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How Worldwide Demographics Affect Your Portfolio
While China, Japan, Germany, and other major economies are grappling with a decline in their working-age population in the decades ahead, the U.S. working-age population is expected to grow. Since growth in the size of the labor force is one of the two determinants in economic growth, it's a key fundamental factor that will shape the future of financial markets. This is a key fundamental affecting long-term personal financial plans. It's important and it has practical consequences on retirement portfolios.
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Financial Lifeboat Drill For Mustering In Emergencies
Put yourself through this brief lifeboat drill, to prepare for things suddenly going wrong. Everything may be fine right now, in the eleventh year of the economic expansion. That's a sensible time to test your ability to muster the resources to respond to a range of emergency scenarios.
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Hiddenomics™ Challenge: Find The Leading Economic Indicators
The leading economic indicators (LEI) are part of this picture, but this quiz will help you see the forest for trees. Just like this picture of change, the economic picture is always changing right in front of us, making it hard to see even the most obvious trends unfolding in front of us.
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20-Second Year-End Tax Planning Quiz For Pre-Retirees
If you're in your 50s or 60s and own an interest in a business or professional corporation, knowing the answers to these four questions can lower your 2019 federal tax bill sharply, while jumpstarting a tax-advantaged retirement income plan.
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Last Chance In 2019 For Pre-Retired Professionals & Biz Owners
Doctors, dentists and business owners with more than $321,400 of 2019 adjusted gross income have one last chance not to pass up on this tax and retirement planning opportunity.
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The Fed Just Cut Rates Again; What's It Mean To You?
The Fed cut rates again on October 30th, for the third time in 2019. What's it mean to your long-term financial plan?
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Fed Actions Are Driving Markets
It's notable that the stock market in 2019 has not suffered a 10% correction on worries about the China trade confrontation, the manufacturing slump or concerns about the U.S. political situation - three bad-news narratives currently haunting markets.
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Navigating Required Minimum Distributions
When you are halfway through your 70th year on the planet, U.S. law says you must start taking money out of IRAs, SEPs and SIMPLE plans, as well as 401(k), 403(b) and other U.S. Government qualified retirement plans. Only a Roth IRA account, which you fund with after-tax dollars, is exempt from federally-required minimum distributions (RMDs).
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Four Retirement Income Withdrawal Methods
How much should you withdraw from your tax-deferred 401(k) or IRA, and in what form? Here's a brief summary of four retirement income withdrawal methods to help you optimize the decumulation of your retirement income portfolio prudently.
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The American Opportunity Credit (for college students) and the Lifetime Learning Credit - for undergrad, graduate and vocational students - are the two education tax credits available from the federal government. Students can claim either of the two credits for schooling costs, or their parents can - provided they don't opt for married filing separately.
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Financial Briefs
Foreign Intrigue In Estate Planning
Are you married to someone who isn't a U.S. citizen? If you are, special estate planning considerations may come into play.
Whether your spouse is a citizen or not, you can use the same basic estate planning documents without any reservations. You can create a will bequeathing assets to your spouse, name him or her as a beneficiary of retirement accounts, and designate your spouse as the agent under a power of attorney. No problems there.
But things get trickier when your spouse inherits assets. Normally, property transferred from one spouse to another, during your lifetimes or when one of you dies, is completely exempt from gift or estate tax thanks to an unlimited marital deduction. But that doesn't apply to non-citizen spouses.
Instead, you can make use of a $5.49 million unified gift and estate tax exemption that covers transfers to any beneficiaries, including a non-citizen spouse.
In addition, you can give a non-citizen spouse as much as $149,000 (in 2017; the amount is indexed for inflation) in gifts during your lifetimes.
Other ways to avoid being subject to the rules for non-citizen spouses may include:
1. Have your spouse become a U.S. citizen. This can be an obvious solution. It allows your spouse to qualify for the unlimited marital deduction by the time your federal estate tax return is due. That's generally nine months after death, but the IRS may grant a six-month extension.
Because it takes time to obtain citizenship—there is a waiting period before you can even apply—it's important to start sooner than later.
2. Rely on a QDOT trust. With a qualified domestic trust (QDOT), you can leave property to the trust, rather than directly to your spouse. Then your spouse can receive income from the QDOT that is exempt from estate tax.
But there are a couple of extra wrinkles. If your non-citizen spouse withdraws principal from the QDOT, it will be taxed like a distribution from your taxable estate, which can increase estate tax liability. There are also limitations on investments made by QDOTs. In some cases, it could make sense to complement a QDOT with other kinds of transfers to your spouse. Finally, a QDOT can be structured to end if your spouse becomes a U.S. citizen.
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