Wednesday, November 30, 2011

Are Your Beneficiary Designations Up To Date?

Are Your Beneficiary Designations Up to Date?

As the year-end approaches, there are many things on one’s financial to do list. One that is often overlooked is reviewing the beneficiary designations on your 401(k), Individual Retirement Account (IRA) and life insurance policies. For many Americans, much of their wealth is held in these accounts. The rules can be complicated especially for those who have remarried.
Designating a beneficiary for these accounts allows for the assets to avoid probate and go directly to the named beneficiary. There are some important points to keep in mind.
401(k) plans are governed by federal law which states that the primary beneficiary of a married person is their spouse. If a married person dies, their spouse is entitled to 50 percent of the account balance unless the surviving spouse has signed a Spousal Waiver. 
 
These rules can cause complications if not understood. For example, an owner of a 401(k) divorces and changes the beneficiary designation to her children. She remarries and soon thereafter dies. Despite her children being named beneficiaries, her new husband is entitled to half of the account balance under the law even though he was not named as a beneficiary.
IRAs are governed by state law and spouses are not automatically entitled to half of the account. There is much more flexibility in naming a beneficiary. In fact, the owner of an IRA can name anyone a beneficiary. However, there are cases in which a long divorced spouse forgot to change the beneficiary designation removing his ex-spouse before he died. The result was that the assets passed directly to the ex-spouse. Once the owner of a retirement account dies, the designation is written in stone and cannot be changed. In fact, many people mistakenly think that their will supersedes a beneficiary designation. However, this is not true. Beneficiary designations trump the instructions left in one’s will. 
As we head into year-end:
  • Check your beneficiary designations and update them as needed.
  • Use the proper forms issued by the custodian of the account so there are no mistakes or misunderstandings.
  • Consult with a financial planner, tax professional or attorney to see how these rules may apply to your situation.

Thursday, November 17, 2011

Full Stockings and Full Wallets...a Happy Holiday!

How a Holiday Spending Plan Can Turn Humbug to Ho, Ho, Ho!

How a Holiday Spending Plan Can Turn Humbug to Ho, Ho, Ho!Last Updated: November 1, 2011
The decorations, the shopping mall and, of course, all those screaming retail deals mean it is time for American consumers to start compiling their holiday shopping lists.
The challenge many consumers face when holiday gift-giving season rolls around is making sure that in opening their hearts to show appreciation for the people they care about, they do not open their wallets beyond what is financially practical. The post-holiday bills that result from generous-to-a-fault holiday gift-buying habits can be harder to stomach than a stale holiday fruitcake.
“The generosity of spirit and the feeling of joy you get in giving gifts can turn into feelings of buyer’s remorse, pain and anguish come January when you get your credit card bill,” said FPA member Charlotte Dougherty, CFP®.
All it takes to experience the joy of giving without the post-holiday debt hangover is a little advanced planning, creativity and control over your consumer impulses.
Start by assembling a list of the people for whom you plan to give gifts, and determine a bottom-line amount of how much you can afford to spend on gifts this year. Then determine what you can spend for each gift, based on that figure.
If money’s really tight, use unique gifts to show you care and lighten the financial load in the process. “It does not have to come from the store to come from the heart,” Dougherty said. Indeed, some of the best gifts cost next to nothing. “Use your talents and your creativity to come up with homemade gifts things like baking cookies or knitting something or making a photo book or calendar for someone.”
When you start shopping, have the list and budget in hand, and stick to it. Track each gift you purchase, including the extent to which it exceeded or fell beneath the budgeted amount.
Just say no to impulse buys and plastic. Those amazing holiday deals are difficult to resist, especially if you are armed with a credit card. But resist because the credit card finance charges you will incur from an impulsive gift-buying binge are a gift that will keep giving (headaches) well into the New Year. Dougherty’s advice: “Use a debit card or cash whenever possible and limit the amount you put on a credit card to what you can pay back right away.”
Stash money for holiday gifts in a savings account. It may be too late to begin saving for this year, but there is always next year. So start setting aside a little each month now.
Reward yourself for sticking to your holiday spending plan. As good as it feels to give, receiving is not bad either. So buy yourself something nice (but not too pricey!) for staying within budget.

9 Ways to Keep Holiday Spending Under Control

9 Ways to Keep Holiday Spending Under Control

Last Updated: November 1, 2011
As the year comes to a close, spending in most households heads up – on holiday gifts, entertainment and, depending on where you live, on already-high energy costs.
It’s easy to lose control. So make a plan now to minimize debt while putting money where it absolutely needs to go.
Put your current finances under a microscope: Call it a gift from you to you. If you’re trying to get your finances in order, plan a visit now with a financial planner. This meeting should extend beyond your holiday spending to setting goals for saving, investing and extinguishing debt and setting financial goals for the future. At the meeting you can also examine your spending patterns and the emotional drivers behind many of your financial decisions.  It will start the New Year out a whole new way.
Create a holiday budget: Obviously if you have credit card debt now, you don’t want to elevate those numbers. Set a spending number you will not exceed and start setting aside cash in an account to cover it.  When should you make the budget? As early in the year as possible, but if you haven’t started shopping yet, figure out how much money you can realistically set aside and stay as close to that number as you can.
Avoid the binge: Staying on a financial diet can be tough. Permit yourself to stray a bit, but commit to avoiding ANY unplanned purchase above a certain threshold, such as $25.
Revamp your gift policy for all the adults on your list: Does everyone on your gift list over the age of 21 really need a present? The answer is as individual as your family and friends, but if you think it might be welcome, make a suggestion for a gift drawing, a budget limit, a moratorium on gifts or some other alternative where you trade off gifts for quality time. For instance, you might agree to take each other out to dinner during the New Year or find some other fun way to spend time together. You could help a friend or family member with a household project that could save them money. In any case, you’ll save money wandering around the mall wondering what to buy, and personal time might be more enjoyable in the long run.
Start your shopping list for next year: With your budget figure in mind, start jotting down items when your kids or other friends and family members mention something they want. If it’s something you know they’ll definitely want, keep an eye peeled for that item on sale before the holiday craziness begins. Granted, you might see an item at deep discount when the holiday season officially begins, but you won’t need to burn gasoline or fight your way into parking lots and through crowds to get it, which may be worth the whole difference in price.
Price gifts online, then compare by phone: Whether you plan to shop online is a separate issue, but browsing online can be a very good idea. Websites like mySimon.com or cheapuncle.com can help you determine general price ranges for gifts you need that are sold online. Once you have those ranges, get on the phone and determine whether you can buy the same items more affordably at retailers close to home – again, save gas whenever possible.
Don’t forget the coupons: Coupons aren’t just in newspapers or direct mail anymore. If you know particular stores where you’ll shop, get on their e-mail lists – you’ll start getting coupons and news of specials on a regular basis. Also, if you do shop online, sites like BradsDeals.com and CouponCabin.com have promotional codes that you can type in for discounts before you hit the “total” button on an order. 
Don’t forget taxes, shipping or fine print when shopping online: Online prices might look like a great deal until you realize you may be spending another 20 percent of the gift’s price to get it to your house or the recipient. Also, read product descriptions very carefully to make sure what you’re buying contains all the features of the item that you could buy at the store.  At the same time, if there is a legal opportunity to avoid paying sales tax, watch for that.
Allocate spending for charity: You can either make charity a separate item in your annual budget or part of your holiday budget, but if there are specific charities you want to support by yearend, it’s a good idea to decide on those amounts before the holiday shopping season gets underway. This way, you’ll support the organizations you wish to without going outside your budget. Also, don’t forget to check with your employer to see if they’ll match your contribution and consider gifts of appreciated stocks rather than cash if it fits your charitable goals and tax situation.

Thursday, November 3, 2011

Returning Military: Planning for Financial Re-entry to Everyday Life

Returning Military Need to Plan a Financial Re-entry to Everyday Life

Returning MilitaryIt's never too early for military personnel and their families to start talking about the right financial steps to make when returning home.
One of the smartest moves a serviceman or woman can make is scheduling a meeting with a trained financial or tax adviser. This is best done before deployment, but it's never really too late to get advice.  In the case of married military personnel, it might be wise for the spouse at home to locate a qualified financial planner near them to start the discussion. 
Here are some suggestions military personnel and their spouses should follow during deployment or at the end of their service:
Prevent identity theft: If a member of the military on active duty hasn't registered an "active duty alert" with the three major credit reporting companies (Transunion, Experian and Equifax), they should do so immediately. Such an alert – effective for one year but renewable — automatically stops all credit offers from being mailed to their homes. A call to any one of the credit bureaus will automatically put an alert on an individual's file with all three agencies. For extra protection, get a trusted family member authorized to check your credit report annually and place or remove an alert in your stead.
Know your rights if problems occur: The Servicemembers Civil Relief Act of 2003 provides a variety of financial protections for active duty personnel. The act provides stays on civil litigation including bankruptcy and divorce and prevents wage attachments while military personnel are away. Coverage requires active duty confirmation from a commanding officer but expires 90 days after that status has been terminated. The law also makes it tougher – but not impossible – for landlords to evict military families for nonpayment of rent.
Note credit protections: The 2003 act also freezes credit card, mortgage and some student loan interest at six percent if military personnel were approved for the loans before they were called to active duty. Reservists and active duty members of the military assigned away from their permanent-duty stations may receive a deferment for up to three years on student-loan payments as well as a break on accruing interest on missed payments. Finally, deployed military away for at least six months can terminate a car, truck or other vehicle lease without penalty.
Understand tax issues: Activated and deployed military personnel receive special tax breaks at the federal and sometimes state level. Military income earned by soldiers in combat zones is tax-free and they don't have to file taxes until 180 days after their return. Activated military personnel also are entitled to an extension on the period of time allowed for a tax break on the profits from the sale of a home. They're also entitled to tax breaks on childcare assistance and certain travel.  Nontaxable combat pay can also be considered for the Earned Income Credit.
Plan ahead for lump-sum earnings: For returning military receiving accumulated military pay or compensation from civilian employment, it's tempting to take the money and blow it. It makes sense to sit down with a financial and tax adviser before a dime gets spent.
Know injury benefits: The Veterans Administration's Traumatic Injury Group Life Insurance Program (TSGLI), launched late in 2006, has already distributed more than $165 million in grants between $25,000-$100,000 for wounded troops. Servicemen and women need to register for the program for a monthly fee of $1 for the extra coverage on top of what they pay for Servicemembers Group Life Insurance.
Don't forget retirement: Military service counts toward vesting for all civilian retirement plans — even though employers may not always be required to give you your job back when you return.  And thanks to the Heroes Earned Retirement Opportunities (HERO) Act enacted in May, military and their families can actually put more money into their traditional or Roth IRA accounts. The act allows tax-free combat pay to be considered as earned income for determining the contribution amount for traditional and Roth IRAs. Before, a military person who earned only combat pay wasn't allowed to contribute to either form of IRA. 
Thrift Savings Program (TSP): This program allows you to put money into the TSP program each pay period while deployed. This money will be set aside in the 401(k) program and will not be taxed when you retire because you did not benefit from any tax savings during deployment. While the normal contribution limit for this 401(k) plan is $16,500, during deployment the limit is raised to $49,000 annually (plus an extra $5,000 annually if you are over age 50).
Saving money while deployed: In addition to the retirement savings opportunities, a deployed service member can put up to $10,000 in a savings program under the Savings Deposit Program and earn an annualized 10 percent interest for the period that the money is invested and for six months after returning from deployment. The money is deducted from each pay period and can be for the net amount of your pay after deductions until you reach the $10,000 limit. This is a great chance to give yourself a bonus for saving money.

Finance 101 for Military Families

Red, White, Blue…and Green: Finance 101 for Military Spouses

Finance 101 for Military Spouses
Among the many unique challenges that military families face, managing household finances can be especially demanding, particularly for military spouses who must handle the majority of those responsibilities when military duty takes their husband or wife elsewhere for extended periods of time.
Recognizing just how vital financial readiness is for military families, the U.S. government and each of the armed forces requires their personnel to take financial training courses. In addition, they offer a wealth of financial counseling and educational resources to their spouses.
"It pays to take advantage of those resources," said Sylvia Kidd, director of the Association of the U.S. Army (AUSA) family programs. “When both spouses prepare and are proactive about their finances, they stand a great chance of developing a very nice nest egg.”

Basic Training

First, some tips to help military spouses fulfill their financial duties at home:
  • Start immediately by developing a spending or financial plan detailing your current situation, goals and how you plan to attain your financial goals. Rely on the resources listed in the next section for planning help.
  • Make money management and financial planning a joint effort, so you are both fully aware of debt obligations, creditors and when bills are due.
  • Establish a joint checking or savings account with direct deposit that you both maintain.
  • Create a joint account specific to deployment so when your spouse is away, they do not interrupt the home account and leave your family in a crisis if your account becomes overdrawn.
  • Plan for deployment well in advance with a deployment spending plan.
  • Stash the extra cash. Deployment often results in a pay increase; however you should save it, since it will go away when your spouse returns. Save or invest that money instead of spending it, advises Kidd.
  • When you are apart, use technology including phone, email, Skype, etc. to stay connected and talk through financial issues when they arise.
  • Discuss how your deployed spouse wants to hear about financial issues to alleviate extra stress after a long day on patrol.

Resources

The U.S. government offers several military-wide programs worth investigating, among them Military OneSource, which provides free one-on-one financial counseling sessions with a financial planner. To make an appointment or a phone consultation, call 800-342-9647. Additionally, spouses can access MHN Government Services’ Personal Financial Counselor Program for individual and group counseling.
Also check out:
Each military service provides its own financial readiness resources while participating in the Personal Financial Management Program (PFMP), which provides classes, one-on-one counseling sessions and information. For details on services specific to each arm of the military, check out:

No Shave November @ FAB&T

That's right, the men of First Arkansas Bank & Trust are putting down their razors for the month of November in honor of "No Shave November" to benefit Prostate Cancer Awareness. All men participating in the program were asked to donate money to the Arkansas Prostate Cancer Foundation in order to not shave. Also, to get the ladies involved, they are encouraged to donate $1.00 for the person that they think will have the best (and worst) beards at the end of the month. All money raised will go to the APCF.

In making this announcement, FAB&T Chairman, President and CEO Larry Wilson stated that, "Prostate Cancer will affect about 1 out of every 6 men during some point in their life. In 2011, about 240,890 new cases of prostate cancer will be diagnosed. While these numbers are sobering, it is important to note that early detection can help increase the survival rate and quality of life for men tremendously. We feel it is important as good stewards of our communities to raise awareness of this disease, and that is why we are proud to participate in 'No Shave November."