Guidant Financial Group Blog

We found an article on The Motley Fool today about how to not be an idiot with your IRA. How could that not catch your eye on Google News? No one wants to be an idiot.

Since the deadline for 2008 IRA contributions is coming quickly many people should be thinking about a last minute cash injection! We thought it was worth sharing some other ways to grow your IRA accounts. Here are a few of the Fool’s tips:

1. Don't overpay. Watch those management fees - especially in mutual funds. They can add up and over time cost you a small fortune.

2. Avoid overdosing on accounts. Pay attention to where your IRA money is and try to minimize the number of accounts that sit out there collecting fees.

3. Keep your hand out of the cookie jar. Avoid accessing your retirement funds early and getting hammered with early distribution penalties.

4. Don't “dis” dividends. Invest in companies that pay dividends. If you can live without them, reinvest the dividend money back into your account and watch your shares grow, over time of course.

I think a better choice for #5 might have been, “A fool’s advice could pay dividends”. I suppose they have only used the fool cliché only a few hundred times before.

What did they miss? How about DIVERSIFICATION! Guidant Financial Group provides and individual a chance to buy all sorts of investments inside their IRA. In addition to stocks, bonds and mutual funds, our clients can buy real estate, tax liens, private stock and mortgages and even small business. The opportunity is near limitless!

If you are not satisfied with how your retirement plan has performed – call us. Let us help you discover a new world of opportunity.

If your IRA or 401(k) is heavily invested in the stock market, 2008 is likely a year you’d like to forget. The market’s performance is particularly painful for those individuals who are taking Required Mandatory Distributions (RMD). IRA holders, who have reached the age 70.5, are required by RMDs to withdraw a percentage of funds from their accounts. Unfortunately, most individuals take this distribution in November or December. In most cases this is not of great concern—HOWEVER in 2007 the market was strong. In 2008, not so much. With most accounts losing money, some individuals are still taking withdrawals based on last year’s value.

THE GOOD NEWS: Congress has taken some positive action in reference to RMDs! The President signed the Worker, Retiree and Employer Recovery Act of 2008 on Dec. 23. Section 201 of the Act temporarily suspends Required Minimum Distributions (RMDs) from IRAs and qualified plans for 2009. RMDs will be required again in 2010 unless Congress renews the suspension. It enables retirees the opportunity to reduce their taxable income for 2009 should they determine that doing so is to their advantage and helps retirees and IRA owners avoid having to liquidate investments in a down market. Without the suspension, they could be forced to sell—most likely at a steep loss due to the stock market downturn—investments in their accounts in order to take the distribution, or face a 50 percent tax penalty on the amount that should have been distributed.