Family Investment Center
Dan Danford is a gifted communicator. He has written hundreds of articles and several books. He has taught classes for high school, college, and community groups. He speaks often and served as commentator for a local ABC affiliate television station.
Dan founded Family Investment Center in 1998. In total, he’s been a successful senior officer in five different banking or investment firms since 1984. He earned a Master’s degree in Personal Finance from Kansas State University and an MBA from Northwest Missouri State University. Today, Family Investment Center manages well over $100 million for clients in a dozen states.
Dan is quoted extensively about investing. He’s written for or been quoted in the Wall Street Journal, New York Times, Chicago Tribune, Kiplinger’s, U.S. News & World Report and dozens of other newspapers, magazines, and media outlets.
Dan has served in numerous leadership positions for civic and professional boards including the Missouri Western State University Board of Governors and as treasurer of the St. Joseph Area Chamber of Commerce. He was Chairman of the Friends of the Free Clinic, a support group for the Social Welfare Board in St. Joseph.
Dan has been president of the Missouri Western State University Alumni Association and was honored in 2003 with the Missouri Western State College Distinguished Alumni Service Award.
MS, Personal Finance, KSU
BS, Marketing, MWSU
Assets Under Management:
Dan Danford / Family Investment Center
You nailed the issue by asking about monetizing the investment. Without dividends, your only hope is that the company sells out at some future date and that all investors are rewarded. That's a big "if." It is probably more likely in some industries than others, but the general likelhood is low. Crowdfunding seems more to me like marketing than investing ... trying to make friends and customers feel part of a new venture. There is nothing wrong with that, but remember that investment prospects are low. Do it for fun, do it for prestige, do it for personal fulfillment. Don't do it for investment purposes.
You may return money to your traditional IRA within 60 days of withdrawing. Not two months. Not 61 days. Sixty days, period. The IRS is a sticker on this point and it's worth noting because taxes will be due for the amount withdrawn, plus penalty is you are younger than 59.5 years. That's a steep tax bite and you'd hate to pay it simply because you miscalculated the deadline.
You may be able to transfer old 403(b) (misnamed tax sheltered annuity accounts) or some account assets to a new provider … no-load funds are your best choice. Individual stocks aren’t allowed in these specialized retirement accounts. Because of the investment restrictions and monthly contributions, many traditional firms won’t accept 403(b) plans that are still active. Also, 403(b) plans tied to your current employer may not be transferred, either.
The 403(b) marketplace is a freaking nightmare. Your educational or health care institution is gatekeeper to these plans, and they’ve been a mess for decades. Personally, I’ve been an advisor for 30+ years and my wife was an educator for most of that. I’ve tried to intervene on her behalf and for her colleagues, but with little success. The institutions decide what providers (mutual funds, insurance companies, or advisors) can participate via payroll deduction, so they control employee choices. It is better now than it used to be, but they often chose cronies or golf buddies as providers. Even today, those legacy providers are usually the core of investment offerings.
Like expensive 401(k) plans, I usually advise clients to continue investing but to choose the best options under the plan. You reduce taxable income and accounts still grow tax-free. It’s not ideal, but it is still a pretty good strategy.
That’s a legal question and I’ll not tackle it directly. Instead, let’s think about some practical aspects of your idea. First, budgeting and basic finance are relatively simple and well-documented. Anyone interested can buy a book or visit one of hundreds of free websites. Second, the American population is self-sorting on financial issues; that is, people who care about money tend to find information or advisors, and people who don’t, don’t. Obviously, the profitable market is among the group that cares. Since they usually seek out information or advisors, what makes you think they’d choose someone without a license or credentials? So, the notion of taking the CFP® courses and passing the exam is a great one and I encourage you to do it. In the meantime, try to get hired on to a legitimate advisory firm for mentoring and experience … when you pass the exam, you’ll be ready to go. Finally, I don’t want to discourage your idea for serving young college graduates, but I’ll offer my observation that it likely needs a different pricing model than is common today. Young college graduates often struggle to pay what a qualified advisor is worth … today, it takes ridiculous volume of smaller clients to make a good living. Maybe you can crack that nut!
The best way to do this is to make sure the divorce documents include a Qualified Domestic Relations Order (QDRO). Then, your wife can transfer her half to an IRA-Rollover account. Withdrawals will be taxable for her (not you), but she can make withdrawals as needed instead of incurring a large one-time distribution. Another way would be to offset her half of the 401(k) with other assets - home equity, for instance, or other saving or investments. The 401(k) loan idea saddles you with future payments and the loan amount is limited anyway.