After a week of strong gains, stock slid Friday as concerns over potential interest rate hikes grew, thanks to the Commerce Department's report showing gross domestic product increased more than expected in the fourth quarter. For the week, the Dow rose 1.56 percent to close at 16,639.97. The S&P gained 1.63 percent to finish at 1,948.05, and the NASDAQ climbed 1.91 percent to the end the week at 4,590.47
Comparing US and Them –
Gross domestic product (GDP) in the United States grew by 2.4 percent in 2015. GDP in the 19-nation Eurozone grew by 1.5 percent in 2015 (source: Commerce Department, BTN Research).
The Way We Were –
From January 1962 to the end of August 2011 (a period of almost 50 years), the yield on the 10-year Treasury note closed below 2 percent on zero trading days, i.e., never (source: Treasury Department, BTN Research).
In the Six Months Before -
From a peak closing value on Oct. 9, 2007, the S&P 500 fell 56.8 percent over the subsequent 17 months before bottoming on March 9, 2009. In the six months preceding the March 9, 2009, bear market low close, the S&P 500 experienced 12 separate trading days when the index fell by at least 5 percent in a single trading session (source: BTN Research).
WEEKLY FOCUS – Things to Know if You Inherit a Retirement Account
It’s difficult to think about finances while grieving the loss of a loved one. However, if you inherit a retirement account, it’s wise to consult a tax professional immediately. Strict IRS rules, deadlines and penalties may apply. If you’re a surviving spouse, the IRS will allow you to do a spousal rollover. This means, you can transfer your deceased spouse’s 401(k) or IRA into your own IRA, where the funds will continue to grow tax-deferred.
If your spouse was 70 ½ or older, their annual required minimum distribution (RMD) must be subtracted before rolling the assets into your account. From that point on, the funds will be treated as your own. Early withdrawal penalties and required minimum distributions will be based on your age, rather than your spouse’s age. (Roth IRA’s and Roth 401k’s are never subject to RMDs.)
As a friend or other family member, you do not have the spousal option. You can, however, transfer the assets into a newly created inherited IRA and begin taking withdrawals immediately without an early withdrawal penalty. You will be liable for income tax on those withdrawals. You must keep an inherited IRA separate from any personal retirement accounts you may already own, and distribution rules will be different than those for your own accounts.
Whether you are a spouse or non-spouse, you can take a lump sum without paying a penalty. But the entire amount will be subject to income tax. Please be advised, there are specific tax consequences for handling inherited IRA vs. inherited 401k rollovers. You should consult with your tax advisor regarding rollover guidelines. (Earnings are generally tax-free on an inherited Roth IRA if the five-year holding period has been met.)
Depending on the individual plan stipulations, a designated non-spouse beneficiary may also leave the money in the original account and liquidate it within five years of the owner’s death or take distributions over their own life expectancy (known as the stretch option).
There’s much more to consider with inherited 401(k)s and IRAs. We can work with you, your attorney and your accountant to make the most of your inheritance or to ensure your own estate plan addresses your retirement accounts. Call our office to schedule an appointment with us and your other trusted advisors. Consult your tax advisor regarding your own unique situation.
The Dorion-Gray Team
Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. a Registered Investment Advisory Firm. Dorion-Gray Retirement Planning is a trade name of Dorion-Gray Financial Services, Inc. located at 2602 IL Route 176, Crystal Lake, IL 60014. Dorion-Gray and the Securities America companies are separate, unaffiliated entities.
Diversification seeks to reduce the volatility of a portfolio by investing in a variety of asset classes. Neither asset allocation nor diversification guarantee against market loss or greater or more consistent returns.
© 2013. Dorion-Gray Financial Services, Inc.