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Friday Financial Five – September 2, 2016

Friday, September 02, 2016


IRS issues procedure for 60-day rollover mistakes

Confused investors can sometimes find themselves paying taxes and penalties because of missteps in the retirement account rollover process which cause them to miss the 60-day rollover window. The IRS has issued a self-certification procedure in Revenue Procedure 2016-47 which he process of correcting mistakes. There are 11 circumstances, listed in the revenue procedure, that will qualify the individual with self-certification. The IRS includes a sample self-certification letter that a taxpayer can use to notify the administrator or trustee of the retirement plan or IRA receiving the rollover that they qualify for the waiver. While having a simplified correction process is beneficial, the bottom line is that individuals should do whatever’s possible to get funds situated within 60 days.

Reducing debt a top concern

Although it may not seem like it’s working, a BMO report cites debt reduction as the number one concern facing Americans. 31 percent of respondents would like to decrease the amount they owe, 26 percent would like to put more money into savings and 21 percent consider wise investments to be the top priority. Meanwhile, budgeting came in 4th. Ironically, most people don’t budget and sensible budgeting would most likely result in debt reduction, increased savings, and more money to invest wisely.

Dramatic raise to Social Security age proposed

With Social Security becoming the de facto replacement to the traditional worker pension, the need for the program’s stability can’t be overstated. There have already been changes and more are coming down the road. Popular options for change include “means testing”, which would reduce or eliminate benefits for those that cross a certain income threshold. Raising the retirement age makes sense, given the average mortality from when the program was implemented in the 1930’s has risen dramatically. A Yale professor has suggested raising the age to 76 and eliminating spousal benefits, as women are now more well represented in the workforce and earning their own benefits.

Canada’s economy says Oh

The economy in Canada shrank in the second quarter at an annualized rate of 1.6 percent, as oil disruption contributed to the worst showing in over seven years. Growth is expected to rebound in the third quarter thanks to an increase in exports. On top of the country’s sputtering economy, the Conference Board of Canada cites lost productivity in the country to the tune of $50 billion annually due to worker depression and anxiety.

The financial future of Generation Z

Parents that are worried about how their school-age children will fare in an ever changing work environment should take heart. “Generation Z” is well equipped to change the traditional work dynamic according to Monster Worldwide. Gen Z, entrepreneurial and benefitting from working with technology since birth, is comprised of those in school and the early years of college. According to Monster, they’re expected to work longer hours and make more money than Baby Boomers, Gen X’ers, or Millennials. 

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected]


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