Armstrong Financial Strategies
Morris Armstrong founded Armstrong Financial Strategies in 2001 as fee-only firm. The firm does not accept commissions or referral fees and the only source of its income is from the client. Morris has taught at Marymount College in Tarrytown, NY and has written extensively on the subject of investments, taxes and planning for Multex Investors, which Reuters purchased in 2003.
Morris has also been active in the field of divorce planning, and in 2008, the Connecticut Law Tribune recognized his efforts. The lawyers in the state voted him as one of the top three planning firms in the state.
Morris has written for and been quoted in numerous publications including the Wall Street Journal, New York Times, Financial Planning magazine, Wealth Manager Magazine and Yahoo Finance. His investment philosophy has been shaped by both John Bogle and Eugene Fama, and is his portfolios, which are a blend of passive and active vehicles, reflect this.
While he enjoys divorce planning, it can be draining and he prefers not to work with those couples who believe that “War of the Roses” was a manual for divorce. He enjoys his role as an Enrolled Agent helping people resolve their issues with the IRS, whether it is a notice or something more involved such as an audit or offer in compromise.
BBA, Banking, Pace University
Assets Under Management:
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I have my own RIA and in my opinion, that is a high fee. The maximum fee at my shop is 1 percent. You need to consider what services are included in that fee and what is the value to you. The answer may be blunt, but in my opinion, that is a very high fee for asset management. On top of that you also have the fees of the mutual funds.
Hopefully, you are doing well emotionally after the divorce. What I would suggest is to sit down and think about what your goals are and how much you need each year to exist in your chosen lifestyle. You then can add up your sources of income and subtract that amount from the total. In the ideal world, you would want the portfolio to generate that difference.
However, we are not in the ideal world. Your personal tolerance for risk and investment experience come into play. Are your goals realistic? Are there any events that strongly suggest that you will not live to the average expectancy or beyond?
Is the bulk of your money in retirement accounts or in actual post-tax money?
The actual investment allocations are relatively simple once you have established clear ideas of your needs and goals and resources. The conventional allocation would include stocks, bonds, cash and possibly fixed annuities. You would want to have exposure to both domestic and foreign markets. If you feel comfortable there is plenty of material available on Vanguard's website as well as BlackRock's. If you do not feel comfortable doing this and want to consider a professional, I would suggest speaking with someone who is a Registered Investment Advisor and must act in your best interest all of the time.
I wish you well for the rest of your life.
Very rarely do people remove money from a 401(k) plan at once upon retiring. The impact on taxes could be devastating because the entire amount would be treated as ordinary income and if you were fortunate enough to be under the age of 55 and retiring, then you would be hot with a 10 percent penalty. Instead, most people either do a rollover into an IRA and arrange for the money to go directly from the plan to the IRA or leave it in the plan if permitted. Then you will take money out as needed, and only that portion of the money will be taxed as ordinary income. If you are between age 55 and 59 1/2 and move the money to an IRA, your withdrawals will be subject to a 10 % penalty. If you leave the money in the 401(k) plan, they will not be,
I cannot tell what state that you live in, but if it is a community property state, you receive the step up in basis on the entire property. If you do not live in a community property state, then you do receive a step up in basis for 50% of the value of the property upon his death.
As an example, if you paid $200,000 for the home in 1986 and then another 200,000 for the addition in 1994, the basis in the house would be $400,000 or $200,000 each.
If the property was worth 800,000 in 2004, then your late husband's half would transfer to you at a value of $400,000 and your basis would be $600,000. If you are in a community property state, your basis is $800,000.
Keep in mind all of the closing costs at purchase and at time of selling. Consult an Enrolled Agent if you have a more complicated tax issue and need assistance.
The proper procedure is to take the distribution as soon as possible after the fact. You already did this. The income is reported on your 2018 return. When you complete the 5329 make sure that you state why you failed to take it and the corrective action that you took. The penalty is 50% of the RMD and that is the amount which you ask to have waived. I would not include the penalty in the tax payment since it is very likely that the waiver will be granted.