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 three 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.
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.
3) EA--Enrolled Agent. Having the tax knowledge adds tremendous amount of advantages to help you save and invest, especially at the retirement time for social security and Medicare planning and retirement saving withdrawals.
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. At the present time, Rose is a SmartVestor Pro, a program funded by Dave Ramsey and the Ramsey Solutions organization to help you connect with investing professionals for assistance with retirement, college savings, and investments.
BS, Medical Technology, Georgia State University
MBA, Financial Planning, California Lutheran University
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Advise Finance, LLC
It’s very tempting to pay off the credit card debts when you know you have a stash in an IRA. However, the amount of money you take out (I assume $65k to pay off credit card balances) will add into your regular income, which may accidentally bump you into the next higher tax bracket. For example, if you file as an individual and your income is usually below $38, with that $65k from the IRA, you suddenly look at the 22% tax bracket vs. 12% prior to the IRA withdrawals.
Worse, if you file Medicare at 65, the SSA will review your 2018 return when you’re 63. Once income, or more precisely the AGI, is above $85k for single, you will be paying additional premiums for Medicare Part B and D.
Thus, look the pros and cons for each choice before making a withdrawal from the IRA. Better yet, talk to a professional for ideas/confirmations. Best!
If your AGI (the last line on the front page of 1040) is less than $99k, you can deduct the IRA contributions even if you and your wife already made a contribution to the SIMPLE plan. Once your AGI is above $119k, you’re fully phased out for any deduction from the IRA contribution. Hope that helps!
Regardless it’s fixed or variable, the primary purpose of an annuity is to provide a lifetime income. Others may use it as an investment tool to minimize the annual taxation. In your case, if you find after adding all the annuity income, pension (if you have one), and social security income still can’t cover the occasional contingencies, such as the house maintenance cost, you may want to dip into other savings, whether it’s a checking account or an IRA account. Last but not least, if the bills getting too much and you don’t plan to leave the home, a reverse mortgage may be an option too. Make sure you check out with a CFP® or RICP® first. Best!
I agree with your research. Unless the pension administrator can point out where exactly in the plan summary says there’s no rollover option for an older beneficiary, your mother should be able to do a rollover without the 20% tax withholding. She may need your help get the paperwork done right so she won’t get a nasty 1099-R distribution notice next year. One caveat: because your mother is over 70 ½, which means she needs to take a RMD from the rollover. This can be easily solved with the custodian company that holds the new rollover IRA account. Usually the custodian or financial institution will calculate a number for your mother to do an annual withdrawal. Lastly, please urge her to set up primary and contingency beneficiaries once she opens her rollover IRA account. Best!
I think what you referred to as the “rule 55” is the allowance of your taking out retirement plan (401k) without paying the 10% penalty tax since most retirement plans impose the penalty if you withdraw earlier than 59 ½. There are special criteria you must comply in order to use this exception: 1) You must be 55 years old or older at the time of the withdrawal, and 2) you must separate from your employer already. Furthermore, you can’t roll the money from your 401k into an IRA first as this special rule does NOT apply to any IRA accounts, which means you either wait for 59 ½ or use the “SEPP (Substantially Equal Periodic Payments” to make the withdrawal without risking the 10% penalty.
To summarize, if you leave your current employer at age 55 and intend to pay off the mortgage ($260k) with your 401k, you need to take the $260k from the 401k balance first. Then, roll the rest of $540k to an IRA. Best!