This was a surprising and refreshing book. The full title is Uncertainty is a Certainty, Fables for Fiduciaries. The author, Guerdon T. Ely, has done the near impossible: the very topic of fiduciary duty has been known to induce a near coma-like status in even the most devout financial professional, but Ely has distilled the critical concepts into a very easy-reading tome that keeps the reader interested, even engaged, in his explanation of what is required of the fiduciary. For the uninitiated, a fiduciary is a financial professional who has the responsibility of handling financial affairs for another entity – it could be a trust, a pension plan, or an individual or family. There is a set of rules that explain the duties of a fiduciary, known as the Uniform Prudent Investor Act, or UPIA for short (we certainly love our acronyms in this industry, don’t we?). This bit of […]
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A File and Suspend Review
Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. I get a lot (a LOT) of questions about the File and Suspend tactic for Social Security benefits, so I thought some more review would help. For the uninitiated, File and Suspend is a tactic that married couples can use to help maximize their total Social Security benefits. In this post I’ll try to cover some of the more common questions. File and Suspend works like this: One of the two in the couple can file an application for Social Security benefits and then immediately suspend in order […]
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Tax Bill Higher Than You Expected?
Now that you’ve (hopefully) filed your return for 2010, you may have noticed that the bill was higher than you expected. This may be due to some subtle changes to the tax law that affected your return for this year. Listed below are some of the changes that you may have been impacted by: Social Security taxation: Especially if you had unusual income taxed in 2010, such as a Roth Conversion, you could be subject to as much as 85% taxation of your Social Security benefit. Alternative Minimum Tax: If you’ve been impacted by this, not only are your ordinary income tax items taxed at a higher rate, but your capital gains and dividends could be taxed at a rate higher than 15% as well. This happens for folks with incomes between $150,000 and $439,800 (or $112,500 and $302,300 for singles) as the AMT exemption phaseout occurs. Image via Wikipedia […]
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Book Review: Investing and the Irrational Mind
This was an interesting book for me. I found that the research that author Robert Koppel has compiled from various sources throughout academia lends a great deal of insight into the “why?” of activities by individuals, professional traders, and others that take part in the great game of investing. Even though the majority of the discussion and analysis that Koppel brings forth deals with professional traders, the behavioral psychology applies to individual, non-professional investors as well. An example of a particularly interesting passage is one where Koppel quotes Nassim Taleb from his book, The Black Swan – effective responses to Black Swan Events (such as the 2008 economic crisis or the 9/11 crisis): What is fragile should break early, while it is still small. Nothing should ever become too big to fail. There should be no socialization of losses and privatization of gains. People who were driving a school bus […]
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Re-Converting Your IRA
Image by accent on eclectic via Flickr Okay, so we’ve covered Roth Conversions – where you distribute the funds from your traditional IRA to a Roth IRA. Then we covered Recharacterizations – where you can “undo” the conversion by moving all or part of the converted funds and the earnings associated with it back into a traditional IRA. The end result is that, for those funds converted and recharacterized, from the eyes of the IRS, nothing happened to the account (except that you may have put the money back into a different IRA). So, if you went through a Roth Conversion and then Recharacterized it, the assumption is that you wish to eventually re-convert those funds to a Roth account. When are you allowed to do this? There are two limits on the Re-Conversion of funds to a Roth account once they’ve been through the Conversion/Recharacterization wringer: This first limit […]
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Book Review: The Last Economic Superpower
Have you found yourself wondering over the past couple of years just how the Great Recession came about? What sorts of things led up to this meltdown, and how far in advance did it all start? What might we do in the future to keep something similar from happening again? In his book, The Last Economic Superpower, Joseph P. Quinlan does a wonderful job of answering those questions and many, many, more. While the text does get long on statistics and therefore a bit technical to comprehend, I think Quinlan has done an excellent job overall of walking the reader through the precursors to the crisis, the crisis itself, and what our present situation looks like as a result. The first section of the book covers all the events leading up to the late-2008 global economic crisis, tracing issues back to the very roots of the rise of globalization after […]
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March 15 is the Deadline for FSA Claims
If you’re a participant in your employer’s Flex-Spending Account plan (FSA), whether for health-care or dependent care cost reimbursement, you have a limited amount of time to claim the monies that have been set aside in your plan. The way these plans work is that you voluntarily decrease your income by a certain amount, generally paycheck by paycheck, and that amount is placed in a separate account. Over the course of the calendar year, you can request reimbursement from your FSA funds for qualified expenses that you’ve incurred. If it’s a health-care FSA account, you can request reimbursement for your healthcare deductibles, co-payments, and co-insurance costs – literally any health-care expense that is not covered (paid) by other insurance. There are limits, though: beginning with 2011, you cannot be reimbursed for non-prescription (over the counter) medications. If the FSA account is for dependent-care expenses, you can request reimbursement for your […]
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Tax Benefits For Parents
As parents, we spend a lot of money raising our children – from basic needs such as food, housing, doctor bills, and clothing, to education, daycare, soccer teams and lessons on the clarinet – it seems like the list is endless. Since the kids don’t generally pay you back (at least in dollars), the IRS steps in to help out. There are several tax benefits that you may be eligible for just because the little urchins are in your care… and here’s a list of ten tax benefits that the IRS has put together (taken from IRS Tax Tip 2011-18): Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. Child Tax Credit You may be able to take this credit on your tax return for each of your […]
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The Roth Recharacterization
1/1/2018 Note: Recharacterization of Roth conversion is no longer allowed as of tax year 2018. The last tax year that you could recharacterize Roth conversions is 2017. See Roth Recharacterization is No Longer Allowed for more details. After all the hoopla around Roth conversions in 2010, now is the time to consider whether or not a recharacterization is in your future. So what is a recharacterization, and how does it work? Recharacterization is the “backing out” of your Roth conversion. In other words, you can literally make the conversion as if it had never been done at all, with your money back in the traditional IRA where it started. Why would you want to do that? Here’s an example: let’s say you converted $100,000 to a Roth IRA in 2010 and you are ready to pay the tax on your 2010 return (you elected out of the spread to 2011 […]
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Why Your Paycheck is Changing in 2011
After the passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Act) late last year, there were certain changes that will impact your take-home pay in 2011, versus what you were seeing in 2010. For starters, although the 2010 Tax Act extended the tax rates to be the same as they were in 2010, as always there are increases in the tax tables which have a minor impact on your take-home pay. Typically, this change will increase your tax withheld, reducing your take-home pay. The 2010 Tax Act also included a provision to reduce the withholding requirement for Social Security from 6.2% to 4.2%, which will have the effect of increasing your take-home pay by 2%. One other change to your paycheck came about because of a provision that was not included to be extended as a part of the 2010 Tax Act […]
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Credit for Energy Saving Home Improvements for 2011
This tax credit has undergone a change from previous years. In 2010, for example, you could achieve a credit for as much as 30% of the cost of your energy-saving home improvements, with a ceiling of $1,500. Beginning January 1, 2011, the credit rate is now just 10%, and the ceiling has been lowered to $500. Something important to keep in mind about this credit: any credit claimed in prior years (2009 and/or 2010) will be used to reduce your ceiling. In other words, if you claimed the full credit (or any amount up to $500) on a previous year’s tax return, you have no energy-saving home improvement credit available to you. In addition to the changes above, there are specific item caps in place as well. For example, if you are putting in a new furnace or water heater, the credit for those units is capped at $150. If […]
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Book Review: Small Business Taxes Made Easy
This book was a surprise to me – I did not expect to find such a thorough guidebook on the process of starting up a small business, but that’s what Small Business Taxes Made Easy is. Author Eva Rosenberg, (“TaxMama” to her devotees) has not only the experience, but also the in-depth understanding of both the small business and the small business-person to lead you through this process and help you to succeed, quite possibly in spite of yourself. The title of the book is misleading, as the first several chapters of the book have little to do with taxes and much to do with all of the administrivia that you need to go through when setting up a small business. In fact, you really don’t get to tax matters at all until about page 70 (of 261) in the book. The first few chapters take you through the concepts […]
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Baby Boomers Start Medicare
As of 12:01am EST on January 1, 2011, the very first Baby Boomer reached age 65… and that means that the era of Baby Boomers receiving Medicare has officially commenced. It is estimated that, during the period when Boomers are reaching age 65, between now and roughly 2030, the number of folks on the Medicare rolls will double. Presently there are approximately 40 million Medicare recipients, and that number is expected to be around 80 million in 20 years. These incredible numbers will cause major challenges in funding the system – along with serious challenges in controlling the overall costs of healthcare during this period. The rate of increase in the over-65 population will cause dramatic changes in the healthcare system in terms of capacity, costs, and controls. The new healthcare law passed earlier this year created an Independent Payment Advisory Board, which is supposed to provide guidance on how […]
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2011 IRA MAGI Limits – Married Filing Separately
Note: for the purposes of IRA MAGI qualification, a person filing as Married Filing Separately, who did not live with his or her spouse during the tax year, is considered Single and will use the information on that page to determine eligibility. For a Traditional IRA (Filing Status Married Filing Separately): If you are not covered by a retirement plan at your job and your spouse is not covered by a retirement plan, there is no MAGI limitation on your deductible contributions. If you are covered by a retirement plan at your job and your MAGI is less than $10,000, you are entitled to a partial deduction, reduced by 50% for every dollar (or 60% if over age 50), and rounded up to the nearest $10. If the amount works out to less than $200, you are allowed to contribute at least $200. If you are covered by a retirement […]
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2011 MAGI Limits for IRAs – Married Filing Jointly or Qualifying Widow(er)
Note: for the purposes of IRA MAGI qualification, a person filing as Married Filing Separately, who did not live with his or her spouse during the tax year, is considered Single and will use the information on that page to determine eligibility. For a Traditional IRA (Filing Status Married Filing Jointly or Qualifying Widow(er)): If you are not covered by a retirement plan at your job and your spouse is not covered by a retirement plan, there is no MAGI limitation on your deductible contributions. If you are covered by a retirement plan at work, and your MAGI is $90,000 or less, there is also no limitation on your deductible contributions to a traditional IRA. If you are covered by a retirement plan at your job and your MAGI is more than $90,000 but less than $110,000, you are entitled to a partial deduction, reduced by 25% for every dollar […]
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2011 MAGI Limits – Single or Head of Household
Note: for the purposes of IRA MAGI qualification, a person filing as Married Filing Separately, who did not live with his or her spouse during the tax year, is considered Single and will use the information on this page to determine eligibility. For a Traditional IRA (Filing Status Single or Head of Household): If you are not covered by a retirement plan at your job, there is no MAGI limitation on your deductible contributions. If you are covered by a retirement plan at work, if your MAGI is $56,000 or less, there is also no limitation on your deductible contributions to a traditional IRA. If you are covered by a retirement plan at your job and your MAGI is more than $56,000 but less than $66,000, you are entitled to a partial deduction, reduced by 50% for every dollar over the lower limit (or 60% if over age 50), and […]
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Review of 2010 Stats
Ed. Note: As in past years, I’m taking a break from my normal business of posting retirement, tax and other personal financial planning topics to report on the blog itself and the statistics we’ve seen in this, the 7th year of publication for the blog. I’ll be back to regular programming with the next entry. – jb Over the past year, this blog has seen a huge amount of growth – you could call this the year of the tax law change more than anything, as you’ll see from the stats below. Through your comments and email questions I have come to meet literally hundreds of you – and we’ve learned a lot together. I’ll take this opportunity to thank you for your tremendous support by reading, asking questions, and making comments on what I have written. I hope these interactions have been as fulfilling for you as they have […]
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Your 2% Opportunity in 2011
By now you’ve heard the news from the 2010 Tax Act – one of the provisions is that during calendar year 2011, the Social Security withholding tax is reduced from 6.2% to 4.2%. This means that you have an additional 2% of your income, up to the $106,800 limit, available to you to do with as you wish. This is your opportunity to make a splash! I think it would be a very good idea to bump up your 401(k) deferral by 2% if you aren’t already maxed out. If you have maxed out your 401(k), you could use the extra money to contribute to your Roth IRA, or put some money into your taxable investment account. No matter what, since this money was originally intended to be for retirement (if it had been withheld for Social Security, it would have gone to *someone’s* retirement), you should put it toward […]
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Tax Act 2010 Provisions
As you are likely aware, two major bills enacting tax cuts for individuals will expire at the end of 2010: the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Tax Act 2010) extends quite a few provisions from EGTRRA and JGTRRA for an additional two years, most through 2012. It also extends a number of provisions enacted as part of EGTRRA that were modified in the American Recovery and Reinvestment Act of 2009 (ARRA). fyi – you can find the technical explanation at jct.gov – in the document JCX-55-10. Below is a summary of some of the more important provisions that will be extended: Reduction in Employee Payroll Tax The 2010 Tax Act provides for a temporary reduction, for 2011 only, of the employee-paid Social […]
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Charitable Contributions From Your IRA in 2010 and 2011
With the passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Tax Act 2010 or 2010 Tax Act), Congress retroactively reinstated the ability to make direct qualified charitable distributions (QCDs) from your IRA, in amounts up to $100,000 by IRA owners who are at least age 70½ years of age. This provision expired at the end of 2009, but is once again available, retroactive to January 1, 2010, through December 31, 2011. The provision allows the individual, age 70½ and thus subject to Required Minimum Distributions (RMDs), to make contributions directly from an IRA to a Qualified Charity, in an amount of up to $100,000 per year. Since the 2010 Tax Act was passed so late in the year, there is a special provision for 2010 only, which allows the IRA owner to make such a QCD for the 2010 tax year as late as […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.