True Contrarian Investments LLC
Steven Jon Kaplan began TrueContrarian.com in August 1996 as a weekly blog and later expanded this to a daily newsletter with intraday updates in February 2006. He has been trading his own account, and those of family and close friends, since 1981, and handles separately managed accounts for qualified clients. As a registered investment advisor, Steve charges a 20 % performance fee on net profits and no management fees. He has been quoted in Barron's, Market Watch, Dow Jones Newswires, Seeking Alpha, Kitco, and elsewhere and has appeared on Market Watch cable TV with Stacey Delo.
Steven's goal is to identify those assets which are farthest away from the best estimates of their realistic fair-value levels. This is done through designing algorithms which examine the most reliable signals in the financial markets. These include insider buying relative to selling; investor inflows and outflows; media and advisors' sentiment; and intraday behavior especially near multi-decade tops and bottoms. He studies historical interrelationships to mathematically identify which divergences from typical behavior are pointing the way toward essential trend changes.
Steve enjoys running with the New York Road Runners Club, composing and performing on piano and voice, writing stories, and traveling to unique places. He enjoys hearing from anyone about a wide range of topics, so please let him know what you think about the web site or whatever is on your mind. You can find his music on ReverbNation.
BES, Electrical Engineering and Computer Science, The Johns Hopkins University
Assets Under Management:
20% of net profits; zero management fees.
True Contrarian Investments LLC
Steven Jon Kaplan explains why investors repeatedly fool themselves.
Steven Jon Kaplan: April 2010 conference
I think you are trying to say that each year your Dad takes his required minimum distribution from a traditional IRA by having it transferred from his IRA to a checking account, thereby gradually reducing the value of the IRA. As the power of attorney, you should have taken the responsibility of gradually converting his traditional IRA to a Roth IRA over a period of years so that this would not be necessary.
The required minimum distribution should usually be taken early in the year. If your Dad passes away in 2017, 2018, or any other year, and he hasn't yet taken his required distribution for that year, then someone must make the transfer for him after his death. The IRS doesn't care who does it, but if you have power of attorney then you should do so as soon as possible after his passing. As I mentioned, it is usually safer to do that as early in the year as possible; January 1 is permitted.
The taxes will be considered your Dad's legal responsibility, not yours, even if you make the transfer. Once your Dad passes, any subsequent dividends or capital gains in the IRA are considered to be part of your Dad's estate and must be separately reported on an estate form for the year in which your Dad dies; you have to apply to the IRS for a special estate tax ID number (like a social security number). If the estate is not fully distributed by December 31 of the year in which your Dad passes away, then you have to file an estate form for the following year also. The estate is responsible for paying the taxes--not your Dad and definitely not your personal account even if you do all of the paperwork. It is illegal to combine your own income with anyone else's except your spouse.
I would say that you're in a ton of confusion as well as a ton of debt. You can transfer your 401(k) plan with any former employer(s) to IRA accounts, moving the before-tax contributions to a traditional IRA and the after-tax contributions to a Roth IRA. However, that won't affect your debt in any way. It will merely move your money from one place to another and somewhat change its tax status.
There are many strategies for reducing debt. If your income is low and your debt is high then you can work out a payment arrangement with your creditors, like asking a credit card company if they will accept half to settle your payment owed. Sometimes that works and sometimes it doesn't. If you have a mortgage then you can pay it off by selling your house and renting.
In a worst-case scenario you can declare bankruptcy, but that only makes sense if your debt far exceeds the balances in your various accounts.
If you start with 999 thousand then you should reach your goal of one million by age 25.
More seriously, you have to assume you aren't going to make money faster than Warren Buffett or Seth Klarman. If you can double your money every several years that is par for the course, and sometimes you have to be conservative like now because U.S. equities are far too expensive to buy. If you lose money in your early investing years then you may be reluctant to take risks later on when prices are really worthwhile bargains.
I would recommend putting your first contributions into http://myra.gov/ which pays 2.25% guaranteed by the U.S. government. As your money begins to grow, you will slowly work toward your goal of having a million dollars or more when you get older--but not by age 25.
It takes work to discover truly independent financial advisors. They will usually be listed on finra.org which is the official federal registry of registered financial advisors; you can check those in your area and see which ones have the best long-term records with the fewest complaints by their clients. Many large institutions will tend to recommend nearly identical asset allocations for their clients to minimize lawsuits and to guarantee steady compensation for their employees rather than to maximize your long-term after-tax returns which should be your advisor's goal.
Whether stocks pay dividends or not is irrelevant; the RMD is calculated as of the closing price the previous December 31.
The way to minimize RMDs is to start converting your non-Roth retirement accounts into Roth accounts. I began at age 40 and I usually make one or more conversions each month, so that when I reach 70-1/2 my non-Roth accounts will be relatively small compared with my Roth accounts. I recommend this for nearly all of my clients. I have even told teenagers with Roth accounts to begin the practice of converting them to Roth accounts. The way to do this is to convert whatever is most undervalued and oversold, so that you pay tax at the lowest rate and so that all future gains are tax-free.
If you convert anything which ends up dropping further in value, you can unconvert or recharacterize those conversions back into a non-Roth IRA by October 15 of the following year, and then convert them a second time at a lower price. You can repeat this process as often as you like as long as you follow the rules.