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:
The answers presented on Ask an Advisor, together with any commentaries, articles or other opinions should be considered general information presented to inform the public. They are based on the information provided in the question, which may have omitted important details that would have changed the answer had they been known.
Articles and answers are not intended as a solicitation of an offer to buy or sell any security investment or instrument or to participate in any particular trading strategy. Armstrong Financial Strategies and Morris Armstrong, EA. are not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this site. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
You have to look at the cost of credit vs the return on the fund, and unless you are in a teaser rate, I would think that the rate of return in the TSP is less than the interest that you are paying. I would borrow against the TSP and burn the credit cards! The question is how you accumulated so much debt and what will prevent that from happening in the future.
Your loan must be repaid back on schedule or it is a deemed distribution. The portion that you default on will be added to your income. If you are under 59.5, unless retired, you will pay a 10% penalty.
I have one client that has allowed credit card debt to derail her retirement. She will have a lower standard of living than planned.
When you are ready to receive the money you can have a portion of it paid directly to you and roll the rest into an IRA. You will not pay a 10 percent penalty on the amount that you take directly. However, once you place the money into the IRA, any distributions will be subject to the 10% penalty as long as you are under 59.5.
You should have an IRA already established and the firm handling the 401K will make two distributions, one to you and one to your IRA.
If you feel uncomfortable handling this transaction, you may wish to utilize a financial advisor.
If I read your question correctly, you do not need your RMD money and you also like to make charitable contributions. The QCD is made for someone like you!
You will need to ask your annuity company what their procedures are since each firm has their own paperwork. Usually, it will involve your filling out a form listing the charities and the amount that you want them to receive. You must be 70 1/2 or older when the money leaves your account. The annuity firm will then issue checks to the charities and either mail them directly or give them to you to mail. I have them mailed directly.
You will get a 1099R from the annuity company showing the 16,500 as being distributed to you. You or your tax person will indicate that 16,500 was a QCD. That will result in a ZERO taxable amount appearing on your tax return. You do not claim the charitable contribution on Schedule A.
You must keep the acknowledgment letters from each charity and also DO NOT ACCEPT ANY GIFTS from the charities. That tee shirt or CD will cost you the whole contribution that you made to the charity.
You are 100 percent correct that this may help you avoid paying higher Medicare B premiums and also state income tax.
Good news, life insurance proceeds paid as a death benefit are generally exempt from income tax. There are very few instances where it is taxable and those tend to be business related.
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.