As the CEO of www.taxconnections.com, I had been searching for a top expert in Financial Planning. Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series.
On Fridays, TaxConnections presents questions often asked of a Financial Planner. Although the majority of Ed Mahaffy’s clients have in excess of 1M in assets, Ed has made himself available to answer financial planning questions for our readers.
Dear Ed: Financial Planning Questions
Question: Do individuals have the option to forego a retirement plan required minimum distribution (RMD) in 2020?
Answer: Yes. If taken in 2020, the distribution will be treated as a voluntary distribution. The distribution is still taxable, but the withdrawal can also be converted to a Roth IRA. The RMD waiver applied to SEP, SIMPLE, 401(k), 457(b) as well as 403(b) plans although defined benefit plans are not part of the RMD waiver.
Question: When might gifting “upstream” to parents make sense?
Answer: If parents are in much lower income tax brackets, gifting stocks or mutual funds may make sense as payouts are generally treated as qualified dividends with 15%-20% income tax. Single taxpayers earning up to $40,000 and married filing jointly earning up to $80,000 have a tax rate of zero.
Question: What is your investment style?
Answer: Inquiring about an advisor’s investment style can ensure that the advisor can articulate their investment approach In a way that is easy to grasp.
Do You Have More Financial Planning Questions? Ask Below Or
You can reach Ed Mahaffy directly at email@example.com or call Ed at 501.603.0406
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