As promised, it’s Lori back again to re-introduce you to Roth IRA’s, but this time, as great financial gifts for your lucky and hard-working children or grandchildren. As I said earlier in the month, there are very few investments which grow tax free but 529 plans and Roth IRA’s do just that!

Many of you are familiar with Roth IRA’s, but for those of you that are not, here is a brief overview:

Roth IRA’s were created by the Taxpayer Relief Act of 1997 to help Americans save for retirement. These IRA’s have become enormously popular in the last 20 years but there are some important considerations:

• The dollar contribution limits are the same for Roth IRA’s and traditional IRA’s. Eligibility for a Roth IRA requires “earned income,” subject to an income cap which is not present for traditional IRA’s.
• Contributions are made with after-tax dollars, unlike those in traditional IRA’s or most company sponsored retirement plans.
• Because the contributions are made with after-tax dollars, the contributions can be withdrawn at any time, without tax or penalty. This might be important for young investors like your children or grandchildren who might need the money they invested before retirement.
• Unlike traditional retirement plans, the earnings can also be withdrawn tax-free, subject to owner age and account duration rules, and there is no requirement for distributions to begin at 70½ years of age.

As I said above, there is a requirement for the Roth IRA account holder to have “earned income” in order to be able to contribute BUT the actual contribution can be funded by anyone (YOU in this case) as long as the dollar amount of the contribution does not exceed the owner’s earned income or annual maximum allowed.

Head spinning? How about an example? You have a 19 year old grandson who worked over the summer as a lifeguard at a community pool. He earned $2000 and will receive a W-2 from the city. I am guessing he probably can’t invest this $2000 in a Roth IRA because he is saving every penny for college, BUT you can fund it for him. You have until April 2019 to make this 2018 Roth contribution. We will help you understand eligibility requirements and then help you actually pull this off.

Want to read more about Roth IRA’s?  See attached link. https://www.investopedia.com/terms/r/rothira.asp

It’s Lori blogging in December to share our thoughts on great holiday financial gifts for your children and/or grandchildren. This post will cover 529 educational plans and the next one will re-introduce many of you to Roth IRAs. By the way, we are not suggesting that you forego fun gifts for your offspring, but we really like the idea of longer term not nearly as “fun” gifts to help secure the financial futures of your lucky family members.

As many of you know, there are very few investments which grow tax free but 529 plans and Roth IRAs do just that.

529 plans are state run educational savings plans which can be used for very broadly defined educational expenses for adults or children. Starting this year, these funds can be used for pre-college, trade school, or college tuition/fees. The investments in a 529 plan can be made by anyone, subject to gift tax requirements, and are made with after-tax dollars although some states offer a state tax credit to parents who contribute in their state of residence (North Carolina does not offer this credit at this time). The funds in a 529 plan can be moved to another child and the funds do not have to be used in the state in which the plan was funded. Unlike other investments, 529 plans are controlled by the account “owner”, not by the child. Taxes and penalties are due if money is not used for educational expenses, but again, the definition of educational expenses is quite broad and usually includes computers, books and room and board.

These plans carry low management fees because they tend to be “target date” funds where the investment mix is automatically re-balanced as the child gets closer to college age.

Although 529 plans are not LFS managed assets, we would be happy to assist you in starting one for your children or grandchildren, or even for yourself! There is no minimum dollar requirement to open an account and dollars can be added throughout the year.

If you want to read up, see link below, or feel free to call us to talk more.

https://www.investopedia.com/terms/1/529plan.asp

Hi everyone. It’s Lori blogging today from our Atlanta LFS office. I just want to share a few quick updates and an invitation for all of you.

First (and most important if you ask me!) is that after 250 grueling study hours, I have just passed the Series 65 investment advisory licensing exam and am now a registered investment adviser along with my dad Bernie and sister Marci. You will get formal notification in Q1 but I just wanted to share the good news now.

Although Marci has been working out of our new office in Atlanta since January and I joined her in June, we haven’t had an Open House yet to show off our new digs. We never want to pass up the opportunity to celebrate good news, and since the market isn’t providing much these days, we are throwing ourselves a party!

The Atlanta clients have already been formally invited, but if anyone else is looking for an excuse to visit Atlanta, we would love to have you too. Just let us know!

Date: Sunday December 9

Time: 4 to 7 pm (drop in)

If you are feeling a bit queasy today, it’s with good reason. Stocks have declined precipitously over the last couple of days and there may well be more to come. There is no denying that it has been painful to watch.

Since we don’t know how steep or prolonged this decline may be, let’s spend a few minutes on what history has shown regarding stock market declines.

First, despite the pundits on TV and online, outside of an external event like a terrorist attack, no one knows what triggers a rapid sell off. Contributing factors MAY include the strong jobs report last week that raised inflation fears, the Federal Reserve’s likely interest rate hikes this year, Washington dysfunction, or a stock market that has been moving higher almost every day for the last year. The steep decline in the last several days is only a fraction of the huge stock market gains we have all gotten in the last year.

The US economy is strong. Corporate earnings are growing and both large and small companies stand to benefit from the recently passed tax legislation. The housing market continues to rebound, and consumer confidence and spending are increasing.

Obviously, the stock market and the economy don’t move in tandem every day, and this selloff might continue for a while, so how do we as investors respond?

Our recommendation, as always, is not to panic sell (or buy). While this is a difficult period for sure, history has shown that selling into a downturn rarely works out over the long term. Our goal for all of our clients is that you have a sufficient allocation to cash and bonds to both provide for near term cash needs and allow you to sleep at night during these periods.

The most important message we want to send this morning is that we are here. Call, email, or come by either office. If you are nervous and want to talk, that’s what we are here for.

Best wishes for a healthy, happy, and prosperous 2018!

Over the last several months, we’ve enjoyed showing many of you our new office (and Linder home) in North Carolina.

Now, we are excited to announce the opening of our new office in Atlanta, located in downtown Alpharetta. The new address and phone number:

308 Maxwell Rd, Suite 300
Alpharetta, GA 30009
770-696-4470

It’s still a bit of a work in progress, but the internet, phone, and coffee pot are working, so we are open for business and looking forward to seeing you.

Of course, the “brilliant” advice you receive from both offices is unchanged!