Your credit score is usually based on the FICO model that weighs reported credit activity in five categories, which consist of payment history, debt-to-credit ratio, length of credit history, new credit applications and types of credit used. For more information on how your credit score is used and how your credit activity is ranked, read this Financial Strategy.
If your thoughts of spring include a tax refund check, you may opt to use your windfall to benefit your future, rather than spend it now. Some uses you may consider include adding your refund to your retirement savings or investing in continuing education. For more ideas on how to make your refund work for you, read this C.P.A. Insight.
A living Will and a Healthcare Power of Attorney can be used to make your wishes known if you become incapacitated and can cannot make decisions regarding your medical care. You can make your wishes know in advance regarding resuscitation, and the administration of food and water. For more information on planning health care decisions in advance, read this Financial Strategy.
If you take a distribution from a retirement account before you reach the age of 59 1/2, generally, you will have to pay a 10% early distribution penalty. However, if you take an early distribution to pay for unreimbursed medical expenses or qualified higher education expenses, you may be able to avoid the early withdrawal penalty. For other common exceptions in which you may not be subject to the 10% penalty, read this C.P.A. Insight.
Both SEP-IRAs and Safe Harbor 401(k) plans allow small-business owners to provide a qualified retirement saving option to their employees while saving a significant amount for their own retirement. These plans have different funding rules, and should be looked at closely by a business owner. For more information on the differences between SEP-IRAs and Safe Harbor 401(k)s, read this Financial Strategy.
If you are receiving a tax refund, consider directing your refund into your retirement account. This option is available to all individual filers no matter which 1040 form they file. For more information on the direct deposit of your refund, read this C.P.A. Insight.
Investors who are seeking income producing investments during a time when interest rates are low may turn to master limited partnerships. It is important to remember master limited partnerships are businesses first, and they expose the investor to more than investment or market risk. For a detailed explanation of master limited partnerships, read this Investment Whys.
When discussing the initial mandatory IRA withdrawal, one can easily become confused by the rules and regulations on when the withdrawal should occur. Assets such as qualified retirement plans, 403(b) Plans, IRAs, SEPs, SIMPLE IRAs and section 457 Plans are all included in calculating a mandatory withdrawal. For more information about your first mandatory IRA withdrawal and to learn how your withdrawal is calculated, read this Financial Strategy.
Section 529 College Savings Plans offer families an effective way to save for college costs including tuition, books and room and board. The advantages to 529 Plans include portability, tax advantages, age-based asset allocation and professionally managed portfolios. However, there are some disadvantages as well. For more information on these drawbacks and who should consider a 529 Plan, read this Financial Strategy.
IRS notices are common; however, most taxpayers dread receiving one. A notice usually covers very specific issues and contains instructions on how to deal with it or a number to call if you have any questions. For more information about IRS notices and what to do if you receive one, read this C.P.A. Insight.