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Bernard WolfeUnderstanding Roth IRA Conversions

By Bernard Wolfe, CFP (R)

Over the next few months, you will be hearing a lot about Roth IRA conversions and the new rules, which go into effect on January 1, 2010. We wanted to provide a little background, and help you understand how this may impact your financial management.

Currently, single taxpayers can convert traditional IRAs and qualified retirement accounts to Roth IRAs so long as their adjusted gross income is under $100,000.

  • In 2010, the $100,000 limit will be eliminated and all taxpayers will be permitted to convert some individual retirement accounts to a Roth IRA.
  • The amount converted to a Roth IRA will be included as ordinary income for the year in which the account is converted.
  • For 2010 only, the taxpayers can elect to defer half of their tax liability to 2011, and the other half to 2012.
  • The Roth IRA growth can be distributed tax-free so long as the distributions are not taken within five years of the first contribution or conversion, and not before age 59 ½.

The pros / cons

From our point of view, there are many advantages and disadvantages to a conversion, and the appropriate decision really depends on each person’s particular situation and financial goals.

For one thing, a Roth IRA conversion can have tax implications and/or estate planning consequences of which all the members of your wealth management team should be aware. For this reason, it is important to make sure that your financial advisor, CPA, and estate-planning attorney are on the same page working for your benefit.

But there may be significant benefits in executing a conversion including the ability to re-characterize without any tax consequences before filing your return (extensions included), in the event that the Roth IRA loses value.

What you’ll need to do

If you haven’t already done so, please send us a list of your CPA and Estate Planning Attorney. If you need us to lend a hand, we will be happy to call them to introduce ourselves and discuss how this opportunity may affect you.

While a final decision on whether to convert in 2010 won’t be made until after January 1, 2010, this is something we can begin discussing/planning for today.

Samantha Fraelich5 Statistics Women Need to Know About Managing their Money — and 5 tips on how to take control

By Samantha Fraelich, Financial Representative, Bernard R. Wolfe & Associates, Inc.

Whether you're a women who is single, divorced, or widowed, it's more likely than ever that at some point in your life you will need to fend financially for yourself.

Take a look at these statistics (sources are listed below):

The web site links referenced are being provided strictly as a courtesy. Neither us, nor NFP Securities, Inc. are liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of the links provided.

  • 47% of Women over 50 are single and have to support themselves.
  • In the first year after a divorce, a woman's standard of living drops 73%.
  • 80% of widows experience a significant drop in their standard of living compared to before their husband’s death.
  • Studies have shown the average woman lives 5-6 years longer than a man-thus making their retirement funds even more crucial.
  • Women retirees receive only half the average pension benefits that men receive.

The good news

Generally speaking, women are working today. Take a look at any elementary school drop-off site and you are likely to see just as many career women dropping off their kids, as stay-at-home moms.

Plus, given the recent economic downturn, female dominated industries such as education and health care haven't been hit with nearly as many lay-offs as have many male dominated industries such as construction, investment banking, and manufacturing.

With more women earning wages on a regular basis, they are typically now able to contribute to an employer-sponsored and/or a self-directed retirement plan and take control of their financial futures.

Here’s some pointers on how:

1. Identify your goals. Ask yourself what do you want to be able to do during retirement to feel comfortable? How much money do you think you’ll need to accomplish that goal? What is your current saving style? How long do you plan on working? Do the math to determine if your current habits reflect the amount of money you are saving. Write down your answers and refer to them regularly so you will be able to visualize and strive toward your goals.

2. Consider the possibility that you might have to support yourself someday. Regardless of how savvy today’s woman is, many still rely on their husband to make financial decisions for the family. If that is you, realize that you may have to take control of the finances at some point — so begin preparing for that day now.

  • Know the name and phone numbers of all of your professional advisers — including your CPA, estate-planning attorney, mortgage lender, and financial advisor.
  • Make sure you have investments in your name and not just your husband’s.
  • Open your own retirement account if you haven’t already done so.
  • Make sure you save some of your own salary if you have one. Often, women who are married or have children let their husbands make the larger retirement plan contrubtions, but often the women's salary is used for household or children's expenses, or gifts to the children and grandchildren.
  • Have at least one credit card in only your name so you establish and maintain credit.
  • Make sure you have assets and investments* in your name too so that whether it’s divorce, illness, or death, you won’t be in financial trouble.

3. Open your financial statements. There’s no doubt about it — 2008 was a rough financial year for almost everyone. Unfortunately, many of our clients admit they stopped opening their investment statements. Although it’s understandable, it simply isn’t smart. If your husband currently manages your finances, and you’ve noticed larger piles of unopened statements lately, take charge ladies and open them.

4. Be careful whom you listen to. Although financial advice seems to be available from a variety of TV commentators and other free sources, be careful whom you listen to. Simply beating the S&P 500 every year, or owning five-star rated Morningstar funds, won't help everyone achieve their specific financial goals. Generic advice most likely will yield generic results.

5. Know when to get professional help. Sure, it’s tempting to do everything yourself, but just as most families have accountants and lawyers; many are adding financial consultants to their list of trusted advisors. The reality is that when you have the help of a professional, you’ll more than likely have more clarity and confidence in the process. An advisor can give you some much needed perspective, which is important because it’s usually tough to be objective when it comes to managing our own money.

Here are some tips on how to find an advisor you can count on:

  • Ask your friends for references.
  • Gather all of your investment, retirement, and bank statements so they can get a good picture of your situation.
  • Interview several financial advisors — until you find the person you feel comfortable with.
  • Study all the information you receive so you can be an active partner in the decisions that are made about your investments.
  • Embrace your power. This is your future. This is your money. Invest it wisely. Good luck!



Women, Work & Divorce, Richard Peterson. University of Chicago Press: 1989

Business Week 05/2009

NBC 29

About Bernard R. Wolfe

Bernie Wolfe founded Bernard R Wolfe & Associates, Inc. (BRW)in 1981 and for nearly 30 years has provided financial services to individuals, families and businesses. He is a Certified Financial Planner practitioner (CFP®) and can also provide wealth management services as well as securities through NFP Securities, Inc. a broker/dealer Member FINRA/SIPC and a Federally Registered Investment Advisor. He is also a Certified Divorce Financial Analyst (CDFA). He was one of the first members of the Registry of Financial Planners in the Washington DC area. In 2002, BRW was sold to National Financial Partners, Corp. (NFP), one of the nation's premier independent financial services companies and a member of the New York Stock Exchange. Bernie Wolfe continues as President of BRW and as a principal in the company.


About Samantha Fraelich

Samantha Fraelich began her career in the financial planning industry as a registered client service associate in 1999 at UBS Financial Services. In 2003, she started working with Bernard Wolfe & Associates in the Naples, FL office and relocated to the DC office in 2006. Samantha was raised in Munroe Falls, Ohio, which is a suburb of Cleveland. She attended Kent State University and the University of Phoenix to earn her bachelors degree in Business Administration. Samantha is currently studying for the Certified Financial Planning (CFP) ® designation and is a member of the National Business Women’s Association (NBWA) and the American Association of University Women (AAUW). She is a Registered Representative of National Financial Partners and resides in Washington, DC.


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Securities and Investment Advisory Services offered through NFP Securities, Inc., a Registered Broker/Dealer.

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Bernard R. Wolfe & Associates is an affiliate of NFP Securities Inc. and subsidiary of National Financial Partners Corp., the parent company of NFP Securities, Inc.