The Navigoe Blog

Navigoe First Quarter 2015 Newsletter: 4 Reasons for Roth IRA Conversions, Keeping a 529 Plan Rolling, Dispel Popular Myths About Retirement, and more!

The 2015 First Quarter Navigoe Newsletter is complete!

Here is a summary of some of the articles in this quarter’s newsletter:

Ponder These 4 Reasons For Roth IRA Conversions
Roth IRA conversions remain a top topic of discussion for those who are seeking to maximize their retirement dollars. Although there are many benefits to converting funds from your traditional IRA to a Roth IRA, the reasoning behind the decision may be hard to understand. This article explores the four main types of Roth conversions and the logic behind them.

  1. Strategic: Strategic goals associated with wealth transfer.
  2. Tactical: Taking a tactical advantage on short term tax-based incentives that may expire.
  3. Opportunistic: Opportunities for favorable tax treatment offered by short term stock market volatility.
  4. Hedging: Hedging against rising tax rates or legislative or political changes

What’s The Step-Up In Basis Worth?
Tax issues are always a main concern when developing an estate plan. A large amount of tax liability can be eliminated, with regard to assets that have appreciated over the time you have owned them, by planning around the step-up in cost basis that is received when those assets are inherited. Your investment’s cost basis is what you originally paid for the asset. You are generally taxed on all gains over this basis when you sell the asset. If you bequeath assets to an heir then, upon your death, the cost of the assets receive an adjustment, or step-up, to the current fair market value, virtually eliminating tax on the past appreciation.

Keeping a 529 Plan Rolling Along
529 Plans are a flexible and tax efficient way to save for a family member’s education. Advantages of 529s include, tax free investment growth, flexibility in changing the plan’s beneficiary designation, a possible state tax deduction on contributions (depending on the state), and special gift tax advantages. Qualified expenses include tuition, books, equipment, room and board, and supplies for full time students.

Dispel These 7 Popular Myths About Retirement
With longer life spans and the dwindling frequency of pension income, planning for retirement today is more important than ever. Many individuals believe, to their later detriment, that they are adequately prepared financially for retirement. This articles outlines 7 overly optimistic misconceptions regarding retirement in our new era.

Fill Up Tax Brackets To The Brim
There are currently six income tax brackets and three long term capital gains tax brackets in the federal tax system. Managing these brackets well could yield extra tax savings. During years when you believe that your income will place you in a lower than usual tax bracket, it may be advantageous to fill the rest of that bracket up by realizing long term capital gains. It’s important to consider short term gains that may off-set that long term gains and $3,000 of ordinary income, as well as the 3.8% surtax on net investment income.

Our newsletter is mailed to clients and others who have asked to be included in our mailing list. If you would like to be added to our mailing list, please contact our office at (310) 697-0400.

You can access this quarter’s complete newsletter here: Navigoe_1Q15