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Avoiding penalties — and tax court — on a late 60-day IRA rollover

A late IRA rollover spiraled into a five-year ordeal, with an investor barely escaping being taxed on over $500,000. That’s the mess that landed Nancy Burack in Tax Court.

It’s a nightmare that could have easily been avoided. What’s more, this incident serves as a cautionary tale for financial advisors regarding the need for vigilance in monitoring all rollovers of retirement funds — 60-day rollovers in particular, which are subject to more stringent tax rules than the preferred method of direct transfers. Advisors should also be aware of the various relief provisions available to avoid the time and expense of a full-blown Tax Court case like this one.

On June 25, 2014, Burack received a distribution in the amount of $524,981 from an IRA held with Capital Guardian, with Pershing serving as custodian. Burack used the distribution to purchase a new home while awaiting the closing of the sale of her former home. She intended to redeposit the sale proceeds back into her IRA as a 60-day rollover.

On Aug. 21, Burack received a check in the amount of $524,981, drawn from the closing. Burack was told by someone at Capital Guardian that she could carry out the rollover by overnighting the check to Capital Guardian, which she did on Aug. 21.

retirement legal case Capital Guardian. Nancy Burack. Created by Bernadette Berdychowski

Capital Guardian received the check on August 22 — 58 days after the June 25 distribution to Burack. However, Capital Guardian did not record the deposit of the check into Burack’s IRA account at Pershing until Aug. 26 — 62 days after the distribution. (The Tax Court said that it “is not entirely clear” what happened between the receipt of the check by Capital Guardian on Aug. 22 and the deposit of the check at Pershing on Aug. 26.)

The IRS determined that Burack’s redeposit of funds was not made within the 60-day rollover period and therefore assessed her $524,980 of additional taxable income for 2014.

Burack appealed to the court, making two arguments. First, that the late rollover should be excused as it was due to a bookkeeping error, citing the seminal Wood v. Commissioner, 93 T.C. 114 (1989), where a custodian made an error recording the rollover. Second, that she was entitled to a hardship waiver, citing IRS Rev. Proc. 2003-16. The court accepted both arguments and found her rollover to be valid.

Burack’s rollover was saved, plus the IRS tax bill of $214,333, and additional penalties assessed of $42,867 were all removed.

Dangers of 60-day rollovers

This case offers a number of indispensable IRA lessons for advisors. First and foremost: as tempting as it is for a client to use an IRA distribution as a short-term loan with the intention of paying it back within 60 days, a lot can go wrong to cause that deadline to be missed. Although it is now easier than ever to obtain relief for a late rollover (as discussed later), there are still circumstances in which a taxpayer will be forced to spend a lot of money and time trying to convince the IRS or Tax Court to waive the 60-day rule.

However, the taxpayer will not always be successful and the consequences of a failed rollover can be devastating.

Had the IRS prevailed in Burack, the rollover amount would have been considered a taxable distribution, adding over $500,000 of taxable income to Burack’s 2014 tax bill. Plus, the IRS was assessing an accuracy-related penalty of $42,867. Furthermore, if Burack was under the age of 59 1/2, an additional 10% early distribution penalty would have applied. Finally, if considered late, the rollover could have been deemed an excess contribution in the receiving IRA and subject to a 6% annual penalty unless timely withdrawn.

An indirect, but crucial, lesson to be gleaned from this case is that even a rollover made within 60 days won’t relieve clients from potentially serious tax consequences if they violate the IRA once-per-year rule, which limits certain 60-day rollovers to one in every 12-month period.

Note that this period does not comprise a calendar year; it starts on the date when funds are distributed — not when they are rolled over. And while there may be a relief when the 60-day deadline is missed, the IRS has no authority to provide relief when the once-per-year rule is violated — it is a fatal error that cannot be fixed.

IRA accounts

Another danger area an advisor should be on the lookout for is that if a company plan participant takes a distribution and does not elect a direct transfer (as discussed below), the plan must withhold 20% of the distribution for federal income taxes and may be required to withhold for state taxes as well. This holds even if the participant does a valid 60-day rollover. (Note that 20% mandatory withholding does not apply to IRA distributions.)

Therefore, instead of a 60-day rollover, clients should be strongly advised to do a direct transfer whenever possible, in which the IRA custodian or plan trustee of the outgoing funds directly transfers the funds to the receiving IRA custodian. The funds are never made available to the IRA owner or plan participant. (Direct transfers are often called “direct rollovers” when the distribution is paid from a company plan.)

Since Burack easily satisfied the conditions for the automatic hardship waiver, it is unclear why this matter could not have been resolved at the IRS level. Going to Tax Court no doubt forced her to spend substantial amounts in legal fees and dragged out her case for over five years.

And it still may not be over: the IRS could still decide to appeal the Tax Court decision.

Avenues of relief

To help clients avoid similar messes — and even potentially salvage a lifetime of retirement savings put into jeopardy by a late rollover — advisors need to know that avenues of relief outside the courtroom may be available when the 60-day deadline is missed.

There are three such recourses: an automatic hardship waiver, a PLR, and self-certification.

The automatic hardship waiver is a seldom-used but easy and completely free way to immediately salvage a late rollover. Note that there is a strict deadline for this fix so advisors should act quickly if this option is on the table. Under Rev. Proc. 2003-16, an automatic waiver is granted when the following two conditions are BOTH met:

(1) The funds are deposited into an eligible retirement plan within one year from the date the distribution was received.

(2) The rollover would have been a valid rollover if the financial institution had deposited the funds as instructed.

IRS building taxes IAG

(Bloomberg News)

A PLR is a written statement issued to a taxpayer in which the IRS applies tax laws to a particular set of facts represented by the taxpayer. In Rev. Proc. 2003-16, the IRS allowed taxpayers to apply for a waiver of the 60-day rule by requesting a PLR, and hundreds of taxpayers have taken advantage of that opportunity. (As discussed, the Revenue Procedure also established an automatic hardship waiver — without requesting a PLR — when a financial institution’s error causes a late rollover.)

But PLR requests are expensive — the IRS user fee is $10,000 and professional fees can add thousands of dollars more. They are also slow — a ruling can take as long as nine months. Even then, there is no guarantee of success. For example, the IRS will typically not issue a PLR for a late rollover if the taxpayer uses the IRS funds as a “60-day loan.” This may explain why Burack did not request a PLR.

A client who misses the 60-day rollover deadline can now obtain relief through self-certification under Rev. Proc. 2016-47 — a cheaper and faster alternative to a PLR. An individual can use self-certification only if the late rollover was for one or more of the 11 reasons specified in the Revenue Procedure.

The self-certification procedure was established too late for Burack to use, but it might not have helped her anyway. Rev. Proc. 2016-47 does not specifically address whether self-certification can be used if the IRA owner makes use of the distribution (as she did), but some wording in the guidance suggests that it cannot be used in that situation.

The most important lesson is this: Using a direct transfer instead of a 60-day rollover means the client doesn’t have to worry about complying with all of the strict IRS rules or about fixing the rollover if those rules aren’t complied with.

If clients feel they must use the 60-day rollover because they need the funds, they must be extra careful to make sure the funds are eligible to be rolled back over and that the rollover is completed well before the 60-day deadline.


Ed Slott


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4 Expert Budgeting Tips That Will Help You Save More Money

Yeah, I know: Keeping a budget is important for good financial health. But in terms of creating and sticking to one, what are the pointers I need to keep in mind? How often do I reassess? What should I focus on the most? Should it fluctuate? What budgeting tips are most important? – Shaun, via email

Most of us realize that a budget is the cornerstone of financial well-being. A Bankrate survey from last year found that about two-thirds of Americans have one, which should be good news indeed.

And yet we’re evidently not using them very well. Only 40 percent of adults have enough savings to handle an unexpected expense of $1,000 or more, according to Bankrate. As for retirement planning? We’re no better. Investment giant Vanguard just put out a report showing that its median retirement account balance — where half the population is below and half is above — is a measly $22,217.

So you’ve hit on an important question: How do we create budgets that actually help us achieve our major financial goals? Your email was a good excuse to connect with someone who knows a little about the subject: Frankie Corrado, a Holmdel, New Jersey–based financial advisor who also serves as president of the Alliance of Comprehensive Planners.

As their name implies, the ACP’s mission is to address finances holistically, and there’s arguably nothing more important to it than a solid budget. Here are a few of Corrado’s pointers on the topic.

Fatherly IQ

4 Budget Tips Everyone Needs to Know

  1. Pay Your Future Self First
    Mentally, a lot of folks spend their paycheck before it even hits their bank account. There’s the four-burner grill for the back deck, the new video game that just hit the shelves, or the long-awaited night out with the guys.
    That stuff is fine — if you have money left over. Corrado recommends diverting an appropriate percentage of your income to your retirement and savings accounts first. If you start young, socking away 10 percent of your salary toward a 401(k) should put you in good stead. But if you can, reaching the 15 or even 20 percent mark will give you a little breathing room.
    Will building a nest egg give you the same thrill as a trip to Gamestop? No, but your future self will thank you when you get to retire before hitting a 75th birthday.
    As long as you take care of those long-term needs first, you’re giving yourself some financial freedom, too. “So long as you’re hitting these minimum thresholds, the budget becomes less of a necessity,” says Corrado.
  2. Focus on the Big Picture
    Can it be helpful to look over your debit card statement to know where your cash is going? Sure. In fact, Corrado says new clients, in particular, can benefit from tracing their expenditures for three months or so. (He likes the Mint app for its ease of use, although other tools can also help you get a handle on your transactions.)
    But the point isn’t to flog yourself over every visit to Starbucks or trip to the McDonalds drive-thru — it’s to recognize the larger trends at play. Maybe what you thought of as a once-in-a-while habit of streaming videos is actually costing you $50 a month. Once you know that, you can do something about it.
    “The trouble is when you trying to detail everything out immediately,” says Corrado. So, don’t lose the forest for the trees — the more important thing is to know how much you’re spending overall and which expense categories are really pulling you back over a period of weeks.
  3. Pace Yourself
    Uber-ambitious targets sound great. In reality, they fail miserably in most cases. Corrado uses the example of a couple who hopes to cut their $6,000-a-month spending habit down to $5,000. Chances are it’s not going to happen in one fell swoop. “They tend to get discouraged and stop altogether,” he says.
    One of the strategies Corrado likes is setting it up so your entire paycheck goes into a savings or brokerage account. That first month, you might divert the entire sum into your checking account. By month number two, try scaling that transfer back so that $50 stays in savings, and so on. It’s about baby steps.
    Not only are you less likely to get totally discouraged, but with less money at your disposal you’ll have a harder time falling into what Corrado calls “lifestyle creep” – that unwitting tendency to start spending more than you can actually afford.
  4. Know What You’re Aiming For
    One of the linchpins of effective budgeting is simply having awareness, says Corrado. Unless you know what your spending and savings habits are, you’ll be stuck in first gear.
    But there’s an emotional component to it as well. Simply put, we need inspiration. That’s why Corrado emphasizes “goal visualization” — the ability to see the light at the end of the tunnel. For younger workers, it might be the down payment on a new home. For folks in middle age, a retirement in 10 years is more likely the next milestone.
    Some planners actually recommend naming your savings accounts, be it “home purchase,” “new car,” or whatever your goal is. It’s a mental trick that helps you focus on the end goal and makes you feel like your financial sacrifice is doing some actual good. As Corrado puts it: “If your goals are uncertain, it’s a lot harder to actually feel like you want be intentional.”

3 Money Habits to Master by the Time You Turn 40

Saving money is a lifelong skill, and it’s one everyone needs to learn. Finances might not be the most exciting topic to learn about. But without a basic knowledge of how to save money and prepare for retirement, you’re more likely to struggle financially and risk retiring broke.

If your financial literacy skills aren’t the strongest, though, you’re not alone. Three-quarters of American adults over the age of 60 failed a basic financial literacy quiz, according to a survey from the American College of Financial Services, and fewer than 1% scored an A on the quiz.

However, even if you’re struggling with your money or don’t know how to start saving more, that doesn’t mean you can’t start building a strong financial foundation. But to save enough for retirement, you’ll need to jump-start your savings sooner rather than later. For a healthier financial future, there are a few money habits you should aim to master by age 40.

Image source: Getty Images

1. Create financial goals (and stick to them)

Without goals, you have nothing to aim for. And if you’re blindly saving whatever you can and hoping for the best, it’s impossible to say whether you’re on track. Then if you’re not on track, you may not discover it until it’s too late to do anything about it.

You may have a variety of financial goals, such as saving for a down payment on a house, buying a new car, establishing an emergency fund, and taking that dream vacation. But for most people, the biggest goal is saving for retirement.

Saving for retirement is a daunting task, partly because it’s tough to know just how much you need to save. Unlike a car or a house, there’s no set price tag on retirement. It’s also a highly individual goal, so what you need to save may be wildly different than what your coworkers or friends need to save.

To get a general idea of your retirement goal, input your information into a retirement calculator. Be as accurate as possible here, particularly when it comes to how much you expect to spend each year in retirement. You may even want to create a retirement budget beforehand: The amount you’ll spend each year in retirement determines how much you’ll need to save, so make sure you’re honest with yourself about those expenses.

Once you have a goal in mind, create a plan to get there, and stick to it. Your retirement calculator may also tell you how much you should be saving each month to reach your goal by the time you retire, so that will give you a monthly goal to strive for. If you can’t find that much cash to put toward retirement, you may need to make some sacrifices in other areas of your budget — because the longer you put off saving, the harder it will be to catch up.

2. Increase your retirement contributions on a regular basis

In your 20s and 30s, it’s important to set at least some money aside for retirement. But saving for the future isn’t a “set it and forget it” type of scenario; it’s important to check in on your savings every so often and make adjustments to save more as circumstances permit.

It’s especially vital to have this habit of boosting your retirement savings down by the time you turn 40. That’s because your 40s will likely be some of your peak earning years, making them a good time to supercharge your retirement savings. Every time you earn a raise, receive a bonus, or start a new job with a higher salary, contribute a little more to your retirement fund. These adjustments don’t need to be major, but increasing your savings a little bit each year can add up over a couple of decades.

One of the best ways to increase your retirement contributions effortlessly is to save a certain percentage of your salary. Then as you earn more money, you’ll automatically be saving more. If you can, you might also increase the percentage of income you’re setting aside to boost your savings even more.

For example, say you’re earning $50,000 per year and your goal is to save $500 per month — 12% of your salary. Let’s also say you earn a raise down the road and start earning $55,000 per year. By continuing to save 12% of your salary, you instantly increase your savings to $550 per month. If you have some extra cash each month, you might also choose to increase your contribution rate to 15% of your salary, or around $687 per month. These changes may seem minor, but little boosts in savings can add up — especially if you keep making adjustments every few years.

3. Automate your bills

Nearly half of Americans at least sometimes pay their bills late, a survey from Aite Group found, and just over 60% say they don’t automate their payments.

A late payment here and there won’t ruin your finances, but if you make a habit of not paying your bills on time, it can create long-term damage. One of the key components of your credit score is your payment history, so repeated late payments can cause your score to plummet. A low credit score can lead to a host of problems, including higher interest rates on loans — which eat away at your disposable income and make it harder to save.

An easy way to combat late payments, however, is to automate paying your bills. This ensures they’re paid on time every month, easily avoiding any late fees or dings to your credit score. It also makes bill-paying one less thing you have to worry about each month, so you can focus on more important financial tasks.

In a similar vein, you may also choose to automate your retirement savings to take one more task off your plate. If you have a 401(k), you may even be able to transfer a portion of each paycheck straight to your retirement fund, so you’ll never see that money in your bank account — making it less tempting to spend it before you can save it. If you’re using an individual retirement account to save, you can still transfer a set amount from your bank account to your IRA, ensuring that you reach your saving goals each month.

Managing your finances is hard work, but it’s one of the most important skills you can learn if you want to enjoy a financially healthy future. By taking baby steps and mastering a few easy money habits, you can set yourself up for long-term success.

From Firefighting to Financial Planning

Bill Cuthbertson

William C. Cuthbertson has a cool head and unassuming manner that eclipses the reality that saving folks from burning buildings, delivering babies in jeopardy and stopping people from suicide is scary work. He knows about all that: For 27 years, he was a paramedic firefighter.

For nearly the last two decades, he has been a financial planner: different to-do lists, but both are jobs of trust with a mission to help, as he tells ThinkAdvisor in an interview.

A solo planner and member of the Alliance of Comprehensive Planners (ACP), Cuthbertson manages about $34 million in assets of successful professionals, widows and retirees. He uses a tax-focused retainer model to serve them from his Fiscalis Advisory in San Juan Capistrano, California.

The certified financial planner, 63, chair of ACP’s financial technology committee, transitioned from firefighter to independent financial planner over an eight-year span. During that time, he earned an MBA, the CFP designation and notched work experience at a small planning firm — all the while continuing to fight fires with the Orange County Fire Department (now the OCF Authority).

Even after launching his own shop in 2003, the El Segundo, California-reared Cuthbertson kept living this, sort of, dual life for four years before retiring from the fire department, which he’d joined at age 25.

Now, his medic background comes in handy not only for creating retirement plans, encompassing, as they do, health care issues; but when urgent medical matters crop up in the present, he often helps elderly clients receive appropriate care.

As a paramedic firefighter, Cuthbertson’s duty ran the gamut from treating victims at the scene of gang violence to serving in Ronald Reagan’s motorcade when the president was visiting for a fundraiser one night.

“Nothing happened,” Cuthbertson says. “But we were ready.”

THINKADVISOR: What was it like to be a paramedic firefighter?

WILLAM CUTHBERTSON: The job is 95% boredom and 5% sheer terror. When I was a rookie, we found an elderly couple who’d hidden themselves in the bathroom and died of smoke inhalation. The upstairs of their two-story building was totally engrossed in fire. There were situations of violent gang activity: You’d go on a [gunshot] call where the cops were looking for the perpetrators, but you had a patient to deal with.

My goodness.

One time we got a call that someone was threatening to hurt themselves. When the woman saw me come into the room, she decided to jump off the balcony. I grabbed her and held her by her arm while she was dangling and waited for the rest of the crew to go downstairs to get her. She had bipolar disorder and was just a tortured soul.

Any other rescues that come to mind?

A woman was in labor and about to deliver. But when I got there, the baby’s amniotic sac hadn’t broken. I got him delivered; but when you’re not seeing something that looks like a head, it’s a little disconcerting. I used a medical scissors to get him out of the sac quickly.

Wow. Why did you want to retire from the fire department?

I thought of a firefighter medic as a young man’s job. Not that older guys can’t fight fires; but as you get older, your physical abilities diminish unless you’re amazingly exceptional. I thought of a financial planner as a sort of “older person’s” profession.

Do the two have anything in common?

I saw both jobs as being of service. I think of myself being more an advocate than an advisor. I’m interested in helping people do what’s best for them in spite of, maybe, their own instincts.

How did you become interested in finance?

When I was a firefighter, one of the captains was interested in becoming a CFP. I looked at that work, and it intrigued me. I saw that a financial planner was in a place of trust, guidance and giving help. That was how I saw my role as a medic and a fireman. So it resonated.

Did you have any business background?

Earlier, I’d become involved with labor relations in the firefighters union; so my head was already in the space of legal issues. And I learned I had acumen for financial math.

Does having been a medic firefighter help you as a planner?

Understanding the importance of knowing who you’re there to serve is huge. It’s the ability to talk to people, listen to them and understand their needs and situation. Taking a history from a patient is very similar to getting to know your client and what they’re trying to achieve.

Anything else that’s similar?

Stepping across the line and committing yourself to a course of action you believe is best for the situation. That’s what you do in medicine and at a fire: After you size up, you make a plan of attack and then implement it. Then you reassess how it’s working and adjust as necessary.

Does your work on the medic side specifically ever come in handy as an FA?

I’ve got a sense of what the medical issues are and how they’ll translate [financially]. So I’ll talk to clients about health-related matters when we look at their needs, like whether they’re going to qualify for life insurance.

As a licensed paramedic, you’ve kept medical equipment in your office to check a client’s vital signs if they weren’t feeling well. You’re no longer licensed, so can’t have that equipment; but are you able to help a client some way under that type of circumstance? 

The other day a 92-year-old client with a medical condition phoned about some symptoms she was having. That was consequential information for her physician to have. So I got his office on the line and told them what was troubling her.

You joined ACP even before you opened your practice. What appealed to you? 

ACP gave me a way to communicate with clients regarding their broad financial picture, not simply their investments. Access to the ACP brain trust and community allowed me to quickly set up my practice and move forward as a solo practitioner. I knew I’d have a reliable resource to help me when I was faced with something new. Having a backup plan is key. I learned that in the fire department: Always have an escape plan!

What are the benefits of ACP’s retainer model?

It gives me a way to eliminate conflicts of interest. Anybody with financial knowledge can do the analysis. The key is whether or not the client is going to implement and buy the advice. If they think you’re conflicted, they’re going to discount your advice. So that’s crazy!  If they’re hiring me to advise them, I need to have a practice that’s set up to make it as easy as possible for them to [believe and trust] what I [say].

On July 24 of last year, you wrote to SEC Chair Jay Clayton in relation to Regulation Best Interest, explaining that RIAs “minimize conflicts of interest” by “only receiving compensation from client fees.” What was your purpose in contacting him?

The [SEC] never gets [rules] right — they always get it more confused because they don’t have a clear idea who their ultimate — concern is about. They’re trying to be friends to everybody — possibly more so to those they get financial backing from. People in politics are influenced by a number of factors. A lot of them don’t always seem to have a clear view of who the client is when they come out on the other side — in this case, Wall Street, the financial services industry and people with big pockets — instead of on the consumer’s side.

Please elaborate.

With a conflict of interest, it’s: Who’s your loyalty to? It’s like giving somebody advice with your fingers crossed behind your back. My job is to give good advice so clients get the best benefit, not so [I] can make a higher commission on one product than another.

How do you propose the “best interest” issue be handled? 

The easiest way to solve that whole dilemma would have been to just enforce the law: An advisor is an advisor, and a broker is a broker — and let’s be clear on that.

— Related on ThinkAdvisor:

How to Be Responsible With Money

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Are you saving for this potentially large expense?

CLOSE

It’s summertime, and that means school’s not in session, schedules are more flexible, and the weather is generally mild (albeit hot) on a nationwide level. As such, it’s common for people to take vacation during the summer months. 

If that’s your plan, you may be busy researching hotel deals and booking different tours. But have you put any thought into how you’ll actually pay for your getaway?

Ideally, the money for your trip should come from savings, and 18% of Americans say that setting aside funds for vacation is a top priority of theirs, according to CIT Bank’s Summer Savings Survey. On the flip side, 36% of U.S. adults don’t save anything for vacations on a monthly basis, and that’s problematic when they move forward with travel plans despite not having the money on hand to do so.

If you’re not in the habit of saving for vacations, you’d be wise to rethink that idea. Otherwise, you’ll risk racking up debt in the course of escaping the regular grind.

She received a postcard sent in 1993: Now, she found the sender

Save now, spare yourself the stress later on

Vacations usually aren’t free, and while there are things you can do to minimize their cost, for the most part, you need at least some money to pay for them. But if you don’t accumulate any funds in savings, you’ll risk racking up loads of credit card debt in order to get away. That debt will not only cost you money in interest, but potentially damage your credit score to the point where it’s hard to repair.

A better bet? Set up a budget that maps out your monthly living expenses, and include a line item for vacations in there. Then, set aside funds each month so that by the time your vacation rolls around, you have a way to pay for it.

Online gambling: Now available around the clock in this state

Furthermore, while it’s a smart idea to sock away money for vacation purposes, you shouldn’t tap your emergency savings to pay for a trip or getaway. The purpose of your emergency fund is to cover the cost of unplanned bills that can’t be put off, like home or vehicle repairs. If you raid your emergency savings in order to pay for a vacation, you could wind up in a real pinch the next time an unanticipated bill comes your way.

If you’ve missed the boat on saving for a vacation for this summer, postpone your plans and travel later in the year, after you’ve had some time to accrue some cash. Or, take a staycation, and explore low-cost activities in your hometown. It may not be as exciting as traveling to a foreign country or even to another state, but you could very well end up enjoying it nonetheless.

Remember, the purpose of going on vacation is to have a good time and clear your mind. But if that vacation results in a host of financial problems, you’ll wipe out those benefits. You’re therefore better off actively saving to go on vacation, and waiting until you’ve accomplished that goal, before packing your bags.

Pushback: Business groups slam House for passing $15 minimum wage bill

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The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Offer from the Motley Fool: The $16,728 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

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Financial planner’s 3-step checklist to organize money, build wealth

One of the critical elements for building wealth is patience. Most people’s fortunes don’t materialize overnight; they’re more often the result a solid money-management system that’s implemented once and then modified over the years.

In a recent blog post, financial planner Sophia Bera revealed how her firm, Gen Y Planning, helps new clients set up a system to “get rich slowly.” Bera says it boils down to a three-step process, regardless of how much money a client has or why they’re seeking financial help.

First up, take a simple bird’s eye view of your finances. “Begin by taking an inventory of where your money is now, and where it goes,” Bera writes. Everyone should have a net worth statement, which shows what you own (assets) minus what you owe (liabilities), and a spending plan, she continued. A simple Google spreadsheet or an app like Mint or Personal Capital can help you visualize your cash flow.

After that, it’s time to get more granular. List out every account, debt, and expense you have, including every savings, checking, investment, retirement, and credit-card account. Take a hard look at each account or expense, Bera writes, and ask yourself questions like, “Does this checking account serve me?” and “Am I carrying the right credit cards?” The purpose of this exercise is to cut out what’s unnecessary and streamline what you need.

“Once you make adjustments to your accounts and loans (and this can take a few weeks or even a couple of months, by the way!),” Bera wrote, “you can begin to do one of my favorite things that makes money management easier: automate.”

Bera suggests setting up automatic transfers from a checking account into savings, investment, and retirement accounts, and automatic bill pay for your credit cards and loans. “If you have multiple short-term savings goals (like buying a home in the next year, replacing your old car within two years, or taking a big vacation when you turn 35 in three years), you can even automate money transfers into multiple savings accounts earmarked for each goal,” she wrote.

Bera is hardly the only financial expert championing automation. Bestselling author Ramit Sethi says it’s the key to being good with money and accumulating wealth: “It’s not that hard. It’s not a mystery. It’s not magic. It’s just math. It’s totally, totally understandable,” he told Business Insider.

However, Bera warns, even with your finances on autopilot, you still need to make time for checkups — on your own or with the help of a financial adviser — which can include increasing your retirement contributions, changing your beneficiaries after a marriage or divorce, and reassessing financial goals after big life events.

Manage your money; manage your life

Couple Elle Hall-Colemanand Dee Coleman specialize in helping women get their money — and their lives — under control

Tammye Nash | Managing Editor
[email protected]

Love of money, as the old adage goes, is the root of all evil. Regardless whether that is true, the fact remains that money management — or mismanagement, as it were — is the root of many problems in relationships of all types.

Elle Hall-Coleman and her wife Dee Coleman know that from personal experience. But they found answers for themselves, and now that are sharing their answers with others through Girlfriend’s Budget, “a financial lifestyle blog for women.”

Elle’s father was a banker, and her mother was an accountant, she said. Both her parents had grown up poor, she said, and after establishing themselves in their careers, they were determined that their own children would know how to manage money from the start.

Dee, though, had a different experience with money. Her own childhood had been fraught with financial instability, and she had learned to see money as a way of both expressing love and exerting control over others.

After the two of them became a couple, some seven and a half years ago, their different approaches to money became a problem, until they finally decided to sit down together, get things under control and set a path for moving forward.

“Initially, the money issue was a real struggle for us,” Dee said. But then, Elle added, “We had a sit down, come to Jesus meeting about it. … First we educated ourselves, and then we decided to teach others.”

The two of them talked about things like what a budget actually looks like, organizing money and scheduling so that bills are paid on time and credit is properly managed and improved. It was during this process, Elle said, that Dee turned to her and said, “You really need to teach other people how to do this, too.”

Girlfriend’s Budget, Elle explained, is all about financial literacy. And while it is primarily aimed at women, anyone who wants to get a better handle on handling their money can benefit.

Money management is a skill many people don’t learn from their parents, and it’s not taught at school, the two said.

“Our goal is to educate women on money management because so many women don’t have the chance to learn that anywhere else,” Elle said. “Women typically make less than men, and in the LGBT community, when you are talking about two women living together and running a household, knowing how to manage your resources is essential.”

But, she added, “It’s not just about the numbers. It’s about empowerment, about helping women find their voice.” And money management is a large part of that, she said, because “Money is the power that speaks.”

That’s where Dee comes in. As a certified spiritual mindset coach, she works with Elle, the budgeting expert, to offer clients “the best of both worlds. We help them learn to manage their money, and we help them learn to change their mindset. We help them dispel that negative aura so many people have around money because of things they have been taught all their life. We help them change their perspective around money and on life in general.”

Their goal in combining their two areas of expertise, the women said, is to help their clients find not just financial freedom, but also freedom from within.

Dee explained that as she and her wife moved through their own money management journey, “I realized just how the struggle around money had changed me. Some people are not willing to work on those issues. But you need to get to the root of things before you can change them.”

Some people, for example, are “emotional spenders,” Elle said. “They have a void in their life, and they make all these purchases to try and fill that void.

Dee says to them, ‘Let’s get to the root of the issue.’ It’s like therapy in a way.”

Dee added, “If they understand why they do these things, then they can work to crate positive change. I think this something that is very much needed, is especially in the LGBTQ community, where we can get so focused on acceptance, on being loved. People in our community so often want to be seen and accepted in a certain light, so they spend money to feel good about themselves or to look good or be accepted.”

Both women come equipped with the education and the experience to fill their side of the equation in their business.

Elle has a bachelor’s degree from the University of Texas at Dallas in arts and technology (“I thought I wanted to be an animator for movies when I was younger”) and a master’s in business administration from Texas Women’s University, and years of experience in the corporate world, including a stint with the Dallas Independent School District where she helped develop budgets.

Dee earned her bachelor’s degree from the University of Texas at Arlington then went on to get a master’s degree in psychology from UTA. She worked for Child Protective Services for six years and for a small company providing services for people with mental health disabilities for about a year before starting her own career as a life coach.

Elle developed “Girlfriend’s, Budget! Level Up Your Money, Level Up Your Life System,” which is a series of six “inner and outer financial freedom building steps to help established career women get out of their own head, and financially leverage themselves to follow their dreams.”

Dee, whose website is at DeeToxLifeCoaching.com, developed her own Dee’Tox Signature System, an eight-step program to promote spiritual and emotional healing.

Working together, the women offer a free 30-minute consultation, then from there clients can choose one-on-one counseling or a more affordable group counseling option. But they don’t work with everyone who approaches them, they said.

“We are selective about our clients,” Elle said. “We don’t want to waste our time or their money trying to work with people who aren’t really ready to change. But if you really want to change, we can help.”

Dee concluded, “The way most people are going, they are going to have to work til they drop dead at their job because they do not manage their money well. But it doesn’t have to be that way. Just reach out and ask for help. Go within and ask yourself, are you ready to put yourself first for a change?”

8 tips for saving money on groceries


  • FILE - In this March 1, 2011, file photo, a worker stocks the fresh meat shelves at a Kroger Co. supermarket, in Cincinnati. The supermarket is one of the most important places to be shopping-savvy. The good news is that there are so many easy and effective way to slash your grocery budget. Photo: Al Behrman, AP / Copyright 2019 The Associated Press. All rights reserved.

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I do not know of a single person who doesn’t like to save money. And the supermarket is one of the most important places to be shopping-savvy.

The good news is there are so many easy and effective ways to slash your grocery budget.

Here are 8 tips that will bring that receipt total down considerably.

1. Buy whole fruits and vegetables. Pound for pound, whenever you buy anything that has been peeled, cut up or prepped in any way, you are paying a premium. And not only are you paying more for the work that went into the prepared food, you may lose additional money on the back end, since these items are more perishable than their whole counterparts. Pre-diced onion might only last for a handful of days in the fridge, for example, while whole onions will last for weeks.


2. Don’t snub store brands. House brand foods used to feel like an inferior version of name brand items, but these days stores have more formidable relationships with manufacturers, and often the house brand of something might be made by the same company as a reputable brand name product. You will have to taste some to figure out what you like. And stores like Costco with their Kirkland brand items, or Trader Joe’s with their eponymous line of groceries are powerful examples of how good store brand products can be.


3. Put the freezer to work. If pork chops are on sale but you don’t plan to make them this week, consider buying them and freezing them for later. Or if your market or price club has a great deal on bulk chicken or ground beef, take advantage of it, and just divide up the package into smaller freezer-proof containers or bags. Label everything and wrap it well. Frozen shrimp also deserves a special shout-out: Most shrimp that you buy “fresh” was actually frozen and defrosted anyway, so stash a bag in the freezer for quick weeknight dinners. Frozen vegetables and fruit are also great to have on hand.

4. Look for the bargain aisle. Many supermarkets have a designated aisle where they feature a selection of reduced-price items. Often these items are seasonal, and you might see them discounted further after a holiday (matzoh ball mix is practically free right after Passover, and candy canes are a steal on Dec. 26).

5. Look for “While Supplies Last” signage. In one of the markets where I shop, some of the sales signs on the shelves have additional language (in small print, so get in close to check!) letting shoppers know that an item is in limited supply and intended to sell out. Often these prices are discounted heavily since the store is trying to clear its shelves for new products.


6. Stock up on on-sale non-perishables. If you have the storage space, when you see that canned broth or tomatoes or beans or pasta is on sale, throw a few extra into your cart. I once bought 10 containers of mustard because the price was so good (I happen to really love mustard).

7. Look for clearance areas in the market. Day-old pastries and bread (perfect for French toast or stuffing!) might be tucked into a small shelf near the bakery. Corners of the store may have shelves with collections of miscellaneous products that no longer warrant space on the main shelves. This might be because they are close to expiration, or there are just a few left and they aren’t being restocked. You could also get some serious steals on packages that got a little dinged up, but the contents are still fine. (Who cares what the outside of the box of cereal looks like?)

8. Look at the store circular before you go. Many major markets have a website that will show you the items on sale that week. A chance to think about this in advance means that you can meal-plan around the pot roast that is on special, or decide this is the week to stock up on snacks for back to school.

___

Katie Workman has written two cookbooks focused on easy, family-friendly cooking, “Dinner Solved!” and “The Mom 100 Cookbook.” She blogs at http://www.themom100.com/about-katie-workman. She can be reached at Katie@themom100.com.

BlackRock, Microsoft developing 401(k) retirement tool

BlackRock and Microsoft’s 401(k) retirement tool will include guaranteed income planning and rewards for saving, according to the head of the asset manager’s retirement group.

The technology giant and the asset manager overseeing 15 million Americans’ 401(k) portfolios are developing an app and desktop tool aimed at narrowing the widening gap between what workers will need in retirement and how much they’re saving, said Anne Ackerley in a session at SourceMedia’s In|Vest conference.

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With so many factors unknowable, planning for retirement is perilous

That gap expands by $3 trillion each year, Ackerley noted, for reasons relating to culture, politics and financial literacy. Social media posts celebrate spending money rather than saving it, and millions of people have no access to a 401(k), she said.

Companies “need to have a social purpose,” Ackerley said.

She continued: “Both Microsoft and BlackRock really believe that financial security and financial well-being need to be in everybody’s reach, not just the wealthy. And we’re putting the resources from both companies together to try to help that.”

Ann Ackerley, head of BlackRock’s retirement group

Anne Ackerley, head of BlackRock’s retirement group, spoke at the SourceMedia In|Vest conference on the asset management giant’s plans for its upcoming retirement planning collaboration with Microsoft.

Ben Norman

The strategic partnership, unveiled in December, includes visualizations around the so-called next dollar problem, solutions on how to deal with student debt and simulations involving guaranteed income, Ackerley said.

An annuity will figure in the mix of the upcoming investment product, with Microsoft providing the technology platform, according to BlackRock spokesman Logan Koffler. The firms will begin rolling out their tool later this year, Koffler said in an email.

Why advisors ‘must love technology more than they fear change’

Charles Paikert | Lists

Microsoft and BlackRock are also designing methods of showing workers how much extra contributions today could end up netting them in retirement, Ackerley said. Rewards for additional contributions could be as simple as confetti appearing in the app, she said.

“We’ve been out testing it, and I know it sounds sort of simple, but people actually reacted to it,” Ackerley said. “They liked it, and they said it might get them to do something.”

The firms are also considering monetary payments from employers to incentivize workers to sign up as part of the “whole bunch of things” that could act as rewards, she added. Ackerley expressed support for employers automatically enrolling workers in 401(k) plans and increased access to 401(k)s.

Retirement planning covers a wide range of areas, and workers need tools to assist them if they are going to achieve financial security, she said.

“This is a really hard problem,” Ackerley said. “You don’t know how long you’re going to live. You don’t know what your expenses are going to be, particularly your medical expenses. You don’t know what the rate of return is going to be in the market, and [you’re expected to] ‘hey, go figure it out.’ That’s what we’ve sort of done.”


Tobias Salinger


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Md. must address OPEB debts

Just like Montgomery County, Maryland used to pay OPEB expenses as they came up, a method known as “pay-as-you-go.” This was fine, initially, when Maryland and other states had relatively few retirees and near-retirees, but the fiscal calculus changed as the size of state workforces grew, making it necessary for states to pre-fund these benefits in order to avoid a severe future financial reckoning. In 2008, the federal Government Accounting Standard Board advised all states and localities to create OPEB trust funds and begin pre-funding the OPEB the same way pension funds are funded.