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 am truly sorry for your loss. It seems as if you were planning for golden years together and now, that will be just a dream. When you do experience a dramatic life event, such as yours, it is very hard to make a decision and do the "right" thing. If you are like others that I have helped, no matter how hard you focus, your mind is elsewhere.
The advice that may be best is simply do nothing - place the money in a bank and earn the 1percent plus and take many months to look at your life and see where you are and need to be, You might want to find a qualified financial advisor, one who acts in your best interest whether it is planning or investing, and go through the process of creating a roadmap for the future.
They can work with you and look at your current situation, cash flow needs and future needs, and perhaps construct a risk-appropriate portfolio for you. Don't be afraid to allow someone to provide guidance but also, don't cede control.
Each spouse may have an IRA but both spouses cannot have one. There is a famous IRA guru that reminds us that the "I" in IRA stands for INDIVIDUAL. That stayed with me for over 20 years.
I am sorry for your financial distress. Taxation of the 401(k) works as follows. Your plan sponsor must hold 20 percent unless it is being directly transferred to another retirement plan. Because you received a check, they withheld 20 percent and sent that to the government for credit to your tax account. If you had a loan outstanding and were unable to repay it, that is then considered a distribution.
The total amount of your 401(k), including your defaulted loan, is considered ordinary income and will be taxed at your normal rate. You are older than 55 and separated from service so there is no age-related penalty. When you file, you may get a refund or have a balance due. That answer will depend on a variety of factors not discussed here. You may want to sit down with at professional and see where you are.
The short answer is yes - the long one is it all depends. If you are referring to capital gains and losses then the answer is yes. Under your scenario, you will have up to a 35,000 capital loss carryforward which can be applied against capital gains going forward until it is used up. If you do not have 32,000 in capital gains in 2018 and 3,000 of ordinary income, you would apply 32,000 of the carry forward and have zero capital gains, and then apply the remained of the carry forward against ordinary income.
If you are referring to a business loss, Net Operating Loss, then you may carry that loss backward two years or carry it forward. If you do not wish to apply it backward, you must make a timely election when you file your 2017 tax return. Talks with a tax pro on that issue.
I am not certain that rates of 2/3 of a percent are high if the funds are active, providing alpha and appropriate for you. You could move the funds to another place if you dislike the bank or the advisor; you could add new money into lower cost options such as ETF that mimics the S&P 500 which is likely available at 5 basis points. I think that what you really need to do is decide what is a fair price to pay. The tax on the cap gains will be hard to swallow and recoup, but you have to look at your overall portfolio and determine how long the break-even period is.