Aegis Capital Corp
Executive Managing Director
Thomas M. Dowling is an Executive Managing Director with Aegis Capital Corp and works both out of Hilton Head, SC and New York, NY. Prior to Aegis Capital, Thomas directed the East Coast expansion of a publicly-traded Investment Banking firm and was Vice President and Senior Advisor of a regional Investment Advisory organization. He was a member of each firm's Chairman's Council and President's Circle. Shortly thereafter, he founded Quadstar Capital Advisors, which provides Advisory Services to Ultra-High Net Worth clients.
Thomas has been featured in various publications and has been a guest speaker at various financial organizations such as the Evelyn Brust Financial Research and Education Foundation and the South Carolina Business Review. He has also been a volunteer for The Dale Carnegie Training Institute which helps people develop leadership, communication and public speaking skills. Additionally, he is the founder and chairman of The Resource Group which is a forum that allows business owners to collaborate in order to help each other gain insight and knowledge to better run their business.
Thomas’s goal is to help people answer two of the most fundamental, yet important, financial questions: "will I make it?" and "what can stop me from achieving it?". After working towards these goals for over 20+ years, he has found that most people have no idea what “it” is. His passion is to help people understand what their “it” is. He believes it is sad when someone is marching towards their goals and dreams and then gets blindsided by something they did not anticipate or overlooked.
Thomas received his BS in Business Administration with a minor in Finance from the State University of New York and completed the graduate-level Certified Investment Management Analyst program (CIMA®) held in conjunction with The Wharton School, University of Pennsylvania. Thomas is proud to hold both the Chartered Financial Analyst designation, as well as the CERTIFIED FINANCIAL PLANNER™ certification, which puts him in a group of fewer than 2,800 professionals in the United States who hold both certifications. Furthermore, he is a Chartered Retirement Plans Specialist.
Thomas is currently a member of the CFA Institute, New York Society of Security Analysts, CFA Society of South Carolina, Financial Planning Association, the National Institute of Certified College Planners as well as the Investment Management Consultants Association.
Thomas attributes his understanding of what is most important in life to his wife and two sons.
BS, Business Administration, State University of New York
Certified Investment Management Analyst Program, University of Pennsylvania, The Wharton School
Nothing contained in this publication is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
Registered Representatives offer securities, insurance and advisory services offered through Aegis Capital Corp, member FINRA/SIPC. No investment strategy or program can guarantee a profit or protect against loss.
Some of the main differences are:
- A 401(k) plan is an employer-sponsored plan therefore you must work for the company in order to participate in the 401(k). In most cases anyone under the age of 70.5 who earns income can participate in an IRA.
- The 401(k) plan usually has better creditor protection than an IRA since it is an employer-sponsored investment plan.
- 401(k) plan contributions are usually made through payroll deductions. An IRA contributions usually are done by the individual writing the check and depositing in the IRA.
- A 401(k) Plan can offer loan privileges. An IRA does not have loan privileges.
- A 401(k) Plan can have an employer match provision. An IRA does not
- Contribution amounts are higher for a 401(k) ($18K for 2017). An IRA has a contribution amount of $5,500 (not including catch up)
- The catch up amount in a 401(k) is $6,000 in 2017. An IRA catch up is $1,000 in 2017.
- The investment options in a 401(k) are usually more limited than an IRA
ETF’s and Closed End Funds have many similarities which is why most people confuse the two however there are some differences. I have listed them below.
1.How they are issued
1. Closed End Funds issue a fixed number of shares to investor’s through an initial public offering.
2. ETF’s can create or redeem shares continuously through an Authorized Participant (AP) which is usually a large financial institution.
2.Investment Strategy and Style Drift
- ETF’s are mostly passive. This means the investments are added based on a specific index strategy such as the stocks listed in the S&P 500 index. The shares and percentages owned of the underlying companies in the ETF equal those listed in the S&P 500 Index. An ETF follows a specific and preordained index therefore the ability for the manager to ‘drift’ from this index is extremely difficult because the only time the manager is buying and selling securities is when the corresponding index removes a company or adds a company.
- Closed End Funds are typically actively managed. This means the investment are chosen by a professional portfolio manager based on an investment strategy determined by the portfolio manager. The portfolio manager will buy and sell stocks depending on whether she believes they will outperform other shares. This discretion allows the possibility for the manager to stray from the original stated investment objective over time. If done correctly an investor can benefit from this discretion. If done incorrectly it can hurt an investor.
- ETF’s follow a specific index of securities, especially the larger ETF’s such as the S&P 500, that are known therefore the securities owned in the ETF are known on a daily basis as well.
- CEF’s have securities being bought and sold at various times and amounts therefore the securities and percentage of holdings will vary over time. Closed end funds are required to disclose their positions on a quarterly basis.
4.Leverage (borrowing money to invest)
- ETF’s usually do not use leverage, however some leveraged ETF’s are available so please do your due diligence before investing.
- CEF’s can and do use leverage. If the manager makes the right investments it can enhance the investors return significantly however, the opposite can occur as well.
- When an ETF investor sells the shares of their ETF the manager is transferring the shares to someone else without creating a capital gain.
- CEF’s create capital when an investor sells because the underlying shares need to be sold in order to give money to the seller. Any capital gains are passed on to investors at the end of every year.
- ETF’s have lower trading expenses since the amount of companies shares being bought and sold are limited to only the instances when the index adds or removes a company. This limits the trading costs. Also, since the investment strategy is usually passive the management fee is lower.
- CEF’s can have higher internal trading fees because the frequency of purchases and sales are usually higher which increases the trading costs. Additionally, the portfolio manager is actively making decisions on which shares to buy and sell therefore the management fee is typically higher.
7.Difference in what the Net Asset Value (NAV) is and what the share price trades on the exchange
- The ETF can issue or redeem shares therefore the underlying index price usually trades close to the NAV especially when it is a larger ETF like the ones that track the S&P 500.
- CEF’s can, and often do, trade at a price different than their NAV. The price depends on supply and demand therefore if more people want to own the CEF than shares are available that could drive the market price above the NAV.
Please note when dealing with a ROTH IRA there is a distinction between contributions (principal) and earnings.
ROTH IRA contributions are made on an after tax basis.
Withdrawal of contributions is, at any time, penalty free and tax free.
Earnings grow tax free and can be withdrawn tax free if you are over 59 ½ and you have contributed to a ROTH IRA more than 5 years ago.
Earnings will be subject to a 10% penalty and taxes if withdrawn when you are under 59 ½ years old and/or if it was not held for more than 5 years. (There are some exceptions such as first time home purchase up to $10k, Higher education, medical expenses etc.).
With simply the information you provided it appears:
You can withdraw your contributions without any penalty or tax.
You will pay a penalty and tax on your earnings (assuming you do not fall into the exception category) since you are under 59 ½ years old.
Distribution order is set by the IRS. The order of distributions is as follows:
- Conversion money or rollover contributions
Your wife can collect Social Security survivor benefits as early as age 60. If she files between age 60 and her survivor full retirement age, she will receive somewhere between 71 - 99% of your basic benefit amount. The amount she will receive as a Survivors benefit will increase each month slightly from 71%, starting at age 60 up until her full retirement age when she would receive up to 100% of your benefit.
All else being equal, there would not be an impact on collecting survivor’s benefits even if she was collecting hers prior to your death. She can switch to Survivors benefits or keep hers whichever is larger. Please remember as with all social security claiming strategies it certainly depends on your personal circumstances.
You can open both a SIMPLE IRA and a Traditional IRA and contribute to both. However, you may lose the ability to deduct the contribution to the Traditional IRA on your tax return if your income is too high.
If you (or your spouse) are covered by a retirement plan at work (a Simple IRA is an Employer provided retirement plan) then your deduction for a Traditional IRA may be limited or completely phased out.
The phase out levels as of 2016 are listed here at the IRS website: https://www.irs.gov/retirement-plans/plan-participant-employee/2016-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work
A nondeductible IRA sounds similar and does have similarities to a ROTH IRA however there is one distinct and important difference and that is how the earnings are taxed.
When you contribute to a ROTH IRA, you contribute after tax dollars and then the earnings and contributions are not taxed again (as long as all the ROTH IRA rules are followed) however, in a Nondeductible IRA you are also contributing after tax dollars so the contribution is not taxed upon withdrawal however the earnings on that contribution will be taxed upon withdrawal.
If you decide to contribute to a Nondeductible IRA please make sure you keep copious records. It will be your responsibility to keep track of the amount of nondeductible contributions not the custodian.