NORTHWEST RETIREMENT

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Thursday, May 12, 2016

Five ways to protect what's yours


Why it's important to keep your key documents and beneficiaries up to date.

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·         Have you been so focused on building assets that you haven't given much thought to protecting them? Naming beneficiaries, creating a will, and other estate-planning tasks can help preserve what you've accumulated and distribute it to the people and causes that are most important to you.
·         Yes, it's an uncomfortable topic, but think of it this way: Do you really want someone else making these decisions for you? Let’s take a look at some of the important documents you need to have in order should anything unexpected occur.
1.
Create a will.
·         A will is an essential legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children when you die. It documents your wishes and is be used to determine the distribution of probate assets in your name when you pass away. It designates an executor, who carries out the provisions of the will. If you don't have a will, your assets will be disbursed according to state statutes—and who wants that?
·         Whether you have a will or not, the distribution of your estate assets will generally be subject to a legal process known as probate. This process varies from state to state. Dying intestate (without a will) can further tie up your assets in the costly delay—and public display—of probate. Without a clear estate plan, you may unintentionally trigger legal challenges among family members, because it may be unclear how you really intended your assets to be passed along.
·         If you have minor children, it's critical that your will designate a guardian for them. If you don't specify who is best suited to look after your child if both you and your spouse die prematurely, the state will. In addition, consider that under some state intestacy laws, if you are married at the time of your death, your current spouse may inherit all your assets. If you have children from a previous marriage, this may not be the result you intended.
2.
Choose who'll act on your behalf.
·         In addition to a will, it is important to consider a power of attorney. A power of attorney appoints an agent to act on your behalf regarding financial and other matters while you are alive. It can take effect immediately or at the time of your incapacity. It typically authorizes someone to act on your behalf with respect to your financial affairs, and is often executed by one spouse for another.
·         There are several considerations to keep in mind when setting up a power of attorney. Any competent adult can serve as your agent. It can be general or limited; for example, it can apply only to particular assets or accounts that you own. Given that you are giving someone authority to make important decisions on your behalf, it is important that you exercise great care in selecting your agent.
·         A health care proxy names the agent who can make health care decisions for you if you are unable to communicate for yourself. Unlike a durable power of attorney, before someone can act as your health care proxy, you must become incapacitated and be unable to make informed decisions for yourself.
·         You’ll want to be specific about what decisions your health care proxy agent can and cannot make on your behalf. You may also want to draft an advance medical directive, also known as a living will. This expresses your wishes to your agent and doctors when considering the use of life-sustaining procedures.
·         Consider naming an alternative power of attorney and alternative health care proxy in case the person you’ve initially named is unable to serve on your behalf.
3.
Name beneficiaries on financial accounts.
·         Designating a beneficiary for investment accounts, and insurance policies, can be as important as writing a will. These decisions are critical but not complex. Assets in your retirement accounts pass directly to the beneficiaries you've designated with your account custodian, trustee, or plan administrator. Furthermore, your beneficiary designations generally supersede any accommodation you have made in your will for your retirement account. Remember to name beneficiaries on all retirement accounts, such as 401(k) accounts and IRAs. In many instances, having beneficiaries designated on an account allows the account to pass outside probate, enabling your beneficiaries to avoid the time and expense of the probate process. As with all accounts, estate taxes may still apply. Be sure to consult your tax advisor.
·         Under IRS rules, required distributions from an inherited IRA are generally based on the age of the beneficiary, not the age of the original IRA owner. So if your beneficiary is younger than you, these rules can minimize the taxable amount that must be withdrawn each year after your death.
·         Employer-sponsored retirement plans. If you are married, keep in mind that some employer-sponsored retirement plans automatically designate your spouse as the beneficiary unless you name another beneficiary and your spouse has consented in writing. You should check with your company to understand their policy on beneficiary designations.
·         Nonretirement accounts. Designating a beneficiary, or beneficiaries, on a nonretirement account, such as a brokerage account, may establish a "transfer-on-death" (TOD) registration for the account. For an individual account, a TOD registration allows ownership of the account to be transferred to a designated beneficiary upon your death.
4.
Keep everything up to date.
·         Even the best plan isn't effective if it doesn't keep pace with your life. Consider setting aside a special time each year— around tax time, for example—to review not only your paperwork but any life events that have occurred. Moving, having children or grandchildren, or losing a loved one can have a big impact on your plan overall.
5.
Ask for help.
·         It's important to know the difference between what you can do on your own and when you need professional help in preparing for the unexpected. Do-it-yourself estate planning is risky, so it makes sense to ask an attorney to draw up legal documents such as your will, power of attorney, and health care proxy. An experienced professional can actually save you money and spare you headaches.

 Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor. Both Eli Mizrahi and Michael Sondheim are registered with Global Financial Private Capital and licensed to give investment advice.
*Guarantees provided by insurance products are backed by the claims paying ability of the issuing carrier.

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Monday, March 21, 2016

Identity Protection Tips for Tax Season



What's the most important number for you this tax season? The amount of your refund? The amount you owe? The number of hours spent poring over all the other numbers?
All of those are pretty important. But, none of them are as important as your Social Security number, at least not in the larger scheme of things.


No one enjoys tax time, right? Not even the Internal Revenue Service or paid tax preparers. Actually, identity thieves do love tax season. Personal identifying and financial information is flying around and the stress of the season can cause some people to drop their guard – and open the door to opportunity for identity thieves.
As you’re gearing up for tax season, it’s important to keep identity protection in mind throughout the process. Take these steps to ensure your information stays safe this tax season:
Choose your tax preparer with care
From the Yellow Pages to your local discount store, tax preparers are everywhere at this time of year. It’s important to know who you’re doing business with; not only can a poorly prepared return cause problems with the IRS, a dishonest preparer can take advantage of your personal information. Warning signs a tax preparer may not be above board include:
  • Asking you to sign a blank return. Always review a completed return before you sign it.
  • A record of complaints with the Better Business Bureau or other consumer organization.
  • Charges a percentage of your tax return as his or her fee, or refuses to quote you an exact fee up-front before preparing your return.
  • Disappears after tax day. Look for a preparer with an established reputation and an actual office where you’ll still be able to find him on April 16.
Protect Your Valuable Documents
Many of the documents involved in tax preparation – from W-2s to interest statements – contain sensitive information. It’s important to take steps to protect these forms.
Throughout the month of January, don’t let mail linger in the mailbox, as tax forms will be arriving. Invest in a locking mailbox – a good identity theft protection measure at any time of year. Gather all your documents and secure them; never leave envelopes or documents in an unsecure place, like your car, desk at work or dining room table at home. And when it’s time to mail your return, don’t leave it sitting in your mailbox for the postman to pick up. Take it directly to the local post office branch and mail it from there.
Be Alert to Scams
Tax scams abound at this time of year. You may receive an email or phone call from someone claiming to represent the IRS or other federal agency. Keep in mind that when it comes to your taxes, only one federal agency is ever involved and that’s the IRS.
On its website, the IRS plainly states that it contacts taxpayers via U.S. Post – and never by email, text messages or phone calls. If you receive this type of communication from someone claiming to be with the IRS it is almost certainly a scam. Report the incident to the IRS by forwarding the suspicious communication to phishing@irs.gov.

Monday, January 11, 2016

How Do You Generating Lifetime Income? Here is a New Opportunity!



 Here is a New Strategy!
A survey of people aged 44 to 75 found that 61% fear running out of money in retirement.1 There may be various personal reasons behind this concern, but the decline of traditional pensions, combined with longer life spans and rising medical expenses, has created an uncertain future for many Americans, including those who have put away a solid nest egg for retirement.
A recent IRS decision opened a new opportunity for retirement plan owners to turn a portion of their retirement savings into a guaranteed future income stream using a qualified longevity annuity contract (QLAC). Although longevity annuities (sometimes called longevity insurance) are not new, the IRS decision makes it more effective to purchase and hold an annuity in a qualified retirement plan such as a traditional IRA or a 401(k). Here’s how it works.
Deferred Payouts
A longevity annuity is a deferred fixed annuity that delays lifelong income payments until a future date — often when the contract owner reaches age 80 or 85. Because the annuity income is deferred, the payouts are typically higher in relation to the premiums than they would be if the annuity income had been paid immediately. Purchasing the annuity at a younger age with a longer deferral period would generally give you a better premium-to-income ratio.
In the past, it would have been counter-productive to purchase a longevity annuity in a qualified retirement plan, because the amount used to purchase the annuity would have been included in the account balance to determine required minimum distributions (RMDs). The new IRS ruling allows retirement plan participants to use the lesser of $125,000 (inflation adjusted) or 25% of their account balances to buy a QLAC, with the annuity’s value excluded from the account balance used to determine RMDs.
Having a QLAC might allow you to take larger retirement plan distributions earlier in retirement, knowing that you will have a guaranteed future income from the annuity. Income payments must begin no later than the first day of the month following the participant’s 85th birthday.
Options and Limitations
The rules also allow for the continuation of income payments throughout the lifetime of a beneficiary (such as a surviving spouse) and/or the return of premiums (minus payouts) as a death benefit. However, these options will either raise the purchase price or reduce income payments later in life. Without the optional death benefit, insurers will generally keep the premiums paid if the annuity owner dies, even if payouts have not yet begun.
Cash-out provisions are not allowed in QLACs, so any money invested in the annuity is no longer a liquid asset, and you may sacrifice the opportunity for higher investment returns that might be available in the financial markets. (By contrast, nonqualified annuities may offer a cash-out option that permits withdrawals during the deferral phase, but surrender charges typically would apply.) Like other distributions from tax-deferred retirement plans, income payments from QLACs are fully taxable. (With nonqualified annuities purchased outside a retirement plan, only the earnings portion is taxed.)
Like most annuities, a QLAC typically would be purchased with a lump sum. However, if your employer chooses to offer a QLAC option in your retirement plan, you may be able to invest through regular salary deferrals.
Annuities are insurance-based contracts that have exclusions, contract limitations, fees, expenses, termination provisions, and terms for keeping them in force. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company.
1) money.usnews.com, February 21, 2014