Advise Finance, LLC
Certified Financial Planner
Rose was born and raised in China, but educated in the US. Consequently, she enjoys the best of both worlds. She aims to incorporate that philosophy into her practice and provides her clients with the same privilege. Rose was the first American Certified Financial Planner(tm) practitioner who ever won the annual international financial plan competition twice (2014 & 2016), sponsored by the Global PlanPlus Award. Additionally, Rose has been frequently interviewed and quoted by major financial media sources, such as The Wall Street Journal, Kiplinger, Forbes, US World News, Reuters, CNBC, Chicago Tribune, and InvestmentNews. You can see a clip of her interview with the local TV, WBIR, about teaching kids of financial literacy.
Besides having the general knowledge of financial planning, Rose has two other distinctive designations: 1) RICP®--Retirement Income Certified Professional, which gives her the expertise to help retirees during the retirement in issues such as safe income withdrawal, Social Security and Medicare planning, long-term care, etc, and 2) CDFA®--Certified Divorce Financial Analyst, which allows her to assist attorneys and clients to achieve the best possible equitable settlement and at the same time to avoid typical financial and tax pitfalls. Rose Swanger is passionate about promoting financial literacy. Her personal goal is to help Americans get their financial houses in order, one community at a time.
BS, Medical Technology, Georgia State University
MBA, Financial Planning, California Lutheran University
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Advise Finance, LLC
With your positive attitude towards saving for retirement, I’m glad to share my knowledge with you. Iif your company offers a 401(k) plan, please sign up that first. The money you don’t see is the money you don’t spend. In addition, if you sign up a traditional 401(k), by deferring your income, you lower your annual tax bill. Say, you’re in the 25% tax bracket, and $10k savings to the 401(k) saves you $2,500 tax.
Secondly, if you have a high-deductible health insurance, make sure to fund your HSA, which offers a triple-tax advantage. You can deduct the money you save, the growth inside the HSA is tax-deferred, and the eventual withdrawal and usage on the qualified medical purposes are tax free.
If you still have extra money after satisfying those two tactics, then by all means, fund a Roth IRA if you can. Lastly, always save for a raining day by directing a portion of your pay to a checking/Savings account automatically each month. It will add up.
Best luck to you!
It’s not the act of marriage but how you deal with the assets after you are married that could potentially affect your credit score. What do I mean by that? As long as you two have separate accounts, one person’s bad credit history will not affect the other spouse’s good credit score. It’s like having a kid who got the cold from the school. Will his cold give you a cold? It depends. If you have a good immunity & keep a good personal hygiene, not to touch everything the sick kid touches, you may be fine. Same analogy applies here. The minute you comingle your assets, such as having a joint account or applying a joint credit card, you may risk your stellar credit history being tainted if the other spouse misses another payment. Thus, the prudent thing to do is to initially maintain separate financial accounts and coach the other to learn personal finance and gradually improves his/her credit score. Only then, have a joint account. Best luck!
It’s difficult not to think about our kids when we make those financial decisions as you see him and interact with him on a daily basis. Having said that, you must also consider if you have enough to live on. Based on your question, I’m not sure you have a pension and a 401(k), or just a 401(k).
If you have both (pension and 401(k)), I would take the pension and claim the social security benefit since you are not concerned about any spousal or survivor benefit, nor can your adult son take any social security benefit directly. Later when you’re 70 ½ and take the RMD (required minimum distribution) from the 401(k), anything left over from the account can be passed on directly to your son. So, make sure you have the primary beneficiary clearly spelt out on the 401(k) document.
If you have only the 401(k) account and the question is if you need to take a lump-sum or annuity payout, no one knows for certain until you talk to a professional. Usually the annuity payout is better as it minimizes your longevity risk. But, with so many factors to consider, such as your own comfort for the retirement, any rules on pension payout to family members, the consideration of your son’s well-being, a consultation with a financial professional is highly recommended.
Deferring your active income to a pre-tax 401(k) plan definitely lowers your AGI and opens the door for Roth. However, you may want to check w/ your HR who withholds your deferral if it’s too late to make a lump-sum contribution towards the year-end. We’re almost in Sept. so if you have not made any deferral to your 401(k), you only have four month to make that deferral, which may not dramatically reduce your income. If your 401(k) permits your catch up to make up the whole year worth of contribution, that would be the solution.
On the other hand, even if you couldn’t contribute $18k to your 401(k) and thus lower your AGI to below the $193K mark, you can still do the Roth, just not directly. You can open a non-deductible IRA and immediately convert to Roth. It has the same effect as your regular contributory Roth in the long run. There are some distinctions between a contributory Roth and a converted Roth. You may talk a CFP® practitioner or Google yourself to learn the difference. Best!
Before one can answer your question, the number one question any planner should ask you is, “Did you sign the dotted line already?” In other words, there are many planning opportunity for questions like that before you officially sign the divorce decree. Once you do, you are limited on what you can do.
Assuming you’re still in the negotiation phase, you can absolutely negotiate that before a half of your husband’s 401k is transferred to you, and you can use a portion of it to pay bills, penalty fee. IRS blessed you with the little known rule of 72(t)(2)(c).
However, once you have the finalized and signed the divorce decree, you can still transfer the half 401k to your IRA, but you have to pay 10% penalty in addition to the income tax for withdrawn any portion from the IRA to pay the bills, assuming you’re under the age 59 ½.
For your 2nd question, if you were able to get any non-retirement account, or taxable account (checking/Savings, CD, or a brokerage account) being awarded to you, you can absolutely to use it anyway you want without worrying about the tax impact on the withdrawal.
That’s why it’s so important to have a CDFA® (Certified Divorce Financial Analyst) on your side during the entire divorce process, who can guide you and avoid many financial and tax traps.