Firm:
Armstrong Financial Strategies
Job Title:
Owner
Biography:
Morris Armstrong founded Armstrong Financial Strategies in 2001 as fee-only firm. The firm does not accept commissions or referral fees and the only source of its income is from the client. Morris has taught at Marymount College in Tarrytown, NY and has written extensively on the subject of investments, taxes and planning for Multex Investors, which Reuters purchased in 2003.
Morris has also been active in the field of divorce planning, and in 2008, the Connecticut Law Tribune recognized his efforts. The lawyers in the state voted him as one of the top three planning firms in the state.
Morris has written for and been quoted in numerous publications including the Wall Street Journal, New York Times, Financial Planning magazine, Wealth Manager Magazine and Yahoo Finance. His investment philosophy has been shaped by both John Bogle and Eugene Fama, and is his portfolios, which are a blend of passive and active vehicles, reflect this.
While he enjoys divorce planning, it can be draining and he prefers not to work with those couples who believe that “War of the Roses” was a manual for divorce. He enjoys his role as an Enrolled Agent helping people resolve their issues with the IRS, whether it is a notice or something more involved such as an audit or offer in compromise.
Education:
BBA, Banking, Pace University
Assets Under Management:
$12 million
Fee Structure:
Fee Only
Hourly
CRD Number:
127983
Disclaimer:
The answers presented on Ask an Advisor, together with any commentaries, articles or other opinions should be considered general information presented to inform the public. They are based on the information provided in the question, which may have omitted important details that would have changed the answer had they been known.
Articles and answers are not intended as a solicitation of an offer to buy or sell any security investment or instrument or to participate in any particular trading strategy. Armstrong Financial Strategies and Morris Armstrong, EA. are not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this site. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
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Morris Armstrong
If I read your question correctly, you do not need your RMD money and you also like to make charitable contributions. The QCD is made for someone like you!
You will need to ask your annuity company what their procedures are since each firm has their own paperwork. Usually, it will involve your filling out a form listing the charities and the amount that you want them to receive. You must be 70 1/2 or older when the money leaves your account. The annuity firm will then issue checks to the charities and either mail them directly or give them to you to mail. I have them mailed directly.
You will get a 1099R from the annuity company showing the 16,500 as being distributed to you. You or your tax person will indicate that 16,500 was a QCD. That will result in a ZERO taxable amount appearing on your tax return. You do not claim the charitable contribution on Schedule A.
You must keep the acknowledgment letters from each charity and also DO NOT ACCEPT ANY GIFTS from the charities. That tee shirt or CD will cost you the whole contribution that you made to the charity.
You are 100 percent correct that this may help you avoid paying higher Medicare B premiums and also state income tax.
You may write a check from your IRA and make it payable to a charity and it is considered a QCD. The RMD is the minimum amount that must be taken from your IRA from Jan 1 through Dec 31 of the year. Bear in mind that you must not take any promotional item from the charity otherwise, your entire contribution is disallowed as a QCD. The custodian does not track the QCD but only the amount of withdrawals. You will still need all of the documentation to substantiate the charitable contribution. In case you are not 70 1/2, bear in mind that the QCD must be made when you are that age or older, not a day before.
You have to look at the cost of credit vs the return on the fund, and unless you are in a teaser rate, I would think that the rate of return in the TSP is less than the interest that you are paying. I would borrow against the TSP and burn the credit cards! The question is how you accumulated so much debt and what will prevent that from happening in the future.
Your loan must be repaid back on schedule or it is a deemed distribution. The portion that you default on will be added to your income. If you are under 59.5, unless retired, you will pay a 10% penalty.
I have one client that has allowed credit card debt to derail her retirement. She will have a lower standard of living than planned.
You state that this is your IRS approved charity so I am assuming that you have formed it and are now funding it. You identify the shares that you want transferred and make the transfer to the charities borkerage account. Your donation is the value on date of transfer.
The amount of money that you can deduct from your taxes wiill be based on your AGI and how long that you held the stock. If you have held it for over a year, then you can deduct the market value, less than one year all you can deduct is basis.
Let us pretend that it is stock worth $200,000 - and your basis is $100,000. Your gain is long term.
You will be entitled to a $200,000 deduction on your federal income tax return. You will be itemizing of course because your deductions far exceed the standard deduction.
Then, you will be limited to as how much can be applied to this tax return. Generally, 60% of AGI is the limit, and the excess may be carried over.
Your state may or may not recognize the charitable deduction.
Make certain that you receive a written acknowledgment of your contribution from the charity to you, and make certain it states that no goods or services were exchanged.
Since this is your own charity, it may well suit you to sit down with a tax pro and make certain that all of your ducks are in one row.
Fun reading - Durden, T.C. Memo 2012-140 For want of a contemporaneous receipt a taxpayer lost over 25,000 in legitimate deductions!
When you are ready to receive the money you can have a portion of it paid directly to you and roll the rest into an IRA. You will not pay a 10 percent penalty on the amount that you take directly. However, once you place the money into the IRA, any distributions will be subject to the 10% penalty as long as you are under 59.5.
You should have an IRA already established and the firm handling the 401K will make two distributions, one to you and one to your IRA.
If you feel uncomfortable handling this transaction, you may wish to utilize a financial advisor.