I’m sure like many people, you’re trying to put away money for everything from a new vacation to retirement, and everything in between. But finding that money to do so is sometimes difficult.
So how about this? I’ll help by loaning you some money to get you on your way. As you put away money, I’ll match a portion of what you save and be your partner.
But it’s a loan. It’s not a gift. After all, I’m not made of money you know.
What are the terms?
Well, I haven’t decided yet. But I will tell you this:
At the time you want to repay, I’ll determine what interest rate to charge, but I can’t tell you beforehand.
If you pay me back too early, I’ll add on extra interest – I want my money working for me.
But if you wait too far into the future to pay me back, I’ll add on extra interest – I do want my money back sometime.
Oh, and if you wait way too long, I’ll require you to pay me back a certain portion each year whether you want to or not – and of course with whatever interest I decide to charge you at that time.
How’s that sound?
What am I talking about? Your traditional 401(k) or IRA of course! And those really are the rules. Your partner that is the IRS of course.
Now that it’s 2010, the IRS is giving everyone to change the rules. You can buy out that partner at today’s historically low tax rates. It’s called a Roth IRA conversion and it’s something that most people should do...unless you want to more in taxes.
I can show you that you may lose money – even if you have a safe investment like a certificate of deposit – just from changing tax rates. Email me directly at jack@merjfinancial.com
It’s 2010. Get rid of your partner!
This week’s trivia question: If a relative passed away and had $5 million in life insurance individually owned policies all left to you living in MA, what taxes would you pay on that amount?
A – Nothing at all. Life insurance proceeds pass income tax free.
B – You pay income tax on the proceeds.
C – You would pay tax on the portion of the proceeds that exceed the estate exemption limit.
D – You would pay both income tax and estate tax on the whole amount.
