Jill on Money: Financial Thanksgiving, tax planning
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It's that time of year and in addition to giving thanks for the big stuff - health, loving mate, wonderful family, great country and of course, the BEST producer in radio - it's appropriate to express thanks for some of the positive developments in the financial world.
I for one am thankful that the economy is advancing, that housing is finally bottoming and the jobs market is (slowly) improving. And the best part of living through a rotten economy is that we all learn painful, but valuable lessons. The prime example is that Fidelity, the nation's largest 401(k) provider, recently announced that the average 401(k) balance reached $75,900 at the end of the third quarter, the highest it has been since the company began tracking the data more than 12 years ago.
Bill from Buffalo and Karen from CT are both small business owners. Bill is trying to juggle the cash flow from his business and is wondering whether to increase retirement contributions this year or pull money out of the firm and pay taxes before they rise in 2013. Karen is trying to kick-start her retirement savings, now that the college bills have been paid.
Marty from CT and Sean from WA followed up on last week's questions about 529 plans. Remember that many (but not all) 529 plans allow the beneficiary to use the funds for private or public college or university, in-state or out-of-state, trade or graduate school. Some of the best 529 plans for non-residents include those offered by Nevada, Utah and Alaska.
Speaking of education, Steve in PA wrote in about his 25 year old son, who has $40K in student loan debt. Is it best for him to start to divert all of his future savings contributions towards repaying the loan?
Switching gears, Edward wrote in to talk about stock that he holds inside his company sponsored retirement plan. This was an opportunity to talk about "net unrealized appreciation" or "NUA," which can allow those with company stock purchased in employer-based plans to potentially avoid paying a heftier tax than necessary.
Teresa is 30 and asked about her retirement plan, which seems pretty awesome right now. The larger issue for her is "financially irresponsible family members," who could be a drain on her later in life. It's time to have "THE MONEY TALK". Here's a TV segment where I discussed how to talk to your parents about money:
I told Edwina to skip the annuity purchase, but also was reminded by Ed in Maryland, that some of those old annuity contracts with guaranteed minimum life income are still a good deal.
Jaxom wrote in with an update on a previous question, which essentially boiled down to a good problem: he and his wife will receive a $180K windfall this year and want to make sure to plan accordingly. Similarly, Rhonda, will be receiving an inheritance of $200 and wants to know what to do with it: pay down the mortgage or invest it?
Finally, Dan wrote in to tell us a pretty awesome financial success story from the under-35 set--these are great, so keep them coming in!
Here are web sites and resources mentioned in this week's show:
-- NAPFA: National Association of Personal Financial Advisors (fee-only advisors)
Thanks to everyone who participated and to Mark, the BEST producer in the world. If you have a financial question, there are lots of ways to contact us:
Call 855-411-JILL and we'll schedule time to get you on the show LIVE
Send an email: firstname.lastname@example.org
Tweet me: @jillonmoney
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