A Roth 401k plan is generally a poor savings tool over the long haul beacuase of the loss of the immediate tax deduxtion, however there are two basic and simple to see events in which it might make sense.  The first is when you are currently in the lowest tax bracket and are sure you will be in a higher bracket in retirement.  This can happen for example for someone who is partially retired and expects to eventually collect a pension,  The deduction now would be small, and the tax would be higher later on, so giving up a limited tax break now for no tax exposure later makes sense.  The second reason may be that you do not expect to change tax brackets when you retire, this agian will only likely happened if you expect guaranteed income in retirement like a pension or a large inherited IRA.  If this is the cae, even though staying in the same tax bracket will not improve your net worth position, tge Roth 401k will improve yourinvestment liquidity position, providing options for future estate or investment planning strategies.  A retirement planning software like ExecPlan Express personal financial planning software with its integrated income tax analysis can easily help figure out the best retirement plan funding strategy.

Like the Roth IRA, the Roth  401k allows savings that will grow and distribute tax free.  However, that is where the comparison ends, and where the significant rationale for a Roth 401k disappears.  Like contributions to a Roth IRA, contributions to the Roth 401k are not tax deductible, and there lies the problem.  When funding a Roth 401k, it only makes sense when you have fully funded your qualfied plans.  Funding a Roth 401k means you are for going any tax deduction.  If you are in the top tax bracket, you could fund $20,000 to a traditional 401k plan for the cost of funding $13,000 to a Roth 401k, this is because the traditional 401k plan will save you $7,000 in federal taxes.  So unless you expect to pay even higher taxes upon retirement, you could never make up the “lost” tax deduction.  A retirement planning software like ExecPlan Express personal financial planning software can easily show the likely long term disadvantage to funding a Roth 401k plan

The dismal unemployment numbers, the reports on Europe slipping into a recession, and the future of higher potential taxes, may motivate you to capture some of the market’s recent gains, think twice.  A good financial planning software will help you see if it is woth selling on stocks that you have only held for a short period of time.  These assets would be subject to taxation at ordinary rates, this could mean as much as an additional 20% loss to your gains, a significant financial price to pay to get out quickly.  Any financial planning software review should incorporate an acutal federal income tax analysis like ExecPlan Express personal financial planning software to help evaluate the cost of selling out of the market and the impact on your long term retirement goals

No matter what the reported details of April’s unemployment numbers, the ultimate answer for how good or bad they were is reflected in the investment markes.  With the stock market down, gold up and oil down, you couldn’t have an answer other than it was a bad report.  The market’s negative reaction is a reflection of a sharp drop in oil prices and a rise in gold.  A rise in gold is nothing more than a thumbs down on the US economy and with it the US dollar, with the expectation of likely inflation froma continued loose federal reserve monetary policy.  Normally this would also mean a rise in oil, but the energy market, though sensitve to a weaker dollar, is even more sensitve to a stagnant economy and low demand for energy.  The equity market in turn is only reacted to the overall assumption of a weakening US economy burden by low growth and high inflation.  These are the worst of all worlds for those saving fro retirement.  At least in the short term, your retirement planning strategies should assume low returns and higher than normal inflation, with maybe a return to better returns and lower inflation in a couple of years.  When doing  financial planning software reviews you should make sure that your retirement planning software allows the abilility to adjust returns and inflation on a year by year basis like ExecPlan Express personal financial planning software.

Borrowing form your 401k plan instead of a bank isn’t always a bad idea.  First you repay yourself with interest, rather than paying a third party like a credit card company, a bank or a credit union so in the long run you are making money on yourself, not someone else.  However there are two downsides to be aware of when borrowing froma 404k plan.  First, once you borrow from your plan, you can not make contribution to this plan for 6 months.  This isn’t much of a problem if you have maxed out for your annual contributions, but if you haven’t, you could be losing a deduction and and matching employer contributions.  Secondly, if you change positions, the plan administrator can request that you immediately pay off the loan, this could be deifficult for some, and failure to make payments to your loan will be considered a distribution and could subject you to a 10% tax penalty.  ExecPlan Express personal financial planning software can model both loan and the impact to your 401k and its net long term financial benefit for any retirement planning strategy, and unlike other retirement planning software, ExecPlan Express is a tax planning software that incorporates an actual tax analysis to accurate measure the impact of various 401k funding strategies.  .

Dollar cost averaging is the simplest and most effective way to invest for any long term investment goal.  It is essentialling “buying” into a specific investment with a fixed dollar amount over a fixed period of time on regular intervals.  The basic logic is that this will protect you from buying in at the top of a market, at the expense of the gains from buying in at the bottom of the market.  This “averaging” over a long period of time will manage the risk from a signle investment’s naturual volatility.   Any financial planning software review should make sure that the retirement planning software incorporates the ability to make purchases of any investment over a desired period of time like ExecPlan Express personal financial planning software.

There are many seminars on forming revocable trusts, with the primary purpose is to avoid probate and the associated costs and exposure to creditors.  However from a practical matter, probate will occur no matter what no matter what for most individuals and thus the cost savings is minmal.  Besides the cost of probate is to execute your wishes, not much different from the cost of modifying your will to move assets into a revocable trust.  Secondly, since assets will still likely be probated, then there will still be assets subject to creditor’s claims, so again this benefit is marginal.  And from an estate tax point of view, these assets are still considered part of your taxable estate and are thus subject to estate taxes.  There are practical purposes for revocable trusts such as funding an A/B trust, but even that has limited value for many with the current estate law, however the current estate tax law changes for 2013 ao when doing a financial planning software review, make sure your retirement planning softwar incorporates the option to sunset the current estate tax law like ExecPlan Express personal financial planning software.

Funding a 529 plan for a child’s education by a gift to the child, may help get assets off your balance sheet and help minimize your estate tax exposure, but caution must be oaid for two reasons.  First, setting up the trust for in someone else’s name means you give up control.  If the child as an adult decides that want to spend the money on a Corvette, they can.  Yes that would subject them to taxes and penalties, but it is their money to do so.  Even if they choose to go to college, there is a second downside, financial aid formulas as well as some needs based scholarships apply a much higher burden on students own assets than they do for their parents.  ExecPlan Express personal financial planning software is the idea tool to evaluate both estate and personal educational planning strategies that are centered around 529 plans

Some estate planning strategies evolve around gifting.  However gifting stocks and can have limited advantage.  First the basis.  When one inherits a stock, they recieve a step up in cost basis, but when it is recieved as a gift, the beneficiary of the gift does not get a step up in basis.  And if the stock is “underwater” the basis is greater than the stock’s current value, then the basis is set to current value, meaning the tax break, the loss that would occur from the sale, would be lost.  Gifting strategies sometimes overlook the tax consequences, however using ExecPlan Express personal financial planning software will capture all the tax consequences from any gifting strategy

Congress has yet to resolve the AMT time bomb for 2012, so this might be the year for higher income individuals to take advantage of a charitable objective.  This is simple becuase there are only a few preference items for AMT that are within your control, and the charitable deduction is one of them.  Unlike real estate taxes or state income taxes, the charitable deduction is an adjustment to your alternate minimum taxable income. this can both srop you into a lower AMT tax bracket, and increase the amount of the standard deduction for AMT.  For example someone who doesn’t itemize and who is filing jointly making $200,000 for 2012 would face $5700 in AMT.  However if they were planning to make a $40,000 contribution to a charitable casue over the next couple of years, and chose to make it all at once this year, they would effectively elimnate their AMT liability while reducing their total tax liability by $13,000.  With its fully integrated tax analysis, ExecPLan Express personal financial planning software can help guide you past this AMT liability for 2012