Answers and Guides from Top Financial Advisors

I favor holding the assets in the parent's name in a 529 savings plan. This has multiple advantages: 1) retain control of assets after child turns 18 (in case they don't want to use for school) 2) parental assets counted at lower % toward expected family contribution in financial aid calcs 3) 529 plans grow tax free and withdrawals tax-free if used for qualified educational expenses negating any 'kiddie tax' motivations 4) your state may allow state tax deduction up to certain contribution amounts 5) REGARDLESS OF VEHICLE USED, BE AWARE OF SHORTER TIME HORIZON AND ADJUST INVESTMENTS ACCORDINGLY AS YOUR BABY APPROACHES LAUNCH DATE

If you see great "discounts" I wouldn't worry about what month it is. Still, I think it's important to consider general "market risk." To determine this I like to look at fundamentals (overall valuation), technicals (the charts), sentiment (general investor mood) and the macro scene (what's going on economically and politically on a global scale). To ameliorate market risk I suggest individual investors adequately diversify, dollar cost average and regularly rebalance their portfolios to maintain an asset allocation mix that suits both their goals and temperament. Best of luck.

If you are currently married, the spouse will receive the proceeds, unless they have signed a spousal consent form giving up their entitled benefit.

I would like to encourage you to seek the advice of an attorney and accountant to make sure that your estate is directed to the beneficiaries of your intentions. They will encourage you to look at all beneficiary forms, such as life insurance and retirement accounts, and update provisions in your will.

David G Niggel

http://www.keywealthpartners.com

Hi Jackie,

An old saying on Wall Street is “sell in May and go away” which comes from the Stock Trader’s Almanac. Generally the 6 months from May through October have a lower rate of return than November through April. Lower does not mean negative.

Since the goal is to buy stocks low and sell high, if this adage held true it would be better to buy in October and sell in April. Unfortunately it’s never that simple.

Buying individual stocks below their intrinsic value, within fertile sectors, and with positive momentum is the most successful strategy. It is much easier to say than to do.

I offer model portfolios for anyone to use currently at no cost. These include a stock portfolio of companies I am buying currently for my clients. You may access these portfolios at www.Davesfavs.com . The user id is “free” and the password is ”markets”.

When buying stocks for my clients, I focus on value, future earnings potential, sustainable competitive advantages, and momentum. I am not concerned with the month of the year. I seek rates of return greater than 9% per year. I am committed to the asset category for 5 years or more.

You should work with a professional to help you insure your investing is in alignment with your financial goals and tolerance for risk.

Good luck, Dave

Jackie I don't think the month of the year should be an issue. If the fundamental's of the company and outlook is good and the stock fit's into your portfolio from a diversification standpoint you should consider proceeding. I would recommend seeking an advisor in your area. Mark Schreiber

The most important point regarding measuring your fixed income portfolio is to compare it to a benchamark that has characteristics that are as similar as possible to your own portfolio. it does not make sense to compare a short term bond index to your fixed income portfolio that may be more similar to an intermediate bond fund. The same goes for long term bonds. The most popular benchmark is the Barclay's Aggregate bond index, AGG. This index includes bonds from many sectors and a large chunk of treasuries. If you own corporate bonds than this is not necessarily a good comparison. A better benchmark for corporates would be ITR which is the Barclays intermediate corporate bond index.

Orange County, Health Insurance, CA, 08/30/2012 - Health insurance costs vary by state, county, age and also plan type. There are other factors such as whether the plan offered is through a group or through the individual marketplace. In addition, factors such as deductible (high or low) and whether the plan is a PPO, HMO, HSA or POS plan. Normally, the younger you are the less expensive the plan will be. Also, typically high deductible plan have lower premiums as well. You should consult with a broker or your HR director for assistance in selecting the most appropriate plan.

All the best,

Greg Levin, CFP® CA Insurance Lic #0F08519

Due to industry regulations, the advisor may not post additional reply comments. If you would like to contact the author, please email him at Gregory.Levin@LPL.com. Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

Blair and James are right on the Mark. Let me add a gentle reminder that when Life Insurance is owned by an individual, the proceeds are included in the owners taxable estate. A strategy that is relatively easy to implement would be to transfer the ownership of the policy to an irrecoverable trust or adult child thus removing the proceeds from the owners taxable estate. But don't try any of this at home! Find a good estate attorney that you like and trust - if possible.

The Certified Financial Planner Board of Standards (www.cfp.net) has a list of questions that you may want to ask your potential advisor. Use this link to find a CFP professional in your area - http://www.cfp.net/find/EnhancedSearch.aspx

http://www.cfp.net/learn/knowledgebase.asp?id=6 10 Questions to Ask When Choosing a Financial Planner

1 Q. What experience do you have? A. Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has experience counseling individuals on their financial needs.

2 Q. What are your qualifications? A. The term "financial planner" is used by many financial professionals. Ask the planner what qualifies him to offer financial planning advice and whether he is recognized as a CERTIFIED FINANCIAL PLANNER™ professional or CFP® practitioner, a Certified Public Accountant-Personal Financial Specialist (CPA-PFS), or a Chartered Financial Consultant (ChFC). Look for a planner who has proven experience in financial planning topics such as insurance, tax planning, investments, estate planning or retirement planning. Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation or certification, check on his background with CFP Board or other relevant professional organizations.

3 Q. What services do you offer? A. The services a financial planner offers depend on a number of factors including credentials, licenses and areas of expertise. Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advice unless registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or on tax matters.

4 Q. What is your approach to financial planning? A. Ask the financial planner about the type of clients and financial situations she typically likes to work with. Some planners prefer to develop one plan by bringing together all of your financial goals. Others provide advice on specific areas, as needed.

Make sure the planner’s viewpoint on investing is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services. Find out if the planner will carry out the financial recommendations developed for you or refer you to others who will do so.

5 Q. Will you be the only person working with me? A. The financial planner may work with you himself or have others in the office assist him. You may want to meet everyone who will be working with you. If the planner works with professionals outside his own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on their backgrounds.

6 Q. How will I pay for your services? A. As part of your financial planning agreement, the financial planner should clearly tell you in writing how she will be paid for the services to be provided. Planners can be paid in several ways: A salary paid by the company for which the planner works. The planner’s employer receives payment from you or others, either in fees or commissions, in order to pay the planner’s salary. Fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income. Commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product. A combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. In addition, some planners may offset some portion of the fees you pay if they receive commissions for carrying out their recommendations. 7 Q. How much do you typically charge? A. While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner’s hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

8 Q. Could anyone besides me benefit from your recommendations? A. Some business relationships or partnerships that a planner has could affect her professional judgment while working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies, securities or mutual funds have a business relationship with the companies that provide these financial products. The planner may also have relationships or partnerships that should be disclosed to you, such as business she receives for referring you to an insurance agent, accountant or attorney for implementation of planning suggestions.

9 Q. Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career? A. Several government and professional regulatory organizations, such as FINRA (formerly NASD), your state insurance and securities departments, and CFP Board keep records on the disciplinary history of financial planners and advisers. Ask what organizations the planner is regulated by and contact these groups to conduct a background check. All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies, or who are associated with a company that is registered as an investment adviser, must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form.

10 Q. Can I have it in writing? A. Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.

The answer to this question is “it depends.” There are a variety of trusts with very specific structures that require detailed tax treatment.

If it is an irrevocable trust funded by an individual or entity for the benefit of another party, for example an irrevocable life insurance trust, and the trust pays out all income to the beneficiary then it is considered a pass through trust with its own tax ID number. This can also include the exemption portion of a living trust. An exemption trust is created when one person dies and their living trust splits assets based on the estate tax exemption amount.

While it is required to file a tax return for an irrevocable trust entity, the income and corresponding tax from this type of trust is passed through to the beneficiary. A K-1 income tax reporting form is generated by the original trust, sent to the IRS by the trust, and given to the beneficiary for filing with their taxes.

Another type of irrevocable trust allows for discretion in the distribution of income and can retain earnings. In this case any income received is taxed at estate and trust tax rates which are 35% for income over $11,650 annually. Any distributed income is again reported on a K-1 and given to the beneficiary for inclusion with their tax returns.

If it is a revocable trust set up by someone for their own benefit, for example a living trust, then the trust typically continues to utilize the individual (or one of the couples) social security numbers as a tax ID number. Tax reporting 1099’s are generated with the individual’s tax id and income is reported on the individual or joint tax return and paid at their prevailing rates.

** The information provided should not be interpreted as a recommendation, no aspects of your individual financial situation were considered. Always consult a financial professional before implementing any strategies derived from the information above.

In order to determine whether or not you will be assessed underpayment penalties we need to review your specific situation and compare the IRS requirements. First, penalties are charged when your total withholding and estimated tax payments do not equal the smaller of: 90% of your estimated tax for the current year OR 100% of your previous year’s tax (110% of your previous year tax if AGI is greater than $150,000).

The simplest of the two methods is to check and see whether or not taxes withheld this year are equal to or greater than 100% (110% if you AGI was greater than $150,000 in the previous year) of your previous year’s taxes. If they are, you will not be charged a penalty for underpaying estimated taxes even though your tax bill will higher this year as compared to last year.

The other method to calculate your current year taxes to avoid underpayment penalties is to pay 90% of this year’s taxes. This method requires some calculation on your part. Seeking advice from a CPA or tax professional may be warranted in this instance. There is also tax software available that can assist you with this estimation. Make sure to include all sources of income and make sure to estimate the information for the full year.

If your taxes withheld in the current year are less than 90% of your current year tax liability and you have not met the 100% or 110% requirement for the previous year, then you will be charged penalties for underpayment if the underpayment is greater than $1,000. Penalties are assessed separately for each quarter based on when the attributing income is incurred. Therefore you may owe a penalty even if you made up in the underpayment in following quarters by submitting estimated tax payments.

Given the complexities of the tax code, my colleagues and I advise clients to check with their CPA or tax professional in order to verify that transactions, such as a Roth Conversions, are handled properly from a tax perspective.

** The information provided should not be interpreted as a recommendation, no aspects of your individual financial situation were considered. Always consult a financial professional before implementing any strategies derived from the information above.

You'll have to check with your company-sponsored 401(k) plan administrator to find out if your plan offers a loan. While tempting it's not a good idea to use your retirement account for current bills. You should note that if you leave your employer and have an outstanding loan, the balance may be added to your income and you'll owe all sorts of income taxes on it plus the possibility for early distribution penalties if you're under age 59 1/2.

That's a tough one...What type of plan was it? What's the newest of the companies? If you know, you can plug it in to the 401k ratings directory on this site and look up the custodian where your funds are being held. You may also want to check with your state's unclaimed property department: icash.illinois.gov/