Blog
Money Purchase vs Cash Balance vs Target Benefit Plans
Course: Retirement Planning Lesson 4: Understanding Types of Qualified Plans Student Question: Hi Bruce- I have studied the material in depth, but am still struggling with the distinction between Money Purchase Plans, Cash Balance Plans, and Target Benefit Plans. I have read all of the notes and think I have it and then get a…
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MEC Income Tax Ramifications
Lauren paid $50,000 for a MEC policy when she was 50 years old. What are the income tax ramifications if she takes a $10,000 loan 5 years after purchasing the policy? The policy was worth $58,000 at the time of the loan. Lauren would not have to report any taxable income or penalty. Lauren would…
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Does Car Insurance Follow the Car or the Driver?
Does Personal Auto Policy (PAP) insurance follow the car or the driver? The answer is… it depends! Let’s face it. This is can be a confusing topic. It’s no wonder there’s confusion – an online search of this simple question returns dramatically different opinions; some are correct, some partially correct, and some are incorrect. But even the…
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Excess IRA Contributions
Course: Retirement Planning Lesson 1: Using IRAs to Build and Distribute More Retirement Income Student Question: Hi Bruce- If an IRA owner over-contributes to his IRA, the owner must remove the excess contribution AND the earning on those contributions by the tax filing date to avoid a 6% tax penalty. However, the 6% penalty tax…
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Accelerated Death Benefits
Which of the following individuals would typically qualify for accelerated death benefits under their term life insurance policy? Ida who is expected to die within 7 months from cancer. Jacob who is expected to die within 10 months from AIDS. Kay who is expected to die within 3 months from kidney failure. All of the…
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CFP® Certificants in the News: Helping Veterans Stay Financially FIT
On Memorial Day, we honored those brave men and women who gave their very blood to protect and defend our freedoms. The sheer number of those who gave it all is humbling. Since our nation’s founding, those servicewomen and servicemen who died while serving is roughly equal to the population of Dallas, Texas – 1.3…
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Taxpayer Penalty – Late Income Tax Payment
Course: Income Tax Planning Lesson 1: Introduction to Taxation Student Question: Hi Dan- I have a question on Review Exercise #1 (below) Review ExerciseShane’s tax return was due on April 15. He filed on April 15 but did not pay his $125 tax bill until May 11. How much, if any, will Shane be penalized?…
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Taxation of Disability Benefits
Paula purchased an individual disability policy offered by her college alumni association to supplement the disability policy provided by her employer. Paula was out on disability for 6 months following a major heart attack. While on disability, Paula received $30,000 from her employer’s disability plan and $20,000 from her individual disability plan. How much of…
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To Roth or Not to Roth, That Is The Question
Conventional wisdom would have us believe that after-tax Roth IRA contributions only make sense if we expect higher taxable income and higher income tax rates in retirement than now. Is conventional wisdom wrong? Not completely but it is woefully simplistic in a complex financial world. Especially for client-facing advisors, the client implications of the Roth…
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