Financial Planning

Financial Planning

Sandwiched Between Receiving and Giving – What’s Important To You?

Some call Baby Boomers — those between 52 and 70 this year — the Sandwich Generation because many are caring for both parents and children.

Similarly, many in this age group are sandwiched between inheriting assets or family businesses, and planning for future distributions of their own assets or transferring the family business.

An estimated 90 percent of inheritance is depleted by the third generation, and only 12 percent of family businesses survive from the second to the third generation, research shows. It is hard to know exactly how to prevent this, but many believe that communicating with and educating family members is key.


Preserving wealth and family business is only part of the picture. Now is the time you can add to the picture of your life, change the story and make yourself understood. Simply put, people in this age group have reached a stage in their lives when finding meaning in life has become a priority.

You want your adult children and grandchildren to understand what you value most and why — how you have tried to make a difference and where. You also want them to be financially literate and prepared to inherit. You want your children to know why you give to your favorite charities, and you may hope that they carry on those choices.

Financial and legal advisers who work with adults in this situation may not feel comfortable starting the “soft” conversations around money and values. It is up to you to ask these professionals if they will work with your family to articulate the values that accompany the inheriting and passing on of valuables. Much more than assets are about to be transferred; ideals are being passed on to the next generation as well.

You can start the conversation yourself. Do you know the charitable organizations that mean the most to the people closest to you?

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IRA – New Rule Changes May Avoid 60 Day IRA Rollover Penalty

A change in tax rules that went into effect in 2015 created potential problems for investors who roll money from one IRA into a new IRA. Now, with a new ruling, the IRS is offering relief for some who inadvertently violate the rules.

Prior to 2015, if you owned more than one IRA, you could roll over each one once a year. As long as you completed the rollover within 60 days of the payout, there was no tax. After the 2015 U.S. Tax Court opinion, such IRA rollovers could be very costly. The new rules allow only one rollover in any 12-month period.

You can avoid trouble by using direct IRA-to-IRA transfers. With a transfer, the IRA custodian sends the money directly to the new IRA custodian. There are no tax consequences and you are not required to report anything on your income tax return. An individual is permitted to make as many transfers a year as they would like.

A rollover may appear similar to a transfer but it is a very different operation. With a rollover, if the distributed assets are not contributed back into a qualified retirement account within 60 days, the distribution is considered a withdrawal and becomes taxable. Additionally, if you are under age 59 1⁄2, an extra 10 percent penalty for an early withdrawal may apply.

With the one rollover per year rule, all additional rollovers are treated as distributions, and the full amount is included on your tax return.

Realizing there could be circumstances where meeting the 60-day rollover rule could be difficult, the IRS in Revenue Procedure 2016-47, which went into effect Aug. 24, 2016, will grant a waiver. Taxpayers can self-certify that due to certain circumstances — such as a death or serious illness in the family, an error by the financial institution, severe damage to your residence, incarceration or a postal error — the time limit was not met, and avoid the penalties associated with the 60-day rollover rule.

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Knowing Your Rights In Power of Attorney

Millions of people have powers of attorney. However, are you opening yourself up to problems in this common estate planning document? Attorney Michael Solomon explains this document and how you can make it work for you.


A power of attorney is a simple legal document that authorizes someone you name, typically a trusted family member, to handle your legal or financial affairs. With this document your agent, the person you give it to, can step in to help when you become incapacitated.


I’ll give you a hint: a will and a trust are the wrong answers. The two most important legal documents are a financial durable power of attorney and a health care durable power of attorney. Wills and trusts are certainly important. Those are documents to plan for your estate at your death. The durable powers of attorney for finances and health care are designated to protect you during your lifetime.

The first document, the financial durable power of attorney, authorizes someone you trust, usually a spouse or child, to handle your finances. The agent you name can pay your bills, sign checks, sell stocks and generally handle your finances. If you become incapacitated or unable to handle your financial affairs, your agent under the financial durable power of attorney can easily step in to handle things.

The other document is the health care durable power of attorney. With this document, you can authorize someone to make healthcare decisions for you if you can’t make your own.


When you give someone a power of attorney, you’re giving them the power to go to the bank and take your money, or to sell the house. That’s a lot of power, and it can also lead to problems.

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Money Matters in Your 50s, 60s, 70s

Exercise. Diet. Medical checkups. Keeping physically fit requires a healthy balance of lifelong practices, common sense and willpower — the same holds true for financial fitness.

An average American man who is 55 today can expect to live another 25 years and women, 28 more years, according to the Social Security Administration. That means decisions about housing, lifestyle, investments, insurance and legal matters today will have long-term implications.

About one third of Boomers plan to earn an income part-time after they retire from their current job, according to an AARP survey of 5,000 workers ages 50 to 64.

Of that group that intends to continue working for pay, 44 percent want a job that’s different from their current one. The survey, released in September, indicates that 6 percent have no plans to retire, about one-fourth plan to retire before they turn 65 and another 25 percent intend to wait until they are 70 or older.

The first thing everyone should  do – whether married or not – is to decide how much money they think they will need, where they want to live and expectations for post-retirement life.

“They (need) to be sure they have in their head what it is they want for their future,” says Dee Siegferth, The Milestone Center for Retirement and Estate Planning in Akron.

People in their 50s should talk about how they want to live 15 years from now. In your 60s, think about life in 10 years and those individuals in their 70s, consider what lifestyle they desire in five years, she adds.

Among items to consider – and these can be made much easier with a financial or investment advisor – are how your current earnings can carry you far into retirement.

Siegferth believes that an equally important aspect of long-term financial planning is having both a durable power of health (to allow someone to make medical decisions for you) and a durable power of attorney for financial decisions.

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Get to Know – and GROW – Your 401(K) – Make time to review your plan, ask questions

In a world of financial instability and declining pension programs, more people are taking a closer look at 401(k) plans and the future income they can generate for retirement.

“The 401(k) plan, in many instances, is the primary method of saving for retirement during your working years. This type of employer-sponsored retirement plan has become the most popular way to save for the future, as the offering of pension plans are significantly less prevalent in the industry,” says John Grech, a Middleburg Heights financial advisor with Edward Jones.

A great feature of a 401(k) plan is the possibility of an employer 401(k) match where an individual’s company adds money on behalf of the employee, typically up to a maximum predetermined percentage, based on the amount that employee contributes, he adds.

An individual has the flexibility in the amount of money he or she decides to contribute toward retirement.

Currently, employees can put away up to $18,000 per year in retirement savings. These funds are able to grow tax deferred until they are withdrawn from the retirement plan. And, if you’re 50 or older, you can contribute an additional $6,000, Grech says.


Independent Mentor financial planner Ernest Brass warns there are good and not-so-good 401(k) plans.

“There are things about 401(k)s a lot of people don’t understand, which is why a good plan should give you someone to talk to and ask questions, rather than let you try to figure things out yourself,” Brass says.

If possible, Brass and Grech say conferences should preferably be face-to-face rather than by phone.

“If you are not familiar with investing, having someone to talk to can add a lot of value,” Grech says.

“There are various factors involved with a 401(k) plan that you should be aware of as you are saving for retirement.”

Withdrawing funds from a 401(k) before 591/2 may cause an individual to incur an early withdrawal penalty in addition to the typical taxes owed on the withdrawal, Grech says.

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