Friday, July 30, 2010

15) To Convert to Roth - or Not to Convert to Roth, That is the Question

            NOTE: This article is not exhaustive and does not address subtle details, which should be explored with the appropriate advisors, such as an appropriately licensed, and qualified attorney, financial planner, investment advisor, etc.  This article comments on certain legal and tax issues; it is recommended that you also explore administrative (e.g. custodial), estate, and investment issues before you invest.

oth IRAs, named after Senator Roth, were created to allow individuals to responsibly save for retirement when they were not allowed to contribute to Traditional IRAs.

            Typically, high-income earners could neither, contribute to a Roth IRA, nor convert their Traditional IRAs to a Roth.  However, for this year only, the restrictions on converting to a Roth IRA are relaxed.

            Should you convert?

            Long-Term Considerations:  The money earns/grows tax free.  You never have to take the money out.  If you do take money out, it comes out tax-free.  There’s no 70 ½ start date for ‘required minimum distributions’; there’s no requirement at any age.  Therefore, you can save on income taxes (not estate taxes).  Do you lose 25% - 50% of your income to taxes?

            Short-Term Consideration:  To convert another type of retirement plan to a Roth IRA will require you to take out a taxable distribution.  If you’re under 59 ½, you will NOT have to pay the ‘early withdrawal penalty.  However, you will have to pay income tax at your regular income tax rate - but, not until the future, and then, over two years, should you elect.

            This may be beneficial based on a number of custom considerations:

·         You don’t have to convert all of your other retirement account amounts; you can pick and choose what and how much.
·         Will you need this money to fund retirement?  (Or can it go to heirs?)
·         If you’re under 59 ½, can you let the principal sit for at least five years?
·         How long can you let the entire amount grow?
·         What might your tax bracket be at retirement, or age 70 ½, based on your other income and what you project for tax rates wherever you’ll be living?  (e.g. lower than while working - or the about the same?!  Living in another country or low-tax state?)
·         Are you subject to the AMT (Alternative Minimum Tax)?
·         Will your tax rate be lower in 2011 and maybe 2012 than in 2010?  That’s when the taxes are due unless you elect to pay them with 2010’s taxes.  (e.g. you’re not working, or have many tax deductions)
·         Do you have the cash to pay the taxes?  (If you take it from the account, you lose some of the benefits, and may be subject to early-withdrawal penalties.  Moreover, might you have to sell something in the account to create cash?  If you have to sell something, is there a cost?  And will you miss potential profits?)
·         How long can you let the money grow?  (It needs to grow long/fast enough to make up for the taxes you pay now, regardless of where you get the tax payment money.)  Can it grow to such a large amount, that it will be bigger than if you left it where it is, minus income taxes?
·         If you convert in 2010, the law will allow you to pay the taxes on the conversion over a two year period (2011 and 2012 which means due dates of 4/16/12 and 4/15/13!), with no penalties or interest, so you have time to come with the tax money or let it grow wherever it already is).
·         These conversion distributions are not considered income for purposes of reducing Social Security benefits!
·         Have you wanted to convert to a Roth IRA in the past, but not been allowed?
·         Have you wanted to contribute to a Roth IRA?
·         Do you want to contribute to a Roth IRA (if you can)?

            This may not be an easy decision.  Then, again, with a professional’s help, it might be academic.  It may be about minimizing taxes rather than maximizing gains.  It could cost what seems to be a lot of money now, but it could cost you more later!  You’ll need to carefully choose.  Speak to Simons Financial Network or your trusted advisor to make a smart decision.


Friday, July 23, 2010

14) 'After the Lovin’ (or, ‘Before You Ask for the Divorce’) ‘The Eleven Essential Steps to the Mythical Mastery of Divorce’


he party’s over.  Everyone out of the pool!  Most women spend the year prior to a divorce emotionally divorcing themselves.  Most men spend the year prior to a divorce hiding the money.

What's a woman to do?!

1.    1) Before you get married, acknowledge at what you’re good (e.g. budgeting) and at what you’re not so good (e.g. depression spending).  Decide if you want a pre-nuptial agreement.  Meet with a financial planner; meet with a marital attorney.  Review what you own and owe (a Balance Sheet or Net-Worth Statement) and what comes in and out, and, when (an Income Statement and/or a Cash-Flow Statement and/or a Budget).  Pull your credit reports.

2.  2) Discuss Money.    Discuss goals, values, lifestyle, risk tolerance, strengths & weaknesses, and DISCLOSURE (paychecks, bank accounts, taxes, debt & credit).  Who’s going to handle what?  Is there going to be ‘your’ money, ‘my’ money, and ‘our’ money?  (For bill paying and/or investing).  Are their credit issues?  Do you want to file joint tax returns? (There are pros & cons such as liability, privacy and tax benefits/penalties).

3.    3) Learn about Money.  You don’t have to get a college degree or watch the stock report.  Just stay aware of news reports, articles, overheard conversations, and ask questions, even when you think they’re dumb, because people will enjoy impressing you with their wisdom and information.  Research with the web; go to the Learning Annex for an evening.

4.    4) Stay Involved.  Notice what bills do, or don’t, come in the door.  Notice if there are ATM statements.  Are the bills paid?  Is the insurance paid and up-to-date?  What’s the bank balance?  What are the credit card balances and other debts?  Are the taxes filed?  Are they paid?  Did you receive a refund?   Is there a list of  where to find things, does someone know where it is?  If there’s an emergency, do you or they know who to call, what medical decisions are to be made?  Where documents are?  (e.g. Health Care Proxies, Living Wills, Durable Powers-of-Attorney, Wills, Trusts, bank books, bank branches, contact information for doctors and financial advisors)

5.    5) Take Inventory.

a.    Gather all important documents (in private?) and photocopy them (e.g. bank statements, brokerage & retirement statements, paystubs & benefits statements, tax returns, insurance policies, legal documents, important bills & credit card statements, tax returns, legal documents).

b.    Investigate areas of which you have heightened awareness (e.g. is the ‘cash’ in the house?  Are important items missing?  Are the charge cards being driven up, or the bank account being wiped out?  Is the Safe Deposit key there?  Are there repeated ATM transactions from a machine in a neighborhood not near his office or home?  How about credit card charges at odd locations or vendors?)

6.    6) Make an Emergency Plan.  If you’re thinking about these things, chances are he has.  Do you have emergency cash?  An ATM card?  A checkbook?  Credit cards in your own name?  Money stashed away that no one can block?  Jewelry or other valuables?  Do you have keys, a car, and a telephone?  How about clothes?  Do you have a friend to call and a place to stay, if something comes ‘out of left field’?

7.    7) Monitor.  ‘Is inventory’ changing?

8. 8) Learn about Divorce. There’s my website’s ‘Forms and Articles’ (  There are others, such as the Association of Divorce Financial Planners, which I helped found and Chaired (, there’s the web, and there are books, Divorce Magazine, seminars, and consultations with divorce financial planners, mediators, and attorneys (and if you consult with an attorney, and then don’t engage them, they are prohibited from consulting with him!)

9.    9) Assemble a Team.    More often than not, the ‘man’ in the relationship’ has the financial team.  He has a broker, an insurance agent, an accountant, and maybe, a lawyer.  “He knows how to talk their language”; “he understands finance, and knows the jargon”.  “Don’ you wurry yur pretty little head, darlin’, I’ll take care of everythang”.  Men don’t expect you to be able to hire an ‘A-Team’, much less so quickly; it doesn’t dawn on them.  There are Divorce Financial Planners, like me, Divorce Mediators (I’m trained), Attorneys who mediate, collaborate (including interdisciplinary, i.e. specially trained attorneys, mental health professionals, and financial pros), or litigate, Private Detectives, Forensic  Accountants (how’s that for scaring off pants?), Actuaries for valuing pensions and annuities,  business valuators, tech specialists, Real Estate Appraisers, Mortgage Brokers, Bankers, the IRS, Family Courts, co-workers, neighbors, etc. who can be your educators, support, advocates, White Knights, or Hired Guns.  If you look, you’ll find moral, if not compassionate ones.  Meet them, feel them out, price them out; decide what you need, and what you can afford.  Let them know what you expect of them (e.g. behavior, goals, and returning phone calls within set limits, to work with other team members).  Negotiate compensation (including non-financial, such as press or referrals) and payment arrangements.  (This will be excellent experience for the divorce proceedings!)  You also should work with a personal mental health professional, and decide if you desire a confidante.  Men don't expect this; men don’t like this.  But, alas, a little knowledge is a dangerous thing.

     10) Make a Plan.  Speak with all the members, create a plan, state the plan, create a strategy.  Decide who you want to Captain the team.

     11) Engage the Divorce.  Separate part of yourself from yourself to become the ‘CEO’.  The mindset of the CEO is that she comes from power and confidence.  She arrives with power and confidence.  She has others who support and represent her, and they blaze her way so that she may enter unencumbered, and without distraction or disturbance.  Others will speak for her in certain matters, while she sits silently wearing her best Poker Face; this way, when she does elect to speak - everyone listens!  The CEO controls the negotiations.  The CEO makes tough decisions with their stakeholders in mind.  Be smart, listen to council, speak your mind, reflect, make decisions.  Coordinate the team.  Take care of your emotional self (behind closed doors unless it serves a greater purpose). 

So, okay, you wanna hear Engelbert sing it? After the Lovin' by Engelbert Humperdinck

For more information, go to and see ‘Forms & Articles’

Friday, July 16, 2010

13) Why a Nup?

Note: This article does NOT include legal advice, which must be offered by a licensed attorney.  


ou may not mind if your marriage is like a Marx Brothers film, but you may mind if your divorce becomes a painful, frustrating farce.

            Enter, the Pre-Nuptial Agreement.

            Divorce is common, and the odds are against you:  50% of first marriages end in divorce, 67% of second marriages and 75% of third marriages.  And, it’s hard enough emotionally, psychologically, and financially, not to mention dealing with kids, family, friends, assets, a home, a job, and life in general.

            Divorce often feels like failure.  And if you're the one being left, you may be destroyed in any number of ways, with no emergency plan, no plan for rebuilding your life, and no energy to get out of bed.

            To add insult to your injury, do you really want the details of your marriage and divorce to become public knowledge via the Court System?!

            Aside from being a responsible citizen by not clogging the court system, and being a responsible member of society by not giving lawyers fodder for litigation, and being a responsible individual & parent by keeping your money for yourself, rather than donating it to your attorney, do you really want money and children to become pawns or weapons in a battle with your about-to-be former partner?

            You need to keep all of this out of the way in order to deal with the hurt, pain, and the process of redefining your life, and moving on to, once again, pursue happiness.

            Aside from the romance of marriage, it is a legal contract.  Good business people plan for dissolution of a partnership prior to entering into one.  Isn't marriage a higher priority, if not sacred?  Shouldn't you be smart, too?

            Getting money and related issues addressed up front helps to manage expectations, and allows you to focus on the love and romance, rather than having to connive behind the scenes.

            A pre-nup might cover what belongs to whom, who will pay for what, household responsibilities, vacations & lifestyle, assets & purchases, taxes, investing, estate planning, children & money, retirement, disability, long-term care, death, other, non financial responsibilities, and anything else you negotiate from children’s religious exposure, to weight management,  to smoking, alcohol, drugs, sex, where you live, travel, time management, and conflict resolution.

            People often design a clear vision of their wedding, even their honeymoon; why not have a marriage vision, mission, and plan?  Isn't it important enough?

            Marriage takes work.  Love is only the starting point.  There needs to be communication, compassion, and compromise.  If you know what you each expect of each other, you may actually make each other happy, and avoid, or mitigate, your honeymoon quickly devolving into a long, slow, chronic, depressing nightmare.

            Wouldn't that be nice?  Wouldn't that be living the fairy tale or, maybe Heaven-on-Earth?  Isn't that what you really want?

            A pre-nup isn't the end of the romance.  It takes it to a higher plane by clearing the path for happiness, since it addresses your individual, emotional issues like security, fidelity, friendships, values, and life goals.  It creates trust rather than hampering or ignoring it.

             It allows informed decision-making for when one switches from their rose-colored glasses to another pair, or when one steps off a pedestal to be seated on a throne.

            And it can be amended.  In fact, post-nuptial agreements, where recognized by State Courts, may be stronger than pre-nuptial ones since they imply greater knowledge about one another, now that you're already married.

            So you tell me: do you want to be a divorce statistic, or increase the odds of living happily ever after?

 For more information, go to and see ‘Forms & Articles

Monday, July 12, 2010

12) Suffering but Surviving


t’s hot.  It’s really hot.  I‘m challenged by the heat; I get ‘brain-fry’.  I’ve been attending Bikram Yoga - the heated yoga - for the last eight years, in order to learn to master it.  It’s mind over matter.  But I have no motivation; it’s body over mind.

I like the cold; that’s why I visit Iceland and Sweden, and live by the shore in the summers.

The week of Memorial Day, three of my four air conditioners died, along with a fan, two vacuum cleaners, two barbeque grills, and two computers.  Mind over matter.  I looked to Neptune since no other retrograde planet made sense (- not necessarily, that Neptune did).

People are out of work, it’s summer, it’s 100°+; new record temperatures.  People are dehydrated, people are depressed; the nation’s psyche is depressed, but I sense has now lived with it so long, that we’re burying it alive and trying to cope.  Therapists, my best source of referrals, tell me that the Nation has lost hope and that, that’s a dangerous place to be.

The Gulf continues to be assaulted, Afghanistan’s ramping up, Israel’s playing tough and the referees have called them ‘off-sides’; are The Four Horseman saddling up?  On the other hand, the stock market climbed (recovered) an amazing amount Wednesday (and a good amount on Thursday), and the attendees at the World Cup, Earth’s most popular sport, are sitting in autumn & winter jackets to watch two first-time finalists, Spain and the Netherlands (Sun. 7/11, 2pm ET).  (What’s the difference between Holland and the Netherlands?)

I’m trying to work, but the heat is overwhelming.  Intermittently, I have to go to the back yard of the ‘Country Castle’ and step into my 8’ x 4’ x 18” inflatable pool, and sit in my floating chair.  The chair has a cup holder and head rest.  The pool is surrounded by my two beach chairs, my two plastic, melon-colored  Adirondack chairs, and flanked by the 9’ lifeguard chair I built with a friend (it 'cracks me up').  My father always says it’s good to be able to entertain myself.

My arms stick to the desk chair’s.  I feel like I should be working more.  However, I do work hard, often long, and I’m constantly improving my ‘working smart’.  One of my two majors at NYU was Management, but being a full-fledged entrepreneur is not ‘corporate’.  I have to be the ‘professional’ (financial planner), the manager, and the salesperson - it’s like spinning plates on Ed Sullivan.

I want to do more public speaking; that’s where I shine.

It’s better to do something, rather than nothing, when there’s work to be done.  Be flexible.  The staff is working, albeit with smart breaks.

I’ve built the infrastructure of my practice and now can handle more clients; however, I want to be very selective about who we engage.  We serve single women, or women who ‘run’ the family money.  We’d like investment clients, because it’s one of our favorite specialties.  And, we’d like busy, high-income women (A&E professionals or executives/entrepreneurs) who need us to be her personal CFO.

I think entrepreneurs average about seven businesses before they strike success.  I think it’s 90% of new businesses go under in their first five years (I have 30 next February).  I believe, according it’s the Harvard study that concluded if you have goals and write them down, you are 10,000 times more likely to achieve them.  But, you must take action; yet, you have to balance doing with being.  However, beware the entrepreneurs’ credo: “Ready, FIRE!  Aim.”

Schedule down time and a vacation.  Be flexible if the opportunity finds you rather than you pursuing it.  Live for today; plan for tomorrow.

Hang on for one more day.  Or even one more hour.