Never use a 401(k) to pay off debt

The number of people 65 and older that have filed bankruptcy has tripled since 1991. Those struggling with debt often tap into their 401(k) to pay it down, in an effort to pay their bills and to not have to file bankruptcy. Here’s what you need to know if you find yourself in this position. 
Funds in your 401(k) and IRA’s are protected in bankruptcy by federal law. So even if most of your assets are seized to repay your creditors, your retirement account is considered exempt and can’t be touched.
 The exemption of 401(k)s in bankruptcy started with the Employee Retirement Income Security Act of 1974, a federal law that sets minimum standards of protection for individuals who voluntarily contribute to retirement accounts and healthcare plans in the private sector. 
The special thing about a 401(k) is that it isn’t considered property of the [bankruptcy] estate. But if you transfer any or all of your 401(k) out your employer-sponsored account and into your regular checking or savings account, that money is no longer protected. Not only do you lose your retirement savings when you tap your 401(k) to pay down debt, but you also have penalties if you’re under age 59½. Outside of certain limited circumstances, the IRS imposes a 10% early-withdrawal penalty on funds in a traditional 401(k) withdrawn before that age, on top of the ordinary income taxes that you owe on the money you take out.  
If you have questions call 320-679-5183.

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Your Safe Money Show highlights for April 27th show

For this weeks Your Safe Money Show (April 27), as another school year is wrapping up, seniors are looking at their next step, and technical colleges are changing the way they recruit students. The trades are fighting back against the 4-year college as the only choice. We’ll look into that.
Also, if you paid more in taxes in 2018, I have something for you to consider that might help with taxes this year.
And I have the biggest reason you should never use your 401(k) to pay off debt.
Listen at 7:30 a.m. Saturdays at 95.5 FM KBEK.
They stream live at kbek.com.
To hear recent shows go to the podcast page at yoursafemoneyshow.com.

Travel Insurance

Social Security debt card

Retirees who don't have bank accounts or prefer not to use one can have their payments loaded on a prepaid Direct Express Debit Mastercard. 
There can be fees with these debt cards, here’s how to limit those fees. Debit card users can withdraw cash from Direct Express network ATMs for free once per deposit to the account each month. Additional cash withdrawals at network ATMs are 85 cents each. Since ATM withdrawals are limited, it's often more convenient to shop with the Direct Express debit card instead of using cash. This card can be used to make a purchase anywhere that a debit Mastercard is honored, which is just about anywhere, so use the card to make your purchases rather than using cash.
When you use your Direct Express debit card at retail locations, you can request cash back with your purchase. The smart thing to do with the card is to use it to shop, use it to pay bills, and then if you need to get cash back, you can do it at the point of sale. If you do that the card can be used virtually fee free.
While multiple ATM withdrawals trigger fees, you can get access to the cash loaded on to your card from a bank or credit union teller for free.
A paper statement mailed to you costs 75 cents per month. This fee is easily avoided by accessing your account information online. A funds transfer from your Direct Express debit card to a personal U.S. bank account costs $1.50 each time. You can avoid this fee by signing up to have your Social Security payments directly deposited into your bank account instead of applied to the debit card. Plus you get interest in a bank account but not with a Direct Express debit card.

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Closed on Good Friday

Sjoberg & Holmstrom Financial Services will be closed on Good Friday. 
You can leave a message at 320-679-5183 we will return your call as soon as possible.
We hope you have a blessed Easter.

What's happening on this weeks (April 20th) Your Safe Money Show

For most of us, buying a house is one of the largest financial purchases we ever make. On this Saturday's April 20th Your Safe Money Show, I have things you should NEVER do when buying a house. This is great information if you’re a first-time buyer or you find yourself after many years looking to buy a home. 
Also, on Saturdays show, a survey found 53% of Americans want to live to 100 but are anxious about paying for that long retirement. I have answers to help that anxiety.
And, we’ll look at the unexpected costs of retirement and how to handle those costs.
Tune in at 7:30 a.m. at 95.5 FM KBEK. 
They stream live at kbek.com.
Hear recent shows at the podcast page at yoursafemoneyshow.com. 

Social Security terms

Medicare Annual Wellness Visit

Coverage rules with Medicare can throw people. A good example is the verbiage “Annual Wellness Visit” as opposed to Annual Physical.
Federal law prohibits the health care program from paying for annual physicals, and patients who get them may be on the hook for the entire amount. But beneficiaries pay nothing for an “annual wellness visit,” which the program covers in full as a preventive service. What’s the difference? An annual physical typically involves an exam by a doctor along with blood work or other tests. The Medicare annual wellness visit generally doesn’t include a physical exam, except to check routine measurements such as height, weight and blood pressure. The focus of the Medicare wellness visit is on preventing disease and disability by coming up with a “personalized prevention plan” for future medical issues based on the beneficiary’s health and risk factors. Medicare beneficiaries pay nothing for the annual wellness visit as long as their doctor accepts Medicare. However, if a wellness visit, goes beyond the bounds of the specific covered preventive services into diagnosis or treatment — whether at the urging of the doctor or the patient — Medicare beneficiaries will typically owe a copay or other charges.
The main take away is when making an appointment be sure to say Annual Wellness Visit not Annual Physical.
If you have questions call 320-679-5183.

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Highlights for April 13 Your Safe Money Show

The April 13th Your Safe Money Show will be eye opening. Federal agencies, since 2004, have admitted to improper payments. Find out how much money has gone out and to whom that money went.

There’s a difference between an “Annual Physical”, and an “Annual Wellness Visit”, when it comes to Medicare and what they’ll pay for. This is important information if you are on Medicare.

 And I’ll explain how to avoid fees on your Social Security debit card. Yes, there is such a thing as a Social Security debit card.

Listen at 7:30 a.m. at 95.5 FM KBEK. They stream live at kbek.com. Hear recent shows at the podcast page here at yoursafemoneyshow.com.

Borrowing from your 401(k)

Spousal IRA

If you’re married and you want to put more money away for retirement you may want to look into a spousal IRA. A spousal IRA is an IRA that can be opened for a non-working or non-participant spouse. A non-participant spouse means a husband or wife who is working but does not have access to a retirement plan through his or her employer.

The IRS states that you must have earned income to contribute to an IRA. With a spousal IRA, you don’t need to have any earned income at all, but your spouse does. The spouse with earned income can contribute to his or her own IRA and also put funds into the spousal IRA. The IRS allows up to $6,000 in contributions to an IRA in 2019 for individuals who are under age 50. For those who are 50 or older, the limit in 2019 is $7,000.

 With a traditional IRA, when you make contributions to the account, those funds may be tax-deductible. When you withdraw from the account during retirement, the amount you take out will be subject to taxes. For a Roth IRA, you’ll make contributions to the account with money that you’ve already paid taxes on. When you make withdrawals in retirement, those funds won’t be subject to additional taxes.

Taxes play a key role when deciding between a traditional spousal IRA or a Roth spousal IRA. To open a spousal IRA, call my office 320-679-5183.

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Your Safe Money Show highlights for April 6 show

I think you’ll like the April 6th Your Safe Money Show, because I will share how the definition of aging is changing, is 75 the new 65? 
Tying into that discussion, what things matter most later in life? We’ll talk about our “third age” and what we have to look forward to.
And I’ll have your April financial to-do list.
Tune in at 7:30 a.m. on Saturdays at 95.5 FM KBEK. They stream live at kbek.com.
To hear recent shows go to the podcast page at yoursafemoneyshow.com.

Long term care costs

Social Security terms

By understanding terms used with Social Security you’ll have a better chance of boosting your payments. 
We’ll start with FICA taxes. “FICA” stands for the Federal Insurance Contributions Act. FICA taxes fund both the Social Security and Medicare programs. If you work for an employer, you each split a 12.4 percent payroll tax for Social Security. You also split a 2.9 percent Medicare tax. 
Your earnings record is the Social Security Administration’s record of your lifetime earnings — “a chronological history of the amount of money you earned each year during your working lifetime.
 Your full retirement age is the age at which you can begin collecting your Social Security retirement benefits in full. It’s important to know your full retirement age because claiming your Social Security benefits before or after that age will lower or increase the amount of your benefit payment, respectively. If you begin collecting benefits before reaching your full retirement age, your monthly benefit will be less than your full benefit amount — for the rest of your life, this is called delayed retirement credits. In other words, you will receive a smaller monthly benefit payment than you would have received if you waited until full retirement age to start collecting. If you want more information, ask for Your Guide to Social Security by going to yoursafemoneyshow.com. 

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