Money from your 401(k) plan

You already know you shouldn’t tap your retirement plan to fund frivolous purchases, yet in a handful of cases it just might be okay to take a loan.  Retirement plans account for a large chunk of personal wealth and in order to get the most out of your retirement plan, you should let the money accumulate over the course of your career.  But, sometimes, emergencies will call for the more drastic step of taking a plan loan.  Here’s how to borrow from your 401(k) without ending up with a big tax bill.

Depending on whether your plan permits borrowing, you’re generally allowed to take up to 50 percent of your vested account balance to a max of $50,000, whichever is less. You have five years to repay the loan.

Your plan administrator will withhold 20 percent of the amount to cover income taxes and you’ll trigger a 10 percent … Read More

ID Theft Prevention

According to a recent survey, nearly half of Americans say ID theft is likely to cause them financial loss in the next year. Here are some tips to help you prevent and mitigate the effects of identity theft.

Monitor your credit report. You can request a free credit report from all three major credit reporting agencies once a year, including TransUnion, Equifax and Experian. Additionally, some monitoring services allow you unlimited access to your credit information year-round. These services are there to help you spot inaccuracies, potential fraud and more on your credit report. This should also be done for children. Theft of a child’s ID may go undetected for many years such that by the time they are adults, the damage has already been done.

Don’t provide your Social Security number unless it’s necessary. A space for it on a form doesn’t necessarily mean that it is required. For example, … Read More

Tax Cuts and Jobs Act and Life Insurance Policies

A doubled estate tax exemption makes life insurance policies less necessary, while more
favorable basis rules decrease gain on their sale. The law known as the Tax Cuts and Jobs Act
(TCJA for short), approximately doubled the individual exemption from estate tax, which
increased from $5.49 million in 2017 to $11.18 million in 2018.

Life insurance is often employed to reduce the estate tax's financial impact. The doubling of the estate tax exemption diminishes the need for certain estates to use life insurance to cover the
estate tax. Life insurance owners whose assets are now sheltered by the increased exemption
may consider selling policies that are no longer necessary. Those who sell will also benefit from
more favorable basis rules.

The TCJA allows the seller of a policy to include all premiums paid in cost basis when
calculating taxes due on a settlement transaction. Thus, sellers of life insurance are now … Read More