Answers and Guides from Top Financial Advisors

Here is why I like Health Savings Accounts for my clients who can think out of the box. Lower cost for the health insurance premium due to using a high deductible along with a tax advantaged savigs account that you control. Because there are fewer actual "claims" for the insurance company to deal with, they have lower adminstrative costs and therefor the rate of future premium increases should be less than a "traditional" health insurance plan. If you fund the actual savings account portion properly (I usually try to have my clients put half of the deductible in during the year), and have a couple of years without major claims, you can have your total deductible or more saved up and then you can reduce the payments into the savings account and sit back and enjoy. Funds in the savings account can be used to pay for dental and vision care too, but probably won't be applied to your deductible. On the other hand you are using tax advantaged dollars to pay for these expenses.

In this day and age a good rule of thumb if you are managing the withdrrawals yourself is to withdraw no more than 4% a year. In recent years though there have been a number of excellent annuity products that have come to the market that provide access to upside moves in the markets using "lock in" provisions along with some type or Guaranteed Lifetime Income Rider. These riders have an associated fee, but may give you more than the 4% withdrawal rate and provide a place to put a portion of your retirment assets to provide a stable base of income which can go up over time. Contact an independent insurance agent or financial planner in your area to find out more including all the fees involved.

Here is another thought. If your company allows "in service distributions" you can roll part of your 401K to an IRA and then convert that to a Roth IRA. You will owe taxes and it is best to pay the taxes I think out of your own pocket that to pay the taxes out of the converted IRA.

So contact the HR department and find out about the availability of "in service distibutions".

When I first started selling LTC insurance in the mid 1980's the average age of a buyer was something like 72. Today it has fallen dramatically and is below age 60. My recommendation is, the sooner you can afford to buy it the better. Rates will be very affordable at your age and there are a substantial number of "young" people now getting benefits from their LTC policy, usually due to a catastrophic accident causing a traumatic brain injury or spinal cord injury. LTC insurance is not just for nursing home care. Even better, if you buy it today vs. buying it when you are 55, you will pay less in premiums by the time you reach age 80 by buying it today just do to the higher cost at older ages.

Assuming that you have a type of life insurance policy that builds cash value (like Whole or Universal life) and depending on how long you have had it, it can be an excellent spurce of cash. The secret is not pulling out too much which. If you call the insurance company's customer service number they can tell you what the maximum recommended amount that you can borrow is. You might alos ask them what the affect would be if you simplify withdrew the funds you need. There are different ramifications to borrowing and withdrawing.

There are a number of ways to look at this question. If you need a lot of coverage and you have a limited budget, then Term Life insurance may be your best bet to start with. As your income increases, Term life insurance usually allows you to convert some or all of it to a permanent type of coverage like "Whole " life or "Universal" life.

If on the other hand you are looking for some permanent coverage or a policy that will build cash value that you can use some day, then you need to consider some type of "Whole" life or "Universal" life policy.

Either way, find an independent agent. Buying from your auto insurer or from a captive agent representing only one company is a recipe for paying too much.

You should be getting statements quarterly from your plan. Many times you can go online at the plan provider's website and set up a password and user name so that you can log in and see your account. Don't get too bogged down by day to day changes in the account value, it is better to look at the long term trend since we know that on a daily basis their can be swings in value.

If your mom has taken a distribution in 2012, you do not need to take a distribution this year. Using RMDs, you will, starting next year be able to "stretch" your mom's retirement plan assets out over your life expectancy. I usually like to set it up to have my client's get their inheritied IRA RMDs either in the month of their birthday or for December around Christmas time, so that they remember their loved one during a meaningful time in their lives.

Robin, There are two things to consider here. 1] If you are trying to replace your tax deductible contributions [like your 401k], then consider a IRA or ROTH, but ask yourself these questions: a] Do I want a tax deductable or taxable account? b] Do I qualify under IRS guidelines to have a 401k and a IRA? c] What type of risk can I take?

2] If you are trying to just put money away to have access to in a 6-10 year period and have greater choices to allocate your funds at a lower cost, then there are many mutual fund companies to consider. Hope this helps your thought process. Good luck, Dan

Your HR department will have contact information about your company's retirement plan administrator. You will be able to request a copy of a "summary plan document" that the administrator provides to participants about the plan and options. You can also find out information about a plan's expenses or rating from a service like BrightScope or by searching for the Form 5500 that each plan has to file with the Department of Labor that details the expenses and options of the plan.

Robin,

You may have some options here. It can be frustrating when you want to save, but your choices are limited and they don't meet your expectations.

1) Are you currently saving in a deductable IRA? If not, depending on your income and marital status, you may qualify to contribute to a deductible IRA. You can get information on limits based on age, marital status, and income at http://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits. Essentially, how useful this option may be for you depends on if you are married and your spouse participates in a retirement plan, etc. However, $400/mo is within the IRA contribution limits, especially if you are over 50.

2) Based on your income, you may qualify for a ROTH. True, you won't get a deduction on the contributions, but you do get tax deferral on growth now and eventually tax free distributions when you retire. Furthermore, you won't have those pesky RMDs to consider when you are over 70-1/2. The question to ask is do you want to pay taxes on the harvest or only on the seeds?

3) Another choice is to show the information you collected and speak to your HR/Payroll department. If enough folks "discuss" (complain, kvetch, etc.) this with them, they may change to another company. With more transparency comeing to the 401(k) space, we should start seeing competition in smaller 401(k) plans, and potentially better options.

Stay tuned. I'm sure you'll get some additonal ideas posted pretty quickly.

You're bringing in two different questions which may be mutually exclusive. If you are looking to take advantage of tax-deferred savings and possibly an employer match, then the 401(k) is your best option. While the internal expenses may be high or the fund choices limited, it does provide a way to save for retirement. And if there is a company match, you are getting a "bonus" benefit.

On the other hand, if you are looking to access these funds, then the question is "What is the priority or goal?" Are you looking to tap the funds for paying college tuition? Or is it for a down payment on a home?

The 401(k) is a retirement savings vehicle. It's not meant to be a piggy bank. Even if your employer plan offers the opportunity to borrow from it, it's not in your long-term best interests.

So without knowing your age or planned use of the funds, it's hard to provide a specific answer.

But in general, you could consider a traditional or Roth IRA separate from your employer plan. You'll certainly have more choice in investments although you may be giving up on the tax credit for participating in a company retirement plan as well as the company match.

Or maybe because of the time line you noted, then you may be better off in a non-IRA account. I'm partial to using a core of index funds for an allocation based on your age and risk tolerance. Such an allocation would have a US stock index plus an international stock index and a bond index fund. Then you can add some other "satellite" (non-core) positions such as small company stocks, real estate, international bonds and "alternatives" like natural resources, commodities or precious metals. There are other options as well. A good "go anywhere" world allocation fund may be a good way to get access to some of these areas. BlackRock and Ivy Funds have some good choices to consider for this more actively managed piece of the investment pot you're considering.

You can get more specific advice by contacting a professional (I recommend a CFP(R) or ChFC Professional). You can also get advice for accounts both within and outside a company plan at www.futureadvisor.com for a nominal fee if you are a DIY type investor.

To get a handle on your risk profile, consider the tools available at www.myrisktolerance.com.

This is a common type question in this forum. You may also want to refer to any of the guides or answers provided by many of the professionals found on this forum.

Hi Thomas,

In general, if you own a home with your spouse as joint tenant with right of survisorship (titled as such)in a community property state, then the surviving spouse will get a full step up in basis.

However, this should not preclude you from speaking with an advisor and an estate attorney in your area. There may be other aspects to your estate you didn't mention. Also, there may be changes coming to estate law that may change the current situation.

Mr. Evans,

While your contribution was lucid and very well-articulated, I felt it was necessary to gain further information from the poster to clarify what they have. Speaking to the issue of 401(k)s only does not address a pension or a 403(b). Given the original question being somewhat confused, I added to the discussion.

Your down-grading the vote is entirely inappropriate. If I had been "talking smack" about you or any other contributor, denigrating you or anyone's credentials, or insulting the poster, then I could understand the downgrade.

I did not flaunt anything. I did not even suggest that the client call me by putting in the top of my post my address or contact information.

I take exception to you and your action. I take exception to this entire forum. I do not plan to continue with this line of discussion.

Learn the rules or get off the forum.