Archive for October, 2006
Ira Withdrawal Rates
October 21st, 2006
Question: Long term Savings Gift to child?
I would like to give a savings gift to my Goddaughter for first birthday and subsequent birthdays. The goal is to save money to apply towards college, but I am not her parent so I can not force her/guarantee that monies will be applied towards college expenses. Reading has revealed that EE and I-government savings bonds are low yield and may not reach face value. Whole Life Insurance was another suggestion but fees could be high. Stock certificates, mutual fund investments will yield high returns over the 18 years. Certificate of deposit was also suggested but what if i-rates increase over 18 years and I am locked in? Education IRA would require withdrawals to be towards education expenses to qualify as tax free.
WHAT IS YOUR RECOMMENDED SAVINGS GIFT TO MAXIMIZE INTEREST?
Answer: None of the examples you given are good. The best way to save for a child’s education is a 529 Plan. In my opinion, these are the best plans. You should check for your state’s 529 Plan and then check with other states.
If you want to read more info about 529 Plans, check this link: http://obe231.blogspot.com/2006/12/529-plan.html
To review each state’s 529 plan, go here:
http://www.savingforcollege.com/
Under any circumstances, never use life insurance as an investment for the future. Life insurance soul purpose is to protect your family from income loss in case you die. If no one is dependent on your income, then you shouldn’t need life insuance.
Self-Direction — How do I Know This is Legal?
Posted in IRA Withdrawal Rules | 
Tags: finance, investing, ira withdrawal rates, research_jargon, retirement, tools | 
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Penalties On Ira Early Withdrawal
October 13th, 2006
Question: Help with fafsa questions?
I am doing the parents income estimator. I have no problem getting the income information from my father but would like to know what these questions mean.
it ask for the amount of Wages, salaries, tips, etc.
also,
IRS-allowable adjustments to income (payment to IRA and Keogh Plans, one half of self employment tax, self-employed health insurance deduction, interest penalty on early withdrawal of savings, alimony paid, and student loan interest deduction).
I am confused, can anyone help me out?
thanks
Answer: Those adjustments are found on lines 23 to 35 of your parents tax return (IRS Form1040). The following link will give you a blank copy of that form. It is rare that anyone can complete the FAFSA forms without having a copy of the last years income tax return for their parents and or their own.
http://www.irs.gov/pub/irs-pdf/f1040.pdf?portlet=3