Category Archives: Household

10 most overpriced housing markets

Denver_overvalued

  • Median home price difference : (2008-2015) +33.92%

Inventory is tight and home prices are soaring in the Mile High City. “To us, it looks like everything is close to peeking,” said James Paine, managing partner at the real estate investment firm.

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Home mortgage rates and real estate news – CNNMoney.com

How To Meet Your Savings Goals For 2015

Another New Year has arrived, and with that usually comes a new resolution or two. Have you decided to shed those extra pounds this year? Spend more time with the family? Let’s face it, we’ve all made at least one of those common resolutions before, but how successful have we been in the past?

Perhaps one of the most common resolutions people make these days, is to improve their personal finances and get better at saving money. While it’s a great idea in theory, unfortunately many of us lack the follow-through and dedication needed to actually achieve those goals.

That’s why we have come up with a basic road map to help guide you towards your personal saving goals. You can travel down this path, step by step, to achieve at least one of your New Year’s resolutions this year and find your own personal financial freedom.

Let’s start with the basics:

Step 1: Identify

identifyThe first and most obvious thing you need to do is figure out why you want to save. What are your ultimate goals when it comes to saving money? In this step you need to identify exactly what it is you are hoping to achieve with this process.

Step 2: Prioritize             

The next step you should take is a close look at what your needs are and prioritize if you have to. You might need to fix that leaky faucet before you can dive head first into putting money away for retirement. Once you have considered what your needs are and prioritized them accordingly, you can then proceed to the next step.

PrioritiesStep 3: Calculate

Your answers to the first few steps have helped clearly define your goals. Now it’s time to calculate exactly how much you’re going to need to save in order to achieve them. For instance, if you’re planning on buying a home, you’ll need to calculate how much you can afford as a down payment, and then how much you can allocate in your monthly budget for a mortgage payment. Knowing these things will help you identify how much house you can truly afford.

Here are some great tips to maximize your savings regardless of what your ultimate goals are:

buy home 2There are a myriad of tools available on the web to help you calculate how much you can afford on a monthly basis for your mortgage payment, as well as how much you’ll need for a down payment.

red2Debt reduction requires a different type of calculation, and there are also many calculators on line to help you with this goal.  You’ll want to take into consideration the type of debt you’re trying to pay down, the interest rate and the amount of time it will take to pay it off completely.

imp2

Are you repairing a roof?  Or remodeling your home?  There’s a world of difference between $ 3,000 and $ 30,000.  Whatever the case, be sure to obtain estimates from reputable general contractors.  You don’t want to go through a whole year of saving only to realize you don’t have enough.

nest egg 2

There’s nothing more satisfying than watching your retirement fund grow. Why not take the time to calculate exactly what it will take to start saving now so you can enjoy that retirement comfortably later?

Step 4: Plan

It’s time to get out the red pen and start taking a hard look at your monthly expenses. Pull out your bank statements and credit card receipts and look for all of the items that you spend money on each month that are not “necessities”. Start slashing things like your weekly coffee budget and movie nights. It’s the luxury items that need to go first. Remember, they’re called luxuries for a reason. Yes, it’s no fun to do without, but it’s a necessary step when trying to achieve your 2015 money saving goals.

Unexpected-ExpensesYou also need to be very realistic during this step. Understand that unexpected expenses invariably rear their ugly heads. You should plan for those “unexpected” surprises so that they don’t knock you off track, as well as any other expenses you think might come up throughout the year – home repairs, vacations, speeding tickets. It’s not enough to say, “I want to save $ 100 a month.” You should always try to tack on a little more for the unexpected.

Step 5: Stay Focused.

Having goals and being determined to meet them is critical to this process, but it’s going to take a little more than that to get to where you want to be. If only it were as easy as saying, “This is what I’m going to do.”  If it were as simple as that, we’d probably all have a million dollars.

As mentioned above, life throws curve balls. Not only that, but there will be times when you find yourself sliding down the slippery slope of temptation. Your subconscious will say, “Go ahead, buy that $ 50 bottle of wine. You’ve done so good so far, it’s ok to have that now.”

focusThe trick is to squelch that voice. This is where having finite goals will come in handy. It’s easy to talk yourself out of socking money away if you have no clue what you’re saving for. But if it’s there in black and white, all you will have to is stay focused on that end goal to help you ignore that little voice during times of temptation.

Step 6: Ready, Set, GOAL.

goalsWhether you are new to the idea of setting goals or a seasoned pro, there are many applications on line to help you stay focused and reach your financial goals. From tracking your spending habits to helping you stay on budget each month, there is a program out there for your needs.

Step 7: Reward Yourself.

After all of the sacrifices you have made and the hard work you’ve put in toward reaching your goals, it is important to reward yourself when you reach them. But you don’t have to wait until you have accomplished the entire process to pat yourself on the back.

One of the best things you can do throughout this process is set up smaller, measurable goals to accomplish while on your journey to the ultimate prize. These benchmarks will encourage you to recognize that you are making progress, even if it is slow and steady.

Research shows that when human beings recognize good behavior in the form of treats, they gain self-control. The treat doesn’t have to be something sweet to eat (although who doesn’t love chocolate), it could be that cup of specialty coffee you’ve been craving for days. By setting up smaller, achievable goals throughout this process, you will be reminded of your progress, encouraged to continue, and allow yourself a little treat now and then.

 success.

Whatever your 2015 saving goals might be, it’s important to stay on task. It’s equally important not to beat yourself up if you take a step or two backwards.  Everyone has their ups and downs. Your goal for 2015 should be to have more ups than downs. And remember, no matter what kind of financial situation you’re facing, we’re always here to help.

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SuperMoney!

Hosting a Super Bowl Party? Here’s What You Should Know

On Super Bowl Sunday, everything is big. Except for Thanksgiving, Americans consume more food on this day than on any other. The game usually ranks as the most watched television event of the year in the U.S. And with 90% of viewers at their home or someone else’s, that means there are lots of Super Bowl parties – and lots of risk for homeowners.

If you’re planning to serve alcohol at your Super Bowl party, you aren’t alone. More than 51 million cases of beer are drunk during the game. But many people don’t know most states have liability laws that hold alcohol-serving hosts accountable for their guests’ actions.

In many situations, a host is not liable for injuries sustained by a drunken guest. But as the person who served alcohol you could be liable for injuries to third parties in situations such as drunken driving accidents.

So no matter the size of your Super Bowl party, here are a few steps to limit your risk of liability:

  • Limit your guest list: The better you know your guests, the easier it will be to identify who’s had too much to drink. It’s also much easier to ask friends to cut out bad behavior or sleep on a couch than an acquaintance or stranger.
  • Discourage driving: Make sure your guests have a safe option to get home. Between assigning a designated driver, taking public transportation, or using a ride-share app such as Lyft, there are plenty of options to avoid driving after drinking. If you see a guest who is visibly intoxicated, it’s in your best interest to help them find a way home or let him or her spend the night.
  • Offer food and non-alcoholic options: Drinking on an empty stomach is an easy way to magnify the effects of alcohol. The average fan consumes about 1,100 snack food calories during the game, so don’t feel guilty about serving lots of fatty food. Additionally, be sure to have non-alcoholic drinks on hand to keep everyone hydrated.
  • Stop serving alcohol before the end of the game: Your guests may appear sober, but that last drink ‘for the road’ could be what puts them into a dangerous situation. As the game winds down, be sure to offer water, coffee, soft drinks, and other non-alcoholic beverages.
  • Don’t allow drinking games: Some fans enjoy having a drink for touchdowns; that can quickly escalate to drinks for every first down.

Even if you’re hosting a small party with only trusted friends, it’s worth examining your home insurance policy to understand the conditions and limitations of coverage. A typical homeowners insurance policy provides some liquor liability coverage, but the standard coverage limit can be as low as $ 100,000. In a major claim, this may be insufficient. If you regularly host parties, you might want to increase your coverage.

If you’re done reviewing your coverage and preparing for unexpected risks, you can grab a snack, kick back, and enjoy the big game.

Photo credit for preview image: Flickr user/Andrew Ratto

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Home Insurance Blog

Shelter From the Blizzard? Look to Your Home Insurance

Winter Storm Juno – storms seem much more threatening now that we’ve given them names – continues to pound the Northeast today, after depositing more than 28 inches of snow in some locations along its path. Perhaps even worse, wind gusts in some places topped 70 mph – keep in mind that hurricanes start with sustained winds of 75 mph.

(Post updated Tuesday morning) 

How much damage can a winter storm cause? It’s too early to estimate the problems from Juno. But last year, winter storms caused $ 3.7 billion in damage in the U.S., more than flooding and wildfires combined, according to Munich Re.

What can you do about it? There aren’t many options at this point. Depending on where you live, you probably already have missed the opportunity for that last-ditch dash to the market for food and beverages, to the gas station to top off the tank, and especially to the hardware store for a generator. But you can take comfort from one fact – your home insurance policy can help in many Juno damage scenarios.

What’s Covered By Your Home Insurance

Too much snow and too much wind can combine to create major potential for trouble – especially for your roof. One threat comes from the sheer weight of the snow that could pile up there, which could cause your roof to collapse – a breach that would expose your home to the elements.

Your home insurance policy will address this, though that won’t help as the cold and dampness comes in through the hole. You’ll have to meet your deductible – the amount you agreed to pay toward any claim – but repairs or replacement of the roof and other damage typically would be covered up to your policy limit. That limit should be set at how much it would take to rebuild your house from the ground up. Not sure your limit is high enough – check it against the estimates returned by an online dwelling coverage calculator.

The weight of snow on your roof isn’t the only threat to your home. The snow and wind can cause trees – and tree limbs – around the house to collapse, which could result in damage to the roof, windows and even walls. Again, your home insurance can help – regardless of whether it’s your tree or your neighbor’s that causes the harm, but you’ll have to meet your deductible, of course.

Another major threat from Juno is frozen pipes – temperatures in New York, for example, aren’t expected to exceed freezing until Friday. When pipes freeze, they’re likely to burst and cause water damage to your home. Again, you’d be covered, but there is that deductible thing.

As soon as it’s safe to do so, be sure to clear your sidewalk. If someone slips and falls because you didn’t, you could be sued. Again, your home insurance will step up as standard policies typically include liability protection, which can help with your legal defense and any award in the case, up to your policy limits. The problem: Limits start at $ 100,000, which might not be enough, and you’re responsible for any costs greater than your policy limit.

What you can do: Wrap your pipes with insulation, and let your faucets drip, which can keep them from freezing (and possibly bursting). Also, find your home inventory – a listing of everything you own, complete with photos, receipts when available and estimates of value otherwise, and model/serial numbers. If you don’t have one, you could work on one while you’re waiting for the snow to quit because having a home inventory can help speed your claims process.

What’s Not Covered By Your Home Insurance

Unfortunately, there are some potential types of damage from a blizzard that aren’t covered. For example, if you have a lengthy power outage and the food in your refrigerator and freezer spoils, you typically would not be reimbursed.

Standard home insurance does not cover flooding; if the melting snow causes rising waters that threaten your house, you won’t be protected unless you have flood insurance. Flood policies normally don’t take effect until 30 days after they’re purchased – so if you don’t have coverage in place, you’ll have to take your chances with Juno.

I Have Damage; What Do I Do?

In the event that your home is damaged, the important thing is to remain calm. Take plenty of photos of the damage to document what happened, and contact your carrier as soon as possible to report the problem and start the claims process.

You’ll have to wait until you get approval from your provider to start permanent repairs, but you can do things such as cover any hole in your roof with a tarp, which will prevent further damage. However, it’s important to make sure you’re being safe if you have to tackle such a task.

Juno could pose a major threat to millions of Americans and their homes. Take what steps you can to minimize your exposure, but understand that help with storm damage is available from your home insurance policy. Be prepared to call on it if needed.

Photo credit: Flickr user/Metropolitan Transportation Authority/Patrick Cashin

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Home Insurance Blog

Joan Rivers’ lavish penthouse for sale for $28 million

http://i2.cdn.turner.com/money/dam/assets/150209124336-joan-rivers-penthouse-ballroom-120x90
joan rivers penthouse ballroom

The lavish condo that was home to the late comedian Joan Rivers for 25 years was listed for sale Monday for $ 28 million.

The 11-room penthouse occupies three floors of a limestone mansion in New York City’s Upper East Side neighborhood. Rivers’ daughter, Melissa Rivers, put the home up for sale a day after she accepted her mother’s posthumous Grammy award for a recording of her memoir, Diary of a Mad Diva.

The home was originally built in 1903 for a family of Gilded Age millionaires and socialites. It was later converted into condos in the 1930s.

Soon after she acquired it in 1990, Rivers restored the unique Louis-XIV-inspired décor of the property’s two large entertainment spaces — an ornate gilded ballroom and music room. The spaces are so large that the home is capable of hosting grand social events for up to 125 people, according to Corcoran, which is listing the property.

joan rivers penthouse office
The office

Those gilded rooms, which served as the ballroom and reception hall in the original mansion, are like nothing else available in the city, said Leighton Candler, the agent representing the property for Corcoran.

“These gigantic mansions, a lot of them were torn down and now high rises are where they stood,” said Candler. “People just don’t know that apartments like this still exist.”

Related: New York City’s priciest homes

The palatial property also includes a more intimate wood-paneled library and dining room, four bedrooms, 4.5 baths, two kitchens and five fireplaces. Its two terraces look out on Central Park and the Manhattan skyline. The master bath features a marble soaking tub and vanity, and the lower level includes a separate but contiguous two-bedroom apartment for guests.

joan rivers penthouse terrace
The terrace

Rivers listed the opulent 5,100-square-foot property several times before her death on Sept. 4. The current asking price is down slightly from the $ 29.5 million she listed it for in 2012.

“It was never really seriously on the market before,” said Candler. “She had offers made, but she would change her mind. Nothing else really measured up.”

Candler said she expects the unique Rivers home to be a quick sell.

“It’s absolutely fabulous, and I can’t imagine anyone who wouldn’t want to live in it,” she said.

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Home mortgage rates and real estate news – CNNMoney.com

Ask an Agent – the Videos

Late last year, we launched our Ask an Agent feature, in which Mike Pesackis, a licensed insurance agent who is HomeInsurance.com’s director of carrier operations, addressed in a post a question about what new landlords should consider when insuring a home.

We’ve expanded the feature to include videos of Mike answering questions about home insurance and related issues. Among the questions: “How Can I Save on Home Insurance?” and “Why is My Replacement Cost So High?” Click here to find other Ask an Agent videos. We think you’ll enjoy – and learn from – Mike’s answers.

If you have an insurance-related question for Mike, please email it to AskAnAgent@HomeInsurance.com.

Photo credit for preview image: Flickr user/Antonio Zugaldia

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Home Insurance Blog

CFPB Report Reveals Top Reverse Mortgage Complaints

The Consumer Financial Protection Bureau (CFPB) today issued a report highlighting consumers’ top complaints for reverse mortgages.

Frustrations with loan terms, servicer turnarounds and foreclosure problems topped the list of complaints, according to the report titled Snapshot of Reverse Mortgage Complaints December 2011-2014.

To help consumers who already have a reverse mortgage, the CFPB is issued an advisory with tips on how to plan ahead to protect loved ones from financial hardships brought on by a reverse mortgage.

“Consumer complaints tell us that the complex terms of reverse mortgages continue to be misunderstood,” said CFPB Director Richard Cordray. “As more baby boomers choose reverse mortgages to tap into their home equity, they need to understand the unique terms and features of this product. Our advisory can help those who have already chosen reverse mortgages to plan ahead for loved ones.”

Breaking down the total complaints into subcategories, 38% of consumer grievances stemmed from problems when unable to pay with respect to loan modification, collection or foreclosure, while 32% of complaints were directed at making payments, including loan servicing fees and escrow accounts.

Complaints when applying for the loan represented 18%, while complaints related to signing the agreement (settlement process and costs) and receiving a credit offer (credit decisions and underwriting) garnered 10% and 3%.

Many complaints show a mismatch between consumer expectations and the way the product functions. For example, many consumers cited in the report struggle with understanding how quickly their loan balance will go up and their home equity will fall.

“Many older consumers and their family members who submit complaints demonstrate confusion about the terms and requirements of reverse mortgage loans,” CFPB states in the report. “These complaints suggest that some homeowners may not understand that the loan proceeds as well as the accrued interest on the loan overtime will substantially decrease the amount of available equity.”

As of December 2014, one of the most common reverse mortgage complaints concerns denials for changing terms of the loan. Some consumers complained that lenders refuse to lower their loan’s interest rates, thus making them feel they’re being overcharged, while others complain that the variable interest rate on their loan increased too quickly.

Distress about the inability to add new borrowers to an existing loan was another top complaint among consumers, who complained to the CFPB about not being able to be added to the loan so they could keep their home in the event of the borrowing spouse’s death.

Consumers also complained that loan servicers do not provide a clear process to allow them to settle the debt. Others complained about appraisal delays, improperly performed appraisals, while some consumers complained about a lack of response from loan servicers, including unanswered phone calls and a lack of response to written requests.

“Some consumers describe multiple requests from servicers for the same documents when attempting to remedy defaults,” CFPB said in the report. “In some cases, consumers try to prevent foreclosure by paying the reverse mortgage loan balance in full, but do not receive timely responses from servicers.”

The Snapshot provides an overview of consumer complaints submitted to the agency involving reverse mortgages from December 2011 through December 2014, a period during which the agency handled approximately 1,200 complaints regarding reverse mortgages.

In total, reverse mortgage complaints comprise about 1 percent of all mortgage complaints, regardless of age, submitted to the CFPB.

Since the CFPB began accepting consumer complaints on reverse mortgages in December 2011, the Department of Housing and Urban Development has issued more than 10 policy changes to the Home Equity Conversion Mortgage program.

Continued challenges and complaints, however, may still arise in the future for borrowers who have obtained HECMs prior to August 4, 2014—before Mortgagee Letter 2014-07 allowed for non-borrowing spouses to defer payment of the loan’s due and payable status following the death of the borrowing spouse for new HECM case numbers assigned on or after Aug. 4.

“Notwithstanding the program changes, borrowers and their non-borrowing spouses who obtained reverse mortgages prior to August 4, 2014 may likely encounter difficulties in upcoming years similar to those described in this Snapshot, i.e., non-borrowing spouses seeking to retain ownership of their homes after the borrowing spouse dies,” the CFPB stated.

As a result, the CFPB suggests that many of these consumers may need “notification of and assistance in averting impending possible displacement” should the non-borrowing spouse outlive his or her borrowing spouse.

The Snapshot provides an overview of consumer complaints submitted to the agency involving reverse mortgages from December 2011 through December 2014, a period during which the agency handled approximately 1,200 complaints regarding reverse mortgages.

In total, reverse mortgage complaints comprise about 1 percent of all mortgage complaints, regardless of age, submitted to the CFPB.

The CFPB has not returned a request for comment as of press time.

View the CFPB report.

Written by Jason Oliva

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Reverse Mortgage Daily

Huge Settlements Between S&P, Government

2015 is leaving Standard and Poor’s (S&P) quite a bit poorer. Yesterday, the major credit rating agency agreed to pay $ 1.375 billion to resolve lawsuits brought against it by the U.S. Department of Justice and attorney generals from 19 states and the District of Columbia regarding S&P’s pre-crisis ratings of mortgage-backed securitizations (MBS) and collateralized debt obligations (CDO). Those lawsuits, the first of which were initiated in 2013, allege that between 2004 and 2007, S&P misrepresented the stringency and objectivity of its ratings—that those ratings were plagued by conflicts of interest that incentivized S&P to artificially inflate the ratings in order to appease the issuers that paid millions of dollars for its services. Consequently, a large number of the MBS and nearly every CDO rated by S&P at that time failed, creating billions of dollars-worth of investor losses.

The “Big Three” ratings agencies (S&P, Moody’s, and Fitch) who have taken considerable public fire for their perceived role in the 2008 mortgage crisis week’s settlements, had previously remained largely unscathed in connection with their activities from that period. The settlement announced this morning constitutes the biggest settlement ever paid by a credit ratings agency. It comes on the heels of the $ 125 million settlement S&P reached yesterday with the California Public Employees’ Retirement System over the allegedly inflated grades S&P assigned three structured investment vehicles comprised of CDOs, RMBS, and securitized home equity loans. The collapse of those vehicles in 2007 and 2008 cost their retiree investors approximately $ 1 billion.

And two weeks ago, S & P reached a $ 58 million settlement with the SEC, a $ 12 million settlement with the New York Attorney General’s office and a $ 7 million settlement with the Massachusetts Attorney General’s office, all to resolve what the SEC has referred to as “race to the bottom behavior” in S&P’s ratings activities. S&P also agreed to a one-year suspension from the lucrative U.S. conduit/fusion ratings sector, which involves securities backed by pools of at least 40 loans secured by commercial real estate.

The January settlements were prompted by three separate allegations of misconduct. The first, common to the investigations of the SEC, New York and Massachusetts, focused upon S&P’s 2011 ratings in connection with six U.S. conduit/fusion CMBS transactions, and preliminary ratings in connection with two additional transactions of the same kind. S&P allegedly misled investors about the ratings systems being applied to those transactions, secretly applying a much looser methodology than it purported to apply, inflating the ratings of the CMBS pools in question.

S&P pulled its ratings of these transactions several months later, prompting suspicion and official investigations into the matter. In 2012, in the wake of the incident, S&P attempted to redeem its credibility and gain market strength by replacing its ratings criteria with a more conservative system. S&P subsequently published a study, one that became the second prong of the SEC investigation, touting the virtues and steadfastness of its new criteria. The study theorized that a AAA-rated debt under the new system could withstand Great Depression Era-level economic stress. The SEC has chastised the study as “false and misleading,” saying that the study “relied on flawed and inappropriate assumptions and was based on data that was decades removed from the severe losses of the Great Depression.”

Finally, the third prong of the SEC investigation focused on breakdowns in S&P’s ratings surveillance of previously-rated RMBS between October of 2012 and June of 2014.

The SEC’s S&P investigations represented its first offensive against one of the “Big Three,” but according to a Wall Street Journal article published this Sunday, it looks like Moody’s is about to take a turn in the hot seat. Unlike the SEC’s investigation into S&P, the Moody’s investigation, which is still in its early stages, purportedly focuses upon the agency’s pre-crisis ratings activities.

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Mortgage Crisis Watch

In the Mortgage Process? Follow These 10 Commandments

In the Mortgage Process?

Follow These 10 Commandments

 

     There’s an abundance of info available for Home Buyers looking to be Pre-Qualified and Pre-Approved for a Mortgage.  And that’s great … 

 
    Gaining financing info is the first step towards successful home buying … and perhaps the most crucial. 
  
     Let’s face it.  The majority of home purchases today depend on it.  
     But what are some of the things that you as a Buyer should be aware of and concerned about while your loan is being processed? 
     How can you help your processing stay on-track and successful? 
     First, Buyers (and those Refinancing) must understand that the “work” is not done when you reach Underwriting.  You may still be called upon to answer questions from your Lender.  And further documentation may be needed to address issues that arise during the Underwriting process.
     It’s vital that you remain aware of your expenditures, credit standing, debts, and finances throughout your entire Mortgage process.  How can you do that?

     Below you’ll find a list of “Commandments” that I believe you must follow during your Mortgage Process.   Note Commandment #10 … I can’t stress it’s importance strongly enough.         
     Prior to:  
  • Making any change in your employment 
  • Making a change in the manner in which you’re paid
  • Incurring more debt 
  • Charging a purchase 
  • Buying a new vehicle, furniture, or decor for your new home 
  • Making Deposits or Moving Monies between accounts
  • MORE …

      

     Contact me for guidance and info.  Even seemingly small actions or changes can havehuge consequences on the Mortgage Approval you seek.  

     Don’t jeopardize the timing or success of your Chicagoland mortgage financing. Follow the “10 Commandments While Applying for Mortgage” …
     Should you be thinking of Buying, Building, or Refinancing a home in the greater Chicagoland area, contact me.  I’ll be happy to answer all your financing questions and put my 37 years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:
Direct:  815.524.2280
Cell/Text:  708.921.6331
eFax:  815.524.2281

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Let’s Talk! Gene Mundt, Chicago-area Mortgage Blog

401(k) and IRA changes coming in 2015

With colder temperatures across the nation, and the holidays finally behind us, many financially savvy individuals and households have already began to turn their thoughts to taxes; specifically, the changes made by Congress and the IRS for 2015 that impact Individual Retirement Accounts and 401 (k) retirement plans. Several significant changes in store for this coming year will potentially save taxpayers money, but one change in particular could result in significant financial costs.The professionals at Optima Tax Relief can help assure that you are able to take the maximum advantage of all available tax breaks.

The myRA

iraFor many low and moderate income taxpayers, saving for retirement is difficult. Putting aside thousands of dollars in an IRA or 401(k) plan often simply doesn’t happen. The myRA plan, announced by President Obama in his 2014 State of the Union address, is designed to make saving for retirement easier for individuals who are employed but who don’t have access to workplace retirement plans.

Still under development, the myRA program is modeled after Roth IRAs. Both retirement plans share several features. Both Roth IRAs and myRAs are funded with after-tax dollars, which means that contributions are not tax deductible. But withdrawals of contributions are also tax-exempt. And, just as with Roth IRAs, withdrawals of earnings from myRA plans are also tax-exempt for taxpayers who are at least 59 ½ years old.

Individual taxpayers with annual incomes up to $ 129,000 are eligible to participate in the myRA program; taxpayers filing as married or head of household can have annual incomes up to $ 191,000. The minimum to open a myRA account is just $ 25, contributions can be as small as $ 5 per pay period. The myRA program limits contributions to $ 5,500 per year for taxpayers under age 50, and $ 6,500 per year for older taxpayers. Balances for myRA accounts are limited to $ 15,000; larger balances must be transferred into conventional Roth IRAs.

Higher IRA Income Limits

retirementThe IRS has also set higher maximum income limits for taxpayers who opt to participate in traditional and Roth IRA plans for 2015. Taxpayers with incomes above specified limits may contribute to a traditional IRA but cannot defer paying taxes on their contributions. Taxpayers whose incomes exceed specified limits cannot contribute to Roth IRAs at all, with very limited exceptions.Taxpayers who are eligible can contribute to both Roth and traditional IRAs as long as they adhere to annual contributions limits, which remained unchanged for 2015 federal income tax returns.

Individual taxpayers with modified adjusted gross incomes between $ 61,000 and $ 71,000 who have access to retirement plans at work are phased out of receiving tax breaks for traditional IRAs; couples with MAGIs between $ 98,000 and $ 118,000 are also phased out of tax breaks traditional IRAs for 2015. These limits represent increases of $ 1,000 for individual taxpayers and $ 2,000 for couples over 2014 limits. Married individuals who do not have access to workplace based retirement plans but whose spouses do have access to such plans are phased out of tax breaks for individual IRAs with a MAGI between $ 183,000 and $ 193,000.

The IRS has increased maximum income limits for Roth IRAs by $ 2,000 for 2015 for individual and married taxpayers. Individual taxpayers with MAGIs between $ 116,000 and $ 131,000 are phased out of eligibility for Roth IRAs. Married couples with MAGIs between $ 183,000 to $ 193,000 are phased out of eligibility for Roth IRAs.

The “Fresh Start” on IRA Rollovers

retirementThrough rollovers, individual taxpayers are allowed to withdraw funds from their traditional or Roth IRAs without generating tax penalties, as long as the funds were redeposited in the same type of IRA within 60 days. Previously, the IRS imposed a limit of one rollover per IRA every 12 months. This meant that taxpayers with a Roth and a traditional IRA could conceivably execute two rollovers annually without tax penalties.

However, the Tax Court recently reinterpreted the rule to limit each taxpayer to one rollover every 12 months. To minimize penalizing taxpayers who executed rollovers late in 2014, the IRS imposed a “fresh start” on enforcing the new interpretation of the rule.No rollovers initiated or completed during 2014 would be subject to the new rule. Nonetheless, this change could potentially generate millions for the IRS in penalties.

Higher Income Limits for Saver’s Credits

401kThe Saver’s Credits allows low and middle income taxpayers who participate in IRA or 401(k) plans to claim tax credits. Individual taxpayers can claim credits up to $ 1,000; married taxpayers and heads of household can claim credits of up to $ 2,000. Income limits for the saver’s credit program have been increased for 2015. AGI limits for individual taxpayers increased from $ 30,000 in 2014 to $ 30,500 in 2015. Maximum AGI for heads of household is 45, 750, increased from $ 45,000 in 2015. For married couples the maximum is $ 61,000, $ 1,000 higher than the limit for 2014.

Increases in 401(k) Contribution Limits

The IRS has also increased contribution limits for 401 (k) accounts. For 2015, taxpayers may contribute up to $ 18,000 to an individual 401 (k) account. This maximum represents an increase of $ 500 over the maximum 401 (k) contribution of $ 17,500 set for 2014. This increase also applies to the 403(b), 457 and Thrift Savings Plans.

Dollars and Cents

dollars and centsTrying to keep up with the intricacies of the tax code can give anyone a headache. If you’re confused about how changes in tax laws regarding retirement plans apply to you, there’s nothing wrong with seeking help. An accountant or attorney who specializes in tax law – like the professionals at Optima Tax Relief, can translate the legalese generated by Congress and the IRS into plain English, and help ensure that you are able to take full advantage of all the tax breaks to which you are entitled.

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