Investment Q&A - Tri-State News, Weather & Sports

Investment Q&A

If you don't see the answer to your question, click here to Ask the Expert.

Question:  I have 4000.00 in a ky state retirement. If I draw it out they will cut taxes out of it? I am disabled for 3 yrs now under ssa. Can I roll it over into an IRA and then draw it out without penelaty? I am 52 yrs old. Or is there any way to draw out money without taxes or penalties? The money was taken out of my pay before taxes.

The Hollander Group's Answer:    If you are considered 'retired' from your employer - you can typically roll retirement monies into an IRA. After 59-1/2, you can withdraw monies from a traditional IRA without penalties (but subject to income taxes). Although the taxes are unavoidable, there are exceptions that allow for penalty-free withdrawals before age 59-1/2. You would justify the exception when you file your taxes and your accountant could help you to definatively determine if you would qualify for that or not.

Question:  I asked before why FO was not included in the stocks of interest. I was told that it would now be included. I have looked for it several times and it is still not included. When will this happen?

The Hollander Group's Answer:   The Hollander Group has added this to the rotation for the 6:45 spots on Tuesday and Thursday mornings on Channel 14. The branch also supplies stock quotes to other radio and TV stations. We have asked them to add it as well.

Question: What is your opinion on using equity models, as those discovered by James P. O'Shaughnessy, in his book WHAT WORKS ON WALL STREET? These simple stock-selection formulas have beaten the market for 50 years. Are they "too good to be true"?

The Hollander Group's Answer:   One of the big benefits of asset allocation models is the diversification that it forces into your portfolio. Care should be taken to choose an allocation that meets your time horizon, risk tolerance, income needs and other financial and lifetime goals. Obviously, these factors can change over time, so a single "model" may not be appropriate over a long period of time. Your portfolio should be adjusted to these changing needs and goals over time.

Question:  After reviewing many 529 plans, I have decided on the College of America plan from american Funds. My question is, Do I have to purchase the plan through a financial advisor/broker, or can I do this on my own?

The Hollander Group's Answer:   American Funds offers its funds and other services (529 plans) through financial consultant relationships, although other fund companies do permit direct purchases by investors.

Question:  My husband does not believe in life insurance so we both have a Roth IRA to use as a burial fund. I know the money can not be taken out of the account until we're 59 1/2 but my question is this, if one of us should die before we reach the 59 1/2 can the money be taken out of the persons account without paying the penalty? Each IRA is in our own SS #. Thank you for your help with this question.

The Hollander Group's Answer:   Upon death - a Roth account may be liquidated without penalty.

Question:  I have a 401k from a previous employer, and it is all in the company stock (5/3 bank), their stock has been dropping in value. My question is: Should I move it into another investment or keep it? It is loosing money almost every quarter, and I can't contribute to it anymore, please help!

The Hollander Group's Answer:   We can not comment on a specific stock recommendation via e-mail. We would be happy to discuss this by phone with you (426-1481). However, there are several other things that you may want to consider. First, what percentage of your overall assets is the 401k? We would generally recommend not holding more than 20% of your investment assets in any one investment. Also, what other options do you have with your old company plan? You may want to consider rolling your old 401k to your new 401k w/ your new employer (if that is an option with your new plan) for consolidation purposes. You also may want to consider rolling your old 401k into an individual IRA - which would open up many additional investment opportunities to you.

Question:  Will a 403 b plan affect my roth ira or my sep ira?

The Hollander Group's Answer:   No. 403b contributions will not affect contributions to either a Roth or a SEP.

Question:  We have a small annuity that we are going to have to cash in early. The surrender fees are $6,852.96. Are the surrender fees tax deductible?

The Hollander Group's Answer:   We would advise that you consult with a tax advisor on this question. There are many variables involved with annuities that impact how your proceeds are taxed.

Question:  I heard on sunrise 14 one morning about saving for your children's college. They said there was a fund where you could put so much back per month and you would be locked at todays college rates.Was I hearing this correct or are there more details I'm missing.

The Hollander Group's Answer:   For college savings that work for any school - a 529 or Education IRA allow you to put money back to save and invest for use down the road. With the 529 - any growth in the account, if used toward qualified college expenses, comes out tax free.  There are really 2 questions here: 1) account type and 2) investment options w/in accounts. For college savings for a minor, there are basically 3 account types available: - a custodial account (probably what you would have at a bank) - a 529 plan - a Coverdell ESA (old Education IRA) If you want the money to possibility be available for other than college, the custodial account may be the way to go. If definately for college, the Coverdell and/or 529 have some advantages. Within these accounts - you can generally invest in stocks, bonds, mutual funds, money markets, ... This will depend on your risk tolerance. For stability, you may look more toward the money market, short-term bond type investments while for more growth (with also more potential for volatility), you may look more toward the stocks, stock mutual fund investments.

Question:  Not so much an investment question; what steps should a person take in order to become a stock broker.

The Hollander Group's Answer:    If you are not yet out of college, I would suggest that you study accounting and/or finance in college. Also, start doing some investing of your own if you haven't already - perhaps working with more than one person to get a feel for various styles of consultants and how they interact with clients. Your licensing would generally be done once you were hired by an investment company. Also, the company would generally offer a training program for new consultants.

Question:  Are the government grant programs safe and legal? It seems to good too be true to me. 

The Hollander Group's Answer:   There are various assistance programs offered by the Federal government. The Catalog of Federal Domestic Assistance website at www.CFDA.gov may be able to provide you with additional information

Question:  My 71 year old uncle worked for Auto Zone and retired in 2002. They are telling him he can only receive his Auto Zone retirement in monthly payments. ($68.00/Month, he would like to get this as yearly payments.) This retirement was only company contributions.

The Hollander Group's Answer:   Thanks for your question. It sounds like your uncle has a company-funded pension plan. The benefits of these plans can vary by company. If he desires monthly income, he may want to inquire as to whether he can get a lump sum payout of his benefits. He could then invest this money to generate a monthly income for himself. This may also allow for something to be left for the heirs upon his death. If we can help with this process, please call The Hollander Group at Hilliard Lyons at (812) 426-1481.

Question:  As a retired teacher approaching age 70 1/2 in February, I need to do something with my 401k. Even though I have had capital losses the past three years, over the years I have had considerable capital gains. My question is this: Will the capital losses that I have experienced in the Stock market other than the 401k offset the capital gains of the 401k.

The Hollander Group's Answer:   In short - NO. Monies in a 401k grow tax deferred until they are taken. At the time they are withdrawn from the 401k - they are taxed as ordinary income at your then-current tax bracket. Gains or losses that occured within the IRA/401k do not generally have a tax impact. Gains or losses that occured outside the IRA/401k generally off-set each other and then any excess losses can be used to offset up to $3,000 of ordinary income. We recommend that you consult a tax advisor for the specifics of these rules. At 70-1/2, there is a Required Minimum Distribution (RMD) amount that must be withdrawn each year. This amount is calculated based on a table and is not generally a significant portion of the overall 401k/IRA assets. The bulk of the 401k may continue to grow tax deferred until taken. To simplify, you may want to consider rolling over your 401k to an IRA. This often provides additional investment options and also the assistance of an advisor as you work through these issues. The Hollander Group can help you with this and also with calculating your RMD amount and evaluating how best to utilize any gains/losses you may have

Question:  I have been gifted $150,000.00 by my father. I am 55 years old with a small 401k and potential small pension from the company I work for. How would you suggest that I invest these funds so that it is secure for me at retirement but yet have a reasonable return?

The Hollander Group's Answer:   Your investment(s) should depend on your risk tolerance, time horizon, return needs and expectations, etc... As you point out - it is important to take your pension and 401k into consideration when looking at your overall allocation. In general, a diversified allocation among both stocks and bonds can actually reduce your risk over a longer time period than focusing on any one asset class. We would be happy to sit down with you and help you to develop an investment plan for this money to meet your goals and needs. Please give us a call at 812-426-1481/888-426-1481.

Question:  Is the 529 Education plan a good plan to invest and prepare myself for my daughter's college years? She is almost 8-years old and in 2 nd grade.

The Hollander Group's Answer:   The 529 plan is a good way to plan for college if you feel confident that the money you are investing will actually be USED for college. Any money that is invested in 529 plans that isn't used for higher education will eventually be taxed and penalized. If you feel it is definitely college money, this is a great option that allows you to grow assets on a tax deferred basis with no income limits.

Question:  When taking out an annuity is our entire principal gone after a certain period of time?

The Hollander Group's Answer:   Only if you choose to annuitize your annuity. If you invest in an annuity that doesn't force annuitization at the time of your death it passes to your beneficiaries.

Question:  I am getting ready to retire and have a 401k, some IRA's at banks and an investment account. How will I "get paid" during my golden years?

The Hollander Group's Answer:   A simpler life during retirement often includes simplifying your finances. IRA's, 401k's, lump sum pension proceeds, etc. can generally be consolidated to one IRA account. Other "non qualified" assets would be consolidated into a separate account. These accounts become the source of your retirement income along with Social Security and any pension payments you are eligible for. The Hollander Group works with clients individually on how these assets should be invested to meet your retirement needs.

Question:  I recently received an inheritance of $750,000. I've read a little bit about using Money Managers instead of mutual funds to manage large sums of money. Would I qualify for their services? How do I get started?

The Hollander Group's Answer:   High-net-worth individuals often qualify for money management services. Generally, an entire portfolio is broken down among several managers, each with their own investment style. The Hollander Group will work with you to determine the appropriate allocation, help choose the Managers and monitor the progress on-going. Money management services are typically paid for on a fee rather than a commission basis.

Question:  I have several brokerage accounts and some savings at the bank. I've been seeing a lot lately about asset allocation. What does this mean and does it apply to me?

The Hollander Group's Answer:   Many investors have been reminded over the past two years just how important assets allocation really is. Asset Allocation is the process by which your available financial resources are split across various major asset classes to achieve the most return for a given tolerance of risk. Determining the appropriate asset allocation is perhaps the most important investment decision you can make. Numerous academic studies have concluded that "asset allocation is the primary determinant of portfolio return." It is often easier to monitor and evaluate your overall portfolio allocation if most of your major assets are consolidated into only one or two accounts. Contact The Hollander Group today to see how we can help.

Question:  I'm 45 years old and would like to retire in 10 years. How can I tell if I'm on track to meet my goals?

The Hollander Group's Answer:   Planning is a critical step in meeting desired goals. The planning process begins with gathering information on current position and defining ultimate goals. The Hollander Group works with clients to walk through this process and develop a comprehensive plan to guide them toward achieving their goals.

Question:  Many years ago, I invested in a variable annuity. Is this still a good place for my money to grow?

The Hollander Group's Answer: Variable annuities and the features they offer are continually changing. If you have an annuity that is more than seven years old, it is a good idea to take a look at it and see if it still meets your needs. There may be newer annuities that would allow the money to remain tax-deferred, but offer a greater death benefit or "living options." Contact The Hollander Group today for an evaluation of your annuities.

*Securities offered through JJB Hilliard, WL Lyons LLC, Member NYSE, FINRA & SIPC.
Hilliard Lyons does not offer tax or legal advice. Please consult your tax advisor or attorney before making any decision that may affect your tax or legal situation.

Powered by Frankly