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Friday November 14, 2014

// November 14th, 2014 // Comments Off on Friday November 14, 2014 // Daily News

Delaying distributions too long may mean a big tax bill

Don’t let the hustle and bustle of the holiday season distract you into a hefty tax penalty come April.
The Internal Revenue Service expects consumers to begin taking distributions from their retirement accounts starting in the year they turn 70-and-a-half or the year when they retire, whichever is later. Fail to do so and the amount you should have withdrawn will be taxed at 50 percent. “It’s one of the biggest penalties in the tax code,” said Ed Slott, a certified public accountant and founder of IRAHelp.com.
Yet it’s a penalty consumers often play chicken with. Of the more than 750,000 Fidelity IRA customers who need to take a required minimum distribution (RMD) this year, 68 percent have yet to withdraw enough. “This is a very, very consistent number that we’ve seen for the last few years,” said Maura Cassidy, director of retirement products for Fidelity. “There are definitely a chunk of these people who only intend to take it in December, wait until the stock market has rebounded, or whatever their mindset is.”
To be fair, procrastinating is actually a smart strategy. Waiting to withdraw gives funds more time to grow tax-free, said Marla Mason, a certified financial planner and a vice president at Presidential Brokerage in Denver. When the market is on an upswing, as it has been, consumers are even more likely to put off making their RMDs until the 11th hour, she said.
Just don’t delay too long. “My rule is, don’t do it after Thanksgiving,” Slott said. Mason encourages clients to take their distributions no later than the week before Christmas.
Why not? Partly it’s a time consideration—it can take a few days for trades to settle and funds to become available for withdrawal, Cassidy said. “You can’t wait and sell on December 30,” she said. A few days with early market closings (2 p.m. Eastern on the days of both Christmas Eve and New Year’s Eve) and closed markets (Christmas Day) can tighten the time frame.
The “mad rush” of last-minute moves also coincides with a week many advisors and brokers take vacation, Slott noted. That can increase the chances of an expensive mistake—a wrongly calculated amount, for example. “I’ve seen cases where people didn’t understand, … and their entire account was closed out in error,” he said.
Brokerages often have resources consumers can tap to make sure they’re withdrawing the right amount, or even to set up automatic withdrawals. The IRS also has worksheets and charts to help determine the correct amount.
Even if you think you have that number nailed down, it can help to have a conference call with your tax preparer and financial advisor to plan for how a withdrawal may affect your tax bill next year, said Mason. You may want to take out more than the minimum to ensure you have enough to live on—or just the minimum to avoid being pushed into a higher tax bracket. Other pitfalls to watch out for:
Unnecessary RMDs. Even if you have multiple individual retirement accounts, you only need to take one RMD from the collection, based on your age and the total value of the accounts. “You don’t have to take it out of each individual account,” Mason said.
Merged-money mistakes. If both spouses need to take RMDs, that cash needs to come from both parties’ accounts, said Slott. Filing a joint return doesn’t mean you could take the entire amount for both spouses from one spouse’s account. “The ‘I’ in IRA is for individual,” he said. “There’s no such thing as a joint IRA.”
Death. If you inherit an IRA, check before year’s end to see if you need to take an RMD. You might. “Death gets you out of pretty much everything in the tax code except for required minimum distributions,” Slott said.
Taxpayers facing the RMD for the first time have a bit of a grace period. In the year you turn 70.5, you have until April 1 of the following year to take that first distribution, said Cassidy. But a distribution on say, March 15, 2015, counts for 2014. You’ll still need an RMD for 2015—and that double withdrawal could have a more significant tax impact.
And if you do forget? The IRS is fairly lenient. “You can attach a Form 5329 to your return,” Cassidy said. “Usually we recommend putting a letter with that explaining why you missed the deadline.” Bad advice from a broker, distractedness over a life event such as an ill spouse, simple forgetfulness—all might be forgiven. It also helps to take that RMD as soon as you realize the mistake. “The intention is to meet the obligation,” she said.

Today’s Inspiration

Build on Solid Foundations

by Joyce Meyer – posted November 14, 2014

For no other foundation can anyone lay than that which is [already] laid, which is Jesus Christ (the Messiah, the Anointed One).
—1 Corinthians 3:11

We can know a lot of spiritual methods(or formulas) for getting things, but many such methods simply have no power flowing through them. Powerless methods are like empty containers— useless.

I had learned many spiritual methods, and I was busy trying them, until I realized that methods don’t work. It was like building on a cracked foundation; nothing stood the test of time. If our foundations leak, we get into trouble every time it storms.

Build your life on who you are in Christ. Take time to meditate on the foundational things about being a Christian. Build your life on the solid foundation that you are an heir of God’s grace and His unmerited favor.

Thursday November 13, 2014

// November 13th, 2014 // Comments Off on Thursday November 13, 2014 // Daily News

Foreclosures spike as banks ramp up repossessions

More than five years after the foreclosure crisis began, the number of borrowers losing their homes is rising again.
Most of the troubled loans are not new; instead, the backlog of homes in the foreclosure process is finally starting to move more quickly. There was, however, a slight uptick in foreclosures on loans made in 2013 and 2014, a troubling turn.
Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, were reported on 123,109 properties in October, according to RealtyTrac, a foreclosure sales and data company. That is a 15 percent increase from September, and the largest monthly increase since the peak of the crisis in March of 2010. The numbers are still down 8 percent from a year ago.
Foreclosure activity usually spikes in the months before the holiday season, as banks want to get as many done before implementing holiday moratoria. Over the past three years there has been an average 8 percent monthly uptick in foreclosure auctions in October.
“But the sheer magnitude of the increase this year demonstrates there is more than just a seasonal pattern at work,” said RealtyTrac vice president Daren Blomquist. “Distressed properties that have been in a holding pattern for years are finally being cleared for landing at the foreclosure auction.”
Since the crisis began, there has been a distinct difference in foreclosure volumes between states that require a judge in the process and those that do not. Now the difference is fading. Foreclosure auctions in judicial states rose 21 percent month-to-month, while those in non-judicial states rose 27 percent.
“There is still strong demand from the large institutional investors at the foreclosure auction in some markets, but even in markets with decreasing demand at the foreclosure auction, banks can be confident in selling REO [repossessed] properties quickly and at a good price,” Blomquist added. “That’s because there is still strong demand from buyers, particularly in the lower price ranges, combined with a dearth of distressed homes listed for sale.”

Today’s Inspiration

Love Frees us to Forgive

by Joyce Meyer – posted November 13, 2014

Above all things have intense and unfailing love for one another, for love covers a multitude of sins [forgives and disregards the offenses of others].
—1 Peter 4:8

The apostle Peter said love covers a multitude of sins. Love doesn’t just cover one mistake; it covers a multitude. God’s love for us not only covered our sins, it actually paid the price to completely remove them. Love is a powerful cleansing agent. I want you to notice that Peter said we should love “above all things.”

When Peter asked Jesus how many times he would be expected to forgive a brother for the same offense, Jesus told him to keep on doing it as many times as it took (see Matt. 18:21–22). Peter suggested seven times, and I have often wondered if he was already at six and thought he had only one more effort in him.

We must understand that a lot of forgiveness is required of us. In fact, it will probably be part of our daily experience. Some of the things we need to forgive may be minor and fairly easy, but occasionally that big thing comes along and we start wondering if we can ever get over it. Just remember, God never tells us to do anything unless He gives us the ability to do it. We can forgive anyone for anything if we let God’s love flow through us.

The Bible tells the story of a man named Joseph, who was sold into slavery by his brothers. When Joseph’s brothers discovered years later that he was alive and in charge of the food supply they desperately relied on, they were afraid. They remembered how badly they had treated Joseph, and so did he, but he chose not to reveal it to anyone else. He spoke with them privately and simply told them he was not God—and vengeance belonged to God, not to him. He freely forgave them, urged them not to be afraid, and proceeded to provide for them and their families. No wonder Joseph was a powerful leader who found favor everywhere he went. He knew the power of love and the importance of total forgiveness!

Trust in Him The Bible tells us to love, and in order to do so we must forgive a multitude of sins. Trust God to give you the ability to forgive all things, and thank Him for forgiving you.