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    A look at some popular & obscure options for receiving money with little or no tax.

     

    Provided by MidAmerica Financial Resources

     

     

    Will you receive tax-free money in retirement? Some retirees do. You should know about some of your options for tax-free retirement distributions, some of which are less publicized than others.

     

    Qualified distributions from Roth accounts are tax-free. If you own a Roth IRA or have a Roth retirement account at work, you can take a tax-free distribution from that IRA or workplace retirement plan once you are older than 59½ and have held the account for at least five tax years. One other nice perk: original owners of Roth IRAs never have to take Required Minimum Distributions (RMDs) during their lifetimes. (Owners of employer-sponsored Roth retirement accounts are required to take RMDs.)1,2

     

    Trustee-to-trustee transfers of retirement plan money occur without being taxed. In a rollover of this kind, the custodian financial firm that hosts your workplace retirement plan account makes a payment directly out of the account to an IRA you have waiting, with not a penny in taxes levied or withheld. Trustee-to-trustee transfers of IRAs work the same way.3

     

    If you are older than 80, you might get a tax break on a lump-sum withdrawal. If you were born prior to January 2, 1936, you could be entitled to a tax reduction on a lump-sum distribution out of a qualified retirement plan in certain cases. Unfortunately, this is never the case with an IRA RMD.4

       

    Your heirs could receive tax-free dollars resulting from life insurance. Payouts on permanent life insurance policies are normally exempt from federal income tax. (The payout may be included in the value of your taxable estate, though.) A life insurance death benefit paid out from a qualified retirement plan is also tax-exempt provided the death benefit is greater than the policy’s pre-death cash surrender value. Even if an employee takes a distribution from a corporate-owned life insurance policy on his or her life while still alive, that distribution may not be fully taxable as it may constitute a return of the principal invested in the life insurance contract.4,5

      

    Sometimes the basis in a workplace retirement account can be withdrawn tax-free. If you have made non-deductible contributions through the years to an IRA or an employer-sponsored retirement plan account, these contributions are not taxable when they are distributed to the original account owner, accountholder, or an account beneficiary – it is considered return of principal, a recovery of the original account owner or accountholder’s cost of investment.4

           

    IRA contributions can optionally be withdrawn tax-free before their due date. As an example, your 2016 IRA contribution can be withdrawn tax-free by the due date of your federal tax return – April 15 or thereabouts. If you file Form 4868, you have until October 15 (or thereabouts) to do this.6

     

    Withdrawals such as these can only happen, however, if you meet two tests set forth by the IRS. First, you must not have taken a deduction for your contribution. Second, you must, additionally, withdraw any interest or income those invested dollars earned. You can also take investment losses into account. (There is a worksheet in IRS Publication 590 you can use to calculate applicable gains or losses.)6

     

    These common and obscure paths toward tax-free retirement income may be worth exploring. Who knows? Perhaps, this year, your retirement will be less taxing than you think.

        

    MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@natplan.com. www.mid-america.us

     

    This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

     

    Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser.
    MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to NPC.

     

    Citations.

    1 - irs.gov/retirement-plans/retirement-plans-faqs-on-designated-roth-accounts [1/26/16]

    2 - irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions [7/28/16]

    3 - irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions [2/19/16]

    4 - news.morningstar.com/articlenet/article.aspx?id=764726 [8/13/16]

    5 - doughroller.net/personal-finance/life-insurance-proceeds-tax/ [8/18/16]

    6 - tinyurl.com/gwoxed8 [8/18/16]

  • Weekly Economic Update

    ­MidAmerica Financial Resources Presents:

     

    WEEKLY ECONOMIC UPDATE

     

     

    WEEKLY QUOTE

                 

    “Education’s purpose is to replace an empty mind with an open one.”

        

    - Malcolm Forbes

          

      

    WEEKLY TIP

                 

    One path toward some back-to-school shopping savings: follow your favorite stores on Facebook and Twitter. See if they can also text you some discount offers.

         

      

    WEEKLY RIDDLE

                

    Together, an antique dresser and the old baseball cards found within it are valued at $20,000. If the baseball cards are worth $18,000 more than the dresser, how much is the dresser worth?

      

     

    Last week’s riddle:

    It floats gently when it is born, lies still when it is alive, and runs when it is dead. What is it?

         

    Last week’s answer:

    Snow.

     

     

     

     

    August 29, 2016

      

    YELLEN HINTS AT A RATE HIKE

    Speaking Friday at the Federal Reserve’s annual retreat in Jackson Hole, Wyoming, Fed chair Janet Yellen commented that “the case for an increase in the federal funds rate has strengthened in recent months.” That statement was interpreted by some economists as a sign that the central bank could adjust interest rates this fall, but perhaps only after the presidential election.1

        

    NEW HOME SALES ACCELERATE, RESALES DECLINE

    The good news, from the Census Bureau: July brought a 12.4% leap in new home buying. Sales approached a 9-year peak, even with only 4.3 months of new home inventory available. The bad news, from the National Association of Realtors: July saw existing home purchases slip 3.2%. Inventory was down 5.8% year-over-year; the median sale price was $244,100, 5.3% better than a year earlier.2

       

    SENTIMENT GAUGE SLIPS IN AUGUST

    The University of Michigan’s consumer sentiment index finished the eighth month of the year at 89.8, underneath its 90.4 preliminary reading. Consumer assessment of current economic conditions remained high at 107.0, increasing nearly a point from the initial August survey.3

        

    STOCKS GIVE BACK SOME GROUND

    Wall Street wavered after Janet Yellen’s speech Friday, and all three major indices ended up down for the week as investors contemplated her remarks and the federal government’s new 1.1% estimate of Q2 growth. Comparing the settlements at Friday’s closing bell to those a week earlier, the Dow Jones Industrial Average settled 0.85% lower at 18,395.40; the Nasdaq Composite, 0.37% lower at 5,218.92; and the S&P 500, 0.68% lower at 2,169.04.3,4

       

    THIS WEEK: On Monday, investors will consider the July personal spending report. The Conference Board’s August consumer confidence index and the June Case-Shiller home price index arrive Tuesday, plus earnings from Abercrombie & Fitch, Bob Evans, DSW, Fred’s, H&R Block, and Palo Alto Networks. Wednesday offers the latest ADP employment change numbers, July pending home sales figures and earnings from Chico’s, Five Below, and Navistar. Thursday, the August Challenger job-cut report, ISM’s August manufacturing PMI and a new initial claims report all appear, along with earnings from Broadcom, Campbell Soup, Land’s End, Lululemon Athletica, Smith & Wesson, and VeriFone. Friday, the Department of Labor issues its August jobs report and Sears Hometown & Outlet Stores announces Q2 results.

     

    % CHANGE

    Y-T-D

    1-YR CHG

    5-YR AVG

    10-YR AVG

    DJIA

    5.57

    12.96

    12.60

    6.30

    NASDAQ

    4.22

    11.10

    22.09

    14.38

    S&P 500

    6.12

    11.78

    16.86

    6.75

    REAL YIELD

    8/26 RATE

    1 YR AGO

    5 YRS AGO

    10 YRS AGO

    10 YR TIPS

    0.15%

    0.65%

    0.15%

    2.24%

     


    Sources: wsj.com, bigcharts.com, treasury.gov - 8/26/164,5,6,7

    Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

     

     

    Please feel free to forward this article to family, friends or colleagues.
    If you would like us to add them to our distribution list, please reply with their address.
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    Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser.
    MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to NPC.

     

    This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

     

    Citations.

    1 - usatoday.com/story/money/2016/08/26/yellen-case-rate-hike-has-strengthened/89363312/ [8/26/16]

    2 - nytimes.com/aponline/2016/08/24/us/politics/ap-us-home-sales.html [8/24/16]

    3 - investing.com/economic-calendar/ [8/26/16]

    4 - markets.wsj.com/us [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F26%2F15&x=0&y=0 [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F26%2F15&x=0&y=0 [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F26%2F15&x=0&y=0 [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F26%2F11&x=0&y=0 [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F26%2F11&x=0&y=0 [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F26%2F11&x=0&y=0 [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=8%2F25%2F06&x=0&y=0 [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=8%2F25%2F06&x=0&y=0 [8/26/16]

    5 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=8%2F25%2F06&x=0&y=0 [8/26/16]

    6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [8/26/16]

    7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [8/26/16]