New Direction Financial Strategies, LLC
Certified Divorce Financial Analyst, Financial Planner
J.F. Kennedy said, ”If not I, who? if not now, when?” Michelle Buonincontri was moved and inspired by this quote when she first heard this and joined her children's School Board - more than 17 years later it is still her call to action.
“Belief” is Michelle's number one Gallup strength - her beliefs, in conjunction with this message, drive life her choices. Those with this theme “have certain core values that are enduring. .. your Belief theme causes you to be family-oriented, altruistic, even spiritual, and to value responsibility and high ethics both in yourself and others. These core values affect your behavior in many ways... it also demands that you find work that meshes with your values. Your work must be meaningful; it must matter to you" In 2009 when her divorce began, too many friends, family members, her children and herself were adversely affected by the divorce process.
At this time, Michelle founded her own firm, FOAL Planning, Inc, inspired by the vision of being and having a Faith-filled, Overflowing, Abundant Life; specializing in Investment Management and tax preparation After her divorce, she left her New York State Registered Investment Advisory firm in 2012 and moved to Arizona; worked with Schwab Private Client Investor Advisor, Inc., as an Portfolio Manager, and then joined a small RIA as a CERTIFIED FINANCIAL PLANNER™ (CFP®), where she provided clients with Financial Planning, Investment Management and Retirement Income planning services.
Now, after 20+ years in Financial services, working with corporate/business clients and individuals to define goals/objectives and implement solutions, she is nudged again - this time to found Being Mindful in Divorce, so that she can use her own personal and professional experiences to support couples, and professionals during the divorce process – to be a contribution to others.
Michelle holds the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation, and has experience in Financial Planning, Investments, and taxation with specialized training as a Certified Divorce Financial Analyst (CDFA™) to address her clients concerns before, during and after divorce. Additionally, she is a registered Tax Preparer, is a contributing writer for Credit.com, trained as a mediator and a life coach, and volunteers as a presenter and financial coach at Fresh Start Women’s Foundation in Phoenix. Currently, serve as a WINS Advocate for the CFP Board, and have served as Director of Public Relations for the Financial Planning Association of Greater Phoenix, and as the Director of Communications for the Financial Planning Association's Long Island Chapter. Michelle is also a member of the Maricopa County Association of Family Mediators, The Institute for Divorce Financial Analysts, The Association of Divorce Financial Planners and on a more local note a member of the Chamber of Commerce.
Michelle has the privilege of creating a life she loves to live, and she wants to help her clients do that as well!
BAS, Business Administration and Communication, Adelphi University
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Investing in a Mutual fund/Index fund or ETF, regardless of whether it’s stock/equity or a bond fund brings market risk. Typically investing in “the market” is not suggested unless you do NOT need the money in the next 5 years.
According to facts provided, you will need some or all the money in the next 2 years. This is considered “short-term” savings and as a general rule should be invested in something in which you cannot lose money and you can easily withdraw your money without loss of principal (this is referred to as liquidity). Different buckets of money, have different “jobs to do” “or “perform”. Short-term money has the job of ‘being safe” and not losing value - that is what your account is doing now.
Having said that, I know interest rates are low, if you haven’t already checked recently, perhaps a CD with a bank or Credit Union may be higher than what you are currently earning - unless you are willing to take potential risk that you may lose some of your principal.
Unfortunately, risk = reward/return, so you will not get a substantially higher interest rate or return without taking on more risk.
It has been my experience that repayment of the depreciation (known as depreciation recapture) falls on the “owner” of the property when the property is sold, as the cost basis is decreased by the depreciation taken in previous years and the property potentially has capital gains as a result of this at sale.
Depreciation recapture is one of those “hidden” tax pitfalls that attorneys, mediators, and other non-financial folks forget to look for and negotiate when dividing assets in a divorce settlement. Typically, in a situation with real estate depreciation, some sort of credit or offset is negotiated and given to the “owning” spouse to help compensate for the potential future taxes incurred due the depreciation recapture that was created by the depreciation tax savings enjoyed by both during the marriage. If this is not addressed in your divorce settlement and you were not compensated another way, I don’t know what kind of recourse you would have since you agreed to the settlement (and it sounds like it does not address the depreciation).
I am not an attorney, I suggest you collaborate with a tax professional proficient in working with divorced folks to see what can be done in your case with your specific details.
1) Having a "qualified" employer retirement plan may limit you annual "deductible" IRA contributions depending on your tax filing status and your modified adjusted gross income (AGI).
For example, Over 50 years old with an employer retirement plan
Filing status AGI IRA "Deductible" Contributions in 2017
Single or Head of household less than or equal to $62K $5500+$1000(over 50 catchup) = $6,500 deductible contribution
> $62K < $72 you may make a partially tax deductible contribution
$72K or more NO deductible contribution
See IRS Link for a handy table that further explains the "deductibilty" limits https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work
2) "Non-deductible" IRA contributions - Regardless of whether you have a retirement plan at work or not, you may be able to make a non-deductible IRA maximum contribution of $6500 (if over 50) - not to exceed earned income if lower. Since there are no income limits on those executing Roth conversions you could work with a financial professional to understand those rules (there are a few things to be aware of) and eventually move the non-deductible IRA monies to a Roth IRA via Roth conversions, to enjoy tax free growth on the latter account if you follow withdrawal rules
3) Roth IRA contributions - Again, regardless of whether you have a retirement plan at work or not, you may be able to make a maximum $6500 (if over 50) Roth IRA contribution (not to exceed earned income if lower) based on your filing status and AGI
Filing status AGI Roth IRA Contribution in 2017
Single, Head of household less than $118K $5500+$1000(over 50 catchup) = $6,500 Max
or Married filing separately >= $118K < $133K a reduced contribution amount
$133K or more NO Roth contribution
See IRS link for rules and more informaton https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2017
As a general rule, “investing” is for money needed 5 years or more into the future. We should never invest in the market, either in a Roth IRA or a brokerage account if we need the money sooner than that 5 year time horizon. Of the two mentioned, the Roth IRA currently offers great long term tax benefits that can equate to more money in your pocket over the long run if you follow the rules on contribution limits and withdrawals AND if you are eligible to contribute. If you are not eligible to contribute to a Roth IRA, see if your employer has a Roth 401(k) option.
Yes, keeping income low will reduce taxes. However, we don't have enough information to know if that will prevent any income taxability. Having and making “qualified” withdrawals from “after-tax” assets like a Roth IRA, and a Health Care Savings accounts (H.S.A.) can help to reduce taxes in retirement, and this can be significant if you are in a single tax bracket. Just make sure you follow the IRS rules to ensure the distributions are “qualified” and NOT subject to taxes and a possible penalty. See https://www.irs.gov/retirement-plans/roth-iras and https://www.irs.gov/pub/irs-pdf/p969.pdf for more information on Roth IRAs and HSAs.Your Tax professional or financial advisor should be able to help you estimate any tax liability based on the specifics of your situation.