List of Articles
Should You or Shouldn't You?
June 5, 2013
Did you know that the Cornerstone team are experts in consolidating, managing, and rolling over 401(k)s, 403(b)s, etc., when appropriate? Many people have abandoned orphan retirement accounts with former employers (some even have several accounts with multiple employers!), and just do not know how or what to do to gain control of their assets.
In most cases it makes sense to roll over your money into an IRA, giving you total control and access to more investment options. You then have the flexibility to withdraw money whenever you need it. This is not how the typical 401(k) works. Plans may restrict how you take money out.
If you are looking for simplicity, consolidate all of your 401(k) accounts into a single IRA. With all of your retirement savings in one place, it is easier to monitor your investments, set appropriate allocations, and re-balance.
It is also easier to handle your Required Minimum Distribution (RMD) after you turn 70 (70½ actually). With traditional IRAs, your RMD is based on the TOTAL amount in all of your IRAs, and you can take the money from any account or any combination of accounts. If you have a 401(k) at age 70½, you must calculate that RMD separately and take the money from that account. (There are no RMDs for Roth IRAs.)
An IRA has estate planning benefits, including maximizing the chance that your heirs can take tax-deferred distributions over their lifetimes. Most 401(k) plans force heirs to take assets after their account holder dies.
Of course, beneficiaries can roll the inherited 401(k) into an IRA. But a rollover can be tricky, so you are better off handling the transfer yourself rather than leaving your heirs to deal with a plan administrator. If they inherit a 401(k), they will have to get the employer to do a direct transfer to an IRA. Employers may be getting better, but good luck with that.
Everyone's situation is different and unique. If you just left an employer or have straggling retirement accounts and need help simplifying everything, just let us know. We can help you get through the maze of tax implications and investment choices.
We lost a wonderful friend and client last week, Dorothy Oxford (or, as we all called her, Aunt Dot). She touched so many lives, and anyone who knew her felt her radiant love and cheer. Over the course of remodeling my house, Aunt Dot would thoughtfully bring me a pot roast every Friday. On occasion, you may still hear me refer to a special Friday as a "Dot Roast Friday."
Our prayers and thoughts go out to the family, especially Lee and Pat McCrary, Dot's favorite nephews. The three of them traveled the world and had many adventures over the past 10 years.
Dot, we will miss you.
Don, Dave, and Lee
Cornerstone Financial, Inc.
Why You Should Have a Will
April 18, 2013
Why is it that so many people spend a lifetime of working, accumulating an estate, and caring for loved ones, and then leave the important matter of distribution of their property up to state law, which may not be in accordance with their wishes?
We hear it from our clients: the "I'll Do It, Only Tomorrow" syndrome (we won't bother writing out the acronym). As many of you know, we give you a year after becoming client to get your affairs in order - or else! Some feel they do not have enough money to justify a will, while others feel that making a will invites death. A further possible reason is the lack of familiarity with intestacy (a legal term that means dying without a will), and the belief that the property will be distributed by law basically in accordance with one's wishes.
A carefully thought-out will can minimize the impact of estate taxes and provide more funds for your family. It can also provide an enduring expression of your charitable wishes. And don't exclude grandma, grandpa, mom, dad, and the children in the planning process. INCLUDE THEM!
Regardless of your age or financial circumstances, there is no better time than the present to plan for the disposition of your assets through a will prepared by your attorney. Current law encourages the support of charitable organizations through income-tax deductions, as well as estate-tax savings.
Don't overthink it. Make a list of your property and its approximate value. Do not overlook retirement benefits and life insurance. Then decide to whom you want to leave your property, and in what manner. The attorney who prepares your will might suggest that some part of your property be left in a trust. Your will, for example, could create a trust to provide income to your spouse or partner, for his or her lifetime, with the property going to your children or whomever you so desire. Trusts of this nature can often be used to control assets and, if needed, save estate taxes.
We have attorneys to whom we can refer you, if you don't already have one. We will also sit in the meeting with you if you would like us to. Bottom line - Just Do It!
Over the next few months, Cornerstone will send every client a summary of all of their beneficiaries on all of their accounts. Beneficiaries can be changed at any time. So if your wishes are outdated (a parent has passed), or you've just changed your mind, let's update your wishes and desires. Going forward, we will do this exercise after tax season on an annual basis.
Don, Dave, and Lee
Cornerstone Financial, Inc.
Do We Need a CFP® at Cornerstone Financial?
June 5, 2013
Get Your Financial Life Together!
For many people, today, living with chaos is just a way of life. Not having control has become the norm. At work it is nearly impossible to keep up with emails and daily deliverables. At home our closets, drawers, and garages overflow with things we did not manage when we should have. Our finances, loans, credit cards, bank, investment, and retirement accounts are floating around on auto pilot. Statements go unopened, because we just don't feel like dealing with them. Do you even know where your check book is? If so, is the register current? If you've gone so far as to set up your accounts on Quicken or other accounting software, how accurate and up-to-date are your numbers?
Often our apathy and unwillingness to focus on our money, our wealth, means that cash balances lie dormant, or worse, disappear. Ultimately we have no idea how much we have saved, burned through,or completely missed! We have no idea what we need for retirement. If your finances are out of control, you are not alone. If you can no longer go on like this, come see us!
Today more than ever, CERTIFIED FINANCIAL PLANNER® professionals, like Lee Frush at Cornerstone Financial, are an essential resource. From consolidation, to budgeting, to planning for retirement, to managing your taxes and your insurance coverage, "finances" doesn't mean just one thing and "financial planning" means much more than just investing. Bringing all the pieces of your financial life together is what we do!
A client asked Lee, "What is different between a CFP® and my broker over at XYZ-Bank?" His first response is always that when it comes to ethics, CFP® professionals are held to the highest standards! The CFP Board's Consumer Guide to Financial Planning explains that, "they are obliged to uphold the principals of integrity, objectivity, competence, fairness, confidentiality, professionalism, and diligence as outlined in the CFP Board's Code of Ethics. The Rules of Conduct require CFP® professionals to put your interests ahead of their own at all times and to provide heir financial planning services as a "fiduciary" -- acting in the best interest of their financial planning clients. Believe it or not, licensed investment brokers are NOT held to this same, high standard by FINRA or the SEC, unless they are a CFP® professional.
Because of the fiduciary standards, CFP® Pros are especially well suited to handle estates or for consultation on estate settlements with complicated tax issues and investment holdings.
Let us know if we can help cut through all the fog and clutter of your financial life. Ignoring it will not serve you best over time and will most likely cost you substantially more than hiring us to help.