I've written a previous article on Required Minimum Distributions (RMD) in terms of what they are and how to calculate them. In this article I want to talk about the one-time exception to the first year RMD. The IRS allows individuals to postpone their first year RMD to the April 15 tax deadline of the year following the year they turn 70 1/2. This extension applies only to the first year. (As a reminder, any other years that you do not take your RMD by the end of the calendar year, the … [Read more...]

Most of my clients contributed a majority of their savings during their accumulation years to company retirement plans using pre-tax dollars. They now have large 401(k) and IRA account balances. They also have large tax liabilities and onerous required minimum distributions. I think if you asked each of them if they would go back and make a different decision about using pre-tax dollars into a company retirement plan versus after-tax dollars into a Roth or Roth-like option, they probably … [Read more...]

Have you ever thought about the transfer of your wealth at your death and who should get your “stuff”? Assuming that your surviving spouse is taking care of, where do you want the bulk of your money to go? If you're like most of my clients, they consider their adult children as the primary beneficiaries of their wealth once they’ve passed. Let's consider this… Most individuals will die in their 80s and 90s. This will put their adult children in their 50s and 60s. I think that most … [Read more...]

In our last article “How Risky Are My Investments? Part 1” we discussed what is meant by the “risk” of an investment portfolio. We ended the article with the question, "How do we reduce risk without compromising return?" One of the best ways to reduce uncertainty and risk without compromising returns, is to reduce the correlation of all of the investment assets inside the portfolio. Correlation means that two investments have similar results and outcomes (even though they have a different … [Read more...]

In my experience of guiding investors, I find that it is common for them to underestimate the risk of their investment portfolio that they bring in. How are investment portfolios measured in regard to risk? What is risk as it relates to investments? Risk is defined as uncertainty. It is the uncertainty that the performance of the investments will be what the average historical return has been. We all know that our investment portfolio does not receive the average historical return every year. … [Read more...]