The final increase was lesser than the initially proposed ordinance.
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الجمعة، 9 ديسمبر 2016
Penn-Stroud Hotel developer talks delays, opening
Keyur Patel has a more clear path to a summer 2017 opening for the historic Stroudsburg hotel.
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Johnny Rockets launches new location at the Crossings
A waitress in a crisp white shirt and gray pinstriped apron set two paper-lined, chrome wire-mesh baskets on the table. Inside the baskets were thickly stacked and garnished hamburgers, with a heaping pile of fries and onion rings.There’s a new kid in town — make that the Crossings Premium Outlets in Tannersville. It’s called Johnny Rockets, a burgers, fries and shakes restaurant franchise. It’s penetrated the major cities, but it’s not widely [...]
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Ask GFC 022 – How to Work the “Rule of 55” to Your Advantage
Welcome to another Ask GFC! If you have a question that you want answered you can ask it here.If your questions get featured on GFC TV or the GFC Podcast, you are the lucky recipient of a copy of my best selling book, Soldier of Finance, and a $50 Amazon gift card.So what are you waiting for? Ask your question now!
Most people are aware that if you withdraw funds from a tax-sheltered retirement plan before you reach age 59 1/2 you will have to pay income tax on the amount of the distribution plus a 10% early withdrawal penalty.
Many are also at least vaguely aware that there are exceptions to the early withdrawal penalty. And in fact, there are actually several of them, and that’s where it can get confusing. Which one do you take, and how much and when?
Cathleen R. of Massachusetts wrote in with a question that covers the range of possibilities:
“I will be separating from my company in May of 2016, and turning 55 in July of 2016. I plan to withdraw funds from my 401K to build a house. I am familiar with the IRS Rule of 55, and know that I will have to claim the withdrawal as income, but I will not have to pay the 10% penalty.
My question is, do I have to take the withdrawal from my 401K in 2016, the year in which I separate service and the year I turn 55? Or can I wait until 2017 and still take a penalty free withdrawal? My goal is to minimize my taxable income as I will have earned income Jan-May of 2016.
I would also like to know if I can take multiple penalty free withdrawals, essentially taking a withdrawal from my 401K in 2017 and 2018 in order to minimize my taxable income? (Note, I have no immediate plans to roll my 401K into an IRA, as I know IRA’s are not qualified plans to the Rule of 55.)”
Cathleen’s question addresses three topics: the general application of the Rule of 55, when it will need to be taken, and how to best keep the actual income tax liability to an absolute minimum by spreading out the distributions.
Using the Rule of 55 to Get Penalty-free 401(k) Withdrawals
Cathleen can indeed make withdrawals from her 401(k) plan, subject to ordinary income tax, but exempt from the 10% early withdrawal penalty. IRS provision 72(t) makes this possible. This provision, sometimes referred to as the Rule of 55, enables employees to take distributions from their 401(k) or 403(b) plans without having to pay the penalty.
The employee must be separated from service during or after the year he or she reaches age 55 although it can be as early as age 50 for certain government workers. In Cathleen’s case, she qualifies because she turned 55 in the same year that she was separated from her employer, 2016. “Separated” can refer to laid off, quit, or otherwise terminated.
This doesn’t apply in Cathleen’s situation, but it’s a point worth emphasizing in this discussion. If you still have money in the retirement plan of an employer that you were separated from before the year in which you turn 55, you will not be eligible to take advantage of the Rule of 55. Your only option to avoid the early withdrawal penalty at that point will be to defer taking distributions until you turn age 59 1/2, when withdrawals will no longer be restricted.
Based on Cathleen’s question however I want to make some important distinctions. Cathleen references needing to withdraw the funds in order to have a house built. This can put a confusing wrinkle into the question, because making an early withdrawal from a 401(k) to purchase a home does not qualify for the penalty exemption.
That exemption applies only to withdrawals from an IRA, and only up to a maximum of $10,000 for a first-time homebuyer. So let’s make clear the distinction that we are not attributing the exemption to the fact that she wants to build a new home.
Second, as Cathleen acknowledges in her question, the Rule of 55 exemption does not apply to IRA accounts. It’s strictly for 401(k) plans, so if Cathleen rolls over her 401(k) into an IRA, the Rule of 55 exemption will be lost.
Something else to be aware of, even if it doesn’t apply in Cathleen situation, is that the Rule of 55 applies only to the 401(k) plan of your last employer. If you have plans from previous employers, the rule of 55 will not benefit you if you begin withdrawing funds before turning 59 1/2.
Good advice here is that if you have 401(k) plans from previous employers, you should roll them over into your current 401(k), if you are permitted to do so.
One other limitation, and this one is pretty important. So far we’ve been discussing the Rule of 55 based on IRS regulations. But whether or not you can actually take advantage of the rule will depend upon stipulations in your employer’s 401(k) plan. If they prohibit withdrawals before a certain age, say 59 1/2 or 62, you will not be able to take distributions at all. Though the IRS permits hardship withdrawals, there are no regulations requiring that the employer participates.
When Should Cathleen Take her Distributions?
Let’s start by discussing the rules regarding Rule of 55 distributions. If you use the rule, you must do so by taking a series of substantially equal periodic payments. These are calculated based on your remaining life expectancy, which the IRS discloses in Publication 575 – Pension and Annuity Income (Page 15).
According to this chart, Cathleen, at age 55, will have to calculate periodic payments based on 360 months. She can determine the amount of the annual distribution by dividing the amount of her 401(k) by 360 months, divided by 30.
So for example, if Cathleen has $360,000 in her 401(k) plan, she is entitled to withdraw $12,000 per year which will not be subject to the early withdrawal penalty.
Once the distributions begin, they must continue for a period of five years or until you reach age 59½ – whichever is longest.
Cathleen did not say how much money is in her 401(k) plan, nor the amount that she will need in order to build a new house. But I think it’s safe to assume that since the annual amount she can withdraw from plan without incurring the early withdrawal penalty will be relatively small – less than 3% of the balance of the plan – accumulating enough funds for the new house may be a slow process.
There’s another complication as well. The amount that you can withdraw from the plan penalty free is limited by the number of months in the year. So if she were to take a distribution in December of 2016, it will be limited to 1/12 of the annual amount. So if the annual amount was $12,000, which she could withdraw in 2017 and beyond, she will be limited to just $1,000 in 2016.
Spreading Out the Distributions to Minimize Income Taxes
This is the last part of Cathleen’s question. But while there might be some wiggle room here, the reality is that the distributions from her plan will be limited by life expectancy requirements. If she has $90,000 in the plan, she will only be able to draw $3,000 penalty-free in 2017 and subsequent years. For 2016, it will be no more than a few hundred dollars.
Given that limitation, Cathleen will have two real options:
- Delay having a new house built until she turns 59 1/2, and can withdraw any amount of money from her 401(k) penalty free, or
- Take as much money out of the 401(k) as she needs to have the house built, and be prepared to pay the 10% early withdrawal penalty as well as the ordinary income tax on the amount withdrawn.
Unfortunately, a 401(k) loan is not a solution either. Employer’s do not permit loans to former employees, since repayment can no longer be guaranteed. In addition, loans are limited to no more than 50% of the plan balance, up to a maximum of $50,000. That might not be enough to have the new house built anyway.
Cathleen, I’m sorry that there isn’t a more satisfactory answer, but those are the rules. I would suggest that you discuss your situation in some detail with both the 401(k) plan trustee and your tax preparer. I’m sure that the amount of tax you will have to pay on any distributions – plus any early withdrawal penalties – will have an impact on which way you will decide to go.
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Congress Just Passed a Bill That Should Make Live Event Tickets Cheaper
Have you ever penciled “buy concert tickets” into your calendar so you could get online the second they were available… only to see them sold out within minutes?
Well, I haven’t.
But sources tell me this is something that happens when you enjoy activities involving other humans. And it’s a serious bummer.
What makes the situation particularly distressing is tickets aren’t selling out because of others like you in the virtual line buying their share.
They’re selling out because sneaky resellers are using programs to buy more than their fair share. That way they can increase the price and resell them to you through platforms like StubHub.
Thankfully, Congress is stepping in to curb this kind of ticket scalping.
Yes, we know you haven’t heard that line in a while, but we assure you, it’s true!
On Thursday, Congress passed the Better Online Ticket Sales (BOTS) Act of 2016. The bill prohibits the circumvention of systems (like CAPTCHA) that enforce ticket purchasing limits — for the laymen, using bots to buy all the tickets.
It also prohibits the sale of tickets obtained with bots.
It’s great news for you, the ticket-buyer, because resellers are marking tickets up by 49% on average, according to the New York Attorney General’s ticket sales report from earlier this year. Sometimes they resell tickets for as much as 1,000% over face value.
Kansas Sen. Jerry Moran sponsored the bill and wants this measure to “level the playing field” for ticket buyers, he told The Associated Press.
“The need to end this growing practice is reflected in the bill’s widespread support,” Moran said.
The bill means tickets should be easier to get from the original source, and you shouldn’t see prices jacked up quite as much through reselling platforms.
Between this bill and Ticketmaster’s class-action settlement earlier this year, the tide may be turning in favor of consumers when it comes to live events. We’re happy to see it!
We reached out to Sen. Moran for comment but have received no reply by time of publication.
Your Turn: Do you plan to buy tickets to a concert, sporting event or Broadway show in 2017?
Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).
The post Congress Just Passed a Bill That Should Make Live Event Tickets Cheaper appeared first on The Penny Hoarder.
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UK pension schemes short of £780bn
UK employers are facing a pension deficit of £779.9 billion, according to the Pension Protection Fund’s (PPF) latest issue of the Purple Book, its annual summary of the health of UK final salary pension schemes.
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How to Outrank Your Competition’s Best-Performing Page
All is fair in love and SEO.
Ranking for a profitable keyword phrase can quickly become a dog fight, and the SEO battle between two rivals can get heated and ugly in a hurry.
Okay, maybe that’s overly dramatic, but you get the idea.
When you’re battling for search ranking supremacy, it can get dirty, and nothing is off limits.
You need to devise a winning strategy to not only outrank the competition but maintain your position.
One technique I’ve found to be incredibly effective for gaining the upper hand in the SEO battle is to identify your competition’s best-performing page and outrank it.
If they’re bringing in a large volume of leads ultimately resulting in conversions, you know you’ll be in good shape if you can usurp them.
HubSpot even found that “search traffic has the highest lead-to-customer conversion rate of all channels.”
Dominate the search results, and reap the rewards.
But how exactly do you do this?
Here’s a step-by-step formula I’ve come up with.
1. Get their SEO stats
The first thing you’ll want to do is learn as much as possible about your competitor’s best-performing page.
For instance, you’ll want to find out:
- Where their backlinks are coming from
- The types of content they’re publishing
- Nofollow and dofollow links
- Titles
- H1, H2, and H3 tags
- Hyperlink anchors
How do you obtain this information?
I suggest using an SEO analysis tool such as Rank Tracker by SEO PowerSuite or Ahrefs.
You simply type in a site domain, and these tools will generate a wealth of helpful data you can use to thoroughly analyze the competition.
More specifically, they will provide answers to the first three factors I mentioned above: backlinks, types of content, and links.
As for the last three factors—titles, tags, and hyperlink anchors—check out their best-performing page to find this information directly.
2. Check for technical issues
Another thing I like about SEO PowerSuite is that they have a tool called “WebSite Auditor.”
This lets you quickly analyze any technical issues a particular page may have such as indexing or crawlability problems, coding glitches, and overall site structure.
Why is this important?
If you know for a fact there’s an obvious technical SEO issue and use this knowledge to your advantage, you stand a very good chance of outranking your competitor.
In other words, you’ll know what their weakness is. By ensuring that your site is free of these errors, you are giving yourself a good chance of eclipsing your competition in the search rankings.
Here’s what I’m talking about:
Notice that this site has issues with crawlability and is lacking an XML sitemap.
After analyzing your competitor’s SEO stats and technical issues, you should have a pretty clear idea of what you’re up against.
More importantly, you’ll know precisely what you need to do in order to outrank them.
3. Do what your competition is doing—but better
I’ve talked about a concept known as the skyscraper technique before.
This is a term coined by Brian Dean from Backlinko. The technique is designed to dramatically boost your search traffic.
At its base level, this technique revolves around pinpointing a piece of link-worthy content a competitor has created, improving upon it, and connecting with influencers to promote it.
To take advantage of the skyscraper technique, you’ll first need to examine your competitor’s top backlinks.
Ask yourself which pieces of content appear to be having the biggest impact on their rankings.
Once it’s clear which specific pieces of content are boosting their SEO, you’ll want to create content that’s even better.
But how exactly do you go about this?
Next are a few techniques to help you achieve that goal.
4. Create more in-depth content
As you probably already know, I’m a proponent of long content.
Numerous studies have shown that content with a higher word count consistently outperforms content with a lower word count.
Here’s a graph that illustrates this perfectly:
As you can see, the average word count for the number one spot in search rankings is 2,416.
Notice that it’s not 500, 750, or even 1,000 words. In order for content to rank highly, it needs to be well over 2,000 words.
Furthermore, you’re more likely to get more social shares by going this route:
This graph clearly shows that content exceeding 1,500 words is far more likely to result in a higher number of social shares, especially on Twitter.
If the bulk of your competitor’s content is much shorter, simply creating longer, more in-depth content can put you well on your way to outranking them.
If you can create something epic on a particular topic, blowing competition’s mediocre content out of the water, this is definitely going to work to your advantage.
Just make sure you’re genuinely adding value and not merely eating up your word count.
5. Be visual-centric
I probably don’t need to tell you about the power of visual content, but I will anyway.
Since humans are inherently visual creatures, we’re more apt to respond to content with plenty of pictures, graphs, charts, etc. than to text-based content.
In fact, “content with relevant images gets 94 percent more views than content without relevant images.”
If your competition is slacking on visuals, this presents a great opportunity for you.
Incorporating plenty of relevant images throughout your content will likely result in more traffic, more engagement, more shares, and, ultimately, a higher ranking within search results.
I also suggest experimenting with infographics.
This type of media has proven to be tremendously powerful and can optimize the user experience.
If your competition is limiting itself to more traditional and, quite frankly, boring text-based content, presenting information through an infographic can most definitely give you an edge.
For more on how to create infographics, I recommend checking out this list of free infographic tools.
6. Make your content easier to digest
It’s also important to understand how the modern person reads digital content.
Hardly anyone reads an article in its entirety. They simply scan and check out a few key points that appeal most to them.
In order for your content to truly resonate, it needs to be scannable and snackable.
If you’re taking an old school approach, your content is likely to miss its mark.
But if it’s easily digestible, your content will have a maximum impact and could very well outperform your competition’s content.
Here are a few fundamental techniques for creating content with the modern reader in mind:
- Use short paragraphs
- Use plenty of H1, H2, and H3 headers
- Use bullets to create lists
7. Outperform competitor from a technical standpoint
Remember when I talked about identifying technical issues on your competitor’s website?
The final step to this process is making sure that your website doesn’t have the same issues and glitches.
For example, maybe your competitor’s site is lacking an XML sitemap.
This is problematic because it makes it more difficult for search engine bots to crawl their site.
Simply taking the time to create an XML sitemap for your website will give you an advantage.
Just identify any technical issues your competitor’s site has, and ensure you’re not making the same mistakes.
Besides this, there are two more ways to outperform the competition.
8. Speed up your site
One is to make your site quicker than their site.
It’s been documented that Google takes into account a site’s load time when determining rankings.
And while it’s not as big of a factor as, say, backlinks, site speed definitely plays a role.
Not to mention that it will directly impact the user experience and the length of time visitors stay on your site.
In fact, a one-second delay can have an adverse impact on pageviews, customer satisfaction, and your overall conversion rate:
Although I don’t have time to discuss all the details here, check out this article I wrote on how to make your site insanely fast.
9. Create content that’s more mobile-friendly than the competition’s
I’m sure you know just how big of a deal it is to be mobile-friendly in this day and age.
If Google’s “mobilegeddon” has taught us anything, it’s that we sure as heck had better be on board.
And if there’s anything less than a stellar user experience from a mobile perspective, we’ll be in trouble.
That’s why my final recommendation for outranking the competition is to make your content more mobile-friendly than theirs.
This all starts with using Google’s Mobile-Friendly Test if you haven’t done so already.
Within seconds, Google will let you know how your site is doing in this area and will provide suggestions on how to improve.
But I recommend taking it one step further and making it a point to create mobile-friendly content, which I cover in detail in this article.
This too can give you the necessary edge to surpass the competition.
Conclusion
Let’s recap.
To outdo your competition, you’ll want to check out their SEO stats and identify the content that’s providing them with the best backlinks.
From there, you’ll want to improve upon that content by using a few proven techniques.
Finally, it’s important to optimize your site from a technical standpoint.
By following this formula, you stand a good chance of outranking your competition’s best-performing page and ultimately cashing in on quality organic traffic.
Can you think of any other tactics that can help you beat the competition?
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Watch These Kids React to Finding Out They’re Going on Their First Vacation
Denise and her family had never been on a vacation.
Although she and her husband work hard to provide for their kids, there never seems to be any money left over.
So during our Purple Friday giveaway — when we helped readers spend time, instead of money — she asked for a family trip.
Here are the heartwarming results.
Their First Ever Family Vacation
“My husband and I work hard every day trying to create a wonderful life for our two children… They both have epilepsy and life has been tough for us at times,” Denise wrote in her entry.
They manage to maintain a positive attitude and spend lots of quality time together, but one thing’s eluded them.
“I always hear about other families going on vacations and even weekend getaways,” she wrote.
“And I have to admit it makes me UNBELIEVABLY jealous that — even though we are able to provide a good life for our kids — we have never been able to save for a family vacation of any sort.”
So she asked for a “chance at giving my family a weekend of fun, laughter and memories that will last forever.”
We were more than happy to make that wish come true, and sent them on a weekend getaway to an indoor waterpark.
They had an “amazing” time, Denise reports.
“It was awesome!” she says. “Honestly, the best part about it was just watching the kids loving it all. They loved the waterpark, the arcade, the tubing, and the whole family’s favorite thing was the Nor’easter Mountain Coaster!”
“I’ve always loved The Penny Hoarder,” she says, “and now it goes to show what a great presence it really is in people’s lives.”
How You Could Save for a Weekend Getaway
If you’re sitting over there saying: “That sounds so cool! Why didn’t I get a vacation?” I’ve got some good news for you: All told, this quick family vacation cost around $1,000.
Which, of course, is a lot of money to save — but not impossible if you start early.
Let’s say you want to take a vacation at this time next year. To save $1,000 over the next 11 months, you’d have to save around $90 per month, or $23 per week.
That doesn’t sound so daunting, does it?
Hopefully, you already have an emergency fund and retirement plan in place — and after that, it’s time to start saving for something fun.
To go on a weekend getaway a year from now, you’d need to pop $25 into a jar each week.
Or create a biweekly withdrawal into a separate savings account, automatically socking away $50 every time you get paid.
Because the look on these kids’ faces when we told them they were going on vacation?
Absolutely priceless.
Your Turn: Will you start saving up for a family vacation?
Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.
The post Watch These Kids React to Finding Out They’re Going on Their First Vacation appeared first on The Penny Hoarder.
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Scam watch: Investors urged to check opportunities are legit
Investors – in particular those aged over 55 – have been urged by the regulator to take their time to check that investment opportunities are legitimate before they hand over their cash.
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Using Negative Visioning to Improve Your Personal Finances
Countless articles and books and videos and classes have been created to talk about the power of positive thinking and positive visioning, some of them sensible and some of them pseudo-religious and fanciful. It’s easy to see why: positive visioning can be a very powerful tool for your financial life.
However, it’s not infallible and it’s not the only type of visioning you should rely on.
Before we dig in too deep, though, let’s step back and take a look at what positive visioning is. Positive visioning or positive thinking is the practice of using your mind to imagine a positive outcome for something that’s coming up in your future or something that you want to come up in your future. You might envision a positive conversation with someone you are interested in dating, for example, or envision a positive outcome of a work project.
The big idea behind positive visioning is that it helps build confidence. It enables you to see that positive outcomes really are possible and also helps you to arrange your thoughts and plans in a way to increase the chances of those positive outcomes. That’s incredibly helpful.
However, it’s also a fragile thing. While it does help you feel more confident and does give you a plan, it leaves you completely unprepared for the unexpected. The truth is that relying wholly on positive visioning for your planning and confidence leaves you with no real contingency plan or backup plan because you’ve given yourself no room to think about anything but a successful outcome. And, like it or not, life’s outcomes aren’t always successful ones.
In the wise words of Jean-Luc Picard, “it is possible to commit no mistakes and still lose. That is not a weakness, that is life.”
Positive visioning doesn’t help at all with those situations. If life has failed you, all of the positive visioning in the world won’t help you with what to do next or with the resources you need to recover from that state.
That’s why it’s my belief that positive visioning, especially with long term planning, needs to be paired with at least some negative visioning.
Negative visioning is just the opposite of positive visioning. It’s all about envisioning undesired outcomes to a particular upcoming event in your life. You don’t get the job. You don’t get the date.
Some people might look upon that idea with disfavor. After all, on the surface, you might think that negative visioning would work against self-confidence.
I actually find that the opposite is true, for several reasons.
First of all, I often discover that the downside of failure isn’t as apocalyptically bad as I think. I’ll often buy into the fact that failure in a particular situation is going to be incredibly bad, with devastating personal consequences and far-reaching effects. The truth is that most failures in life really aren’t that bad.
Second, negative visioning often unveils flaws in my current planning. I’ll envision an negative outcome for a particular event and it will make me quickly realize that the plan I have in place that’s supposed to bring me a positive outcome has a flaw of some kind, one that I would have never seen without negative visioning.
My favorite example of this is the emergency fund. An emergency fund – and the value of it – is an outcome of pure negative visioning. If you never imagine bad outcomes like your car breaking down when you need it, you’ll never see the purpose of an emergency fund. If you never imagine situations like a lost wallet or a bank declining your credit card, you’ll never see the purpose of a cash emergency fund.
When you combine those two together, you’ll often find that negative visioning becomes a confidence builder. If you know that the plan you have in mind is a strong one, it actually accelerates your confidence because you know that your plan has you covered in the case of unexpected events.
Even better, if you do fail – and you will sometimes – you’re ready for that downside. You’re not caught in panic mode because the thing you only envisioned in a positive way fell apart on you leaving you without alternative plans.
Here’s how you can use negative and positive visioning in balance to achieve great outcomes in your financial, professional, and personal life.
First, identify something you’re concerned about in the future. Maybe it’s a job interview or perhaps it’s a little bit further down the road like switching careers or maybe it’s way down the road, like helping your children through college. Whatever that concern is, focus on that for the time being.
During your spare moments, envision those things with a positive outcome. Think about them the way you’d like for them to turn out. Imagine yourself performing well and getting the outcome you desire.
Think not just about the big picture, but the specific elements of your performance in that visioning. What specific things are you doing to produce that positive outcome? Are you smiling? Are you on top of the facts? Do you have a business plan in your hand? Did you start saving long ago?
Those elements are going to form the backbone of your plan for achieving that goal, but you’re not done yet.
Next, envision those things with various negative outcomes. Imagine yourself bumbling in the interview and not getting the job. Imagine yourself failing to save and not being able to help your child. Imagine the starter in your car failing so that you can’t make it to work.
Obviously, such images of the future are not pleasant ones to think about. They might give you a queasy feeling in your stomach and might put a ding in your confidence.
Rather than looking at those visions as inevitable outcomes, though, ask yourself what you can learn from each of those negative visions. What can you do to minimize the chances of bumbling through the interview? Preparing for hard interview questions is one definite route. What can you do to ensure that you’re going to be able to help your child? Automating some savings into a 529 plan is a good start. What can you do to still make it to work if your starter fails? Knowing the bus schedule and having an emergency fund are two powerful steps.
You can take those steps that you think of as a result of your negative visioning and use them directly to make your plan much stronger than before, one that has taken care of potential negative outcomes.
What I often do is alternate between positive visions and negative visions, at least early on. I want the positive visions so that I have an overall structure that leads to a positive outcome, but I want those negative visions so that I have contingencies in place against unwanted outcomes. A positive outcome is great, but a big part of that positive outcome is making sure that you’ve minimized the chances of negative outcomes, and that comes through preparation.
Once I feel that I have a strong plan in place that has maximized my chances of a positive outcome and minimized my chances of a negative outcome, I mostly use positive visioning at that point to build confidence. I envision things that could potentially go bad, but I’m saved by my planning, and I also envision outcomes that are just purely positive.
In the end, negative visioning early on helps me to develop a more robust plan for the thing I’m concerned about, so that my positive visioning later on becomes much stronger and better at building confidence.
I don’t simply ride the pure power of positive thinking from my dreams to my destination, because that train will often fall right off the tracks. Instead, I use a mixture of positive visioning and negative visioning to develop a very robust plan for achieving my goal, and then as I move forward with that plan, my positive visioning for the future becomes much more robust and becomes a tool for increasing my self-confidence.
In short, the power of positive thinking alone is useful, but weak; much of that weakness is bolstered by also incorporating the power of negative thinking!
If you have some plans or events in the future that are weighing on your mind, I highly recommend using a mix of positive visioning and negative visioning to develop a strong plan for making sure that the positive outcome is more likely to happen, and then using positive visioning atop that plan as it progresses in order to build confidence for the event itself. It’s helped me through many life challenges over the years and I continue to use it quite often.
Good luck in whatever challenges life brings you!
The post Using Negative Visioning to Improve Your Personal Finances appeared first on The Simple Dollar.
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"Annuities remain key to retirement income"
Retirees should be using at least some of their pension to buy an annuity, according to a new report from the OECD.
The organisation’s report, Pensions Outlook 2016, argues that even though retirees can now use their pension savings as they wish, it still makes sense to use annuities because they pay a guaranteed income for life.
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Rules of the Roth IRA: Income Limits, Contributions, and More
For many financial growth professionals, Roth IRAs are the most exciting play in the retirement savings game. It’s easy to understand why: tax-free growth and tax-free distribution. You put the money in after taxes, it grows tax-deferred, and comes out tax-free as long as you wait until you’re 59-1/2 years old.
“If your goal is to save as much for retirement as possible, then it’s a slam dunk for the Roth IRA,” says Jeffrey Layhew, president and wealth advisor at Wealth Resources Network.
While not everyone can enjoy its perks, the Roth IRA income limits are fairly high: In 2016, if you make less than $132,000 as an individual or less that $194,000 as a married couple filing jointly, you can contribute at least something to a Roth IRA. If you earn more than those limits, you can’t fund a Roth IRA (that is, unless you use the backdoor).
Regardless of your road to a Roth, there are residual benefits to funding a nest egg with after-tax contributions. “We don’t know what our tax rates will be in the future,” says Layhew. “If they’re much higher, it’s a beautiful thing when you got a Roth IRA.”
Further, if you’re in the position to open a Roth IRA early in your professional career, you’re probably paying less taxes on a smaller amount of money than you would be if you paid taxes at distribution, as with a traditional IRA. “Early in your career, the Roth makes more sense—you’re usually in a lower tax bracket and the tax deduction doesn’t mean that much to you,” says Layhew.
As long as you qualify and play by the rules, a Roth IRA is a great way to save for retirement—which is why the Internal Revenue Service strictly enforces contribution limits, income limits, conversion rules, and distribution rules. Reading the fine print will help you avoid penalties that could cut into that pile of money you worked so hard to put away.
Roth IRA Income and Contribution Limits
The contribution limits on a Roth IRA are primarily based on your income. The most you can put into any IRA in 2016—be it a Roth, traditional, or combination of the two—is $5,500. If you’re at least 50 years old, that number bumps up to $6,500.
But a Roth IRA has income limits, too. If you make between $117,000 and $132,000, or between $184,000 and $194,000 as a married couple filing taxes jointly, then the amount you’re allowed to contribute starts to drop. Roth IRA income limits are based on your adjusted gross income (AGI) and conform to the chart below, which is found on the IRS website.
| Roth IRA Income and Contribution Limits for 2016 | ||
| Filing Status | Modified Adjusted Gross Income (AGI) | Contribution Limit |
| Married filing jointly or a qualifying widow(er) | Less than $184,000 | $5,500 (50 or older: $6,500) |
| Between $184,000 and $194,000 | Reduced contribution amount | |
| $194,000 or more | Zero | |
| Married filing separately, and you lived with your spouse at any time during the year | Less than $10,000 | Reduced contribution amount |
| $10,000 or more | Zero | |
| Single, head of household, or married filing separately and you did not live with your spouse at any time during the year | Less than $117,000 | $5,500 |
| Between $117,000 and $132,000 | Reduced contribution amount | |
| $132,000 or more | Zero | |
A few things to note:
- You can fund your 2016 Roth IRA well into 2017, right up until you file your taxes, granted you file them before April 17, 2017.
- You can never put in more money than your taxable compensation for the year, if your taxable compensation is less than the limit for your age bracket. In other words, a 21-year-old single man claiming $3,200 on his taxes can’t put more than $3,200 into his Roth IRA.
- Unlike a traditional IRA, you can continue to contribute to a Roth after you turn 70½ years old.
Roth IRA Conversion and Distribution Rules
If you’re rolling funds into a Roth IRA from a qualified retirement plan, the contribution limits don’t apply, but some different rules do. Basically, you can convert as much money as you want from a traditional IRA (for instance) to a Roth IRA, just remember that you’ll have to pay taxes on that amount of money upfront, in that tax year, and that you generally have only 60 days to complete your rollover upon distribution. Remember, too, that the rollover (and each subsequent rollover you make) must be left in the account for five years before you can touch it without penalty.
When it comes to withdrawing funds from a Roth IRA, it’s important to note the difference between contributions and earnings. The money you put into the account — your contributions — can be distributed back to you at any time without penalty. After all, you’ve already paid taxes on this money. In addition, you can withdraw contributions and earnings by tax day of the year you funded the Roth IRA penalty-free, but you have to pay income taxes on the earnings.
For your Roth IRA earnings — the investment gains your contributions make while sitting in your retirement savings account — you must adhere to a five-year, 59½-years-old rule: Your account needs to be at least five years old, and you need to be 59½ years old to withdraw earnings tax- and penalty-free. If you withdraw earnings early, they’re subject to both income taxes and a 10% penalty for unqualified distribution. Not fun.
A Roth IRA offers some surprisingly flexibility, however, and there are a number of exceptions to the early distribution rules. You can withdraw funds early, and without taxes or penalties, in the following circumstances:
- Your distribution is for a first-time home purchase (in which case you can pull out as much as $10,000).
- You’re using the distributions to pay qualified higher education expenses.
- You’re dead. In that case, your beneficiary or your estate can withdraw the earned funds without incurring the 10% tax.
- You are considered totally and permanently disabled.
- You have unreimbursed medical expenses that are more than 10% of your adjusted gross income for the year (7.5% if you or your spouse was born before Jan. 2, 1951).
- You’re paying medical insurance premiums during a period of unemployment.
When Does It Make Sense to Open a Roth IRA?
Before you open a Roth IRA, first make sure you’re getting the most out of your 401(k). If your company matches your contributions up to a certain percentage, make sure you put at least that much into your company plan. “We match 3%,” said Layhew. “If people don’t put in the 3%, they’re foolish because it’s a 100% return on their money with no risk whatsoever.”
If you’re a couple of years from retirement at the peak of your career, it might be better for you financially to go with a traditional IRA, rather than a Roth. Play around with an online calculator, or talk to the guy where you get your taxes done. According to Layhew, there’s a certain point in your career where it makes more fiscal sense to pay the taxes in retirement — when you’ll probably be withdrawing funds in a lower tax bracket — than to forego the tax break for earnings that won’t have enough time to bake before you start taking them out.
And finally, try to plan for everything by having a little bit of everything. Mixing a Roth’s flexibility with the required minimum distribution requirements of other retirement accounts can help you balance your savings—and how it gets taxed—against your needs. “Think about this: We all want to diversify our investments, imagine if you could diversify your taxes?” Leyhew said. “And that’s basically what I’m trying to accomplish.”
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