Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Sunday, December 6, 2015

Take Your Required Minimum Distribution (RMD)

If you were 70½ in 2015 or are older, then you need to take a required minimum distribution (RMD) from your qualified accounts (i.e., IRA type accounts).  If you turned 70½ this year, then the distribution must be taken by April 1 of 2016.  Otherwise, the deadline is 12/31/2015.

If you are a lot younger, skip to the last paragraph!

The custodian of your qualified accounts is required to notify you that an RMD is required on the balances you held with them on 12/31/2014.  If an account was rolled over during the year, you need to find out if the distribution was taken and, if not, the amount that needs to be taken.

Failure to take the required distribution results in a 50% excise tax penalty.  If you find yourself in this boat, you can get a waiver by first paying the penalty and then contacting the IRS and doing a triple somersault back flip through a hoop for them.  Recommendation:  take the distribution as required, on time.

If you have an IRA at Schwab, click "Balances":

Source: Charles Schwab


Near the top left, you'll see a dark blue box which contains your accounts.  Make sure you select your IRA(s) and then scroll down.  On the right hand side, you'll see this:

Source: Charles Schwab
As shown by the arrow, you want the "Remaining RMD To Be Taken" to be zeroed out.

To take the distribution ($13,298.36 in this example), you need to have the required amount in cash in your IRA.

Where do you put the distribution?
 This, of course, is up to you.  You can have it sent to you, or you can put it in your taxable brokerage account.

But what if you had an IRA transferred to Schwab in March, say, of this year?  Then, obviously, they won't know what your balance was at the end of 2014; and the previous custodian probably did not take the distribution.  But this is not a problem.  Schwab, as well as many others, provide easy-to-use calculators online to figure the distribution amount.  Here is Schwab's:  Schwab RMD Calculator.

IMPORTANT:  ALL OF THIS MAY NOT APPLY TO YOU BUT TO SOMEONE YOU KNOW.  You may want, for example, to casually mention to seniors (as a great conversation starter) that you just learned about the high fee the IRS charges if people miss their RMD.

Tuesday, December 1, 2015

A Couple of Good Reads

This is the time of year where financial writers like to recommend mutual funds for the coming year. Do you follow their recommendations?  If so, do yourself a favor and read The Best Mutual Funds to Buy Right Now! by Andrew Hallam.

Another good read is at MarketWatch by Robert Powell:  You may need less retirement income than you think.  The article illustrates to me that the whole subject of retirement planning is treated simplistically by researchers, and individuals should be aware of this.  Even going beyond the excellent points made in the study cited by Powell is the fact that individuals vary in the amount they spend during their retirement years.  Many spend heavily at first, doing the traveling or other expensive endeaors they have dreamed of, get it out of their system, and then settle in.  A decade then follows where spending may be somewhat less and even less than the 80% cited by Powell.  Closer to the end, or as Ed Slott is fond of saying "when the life insurance matures," medical costs ramp up.  The point is that spending in retirement is generally more complex than generally made out to be, and it is less cumbersome for researchers to just use simple percentage rate drawdowns.