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Inherited IRA Tax Questions and Answers From Forbes

11/30/2017

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AIG's QoL Flex Term Product - 3 Free Living Benefits Riders Included

11/29/2017

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Q. Which term life product includes free living benefits riders?

A.
Most of term life products do not include free living benefits riders.  AIG's recently introduced QoL Flex term product is an exception - it includes 3 free living benefits riders (terminal illness rider, chronic illness rider, and critical illness rider), and its premium is still very competitive when compared with the regular term life products.

You can click here to visit the QoL Flex term life product page from AIG Direct, it provides a lot details about this product, after reading it, you will have a pretty good idea whether this is the product you need or not.

Here is its quoting tool, you can play around with different coverage amount, term length, and health conditions.


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Which Passive Funds Had the Best 10-year Return Records?

11/28/2017

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Q. Which passive funds had the best 10-year return record?

A.
Financial Planning magazine has an article that puts together a list of 20 of the best-performing passive funds over 10 years.

The average annual return for these 20 passive funds was 12.6%, while the S&P 500 posted a 7.6% annual gain during the same period, as measured by SPY, the biggest S&P 500 ETF.  Over three years, the average return of these 20 funds was 13.1%; for SPY, it was 11.6%.

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How to Use IRA or 401K Fund to Pay For Life Insurance Premiums?

11/27/2017

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Q. Is it possible to use my 401K savings to pay for life insurance premiums?

A.
Yes, you can.

For many savers, their largest asset is their retirement account.  Some life insurance policies allow you to rollover a portion of your retirement account, such as an IRA or 401(k), to an IRA deferred annuity.  Then, from that IRA annuity a withdrawal is taken annually to fund the life insurance policy. 

These annual withdrawals defer taxes and still meet your Required Minimum Distributions (RMDs).  If your life insurance has living benefits riders, you also effectively have a long term care protection which many seniors likely will need.

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Is Bitcoin a Scam or a Legit Investment?

11/26/2017

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Q. Is Bitcoin a scam or a legit investment tool?

A.
How about hear from experts talk about cryptocurrency, from why it’s impossible to value to why people choose Bitcoin over gold?  See a Youtube video by Scott and Aswath Damodaran discussing these topics below.
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Get Your Personal Finance Checkup Score

11/25/2017

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You can use the Fidelity personal finance checkup tool to do a finance checkup - in 10 minutes or less, you can get your score (1-100), find out how you're doing, and leave with a plan.
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WSJ - Why Most People Do Their 401(k) Wrong

11/24/2017

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Are you investing your 401k money the right way?  See the common mistakes below -

The vast majority of Americans with access to 401(K) plans use them, but nearly as many don’t use them correctly.
  • Among 55 to 65 year-olds, about 70% have either less than 20% in stocks or more than 80%.
  • Among 25 to 35 year-olds, almost a third have 80% or more in cash.
  • Across all age groups, 401(k) Participants tend to stick with either stocks or cash while keeping less than 10% in fixed income.
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Is a Robo-advisor Right for You?

11/23/2017

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Q. How do I know if a robo-advisor is right for me?

A.
If you can understand Chinese, below is a great video that analyzes all the aspects of robo-advisor trends and helps you determine whether a robo-advisor is right for you or not.  If you don't understand Chinese, that is fine too, because the content is entirely in English.

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5 Strategies to Minimize Tax in Retirement

11/22/2017

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Q. What are the best ways to limit my tax burden in retirement time?

A.
Morningstar shared these 5 strategies to minimize tax in retirement, they include: have a flexible withdrawal strategy, diversify across account types, and develop a targeted Roth conversion schedule, ...

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How to Acknowledge Satisfaction of Judgement?

11/21/2017

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Q. I am done with collecting judgement, what do I need to do now?

A.
Within 14 days of the judgment being fully paid, the judgment creditor must file an Acknowledgment of Satisfaction of Judgment (EJ-100) with the clerk.  The judgment creditor may be liable for $50 plus actual damages for failing to file the Acknowledgment of Satisfaction within 14 days of receiving a written demand to do so from the judgment debtor.

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How to Recover Cost of Collecting Judgement?

11/20/2017

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Q. How do I recover the cost associated with collecting a court judgement?

A.
A judgment creditor is entitled to recover certain costs incurred in enforcing a judgment.  The judgment creditor is also entitled to claim 10% simple interest on the principal amount of the judgment.  Costs must be added to the judgment within two years of incurring them. Interest may be added at any time.

Accumulated costs and interest are added to the judgment by filing a Memorandum of Costs After Judgment, Acknowledgment of Credit, and Declaration of Accrued Interest (MC-012) with the clerk.  Complete the form and have it sent by first class mail or served personally on the judgment debtor by a non-party to the action who is at least 18 years of age.  After serving the judgment debtor, file the original with the clerk.

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How to Garnish a Debtor's Rental Income?

11/19/2017

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Q. How to garnish a debtor's rental income after winning a court judgement?

A.
If the judgment debtor owns rental property, you may garnish the rents paid by the current tenants.  The procedure is the same as wage garnishment, except you instruct the Sheriff's Department to do a rent garnishment instead of a wage garnishment.  There is a fee for the Writ of Execution and for the Sheriff's Department to serve the rent garnishment. 

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How to Place a Judgement Lien on a Debtor's Real Property?

11/18/2017

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Q. How to place a judgement lien on a debtor's real property?

A.
If you have won a court judgement, you can place a lien on the debtor's real property:

  • If the judgment debtor owns real property, you may record an Abstract of Judgment with the County Recorder which will act as a lien against all real property owned by the judgment debtor in the county in which the lien is recorded.  Complete an Abstract of Judgment (EJ-001) and submit to the court to be issued.  There is a feefor the Abstract of Judgment. Once the Abstract has been issued by the court, record the Abstract at the County Recorder's Office.

  • The Abstract places a lien on any real property owned by the judgment debtor located in the county in which it is recorded. Before the judgment debtor's real property can be sold or refinanced, the lien must be satisfied.  NOTE: You may record an Abstract of Judgment in any county in which the judgment debtor owns property.
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How To Do Till Tap or a Keeper's Levy?

11/17/2017

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Q. How to do Till Tap or a Keeper's Levy after winning a court judgement?

A.
If the judgment debtor owns a business that has a cash register, you may arrange for a Deputy Sheriff to go to the business and do either a Till Tap or a Keeper's Levy.
  • A Till Tap sends a Deputy Sheriff into the business to take all cash and checks out of the cash register.
  • A Keeper's Levy stations the Deputy Sheriff at the business for 4 or 8 hours to collect money as it is paid to the business.
The Sheriff's Department charges a fee to serve the Writ of Execution.  Remember that the judgment debtor may close his or her business for the day and the Deputy Sheriff would be unable to collect any money.  

Certain money is exempt from levy, such as child support payments.  If the judgment debtor files a Claim of Exemption from the levy, you will be notified and will have an opportunity to oppose any claim of exemption.

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How to Levy Bank Funds After Winning a Court Judgement?

11/16/2017

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Q. How do I levy bank funds after winning a court judgement?

A.
If you know the bank and branch where the judgment debtor (or spouse) has a deposit account, you may levy the funds in the account.

To begin this procedure, you must file a 
Writ of Execution (EJ-130) and pay the fee with the clerk.  Once the clerk has processed the writ, take the original writ to the Sheriff's office and request a bank levy.  After the Sheriff's Department serves the levy, the bank account is frozen and the account holder is notified.  The Sheriff's Department charges a fee for this service.

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How to Do Wage Garnishment?

11/15/2017

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Q. How to garnish wage?

A.
If the judgment debtor is employed, his/her wages may be garnished to pay off the judgment.  To begin the wage garnishment process, you should do the following:
  1. File both a Writ of Execution (EJ-130) and a Memorandum of Costs After Judgment (MC-012) and pay the filing fee to the clerk.
  2. Once the clerk has processed the writ, take the original writ to the Sheriff's office and request an Application for Earnings Withholding Order.  Note: Fill out the forms completely with the employer's name and address and the judgment debtor's full name.
  3. Pay the Sheriff Department fee to serve the wage garnishment.
The Sheriff's office can tell you how soon the garnishment should begin after it is served, and how much of the judgment debtor's wages may be garnished per pay period.


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How Do I Find Out Where A Debtor's Assets Are?

11/14/2017

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Q. I won a court case, but I don't know where a debtor's assets are, what can I do?

A.
If you do not have any information about the judgment debtor's assets, you may file an Application and Order to Produce Statement of Assets and to Appear for Examination (SC-134) with the clerk.

  • The Order of Examination is a hearing where you ask the judgment debtor questions about his or her assets. You may ask the judgment debtor questions regarding where the judgment debtor banks, works, and other questions which will reveal assets. There is a fee to file an Order of Examination of a Judgment Debtor.

  • If you file for an Order of Examination, you may request a Subpoena Duces Tecum from the court which, when served, will order the debtor to bring certain documents to the examination hearing. Documents that are generally subpoenaed include pay stubs, bank statements, accounts receivable, and any other documents that tend to show where there are assets.

  • Both the Application and Order to Produce Statement of Assets and to Appear for Examination and Subpoena Duces Tecum must be personally served on the judgment debtor.  For more information on personal service, see our Proof of Service page.



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How to Collect and Enforce a Court Judgement

11/13/2017

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Q. I am a landlord, I won an eviction case, now how can I collect the money from the tenant who has moved out?

A.
The court will not collect the judgment for you.  The key to enforcing a judgment is knowing where the judgment debtor's assets are located.  Common sources of assets are bank accounts, employment income, rental income, and business receipts. 

We will answer a few common questions you might face after winning in the court.
  • What if you don't know where the debtor's assets are?
  • How to do wage garnishment?
  • How to do bank levy?
  • How to Till Tap or a Keeper's Levy?
  • How to place judgement lien on the debtor's real property?
  • How to do rental income garnishment?
  • How to recover costs of collecting judgement?
  • What to do after the judgement is collected?
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AIG's 10-10-10 Plan That One Stone Kills 3 Birds

11/12/2017

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If you are interested in One Policy that can help with life insurance, chronic illness coverage & retirement income, please see the innovative product from AIG below -
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What Is Tax Diversification?

11/11/2017

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Q. I heard tax diversification, what is it and why should I consider it?

A.
There are two main reasons for a tax diversification -

First, we don't know what future tax rates might look like (uncle Sam could change the tax rates at any time, for example, as recently as 1980, the top federal marginal income tax rate (TFMITR) was 70%.  In 2017, the TFMITR is 39.6%. 

Second, there are three investment accounts with different tax exposures you could choose from - a) taxable, b) tax free and c) tax deferred.  So you need to make a decision about how to allocate your funds in these 3 accounts to maximize your after-tax gains, hence a tax diversification strategy.

Investments in taxable accounts that generate interest and/or short-term capital gains are taxed at your income tax rate (top rate is 39.6%), while investments that generate long-term capital gains may be subject to the more attractive top federal capital gains rate of 20%. 

Investments in taxable accounts that generate dividends are generally taxed at the same tax rate as long term capital gains.  For those filing single with an income of $200,000 or more ($250,00 or more if married and filing jointly), your investment gains and dividends may also be subject to 3.8% investment surtax — resulting in a cumulative 23.8% tax. 

Investments in tax free accounts do not generate taxes.  Investments in tax deferred accounts could reduce your taxable income today and may subject your investments to lower tax rates in the future (e.g.: during retirement).

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How Income During Retirement Time Affects Social Security Benefits

11/10/2017

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Q. Will the income I earn during retirement time affect my social security benefits?

A.
The answer is Yes, if you are receiving social security benefits and haven't reached full retirement age (66 for now and 67 later), your social security benefits could be impacted by your earnings.

In 2017, if you make more than $16,920, you will lose $1 in social security benefits for every $2 you earn over that amount.  In the year you reach full retirement age, you will lose $1 for every $3 you earn over $44,880 before your birthday.  Starting from the month you reach full retirement age, your social security benefits will not be impacted by your earnings.

However, your social security benefits were not lost forever.  Once you reach full retirement age, your social security benefits will be adjusted to recover what was withheld.  Nevertheless, it makes sense when you plan your working during retirement time to keep your earnings below the limit or delay claiming social security benefits until you reach full retirement age.

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Top State Estate Tax Rates in 2017

11/9/2017

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Q. What are the state level estate tax rates?

A.
Eighteen states plus the District of Columbia still have an estate tax, an inheritance tax, or both, but many states have reduced these levies in recent years. Here are the top rates and exemptions for 2017 -

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How to Deal With 3 Non-Financial Retirement Risks?

11/8/2017

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How to deal with the following 3 non-financial retirement risks -  excessive giving to adult children, long-term care expenses, and cognitive decline?  See the video below.
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Does Social Security Benefits Increase by Month After Full Retirement Age?

11/7/2017

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Q. Does social security benefits increase each month after I pass full retirement age?  Is the 8% prorated for each month that I delay?

A.
Delayed retirement credits are calculated each month you delay taking benefits beyond your full retirement age, which is 66 for people born from 1945 to 1954 and rises by 2 months each year until it reaches age 67 for people born after 1960.

You will get an extra 2/3 of 1% of your full retirement benefit for each month you delay after your birthday month, adding up to an extra 8% for each full year you wait till age 70!

The clock starts from the month you reach full retirement age.

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Does 529 Cover Off-campus Living Expenses?

11/6/2017

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Q. Does 529 plan cover off-campus living expenses?

A.
Yes, as long as the student is a half time student, you can withdraw the amount he or she spends on off-campus rent, up to the room-and-board allowance the college includes in the cost of attendance for federal financial aid purposes.

You can find the amount from the college's website, or ask the financial aid office, and make sure keep the records of the rent paid.

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