JULY 2018
Khaas Baat : A Publication for Indian Americans in Florida


Marriage and Money: Taking a Team Approach to Retirement

By haren mehta

Now that it's fairly common for families to have two wage earners, many husbands and wives are accumulating assets in separate employer-sponsored retirement accounts. In 2018, the maximum employee contribution to a 401(k) or 403(b) plan is $18,500 ($24,500 for those age 50 and older), and employers often match contributions up to a set percentage of salary.

But even when most of a married couple's retirement assets reside in different accounts, it's still possible to craft a unified retirement strategy. To make it work, open communication and teamwork are especially important when it comes to saving and investing for retirement.

Retirement for two

Tax-deferred retirement accounts such as 401(k)s, 403(b)s and IRAs can only be held in one person's name, although a spouse is typically listed as the beneficiary who would automatically inherit the account upon the original owner's death. Taxable investment accounts, on the other hand, may be held jointly.

Owning and managing separate portfolios allows each spouse to choose investments based on his or her individual risk tolerance. Some couples may prefer to maintain a high level of independence for this reason, especially if one spouse is more comfortable with market volatility than the other. However, sharing plan information and coordinating investments might help some families build more wealth over time. For example, one spouse's workplace plan may offer a broader selection of investment options, or the offerings in one plan might be somewhat limited.

With a joint strategy, both spouses agree on an appropriate asset allocation for their combined savings, and their contributions are invested in a way that takes advantage of each plan's strengths while avoiding any weaknesses. Asset allocation is a method to help manage investment risk; it does not guarantee a profit or protect against loss.

Spousal IRA opportunity

It can be difficult for a stay-at-home parent who is taking time out of the workforce, or anyone who isn't an active participant in an employer-sponsored plan, to keep his or her retirement savings on track.

Fortunately, a working spouse can contribute up to $5,500 to his or her own IRA and up to $5,500 more to a spouse's IRA (in 2018), as long as the couple's combined income exceeds both contributions and they file a joint tax return. An additional $1,000 catch-up contribution can be made for each spouse who is age 50 or older. All other IRA eligibility rules must be met.

Contributing to the IRA of a nonworking spouse offers married couples a chance to double up on retirement savings and might also provide a larger tax deduction than contributing to a single IRA.

For married couples filing jointly, the ability to deduct contributions to the IRA of an active participant in an employer-sponsored plan is phased out if their modified adjusted gross income (MAGI) is between $101,000 and $121,000 (in 2018). There are higher phaseout limits when the contribution is being made to the IRA of a nonparticipating spouse: MAGI between $189,000 and $199,000 (in 2018).

Thus, some participants in workplace plans who earn too much to deduct an IRA contribution for themselves may be able to make a deductible IRA contribution to the account of a nonparticipating spouse. You can make IRA contributions for the 2018 tax year up until April 15, 2019. Withdrawals from tax-deferred retirement plans are taxed as ordinary income and may be subject to a 10 percent federal income tax penalty if withdrawn prior to age 59½, with certain exceptions as outlined by the IRS.

Disclaimer: Securities and Investment Advisory services offered through SagePoint Financial, Inc., member FINRA/SIPC and a registered investment advisor. Fixed and/or Traditional Insurance Services may be offered through Capital Insurance & Asset Protection LLC, which is not affiliated with SagePoint Financial or registered as a broker-dealer or investment advisor.

Haren Mehta, managing partner of Capital Insurance & Asset Protection in Tampa, can be reached at (813) 679-5204 or email haren@mycapitalinsurance.com

Is a Con Artist Targeting Someone You Love?


Financial fraud is on the rise, and the elderly are among the most vulnerable. Merrill Lynch Wealth Management suggests that you watch out for the following warning signs — and take steps to help protect your family.

Suppose you have a mother or grandmother who lives alone. She hires someone to replace the roof on her aging house and gives him half the money up front. And that is the last she sees of her roofer. No matter how close your relationship, can you be sure she would let you know what happened?

Elder fraud is on the rise, but it remains vastly underreported. “Older people are often reluctant to complain about being duped,” says Tom Blomberg, dean of Florida State University’s College of Criminology and Criminal Justice. “They may fear appearing foolish or worry that well-meaning relatives will pressure them to move to a retirement community, depriving them of their independence.”

Even so, by 2020, more than 20 million Americans 65 and older will fall victim to some form of financial fraud, notes Blomberg. Here are some of the most common elder-fraud scams, along with strategies you can use to help protect your loved ones.

6 Classic Cons — and How to Help Prevent Them

1. Pros who are not legit: Con artists often advertise “foolproof” investments, or claim special expertise in working with retirees or older clients. Recent widows may be especially vulnerable if their husbands routinely handled the family finances, says Cindy Hounsell, president of the nonprofit Women’s Institute for a Secure Retirement, based in Washington, D.C.

What you can do: Be wary of anyone promising high returns with no risk. Remind family members that legitimate professionals will happily wait while you check references. If there is uncertainty about a company, it is also wise to ask for a second opinion from a financial advisor or another person you trust.

2. Fake home and car repairs: After storms, scam artists often go door to door, warning homeowners that their properties have been damaged and offering to make repairs at a big discount, says Blomberg. Then they may only pretend to do the work and demand payment. Similarly, auto mechanics can charge for parts not installed and work not performed, he adds.

What you can do: Help older relatives keep their properties and cars in good repair and urge them not to hire anyone who cannot provide clear identification and references.

3. Telephone and Internet fraud: These scam artists may be thousands of miles away, and they often play on a person’s trusting nature and desire to help others. A caller may implore you to send a donation for a worthy-sounding cause. And yet another congratulates you for winning a $1 million prize — and says all you need to do to claim it is provide your Social Security number to confirm your identity and pay a special collection fee.

What you can do: Set a firm policy not to give personal information over the phone and remind older relatives to do the same, suggests Debra Greenberg, a director in the Personal Retirement Solutions Group at Bank of America Merrill Lynch. “And if you want to make a pledge to a charity, ask to receive something in writing first,” Greenberg adds. Ignore Internet offers with obscure origins and prizes that come out of the blue and require a fee to collect.

4. Not-so-free lunches: Whether they are living independently or in a facility, older Americans are often targeted by unscrupulous salespeople offering a free lunch or dinner in return for listening to a sales pitch. As often as not, that pitch turns out to be a very hard sell. Victims can find themselves being pulled into a dubious purchase before the “free” meal is over.

What you can do: Make sure that family members know they must not sign a contract, make an agreement or pay out any money unless a trusted friend or family member is involved, says Blomberg. “Do not be trusting, but rather skeptical,” he says.

5. Overly friendly “friends”: Good friends are priceless, but con artists posing as friends can cost you dearly, says Daryl Gordon, a vice president at U.S. Trust, Bank of America Private Wealth Management. Someone who lives nearby may offer to assist with chores and errands, or even to serve as a home health aide — and soon begin “helping” with financial transactions, gaining access to accounts. Or the person might play on your sympathies, claiming to need a loan to prevent eviction, for example.

What you can do: These cases can be among the most difficult to prevent, with a lonely victim forming an emotional attachment to the perpetrator. Try to get your retired parents or grandparents to talk openly with you about their finances, suggests Gordon, especially if you know there are cognitive issues, and offer to review checking accounts for signs of trouble. “If you see a lot of checks made out to cash, or to someone you don’t know, consider that a red flag,” Gordon says.

Other red flags: Suspect signatures on checks, financial or legal documents, or sudden, unexplained changes to powers of attorney, wills or trusts. One way for family members to get an early warning about such potential red flags is through the Merrill Lynch Client Contact Authorization Form, notes Cynthia Hutchins, director of Financial Gerontology at Bank of America Merrill Lynch. "It authorizes an advisor to reach out to a family member or trusted family friend, if they spot unusual financial activity," she says.

6. Family fraud: Perhaps the most distressing form of fraud involves other family members. Problems may start innocently, when a son or daughter gains control of a retired parent’s accounts to help pay bills, Gordon says. After a while, the line between the finances of the parent and those of the child may become blurred, and the temptation to dip into the funds becomes irresistible. When the parent dies, other siblings could find that their expected inheritance has vanished.

What you can do: Even if one sibling takes on the job of helping with a parent’s finances, try to build transparency into the process from the beginning, with other family members staying involved through regular, open conversations. Or divide the duties.

“If two people have to agree before any decision can be made, then there are checks and balances,” Gordon explains. You might also consider asking your financial advisor to set up a multigenerational family meeting to discuss financial concerns.

In all of these cases, the best offense is usually a good defense. Criminals usually look for the path of least resistance, so if you make it clear that you and your loved ones will not be fooled; chances are they will move on.

Merrill Lynch makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) and other subsidiaries of Bank of America Corporation.

Investment products offered through MLPF&S:

Are Not FDIC Insured

Are Not Bank Guaranteed

May Lose Value

MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corporation.

© 2017 Bank of America Corporation. All rights reserved. ARBT6Y4V

For more information, contact Merrill Lynch Financial Advisor, Seema Ramroop, CRPS® of 26301 U.S. 19 N., Clearwater, FL, 33761 office at (727) 799-5621 or seema.ramroop@ml.com

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