Readers get help from local experts
Callers to Ask An Expert hotline get advice on retirement, taxes.
Callers to the annual Ask An Expert hotline on Oct. 20 asked certified financial planners about retirement, investments, college expenses and even how to pay the taxes on a big gambling win.
Here is a sampling from the free event sponsored by the Orlando Sentinel and the Financial Planning Association of Central Florida:
Q
: I recently left my job. What should I do with my 401(k)? — T.W., Orlando
A
: Some plans provide good, low-cost investment options while others charge high fees. If you are in a plan with high costs, you can roll it over to a low-cost provider. Rolling your 401(k) into an IRA will also give you more investment options. Work with an advisor to help you select investments that will provide you with a low-cost, well-diversified portfolio. — Bob Rall, Rall Capital Management, (321) 452-1251
Q: I was involved in an automobile accident and received a check for my injuries. Do I have to claim this amount on my federal taxes? — M.W., Gotha
A: No. Amounts received as damages for personal physical injuries are excludable from federal taxes. —
Helen Von Dolteren-Fournier, AEGIS Advisors, LLC., (407) 539-3939
Q: I’m trying to pay off credit card debt. I have a house with some equity, and I also have a rental property with no debt. What should I do? — J.T., Orlando
A: You can consider a home equity line of credit or a cash-out refinance on your home, but both of those options only refinance the credit card debt. Selling the rental property will actually pay off the debt and perhaps put you in a better position. — Mike Salmon, Moisand Fitzgerald Tamayo, LLC, (407) 869-6228
Q: I’m behind on two of my four credit card payments. What’s a good plan to repay my debt?
— T.A., St. Cloud
A: You told me you already renegotiated your payment on one of the biggest card balances. Keep doing what you’re doing because your debt balance is manageable if you continue on your plan. — Dennis Nolte, Seacoast Investment Management, (407) 506-2173
Q: What amount of money can I give my children with no tax ramifications? — P.L., Ormond Beach
A: In 2019, you can give $15,000 per person without filing a gift tax return. If you are married, you and your spouse can each give $15,000 per child.
— Rhonda Shurtleff, Stonebridge Financial Group, (407) 695-7100
Q: I am a Florida resident who will be receiving an inheritance of $50,000. Will I have to pay any estate or inheritance taxes? — Name not given
A: It’s possible the estate of the deceased will owe taxes, but you as a Florida resident will not owe any inheritance or estate taxes. — Charlie Fitzgerald III, Moisand Fitzgerald Tamayo, LLC, (407) 869-6228
Q: How should I invest a $16,000 lump sum from my pension? I’m conservative and concerned the stock market will crash. — C.T., Orlando
A: Bank certificates of deposit will guarantee your principal and interest if held to maturity and are covered by FDIC protection. Consider purchasing two or three different maturities in the event interest rates change. — John Pinkley, Raymond James and Associates, (407) 246-4973
Q: I am 71 with $9,000 in my IRA. I know I need to take a required minimum distribution prior to the end of this year. I also want to take a trip to Italy. Can I fund my trip to Italy using my RMD? — A.M., Kissimmee
A: Yes, you can. However, your RMD is likely to be much less than the cost of your trip. That said, you can take more from your IRA than just your RMD. You could use the entire $9,000 toward your trip, but make sure you have enough to pay the federal income tax that will be owed. — Larry Breen, Breen Financial Management, Inc., (407) 712-6780
Q: I’m looking to sell the house that I’ve lived in for almost 30 years and move to the Panhandle. I’m married, and I have a $400,000 gain on the house. What are the tax implications? – J.M., Longwood
A: Since you’re married and have lived in your home for two of the past five years, you can exclude up to $500,000 of gain from the sale of your home. So you won’t owe any taxes. — Tommy Lucas, Moisand Fitzgerald Tamayo, LLC, (407) 869-6228
Q: My son died unexpectedly before removing his ex-wife as the primary beneficiary of his IRA. I’ve been told she may not be the beneficiary because they were divorced. Is this true? — T.V., Sanford
A: Yes. Since July 1, 2012, when the Florida law changed, ex-spouse beneficiary designations are automatically void when the divorce is final and a new beneficiary form must be completed after the final divorce if the ex-spouse is to be the beneficiary.
— Sylvia Presley, Presley Tax and Accounting, (407) 331-7665
Q: My latest mutual fund statement showed that my mutual funds changed from C to A shares. Should I be concerned? — R.G., Melbourne
A: No, and your account may benefit from having lower underlying management fees. Typically, a mutual fund will convert shares purchased under a B or C sales agreement to A shares after a specified time frame. —
Beth Fleming-Brown, Lincoln Financial Advisors, (407) 551-4306
Q: How should I best rollover my 401(k)?
— L.S., Sanford
A: Do a direct rollover IRA so you are not taxed on the funds until you are ready to withdraw them. I would also recommend speaking to a certified financial planner to help you determine the best way to invest the funds. — Christopher Dale, Life After Grief Financial Planning, (407) 917-1913
Q: My daughter is a junior in college, and our 529 plan is running low. I have more than enough money set aside in a high-yielding savings account. Should I transfer more money into the 529 plan to pay her expenses? — L.A., Orlando
A: If you’re in the distribution phase with your 529 plan, with no other children who will be attending college, there is an added level of complexity by adding an extra step to paying the tuition. So if the funds were available elsewhere, paying the college directly will be just as beneficial and not trigger any gift taxes.
— Daniel Robinson, Sigma Investment Counselors, (321) 252-4868
Q: I am concerned with the cost of long-term care are and if I have enough money for it.
— G.C., Clermont
A: The first thing to do is to get real numbers. Visit facilities and get costs. Determine your net worth and your cash flow and what your cash flow would look like with long-term care expenses. Next, have a family meeting to discuss options and costs. Lastly, meet with an elder care attorney. — Wynn Smith, KAFL Insurance Services, (407) 497-2584
Q: I have a special needs son who has an inherited IRA. I’ve been advised to cash it in for him by a couple of people but I’m not sure what to do. — E.V., Orlando
A: If your loved one is receiving state or federal benefits, then a large sum of income may cause these benefits to be forfeited. Consult with an estate planning attorney who has expertise in special needs planning. He or she might also be able to suggest additional benefits that you’re not aware of.
— David Blount, Investment & Insurance Planning Services, LLC, (407) 719-0940
Q: I recently won more than $27,000 from a slot machine at a casino. Do I have to pay taxes on the winnings? — B.B., Lakeland
A: When you are paid your winnings, you typically have to provide your Social Security number and tax information to the casino. They will generally report your winnings to the IRS using a W-2G. Please keep in mind, even if you do not receive a W-2G, you are still required to report all gambling winnings. — Colby Winslow, Creative Planning, Inc. (407) 280-3029
Q: I am 64, newly retired and in the 12% marginal tax bracket. I have about $1 million in my IRA and no other income. Should I convert some of my money into a Roth IRA? — M.J., Longwood
A: Yes, you should consider taking partial distributions from your IRA, paying the tax and moving the assets into a Roth IRA, since the money will be taxfree going forward. — John West, III, Spraker Wealth Management, 407-478-7899
Q: My daughter is 46 and self-employed. How much can she save toward retirement in her solo 401(k)? — P.D.F., Orlando
A: The maximum amount a self-employed person under age 50 can contribute to a solo 401(k) for 2019 is $56,000. — Marisa Bradbury, Sigma Investment Counselors, (888) 718-1132
Q: I have three stocks that are held through ComputerShare. How do I find out the cost basis?
— E.P. Geneva A: Contact ComputerShare and ask it to provide you with written documentation that summarizes your cost basis. — Chris Toadvine, Certified Financial Group, (407) 869-9800
Q: I have $20,000 in my savings account. How should I invest it for the long term?
— R.B. Cocoa Beach
A: You should consider owning stocks as your best investment. I recommend growth mutual funds to diversify your portfolio and reduce risk.
— Gregg Collier, Collier Financial Solutions, Inc., (352) 385-0073