“There are decades when nothing happens, and then there are weeks when decades happen.” – Vladimir Lenin
Click below to read more about the rollercoaster that was Quarter 1 from MAI Capital Management – one of our sub-advisors.
Debt After Death: What Happens to Debt When Someone Dies?
Losing a loved one is never easy. In addition to the emotional challenges you may face, you might also be worried about what will happen to their debts once they are gone.
Generally, with limited exceptions, when a loved one dies you will not be liable for their unpaid debts. Instead, their debts are typically addressed through the settling of their estate.
How are debts settled when someone dies?
The process of settling a deceased person’s estate is called probate. During the probate process, a personal representative (known as an executor in some states) or administrator if there is no will, is appointed to manage the estate and is responsible for paying off the decedent’s debts before any remaining estate assets can be distributed to the beneficiaries or heirs. Paying off a deceased individual’s debts can significantly lower the value of an estate and may even involve the selling of estate assets, such as real estate or personal property.
Debts are usually paid in a specific order, with secured debts (such as a mortgage or car loan), funeral expenses, taxes, and medical bills generally having priority over unsecured debts, such as credit cards or personal loans. If the estate cannot pay the debt and no other individual shares legal responsibility for the debt (e.g., there is no cosigner or joint account holder), then the estate will be deemed insolvent and the debt will most likely go unpaid.
Estate and probate laws vary, depending on the state, so it’s important to discuss your specific situation with an attorney who specializes in estate planning and probate.
What about cosigned loans and jointly held accounts?
A cosigned loan is a type of loan where the cosigner agrees to be legally responsible for the loan payments if the primary borrower fails to make them. If a decedent has an outstanding loan that was cosigned, such as a mortgage or auto loan, the surviving cosigner will be responsible for the remaining debt.
For cosigned private student loans, the surviving cosigner is usually responsible for the remaining loan balance, but this can vary depending on the lender and terms of the loan agreement.
If a decedent had credit cards or other accounts that were jointly held with another individual, the surviving account holder will be responsible for the remaining debt. Authorized users on credit card accounts will not be liable for any unpaid debt.
Are there special rules for community property states?
If the decedent was married and lived in a community property state, the surviving spouse is responsible for their spouse’s debt as long as the debt was incurred during the marriage. The surviving spouse is responsible even if he or she was unaware that the deceased spouse incurred the debt.
How much debt Americans expect to leave behind when they die
What if you inherit a home with a mortgage?
Generally, when you inherit a home with a mortgage, you will become responsible for the mortgage payments. However, the specific rules will vary depending on your state’s probate laws, the type of mortgage, and the terms set by the lender.
Can you be contacted by debt collectors?
If you are appointed the personal representative or administrator of your loved one’ s estate, a debt collector is allowed to contact you regarding outstanding debts. However, if you are not legally responsible for a debt it is illegal for a debt collector to use deceptive practices to suggest or imply that you are. Even if you are legally responsible for a debt, under the Fair Debt Collection Practices Act (FDCPA), debt collectors are not allowed to unduly harass you. Finally, beware of scam artists who may pose as debt collectors and try to coerce or pressure you for payment of your loved one’s unpaid bills.
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is
not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each
taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for
general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure
the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W.
Eldorado Street, Decatur, IL 62522. 217-425-6340.
Accounts for Two: A Team Approach to Retirement Savings
Almost half of U.S. families headed by a married couple include two working spouses.1 With dual careers, many spouses accumulate assets in separate retirement accounts. Each might have funds in an employer-sponsored plan and an IRA.
Even if most of a married couple’s retirement assets reside in different accounts, open communication and teamwork can help them craft a unified retirement strategy.
Working together
Tax-deferred retirement accounts such as 401(k)s, 403(b)s, and IRAs can be held in only one person’s name. [A spouse is required to be the beneficiary of a 401(k), and to some extent, a 403(b), unless the spouse signs a written waiver.] Taxable investment accounts, on the other hand, may be held jointly.
Owning and managing separate portfolios allows each spouse to choose investments based on his or her individual risk tolerance. Some couples may prefer to maintain a high level of independence for this reason, especially if one spouse is more comfortable with market volatility than the other.
However, sharing plan information and coordinating investments could help some couples build more wealth over time. For example, one spouse’s workplace plan may offer a broader selection of investment options, while the offerings in the other’s plan might be somewhat limited. One employer may offer a better contribution match than the other.
Spouses who use a joint strategy might agree on an appropriate asset allocation for their combined savings and invest their contributions in a way that takes advantage of each plan’s strengths while minimizing any weaknesses. (Asset allocation is a method to help manage investment risk; it does not guarantee a profit or protect against loss.)
In 2025, the maximum employee contribution to a 401(k) or 403(b) plan is $23,500 (plus an extra $7,500 for those age 50 and older or an extra $11,250 for those age 60 to 63). Employers often match contributions up to a set percentage of salary.
Spousal IRA opportunity
While many married couples have two wage earners, some spouses stay home to take care of children or other family members, or just to take a break from the workforce. And it’s not unusual for one spouse to retire while the other continues to work. In any of these situations, it can be difficult to keep retirement savings on track.
Fortunately, a couple can contribute $7,000 to the working spouse’s IRA and an additional $7,000 to the nonworking spouse’s IRA (in 2024 and 2025), as long as their combined income exceeds both contributions and they file a joint tax return. An additional $1,000 catch-up contribution can be made for each spouse who is age 50 or older. All other IRA eligibility rules must be met.
Lagging Balances
Despite solid saving habits, women report lower household retirement savings than men across all age groups. This is due primarily to lower wages, more women working part-time without benefits, and more women taking time off to care for children and other family members.
Contributing to a spousal IRA may not only help a couple with a nonworking spouse save more towards retirement, it might also offer a potentially valuable tax deduction. That’s because the IRS imposes higher income limitations for deductible contributions to spousal IRAs than for contributions made to the IRA of an active participant in an employer plan.
For married couples filing jointly, the ability to deduct contributions to the IRA of an active participant in a work-based plan is phased out at a modified adjusted gross income (MAGI) between $123,000 and $143,000 in 2024 ($126,000 and $146,000 in 2025). When the contribution is made to the IRA of a nonparticipating spouse, the phaseout limits are higher: MAGI between $230,000 and $240,000 in 2024 ($236,000 and $246,000 in 2025).
IRA contributions for the 2024 tax year can be made up to the April 15, 2025, tax filing deadline (May 1, 2025, for taxpayers affected by certain natural disasters). Withdrawals from tax-deferred retirement plans are taxed as ordinary income and may be subject to a 10% federal tax penalty if withdrawn prior to age 59½, with certain exceptions as outlined by the IRS.
1) U.S. Bureau of Labor Statistics, 2024 (2023 data)
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.
The Versatile Roth IRA
Used with care, the Roth IRA may help serve several objectives at once — like a multipurpose tool in your financial-planning toolbox.
Retirement
First and foremost, a Roth IRA is designed to provide tax-free income in retirement. If your modified adjusted gross income (MAGI) falls within certain limits, you can contribute up to $7,000 ($8,000 for those age 50 or older) in earned income to a Roth IRA in 2024 and 2025. Although Roth IRA contributions are not tax-deductible, qualified withdrawals are tax-free. A qualified withdrawal is one made after the account has been held for at least five years and the account owner reaches age 59½, becomes disabled, or dies. Nonqualified withdrawals of earnings are subject to ordinary income taxes and a 10% penalty, unless an exception applies.
2025 Income Limits for Roth Contributions
Emergency savings
Because contributions to a Roth IRA are made on an after-tax basis, they can be withdrawn at any time — which means, in a money crunch, you could withdraw just your Roth contributions (not the earnings) free of taxes and penalties. In addition, account holders may withdraw up to $1,000 in earnings each year to cover emergency expenses.1
Teachable moments
A Roth IRA can also be an ideal way to introduce a working teen to long-term investing. Minors can contribute to a Roth IRA as long as they have earned income and a parent or other adult opens a custodial account in their name. Alternatively, an adult can contribute to a Roth IRA within a custodial account on a child’s behalf, as long as the total amount doesn’t exceed the child’s total wages for the year.
College and first home
Roth IRA earnings can be withdrawn penalty-free to provide funds for college and the purchase of a first home.
College. Roth IRA funds can help pay for certain undergraduate and graduate costs for yourself or a qualified family member. Expenses include tuition, housing and food (if the student attends at least half time), fees, books, supplies, and required equipment not covered by other tax-free sources, such as scholarships or employer education benefits. An advantage of using a Roth IRA to help pay for college is that assets held in retirement accounts are excluded from the government’s financial-aid formula. (A related point: up to $35,000 in 529 plan assets that are not used to pay for college may be rolled over to a Roth IRA for the same beneficiary, provided certain rules are followed.)
First home purchase. Up to $10,000 (lifetime limit) can be used for qualified expenses associated with a first-time home purchase. You are considered a first-time home buyer if you haven’t owned or had interest in a home during the previous two years. Funds may be used for acquisition, construction, or reconstruction of a principal residence and must be used within 120 days of the distribution. If the account has been held for at least five years, the distribution will be income tax-free as well.
Estate planning
Roth IRAs are not subject to the age-based required minimum distribution rules that apply to non-Roth retirement accounts during your lifetime. For this reason, if you don’t need your Roth IRA funds, they can continue to accumulate. After your death, the tax-free income benefit continues to apply to your beneficiaries (however, the value of your Roth IRA will be assessed for federal and possibly state estate tax purposes).
Proceed with caution
Although it’s generally best to avoid tapping money earmarked for retirement early, the Roth IRA can help serve multiple needs — if used wisely.
The tax implications of a 529 savings plan should be discussed with your legal and/or tax professional because they can vary from state to state. Also be aware that most states offer their own 529 plans, which may provide advantages and benefits exclusively for their residents and taxpayers. These other state benefits may include financial aid, scholarship funds, and protection from creditors. Before investing in a 529 savings plan, please consider the investment objectives, risks, charges, and expenses carefully. The official disclosure statements and applicable prospectuses, which contain this and other information about the investment options, underlying investments, and investment company, can be obtained by contacting your financial professional. You should read these materials carefully before investing.
1) Due to ordering rules, Roth IRA contributions will always be distributed before earnings.
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.
Scam Definitions and Prevention
Financial Spring-Cleaning Tips
With the first day of spring on March 20, now is the perfect time to think about a little “spring cleaning” — not just at home but also for your financial plans.
Here are some quick, actionable tips to help freshen up your finances and keep them in shape for the year ahead:
- Reassess your financial goals – Take stock of your short- and long-term goals, such as retirement plans or major purchases. Are they still aligned with your priorities, or is it time for an update?
- Organize your accounts – Consolidate old retirement accounts or scattered investments to simplify management and reduce fees. It’s also a good time to update beneficiaries on all financial documents if you’ve experienced major life changes.
- Review your spending plan – Review recent bank and credit card statements to identify recurring charges or subscriptions you no longer need. Redirect those funds toward savings or investments.
- Rebalance your portfolio – Check investment allocations in relation to your current risk tolerance and goals. If you want to adjust your portfolio, reach out, and we can discuss further.
- Streamline debt management -If you have high-interest debt, consider consolidating or refinancing to lower rates. Create a strategy to pay off balances faster, such as prioritizing the highest interest rates.
- Boost your emergency fund – Aim to have three to six months’ expenses in an easily accessible account. If yours needs topping up, set a small monthly savings goal to reach the desired amount.
- Evaluate tax strategies -Before April 15, review tax-advantaged accounts like Individual Retirement Accounts (IRAs) or Health Savings Accounts (HSAs) to ensure you maximize contributions for 2024. Remember, the IRA contribution limits for 2024 are $7,000 for those under age 50 and $8,000 for those age 50 or older. For HSAs, you can contribute up to $4,150 as an individual or $8,300 as a family.
- Protect your digital assets -Update passwords for online banking and investment accounts. Activate two-factor authentication wherever possible for added security.
If you’d like to discuss any of these in greater detail or want assistance tailoring these tips to your specific goals, please feel free to reach out. I’m here to help however I can.
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.
January is…
We hope you’re doing well. As we kick off 2025, it’s the perfect time to take stock of your financial health — especially since January is Financial Wellness Month. To help you start the year on the right foot, I’ve put together a few key tips and updates that may make a significant difference in your finances this year.
Take Note of the 401(k) Automatic Enrollment Under SECURE 2.0: Starting in 2025, SECURE 2.0 mandates automatic enrollment in 401(k) and 403(b) plans, with some exceptions for small businesses. This aims to increase participation, which benefits employees and employers through tax advantages and enhanced employee retention. Eligible participants will be automatically enrolled but can choose to opt out.
Plan for Higher Retirement Account Catch-Up Contributions: Individuals aged 50 and older can make catch-up contributions to their retirement plans within specified limits. Starting this year, SECURE 2.0 significantly raises these limits for those aged 60 to 63, allowing contributions of either $10,000 or 50% more than the standard catch-up amount, whichever is greater.
Prepare for Potential Tax Changes in 2026: Some experts are calling 2025 the “Super Bowl of tax law changes,” with the Tax Cuts and Jobs Act set to expire on December 31, 2025. This includes the reduction of individual income tax rates, increased standard deductions, the doubling of the child tax credit, and limits on various deductions like state and local taxes and mortgage interest. The alternative minimum tax will apply to more people after 2025 as exemptions revert to pre-TCJA levels, while the 20% pass-through deduction and increased estate tax exemption will expire. Additionally, international tax provisions like GILTI, FDII, and BEAT will become more restrictive.
Enhance Your Health Savings: With health care costs rising, don’t overlook the advantages of a Health Savings Account (HSA). The 2025 annual HSA contribution limit is $4,300 for individuals with high-deductible health coverage (up from $4,150 in 2024) and $8,550 for family coverage (up from $8,300 in 2024).
Leverage New Tech Tools: Start the year by exploring the latest financial tech tools designed to help you manage your money more effectively; such as budgeting apps to help keep you on track throughout the year.
Financial Wellness Month is all about taking proactive steps to improve your financial health, and I’m here to support you in that journey. Whether you need help reviewing your current strategy or just have a few questions, feel free to reach out — I’m here to help.
Wishing you a financially fit 2025!
Quarterly Report: 4th Quarter 2024
Would You Be Prepared for an Unplanned Early Retirement?
Most of us would prefer not to think about an unexpected (and unwelcome) early retirement, but it does happen frequently. In fact, nearly half of current retirees retired earlier than planned, and of that group, more than 60% did so due to changes at their company or a hardship, such as disability.1 For that reason, it’s a good idea to take certain steps now to help prepare for the unexpected.
What you can do now
Save as much as possible in tax-advantaged accounts.
If you’re forced to retire earlier than planned, your work-sponsored retirement plans, IRAs, and health savings accounts (HSAs) could become critical resources. HSA assets can be used tax-free to pay for qualified medical expenses at any time, and you can generally tap your retirement plan and IRA assets after age 59½ without penalty. Although ordinary income taxes apply to distributions from pre-tax accounts, qualified withdrawals from Roth accounts are tax-free.2
In addition, the IRS has identified several situations in which retirement account holders may be able to take penalty-free early withdrawals. These include disability, terminal illness, leaving an employer after age 55 (work-based plans only),3 to pay for unreimbursed medical expenses that exceed 7.5% of your adjusted gross income, and to pay for health insurance premiums after a job loss (IRAs only).
Pay down debt.
Generally, it’s wise to enter retirement (especially when unexpected) with as little debt as possible. Ensuring that your financial plan includes a strategy for paying down student loans, credit card debt, auto loans, and mortgages can help you minimize your income needs later in life.
Know your bare-bones budget.
Another way to help cushion the shock of an unexpected early retirement is knowing exactly how much you spend each month on your basic necessities, including housing, food, utilities, transportation, and health care. Maintaining a written budget throughout life’s ups and downs will help you quickly identify how much income you’d need over the short term while you work on a longer-term income-replacement strategy.
Maintain adequate levels of disability insurance. Your employer may offer group coverage at reduced rates; however, you lose those benefits if your employment is terminated. Private disability income insurance can help you secure coverage specific to your needs, and since the premiums are typically paid with after-tax dollars, any benefits would generally be tax-free (unlike work-sponsored coverage that is paid with pre-tax dollars).
Understand Social Security benefits.
If you stop working due to disability, you may qualify for Social Security Disability Insurance benefits if you meet certain requirements. You must have earned a certain number of work credits in a job covered by Social Security and have a physical or mental impairment that has lasted or is expected to last at least 12 months or result in death. If you remain eligible, benefits may continue up to age 65 and then convert to Social Security retirement benefits.
If you need to retire earlier than planned for reasons unrelated to disability and are eligible for Social Security retirement benefits, you can apply as early as age 62. However, starting payments prior to your full retirement age (66 or 67, depending on year of birth) will result in a permanently reduced monthly benefit.
For more information on Social Security disability and retirement benefits, visit the Social Security Administration’s website at ssa.gov.
Consider your health insurance options.
Terminating employment prior to age 65 could leave you without health insurance. You may opt to continue your employer-sponsored health coverage for a limited period (permitted through COBRA, the Consolidated Omnibus Reconciliation Act), although this can be quite expensive. If you’re married and your spouse works, you may get coverage under their plan. You may also seek coverage through the federal or a state-based health insurance marketplace. If you receive Social Security disability benefits, you’d automatically qualify for Medicare after 24 months.
Why 49% of Retirees Retired Earlier Than Planned
Don’t be caught off guard
Don’t wait for an unwelcome surprise. Take steps now to help ensure your overall financial plan considers the “what-if” of an unexpected early retirement.
1) Employee Benefit Research Institute, 2024
2) Qualified Roth withdrawals are those made after a five-year holding period and after the account owner dies, becomes disabled, or reaches age 59½. The penalty for early retirement account distributions and nonqualified withdrawals from Roth accounts is 10%. Nonqualified withdrawals from HSAs will be subject to ordinary income tax and a 20% penalty. After age 65, individuals can take money out of HSAs penalty-free, but regular income taxes will apply to funds not used for qualified medical purposes.
3) Age 50 or after 25 years of service for public safety officers
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.
Birthday Benefits Quiz
Remember when you turned 16 and rushed to get your driver’s license? Or earned the right to vote at 18 and enjoyed the privileges and responsibilities of adulthood at 21? There aren’t many legal changes associated with birthdays after that until you turn 50, and then there are plenty.
Can you match these ages to the related federal benefits and tax responsibilities? One age will be used twice.
50 55 59½ 62 65 67 70 73 75
___ 1. Eligible for full Social Security benefits for those born in 1960 or later
___ 2. Earliest age to make catch-up contributions to a traditional IRA or an employer-sponsored retirement plan
___ 3. Eligible for maximum Social Security benefit
___ 4. Must begin taking required minimum distributions from most tax-deferred retirement plans, for those born from 1951 to 1959
___ 5. Eligible to enroll in Medicare
___ 6. Earliest age to make catch-up contributions to a health savings account
___ 7. Earliest eligibility age to begin taking reduced Social Security worker benefits
___ 8. Must begin taking required minimum distributions from most tax-deferred retirement plans, for those born in 1960 or later
___ 9. Eligible to withdraw money from a tax-deferred IRA or employer-sponsored retirement plan (for most employees) without incurring a 10% federal tax penalty
___ 10. Eligible to withdraw money from a tax-deferred employer-sponsored retirement plan without incurring a 10% federal tax penalty, for an employee who separates from service with the employer
For further information, visit irs.gov, socialsecurity.gov, and medicare.gov.
Answers
1. 67; 2. 50; 3. 70; 4. 73; 5. 65; 6. 55; 7. 62; 8. 75; 9. 59½; 10. 55 (50 or after 25 years of service for qualified public safety employees)
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.