David G. Niggel, ChFC®'s Answers and Guides

A check made out to the qualified charitable organization with a receipt from them is the cleanest way to ensure your charitable tax deduction is the amount donated. Giving away an automobile to a charity was once straightforward. You could claim the old car's fair market value, that is, the amount a willing buyer would pay a willing seller for the product. Typically, you'd refer to auto valuation services, such as the Kelley Blue Book, to get an idea of the donated car's value, give it to your favorite nonprofit and then drive off with a tax break equal to that valuation amount. No more. Because some taxpayers got greedy, claiming much more than their old autos were worth; lawmakers tightened the rules on how much you can write off for a vehicle donation. Now the precise tax break depends on the donor's claimed value of the gift and how the charity uses the vehicle. In most instances, a taxpayer must take into account a $500 threshold on vehicular gifts. This value amount applies to autos, boats and even airplanes. When the donated vehicle's value (based on credible fair market value analyses) exceeds that amount, claiming the deduction gets more complicated. This valuation ceiling comes into play when a charity sells a donated vehicle. In this case, just how much a taxpayer can deduct depends on the amount the sale nets. For example, you donate your old station wagon that's worth $1,000. Under the old rules, that would be the amount you could deduct. But now, if the charity turns around and sells your donation for $800, your deduction is limited to the lower sales price. The charity must give you substantiation of the Internal Revenue Service-allowed donation amount within 30 days of when you turn your car over to the charity or, if the group sells the auto, within 30 days of the vehicle's sale. By now, you should have gotten word from the charity as to what it did with your old vehicle. If you haven't heard from the charity, give it a call and ask that it send, or resend, you the donation specifics. Plus, you now must include a copy of the acknowledgment with your tax return. Previously, such receipts were generally only kept by the taxpayer in case the IRS questioned a claimed deduction. Say you donated your $1,000 automobile. Instead of immediately selling it, the group used the auto for several. Eventually, the organization decided to sell the vehicle for $800. In this case, you could still claim the full $1,000 fair market value of the auto as long as you received documentation from the food bank on not only the sales price, but also how the auto was used for nonprofit works before the sale. Under the IRS regulations, this is classified as "significant intervening use" of the vehicle that allows the taxpayer to claim the higher deduction. Read more: Donating A Vehicle To Charity | Bankrate.com http://www.bankrate.com/finance/money-guides/donating-a-vehicle-to-charity-1.aspx#ixzz1szG4fTaU

I am with Ryan on this question. If the money does not need to be touched for at least 12 months, I would stick with a bank or credit union CD. If you would need access to the money for deposits on venues, caterers, flowers etc., then a money market would be in order. Money market accounts can give you checks or a debit card in order to use the funds when needed.

Reuben,

Another thing to add to your list is an emergency fund. Most advisors will suggest at least 6 months worth of expenses to be set aside in a cash equivalent account. A recent article that I read, suggested even having an entire year set aside. Job security is not what it used to be and you want to be prepared for those downturns in your income.

As Tony mentioned, a budget will be very important to you as you get started. Even writing down every dollar spent during the month (coffee, soda, etc.) it all adds up.

Good luck, and congrats on getting started at an early age.

Passive investing involves buying and holding market components, whereas an active investor or fund manager tries to pick the next winning stock or time where the market is headed next.

A passive approach offers these major benefits:

1. By holding entire market components, one maximizes the benefits of diversification.
2. By “tilting” the portfolio to riskier or less risky components, the investor can expect to capture the highest market return given his or her risk tolerance.
3. The investor maintains control over his or her own portfolio’s components (by avoiding active funds’ tendency to style drift without the investor’s knowledge).
4. Expenses can be minimized.
5. Tax efficiency can be maximized.

Thus, build a globally diversified portfolio that is adjusted to your risk appetite, rebalance your portfolio within certain parameters and keep on maximizing your 401(k) deduction and company match, if offered. Turn off the news and go outside and play with your children or grandchildren.

Carnish,

A primary beneficiary and contingent beneficiary are an important step for your estate. If your beneficiary is under 18, make sure to consult an attorney. You may need a guardian or trust set up for minors to receive the proceeds as you wish.

If you can go online to the provider website and find the correct place to enter your information, this is good. It may take a little searching, but if it is available, you will find it.

If not, your plan administrator should be a resource. Make an appointment with the plan administrator to fill out the beneficiary forms and get a tutorial about the website for your plan.

While with the administrator, you should go over your asset allocation to make sure your risk tolerances are in sync with your goals and objectives. And maximize your contributions to receive the full company match, if offered.

David

http://www.keywealthpartners.com

Every employee also has a responsibility to fight for their benefits. If enough employees raise their concern at meetings and bring their issues to management, you can start the change process. The administration and sponsors of your current plan are fiduciaries. They have a legal requirement to do what is best for the participants. They can have a financial judgement brought against them if their duties have been breached.

The retirement system is changing this year. And hopefully will continue to evolve for the better in the future. This is exactly why I started my business. To help participants and employers to have a better chance of a secure retirement.

Money market funds can be a great place to park money for a short amount of time.

When the stock market is extremely volatile and investors aren't sure where to invest their money, the money market can be a terrific safe haven.

Money market investing carries a low single-digit return, and when compared to stocks or corporate debt issues, the risk to principal is generally quite low. Money funds purchased at a bank are typically insured by the Federal Deposit Insurance Corporation (FDIC). However, money market mutual funds are not usually government insured.

Money market funds tend to be more liquid and that investors can buy into them and sell them with comparative ease.

Watch out for any account fees that may eat into your funds. Small annual fees or account set up fees, etc., can eat up a substantial chunk of the profit.

Hopefully this will fix Jim’s link. http://www.jdsupra.com/post/documentViewer Here is my two cents to look for in a Retirement Plan, Fee-only, independent Registered Investment Advisors that serve as both ERISA 3(21) and 3(38) advisors, taking some liability off of the plan sponsor. Advisor Managed Portfolios that give participants the ability to turn the management of their 401(k) assets over to expert advisors. Independent providers who are free from conflicts of interest normally found in 401(k) plans. No hidden fees or fee-sharing arrangements, giving you full transparency of all plan costs.

Get an independent ERISA Fiduciary to review your plan An independent reviewer may see something that has been overlooked by others, which could save you and your employees’ years of additional work and thousands in lost retirement savings.

5 Core Principles of an independent ERISA Fiduciary Put the client’s best interests first. Act with prudence, that is, with the skill, care, diligence and good judgment of a professional. Do not mislead clients – provide full and fair disclosure of all-important facts. Avoid conflicts of interest. Fully disclose and fairly manage, in the client’s favor, unavoidable conflicts.

The following is an excellent article to keep in mind when you are evaluating plan providers.

5 Characteristics of a Great 401(k) Plan May. 31 2011 Posted by Michael Chamberlain Forbes Magazine

US News recently published an article titled “5 characteristics of a good 401k”.

If you had a choice, wouldn’t you want a Great 401(k) rather than just a just good one?

As background, the 401(k) rules from the DOL and IRS are complex. Employers are busy running their companies and have little expertise running a plan. Employees are poorly prepared to know how much to contribute or how to invest their money. Because of these three facts, the financial services industry, insurance companies and broker dealers have made a killing at the expense of American workers. As a result most 401(k) plans can be dramatically improved to the level of a “great” plan.

Below are the 5 characteristics of a GREAT 401(k) plan, keeping in mind that the goal of all great 401(k) plans is to provide meaningful retirement income for the employees of the plan.

1. The plan hired an Investment Fiduciary. Some companies are aware that the DOL requires that they hire an expert if they do not have the expertise. Most others have no idea of this requirement. The best plans know and the plan and the participants are best protected by the fiduciary standard rather then the suitability standard of broker dealers and insurance companies.

There are two types of investment fiduciary. The first is a 3(38) “investment manager” who makes the investment decisions for the plan and is best suited to the employer who understands that neither they nor even an investment committee have the time or expertise to make prudent independent investment decision for the plan.

The second type of fiduciary is referred to as a 3(21) and provides “independent objective advice” to the investment committee who makes the final decision as to investment selection and monitoring.

In either case the investment fiduciary keeps the plan and the participants interests foremost at all times which is not the case with a representative of an insurance company (such as John Hancock, ING, Principal or Transamerica) or an investment services company (such as Fidelity, T. Rowe Price, Franklin Templeton, UBS or Black Rock)

1. Employees contribute a reasonable amount to their accounts. Starting contributions early in a career and contributing at a reasonable level are the two most significant factors for meaningful retirement income. The focus of employee education should be here and not on how to pick an investment. Employers need to be encouraged to institute plan features such as automatic enrollment with opt-out and stepped up contributions.

2. Improved investment performance with professionally managed portfolios for participants. Most plan participant investments under perform the markets. Participants are much better served with portfolios that are professionally managed by the independent investment fiduciary. The concept is that different portfolios with different levels of risk and expected return are offered. The investments within each portfolio are selected based on a prudent process and are not influenced by any investment or insurance company. The investments are monitored and funds are removed if they fail to pass the quarterly screening. The models are automatically rebalanced.

The key is to get each participant into the correct portfolio, based on his or her goals, timing and risk tolerance. With these managed portfolios, the participants understand the expected rate of return and the range of returns. As the participant gets closer to retirement, they move from one model to the next. This is much more effective than target date funds.

1. Low cost. The DOL has indicated that excess fees can greatly reduce account values at retirement. Controlling costs is a DOL and ERISA requirement of plan sponsors. The financial services industry has robbed plan participants for too long. New DOL regulations are coming to make fee disclosure more transparent but it is up to the plan sponsor to keep more money in the participants’ accounts rather than going to a plan service provider. Part of the task of the investment fiduciary is to help the plan sponsors in this area. The cost for the services of an investment fiduciary and other plan costs is typically lower than what a plan is currently paying.

2. Better utilization of staff time and decreased plan sponsor liability. The investment fiduciary decreases the time required by the investment committee to monitor the plan, which allows the senior staff to do what they do best which is to run the company. The use of model portfolios decreases the time required for employee investment education (that does not work anyway). The goal is to motivate the employee to use the fiduciary expertise and start building more funds for retirement not how to pick a fund. When the investment fiduciary accepts fiduciary status in writing and selects and monitors the investments, the liability of the plan sponsor and other plan fiduciaries is significantly reduced.

In conclusion, with the uncertainty of Social Security and the lack of traditional pensions, we as a nation cannot afford to have poor or even good 401(k) plan. We all need GREAT retirement plans.

It is not that hard to enhance a 401(k) plan to be great. What is hard is to get the attention of the plan sponsor when they are busy trying to make the company successful. Unfortunately, the importance of the 401(k) plan takes a backseat to more pressing issues.

Your 401k statement will usually read: Balance...Vested Balance...Vested Percent. The vested balance is the value of your account on that particular date. Personal account statements can sometimes be tricky to read, if you have a lot of activity. Your advisor should have your balance available from the close of business the day before. Your advisor should be a resource, available to answer questions and concerns that you may have.