IRA early withdraw to fund another. (Update) - Page 2 - TigerDroppings.com

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Ric Flair
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Charlotte
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re: IRA early withdraw to fund another. (Update)


I'd leave the IRA alone, and try to get by with a credit card for the next three months (maybe a new card with a low teaser rate). Since he is self employed, maybe take extra salary if possible, and float the rest on his business account.

I find it curious that this advisor has him in an IRA, but didn't recommend a 3-6 month emergency fund. Of course, they don't make commission on an emergency fund. For someone who is self employed in an industry that sounds like it fluctuates significantly, I'd recommend a 6 month (of expenses) emergency fund.






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ZereauxSum
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re: IRA early withdraw to fund another. (Update)


quote:

after years and years of seeing rock solid couples (you've seen them...you would NEVER suspect in a million years that certain couples would part ways) split and have awful battles with community property issues


Totally agree, but this kind of stuff always happens. Its a risk just like all the other risks that he is supposed to be helping his client manage. A financial advisor can't base all if his advice on just this one risk.

Like slim thug pointed out, he could have just added a disclaimer, or if he thought it was a high risk, suggested the couple draw up a contract or something. But to tell him outright that its a bad idea just because the two might divorce is bad advice IMHO.






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ZereauxSum
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re: IRA early withdraw to fund another. (Update)


quote:

I'd leave the IRA alone, and try to get by with a credit card for the next three months (maybe a new card with a low teaser rate).


Based on the original scenario, this wouldn't work. The couple doesn't have the cash to increase the contributions so presumably, they would be unable to pay off the card.

quote:

Since he is self employed, maybe take extra salary if possible, and float the rest on his business account.


If he could pull this off this is probably a better idea than using the IRA.






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frb1951
Member since Apr 2012
60 posts

re: IRA early withdraw to fund another. (Update)


I'm still more concerned about the offer from the company than I am about how the couple will fund the contribution. Is it just me?

Does anyone ever question investments any more? Maybe because I've recently uncovered a scam one of my clients was unknowingly involved with. I would imagine investing is going to require a lot more of prior personal research from all of us than in the past as these economical times seems to be a breeding ground for bad and/or scam investments.






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foshizzle
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Washington DC metro
Member since Mar 2008
29839 posts

re: IRA early withdraw to fund another. (Update)


quote:

If I have the following facts right, stop and do a little investigation before making a decision:

1. Wife's company usually matches "a high amount" of employees 401(k) accounts but did not match at all in 2012..

2. "Last week" the company announced they will match up to 15k of any contribution for the remainder of the year.



I wonder about this as well. Your hypothesis that the company is borrowing from future benefit obligations could be correct. It is hard to say for certain, but it does bear closer scrutiny.

Maybe she could make a small deduction and wait to make sure it is received by the 401 administrator reasonably timely before doing more.






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tigerrocket
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Member since Aug 2008
90 posts

re: IRA early withdraw to fund another. (Update)


In Louisiana retirement accounts are considered community property if contributions came from income earned while married.





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frb1951
Member since Apr 2012
60 posts

re: IRA early withdraw to fund another. (Update)


[quote]Posted by tigerrocket
In Louisiana retirement accounts are considered community property if contributions came from income earned while married.

[/quot

I agree. Community property (especially $)
unfortunately, is primarily responsible for
greed, arguments, additional attorney fees,
and at times creates an unnecessary tax bill
when dealing with retirement accounts and
unforeseen events such as a death (not unforeseen....untimely would be a better description) or divorce. In Louisiana, especially, it is hard for any advisor to give a "yes" or "no" answer because of what the advisor has experienced with other clients. Bottom line, an advisor can give a clients his 2 cents (some advisors explain the "why" of their advice better than others) but ultimately it's the clients' decision as what route to take.

An advisor that wouldn't discuss the possibilities of what can happen in certain situations wouldn't be worth a dime!






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SippyCup
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re: IRA early withdraw to fund another. (Update)


quote:

I'm still more concerned about the offer from the company than I am about how the couple will fund the contribution. Is it just me?


Dont be. This is not the first time they have increased their contribution limits. They dont provide cash bonuses, so this is their alternative. Its a small company.









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Poodlebrain
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Way Right of Rex
Member since Jan 2004
15184 posts

re: IRA early withdraw to fund another. (Update)


quote:

I'm still more concerned about the offer from the company than I am about how the couple will fund the contribution. Is it just me?
The company has requirements for when its matching contributions must be paid to the plan administrator. It's not like the company gets to write an IOU for contributions. That only happens with defined benefit plans, not defined contribution plans.

The divorce angle cannot be avoided in Louisiana. It's not terribly difficult to split the assets in a retirement plan unless one of the spouses was participating in a plan prior to marriage. In that case the balance of the account at the date of marriage is the separate property of the participant spouse, and it remains separate property (including income earned on the seperate property portion during the marriage). Allocating the income of the plan between the separate property and community property portions is always fun since the contributions and dates of income being earned don't ever match. I've done retirement account analysis for several divorces, and there is always one spouse who is dissatisfied with the results, but the law is pretty clear as to what the result must be.






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