Dealing With Finances After Spousal Death

Comments on “Life After a Loss: 6 Smart Steps for Coping With Widowhood,” by Karen C. Altfest, in the July 2016 AAII Journal.

Excellent article. I have been the CFO in our family and my husband has been much less involved despite my efforts. This article is a great way to approach another discussion of the issues.

I have a team in place and we both meet with them. I have our bills on auto-pay, which may help others who face emotional challenges of illness and death. I know that this aspect of our lives is taken care of. Only occasional adjustments are needed. I think using these steps and making notes as you go along helps the spouses, or parent and adult child, review things in a focused fashion—before the reality of death hits!
—Jo Duchene from Illinois

The article would have been better if not focused so heavily on women, as men have similar issues and feelings of being overwhelmed when a spouse is lost. Their perspective may be different and, yes, a friend can be invaluable in dealing with the many financial concerns and deciding what to do. But based on my experience and those of others having similar loss, one should not make major life-changing decisions for at least a year. Those who do often regret such actions, and some things may be very difficult to undo.
—Wayne Maybach from Virginia

Contribute to HSA Before Enrolling in Medicare?

Comment on “Health Savings Accounts,” by Charles Rotblut, CFA, in the July 2016 AAII Journal.

I will turn 65 in November and enroll in Medicare. Am I allowed to contribute the full amount ($4,350) to my individual HSA this year, prior to enrolling in Medicare?
—Marty Eggerss from Minnesota

Charles Rotblut responds:

Your contribution limit would be prorated based on when you enroll in Medicare. Here is what the IRS says: “Beginning with the first month you are enrolled in Medicare, your contribution limit is zero.”

IRA Rollover Rules

Response to questions on “IRA Rollover Chart: Rules Regarding Rollovers and Conversions,” by Charles Rotblut, CFA, in the July 2016 AAII Journal.

We received several questions regarding rollovers and conversions. Here are a few of the answers:

• A traditional IRA or a 401(k) can be converted into a Roth IRA. The conversion counts as taxable income, which can affect the Medicare Part B premium and the taxation of Social Security benefits. If large enough, the conversion can also push someone into a higher tax bracket.
• Roth 401(k) accounts are subject to required minimum distributions, but Roth IRAs are not. A Roth 401(k) can be rolled over into a Roth IRA tax-free.
• Employer-matching contributions must go into a traditional 401(k) account, even if the employee uses a Roth 401(k) account.
• A Roth IRA conversion cannot be used to avoid taking the required minimum distribution for the current tax year.

Benefits to Dodging Common Mistakes

Comments on “Avoiding the Mistakes Made by Ineffective Investors,” by Spencer Jakab, in the July 2016 AAII Journal.

If you are still investing at 65, it is a good sign. You have made all the mistakes and recovered from them. There is an expensive way to learn and a cheap way to learn: The expensive way is to learn from your mistakes, the cheap way is to learn from the mistakes of others.
—Gordon Robinson from North Carolina

Excellent article and 100% true. But if most people are like my friends, they will think they are the exception and that their financial adviser is doing them a favor by having them as a client. My friends do not know what percent they earn each year versus the S&P 500 and they do not have any idea of their fees. It is a pity, but these pearls of wisdom will fall on deaf ears.
—David Levine from North Carolina