IRA without likely incurring the 10-percent early withdrawal penalty.

Your First Home

A penalty-free withdrawal of up to $10,000 ($20,000 for couples) can be taken from your IRA when you’re buying or building your first home. The funds can be used to pay for a down payment, closing costs, taxes, and other fees that go into buying a home.
The IRS sees this home as your first home only if you or your spouse have not owned a home in the last two years. It’s also important to note that this $10,000 is a lifetime limit per individual, meaning that you can’t make this withdrawal every time you buy a house. The $10,000 mark is the absolute limit for the penalty-free homebuyer provision.

College Costs

IRA distributions are allowed to pay for college costs like tuition, fees, books and supplies, and yourself, your spouse, your children or your grandchildren are eligible. Room and board expenses can also be covered for part-time students. It’s important to note that IRA withdrawals for this purpose could possibly reduce eligibility for financial aid for some students, as the IRA funds can be considered income, therefore possibly disqualifying aid. Waiting until the student is in their final year at college reduces the risk of financial aid being withdrawn.

Disability

If a doctor can determine that due to a mental or physical disability, that you’re unable to find work or stay employed, you are eligible for penalty-free distributions from your IRA. One factor though is that the disability must be expected to last the duration of your life, or result in your death. The funds can be withdrawn for any purpose in this circumstance, but make sure that you check with your IRA custodian regarding their policies for handling distributions due to disability.

In the end, most retirement advisors don’t like the idea of early distribution, but there’s no doubt it can be a life-saver in many situations. Even though the above situations are exempt from early-distribution penalties, they still may be subject to federal and state taxes. Speak with your tax professional to determine whether or not certain amounts are taxable.

Author: Tanya

Here are the Stats: Why You Should Start Retirement Planning Today

Thursday, October 22nd, 2015

Retirement stats

According to the 2014 Survey of Household Economics and Decisionmaking, conducted by the Federal Reserve, American’s are very ill-prepared for retirement. A whopping 38% of the more than 5,800 respondents answered that they had no intention of retiring, or planned to work for as long as possible. 31% of non-retirees had no retirement savings or pension whatsoever, including a quarter of the people in the survey age 45 and up.

If this trend keeps up, and we’re unable to make up this deficit, a big majority of American’s could be forced to rely on Social Security in their would-be retirement years, or may have to work passed the desired age. The biggest issue with working well into retirement age is that unfortunately you can’t know for sure that your health, or your employer will accommodate you working 60 and beyond.

The problem with us relying on Social Security is that ideally, it’s only meant to make up %40 of retiree’s income. With people living longer than before, and baby boomers beginning to retire, it’s no wonder that Social Security is making headlines lately with talks of it possibly drying up.

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Fortunately, there are several options when it comes to retirement planning, 401K’s and pensions offered through your employer, the rollout of myRA through the government, individual IRA’s and Self-Directed IRA’s hosted through IRS approved custodians, SEP IRA’s for self-employed people or small business owners, and more.

Talking with your financial advisor is important when making retirement decisions, they’ll give you an objective view on where you are, and what can be done to help you reach your goals. The most important thing is to not throw your hands up in defeat. Small victories and goals can be met, and make a big difference in the long run.

Click here to open an IRA today, and click here and fill out the form on the right to get more information on how you can get started today.

Author: Tanya

Alternative Assets Your Portfolio Needs for True Diversification

Monday, October 19th, 2015

Alt assets

Diversification is not a new concept, but it seems that it’s a common downfall for many new investors. The reason diversifying your retirement portfolio is so important is to make sure that your risk of loss is reduced in any market condition. By having fingers in a few pies with the right mix of stocks, and investing in multiple sectors, you will be well on your way to retirement bliss. But how do you get there? And how do you know what investments are for you? Let’s explore a couple options.

Energy

For those with a higher risk appetite and a longer time horizon, there are hundreds of individual stocks in which one can invest. As with all individual stocks, companies’ stock prices can swing wildly in short time spans, particularly in the relatively young field of renewable energy. The best way to temper risk while still investing directly in renewable energy companies is to buy shares in companies that do more than just renewables, such as GE, and General Motors.

Real Estate

Here is where you have a few more options. There’s the more traditional route of real estate investing through commercial property, either as the manager or perhaps a developer. And there’s investing through your self-directed IRA, so that it is directly beneficial to your retirement. Investing is always a risk. But unlike stocks and bonds which are intangible, people can see and walk on real estate. Both investors and non-investors have experienced what it’s like to buy or rent a single-family home, an apartment or a condominium sometime in their lives.

Startups

Investing in startups can be rewarding both financially and personally, because by investing in a startup, you are contributing to job creation and capital formation. The influence of entrepreneurs has shaped the U.S. since before its founding, and the contribution with such innovation is absolutely immeasurable. One of the best ways to reduce risk is to understand the market that startup operates in. This will provide you with a better sense when projecting the potential success of the venture. Make sure that the business has a scalable model so that it can grow to a level in which you will be able to get your money back as an investor.

In the end, there are many opportunities to make money in alternative assets. By doing your research and treading carefully, you can minimize your risks while also doing well.

Author: Tanya

The Right Way to Take Your IRA Withdrawals

Thursday, October 15th, 2015

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What most workers are thinking about before retirement is what’s happening now, in their day-to-day lives. What some of those working towards retirement don’t think about often enough is after retirement. The process, the questions, the uncertainty. But Donna Rosato at Time (found on Twitter at @RosatoDonna) has written about that very topic in a piece that was published yesterday, Oct 14th.


Q: I need to start taking my minimum required distribution from my IRA soon. Is there any tax advantage to taking it in monthly installments as opposed to taking a lump sum once a year? —Sherwood Kahmer, Garnet Valley, Pennsylvania

A: There is no tax advantage to taking your required minimum distribution (RMD) in one lump sum annually vs. installments throughout the year. But the timing of your distribution is important, says Mark Copeland, a founding partner at Signature Estate & Investment Advisors in Irvine, Calif.

First, a little background on how RMDs work. At age 70½, you must start taking money out of your IRA and other tax-advantaged investment accounts such as 401(k)s, according to IRS rules. After years of waiting, Uncle Sam wants to collect the taxes you’ve deferred on your contributions. You must take your distribution by April 1 of the year following the calendar year in which you turn 70½. But after that, you can wait until December 31 of each year to receive the money.

You can choose to take the payments monthly, quarterly, or annually. You’ll pay the same amount of income tax no matter when you receive the money. But taking payments earlier in the year is a “lost opportunity,” says Copeland. “The longer you keep the money in a tax-deferred account, the more time your investments grow without the drag of taxes.”

In fact, most people do take the money in one lump sum at the end of the year, says Copeland. You shouldn’t wait till the last minute to do the paperwork though. If you don’t take the distribution by the December 31 deadline, you’ll pay a 50% tax penalty in addition to regular income tax on the amount that should have been withdrawn. A surprising number of people wait to the very end of the year.

You’ll also pay a penalty if you underestimate how much you owe in taxes. Withdrawals from traditional IRAs are taxed as regular income, based on your tax bracket for the year in which you make the withdrawal. How much you must withdraw depends on the account balance and your age. The IRS has a worksheet that can guide you through it. Or you can use a calculator like this one from T. Rowe Price to estimate your distribution (you must take a minimum amount but you can always take out more). To make paperwork easier, you can also have the taxes withheld from your distribution (10% will automatically be held for federal taxes if you choose this option, but you can elect to have more than 10% withheld).

Of course, there may be good reasons to take the money earlier in the year or in installments. Maybe you need it to cover day to day living expenses, or want the consistent cash flow from monthly distributions.

If you have a complex investment portfolio, there may be advantages to taking withdrawals quarterly; consult with a tax adviser.

The bottom line: “You can’t avoid the taxes, but keep what you don’t need tax deferred for as long as you can,” Copeland advises.