Phone: 610-746-7007  Address: 4505 Hanoverville Road, Bethlehem, PA 18020

Ask Gene
* required field

More than Money Newsletter - December 2016

Dear Friends,

 “Pray for America and Its People”

The results of the most hotly contested Presidential election in memory are in the books.  For every American thrilled with the result there is an American – or two – unhappy.  President-Elect Trump has a daunting task before him.  He must not only make good on his campaign promises, but he must find ways to bring us together as a nation.  We cannot naively believe that a few choruses of Kumbaya around a collective campfire will melt our divisions away.  To paraphrase Mr. Trump’s acceptance speech, ‘Now we must do a great job!’  If our President, Congress, and all public servants do a great job – the results will benefit all Americans.  And the ultimate benefits I’m interested in seeing will be for our children and grandchildren.

December 10th in the Holy Lands

Please join us for our annual More than Money Holiday Event at the MtM World Headquarters on the morning of December 10th.  Lots of tasty treats, a live radio show, the entire More than Money family and - hopefully - you.  Details on our website. 

“What Changes Should You Make with Your Investments”

Unless your goals have changed – likely none.  While there are many theories about how a Trump Presidency will affect the economy and the markets – good investment strategies and plans aren’t based on short term events.  If you’ve got a solid plan based on your goals and needs – stick with it.  If you don’t – now’s a good time to get one.  We offer no-charge, no obligation second opinion reviews of your financial situation.  Call today to schedule yours. 

“Are You Paying the IRS Way Too Much?”

Sadly – you may very well be paying the IRS (and/or the state) way too much?

There are a number of actions you can take before the end of the year that could cut your income tax bill next spring:

  • If you have a 401(k), increase your contribution to get as close to the maximum the rules permit ($18,000 if you’re under age 50 and $24,000 if you’re 50 or older). 
  • If you are not covered by a company retirement plan, contribute to an IRA to the maximum the rules permit ($5,500 if you’re under age 50 and $6,500 if you’re age 50 or older).
  • If your tax bracket is acceptably low (consult with your professional tax advisor) consider converting some/all of your traditional IRAs to Roth IRAs.  You may be able to escape the IRA taxation and RMD rules with little or no current tax.
  • If you still need to take an RMD (Require Minimum Distribution) from your IRAs you might consider sending some/all of those funds directly from your IRA to a non-profit (church, charity, etc.) of your choosing.  You may direct up to $100,000 to assist a non-profit and pay no income tax on that distribution and it meets your RMD requirement.
  • If some of your investments have not worked out well – in other words they’ve lost money, you should evaluate the benefits of selling those positions before year end to lock in the tax deductible losses for this year’s tax return.  You may use locked in losses to off-set gains you realized on other investments.  You may also use up to $3,000 of losses against other taxable income (earnings, interest, dividends, etc.) you may have.
  • Make charitable contributions before year end.  You may, of course, contribute cash but you will receive the same valuable deductions if you contribute items you no longer need.  Keep good records, receipts, even photos to document your donations.  If you donate anything of substantial value (car, boat, RV, timeshare, real estate) there are additional rules (required appraisals, etc.) you must also follow.  When in doubt, consult your professional tax advisor.
  • If you have an investment asset (stocks, mutual funds, real estate, etc.) that has grown in value substantially and you wish to make a charitable contribution – consider gifting the stock (prior to a sale) and having the non-profit complete the sale.  You’ll receive a charitable deduction for the full market value without having to sell and declare a large capital gain.  The non-profit will receive all the proceeds without paying income tax.
  • While gifts to loved ones ($28,000 per year per person per married couple) are not tax deductible, they move assets from your taxable ownership to the ownership of someone you love.  In some/many cases the tax bracket of the person receiving the gift is lower than the donor’s bracket.  In essence, you’re shifting all future taxable effects from you to your loved one.
  • If you’re in a high tax bracket this year and expect to be in a lower bracket next year look at pre-paying tax deductible expenses (real estate taxes, church donations, etc.) before end of year.  You will benefit from the deductions on your 2016 return and thereby gain a higher tax savings than you would see if you wait until next year.

Get together with your professional tax advisor now (phone calls work, too) and decide what you should do today to save on income taxes tomorrow.  Our tax professionals are always available to assist you.

“What Should You Do with an Inherited IRA?”

Be very, very careful.

The rules governing inherited IRAs are very different from those of traditional, self-funded IRAs.  The three biggest (but certainly not only) mistakes we see made are:

  • Not taking distributions that are required.  Most inherited IRA distribution decisions must be made within one year of the owner’s passing.  If the rules are not followed and the proper distribution not made, the penalty is 50% of the distribution and the distribution is still taxable.
  • ‘Rolling’ the IRA over improperly.  An inherited IRA must be clearly identified in the ownership of the new account as an inherited IRA for the benefit of the new owner.  Improperly done means big time income taxes – and maybe penalties as well.
  • Keeping one IRA for multiple beneficiaries.  This happens often when children inherit an IRA from a parent.  Often, in the spirit of family, multiple children will keep mom or dad’s IRA intact.  Often this creates real problems when one or more of the children wish to begin distributions.

The time of a loved one’s passing is very difficult.  There are so many things to attend to that are new, foreign, unfamiliar.  If you’re the beneficiary of an IRA, be sure to get counsel from an experienced financial advisor – sooner rather than later.

“Is A Reverse Mortgage Right for You?”

It depends – big time!

Reverse mortgages are a very interesting tool that too often (mostly on TV commercials) are presented as simple, easy ways to get money out of your home.   Reverse mortgages are indeed financial tools.  Like all tools – used wisely they can be very helpful.  Used without thought they can be devastating.

In ridiculously simple terms, a reverse mortgage is a mortgage you (at age 62 or older – married couples must both be 62) obtain against the equity in your personal residence (where you live) that does not require you to make payments.  Your debt (mortgage) is due and payable when you leave your home – voluntarily (selling, down-sizing, etc.) or involuntarily (passing away or moving permanently to a care facility).  Any equity not needed to pay the mortgage balance goes to the heirs of the home owner.  It is very possible, however, that the mortgage balance will consume all of the equity in the home leaving nothing for the heirs.

The proceeds of a reverse mortgage are income tax free (might be helpful if the owner receives benefits affected by increased income) and may be used for any purpose the owner decides.  The most common uses are home improvements or routine maintenance, paying real estate taxes, medical expenses (including long term care premiums), and traveling.  It is rarely (if ever – I’ve yet to find a case) a good idea to use the proceeds from a reverse mortgage for investment purposes.  The suggestion to use reverse mortgage proceeds for an investment ‘idea’ is – for me, at least – a huge red flag of danger.

Like all mortgages, reverse mortgages charge interest and have fees.  Any suggestion this is ‘free money’ is also a huge red flag.  Since the fees are built into the reverse mortgage right up front it is rarely (if ever) a good idea to use a reverse mortgage for a short term need.  Any suggestion a reverse mortgage is a reasonable way to obtain funds for the short term is another huge red flag.

Your best strategy in approaching a reverse mortgage is to get educated and then get educated some more.  Start early.  Meet with an experience financial advisor.  Meet with an experienced reverse mortgage broker.  Include your trusted family members in all of the discussions – more eyes and ears are better.  Take your time and evaluate all your options before making the decision that best fits you and those you love.


More than Money Radio and Television

Have Breakfast with Gene every Saturday Morning at 8:06 as 

More than Money with Gene Dickison airs on AM790 WAEB. 
all with your questions live at 610-720-7900 
Two Full Hours – 8:06 through 10:00 AM.

 Who would you like to see interviewed on our radio or television show? 

What topics would you like Gene to discuss?

 Send your suggestions to JoAnne@AskMTM.com

 

Words are Powerful Tools for American Freedom

 “Christmas – A Time for Gifts!”

“For God so loved the world that he gave his one and only Son,

that whoever believes in him shall not perish but have eternal life.”

John 3:16

Now that’s a gift. Ties are nice.  Power tools are very cool.  Jewelry may be a woman’s best friend.  A nice bottle of wine – nice.  Tickets to the State Theatre – always appreciated. Eternal life – now that’s a gift! Joy to the World – indeed!  Joy to you and me.  How would you even wrap a gift this great?  Why in swaddling clothes, of course!

 

Please allow us to serve you and those you love.

Thank you,

Gene

P.S.  Please pray for the United States of America, all its citizens, particularly the future of our children and grandchildren.  While you’re already in prayer – thank God that we live in the most blessed country in the history of humanity.

Photo Gallery

Ask Gene
* required field