Anthony Capital, LLC
Whether your question is about social security draw age, balancing risk and return in an investment, tax planning, or which strategy you should use to cover long term care needs, your chance for success improves dramatically with accurate information. Matthew believes his role is to guide clients through these trade offs using various tools, experience, and his training as a certified Retirement Management Analyst which centers every decision on improving retirement outcomes using math and science.
Matthew has become an expert in optimizing the financial lives of public and private sector employees. Several years ago, recognizing a huge need for benefits education and basic financial planning, he teamed up with The Society for Financial Awareness to offer workshops, seminars, and private consultations with a goal toward education. This collaboration has given thousands of public and private sector employees access to fiduciary advice while requiring no minimum investment amount. This educational approach that focuses on the best interest of the person has created millions in dollars of value for the attendees and their families.
He is a well know presenter in San Antonio and surrounding areas having taught hundreds of seminars touching on subjects ranging from debt solutions, investing, Social Security, pensions, insurance, and other financial topics.
Being the 8th of 11 children- Matthew has real life experience in financial planning as he put himself through college, graduating from Brigham Young University with no debt and money in the bank. He speaks fluent Thai and enjoys traveling whenever occasion permits. His personal life centers around being a father to 3 boys and husband to a beautiful and creative wife.
Brigham Young University
Assets Under Management:
I'm sorry you're in such a tight spot.
You have two options for a penalty free withdrawal from your IRA:
1- take equal payments for the next 5 years in an amount approved by the IRS. You can use a 72t calculator for this.
2- If you are disabled, then you can take money without a penalty you just need to prove at the end of the year on taxes that you are disabled.
On the 401(k), the same exemptions also apply but with two more exceptions:
3: if you have a QDRO assigning you money
4: if you separated from the employer at or after age 55 (50 for law enforcement).
So it looks like using the QDRO to get money from the 401(k) is your best and fastest option at this point for a penalty free withdrawal. However, given the low income- there would be virtually no taxes on a modest amount from the IRA. So if necessary, pay the 10% penalty and take money from there too.
It's not easy reading but here is the official IRS worksheet on it- https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions
I hope that helps you. God bless you in your difficulty.
I'm sorry to hear about your sister's passing. While you can gift money to your sibling, there could be large tax problems for both of you if you do so.
Alot of what you're asking depends on a few important details: How long ago your sister passed away, whether the money was left to you as beneficiary or because of probate proceedings, what type of account the money went into when it transferred to you, and the amount that was left to you and your sibling?
The finer points really matter on this because the IRS is going to hold someone responsible for the taxes on each of these transfers- which could mean problems for you if it's not done correctly.
Here are a few concerns I have from what you've described: The money should not have gone into your IRA because it should have become a beneficiary IRA. Further, if the money was to be split it should've been done before going into your account depending on how the estate was handled. Lastly, sending her money could have huge tax implications if done improperly and this ties into whether it was a will or beneficiary.
I'd recommend you find a competent financial planner, tax attorney, or CPA.
If you're active duty still, use the TSP Roth. It has higher investment limits and by splitting your money between C and S funds, you'll get a great return.
If you're not active duty, 1 word: Vanguard.
They have low fees, wide variety of great funds for beginners, and you sound savvy enough to navigate their system with little to no help.
Open a Roth IRA, put up to $450 a month into it, and invest the money into an S&P 500 fund- either mutual fund or ETF (Here's a helpful article: https://www.investopedia.com/articles/markets/101415/4-best-sp-500-index-funds.asp - But just pick one and start; that's what really matters at this point).
Then sit back and just have the discipline to invest and forget about it. When you're 47 or as you're about to finish your military service, revisit the plan to determine what kind of diversification needs to take place.
CD's are NOT a good way to build wealth and would be inappropriate for given your age.
Straight into the market is a great solution.
There are two ways to deal with your relatively low experience:
1- use a target date fund or a broad market mutual fund (like the S&P 500) or hire a fiduciary financial advisor to create a portfolio allocation for you.
Or 2- Go to Khan academy, look around investopedia, or otherwise get more information and educate yourself on investment topics. Then proceed to invest according to what you've learned... but I'll give you a hint- though you'll most likely end up deciding to do the S&P 500 index fund after all of this hassle, you'll be much more equipped to manage it for changes as you get older, your lifestyle changes (marriage, children, etc), and you'll actually be able to better weather the storms of investing because of your better understanding.
But good on you mate- you're ahead of the game for even thinking about this at your age. One last tip- Use a Roth IRA as much as you can.
Yes, very possible and likely a good idea.
The best way of doing that is to combine them into his current plan.
If he does not have a 401k, then rolling them all into one IRA could be a great way to be sure that they get managed more efficiently. Also, when rolling out of 401ks because they each have their own rules and generally will involve answering questions about previous employment with the respective company, the sooner you initiate the transfers, the more likely you are to remember the pertinent information that they use to verify identity.