What Is The Difference Between UTMA and UGMA?

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utma-ugma-trust

How Are UTMA and UGMA Alike? UTMA and UGMA are very similar. Both are uniform code proposals adopted by the individual states. Like other uniform codes (the uniform building code is a common one, for example) these work by proposing a common framework for states to use in order to prevent a hard to use patchwork of laws in each state. The uniform code did not prevent one important variation. The UTMA or UGMA account comes under the control of the beneficiary when he reaches the age of maturity. However, that age varies from state to state. Typically, the beneficiary assumes control of the UGMA or UTMA at age 18 or 21. The UTMA and UGMA are two different uniform codes, but they are more alike than they are different. What Is UTMA? UTMA is the Uniform Transfer to Minors Act. People say, “ut-mah” when they talk about them. What Is UGMA? UGMA is the Uniform Gifts to Minors Act. People say “ug-mah” when they talk about these. Both UTMA and UGMA were created to allow adults, usually parents, to transfer assets to minors without the need to establish a special trust to enable such ownership. Both UTMA and UGMA …

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Difference Between a Rollover and a Transfer

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When it comes to rollovers or transfers between 401k accounts and IRA accounts, one word makes a lot of difference. So, what exactly is the difference between a rollover and a transfer? A 401k rollover requires that 20 percent of the amount being rolled over be withheld for taxes, even though the IRS still requires the account owner to deposit 100 percent of the amount within 60 days to avoid taxes and penalties. This means that the account owner has to come up with that 20% on his own, and be sure to deposit it with the 80% proceeds he actually receives. A 401k transfer requires no withholding and moves the funds tax-free. As a result, a 401k transfer is better than a 401k rollover in most cases. Likewise, an IRA rollover gives the account owner 60 days to deposit any rolled over funds into a new IRA account. IRS rules limit each taxpayer to only one rollover per year. An IRA transfer moves the money directly to a new qualified retirement plan account with no delays and with no one per year limits. While many of these rollovers are handled electronically, some are done by a check made out …

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Restart Finances with Restarting Economy

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digging out coronavirus

As parts of the country start moving into reopening after coronavirus lock downs, it’s time to start thinking about how to restart your own personal finances when the restrictions end. So, how do you restart finances while the country is restarting economy? Going Back To Work Despite all the news reports, protesters, and talking heads on television, the decision to go back to work or not is a deeply personal one rooted in your own personal circumstances. Review of Zelle Scam Legit or Safe? First, assess your own personal health risk situation. As many reports have noted, certain people seem to do worse than others when it comes to contracting the coronavirus. Although there are numerous reports of otherwise young, and healthy people ending up in the hospital, the odds still look the worst for those who are older, or that have preexisting conditions. If you can’t safely return to work, it is time to start looking into what your possible options are. Coronavirus Unemployment Be sure to check out unemployment programs. Even if you may not have qualified in the past, the rules have been changed, and benefits are more generous with a $600 boost for many unemployed people. …

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What Does Oil Crash Mean for My Investments?

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oil prices zero

The expiring May oil contract trading for less than $0 made big headlines, but what is zero-dollar oil, and what does it mean for your investment portfolio? Zero Dollar Oil The trick to oil contracts, unlike similar stock options is that execution requires the delivery of a physical good. If you buy 100 options for IBM stock, on the day the contract expires, they put shares of IBM stock in your brokerage account. Obviously, this requires no effort, nor ability to “store” those shares somewhere. When an oil contract expires, its owner has to take possession of the barrel of oil. That doesn’t actually mean that an investor drives up a truck and loads it with barrels of oil. Instead, there are numerous storage and refinery facilities where that oil can usually be directed. However, as the May contract came up for expiration, there wasn’t any room for storage (which isn’t free), and there is no demand at the refineries, so investors were looking at having to take delivery of a good that they had no place to put, and no use for. In this case, it actually would cost such an investor less to dump his contract for pennies, …

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High-Yield Junk Bonds Rally On Fed Buying

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So, this is new. The Federal Reserve announced that it would buy junk bonds, or high-yield bonds, depending upon your point of view. Despite the name, junk bonds are not worthless and aren’t “junk” at all. Also called, “high-yield bonds,” junk bonds are regular corporate bonds issued by companies just like regular, or “investment grade bonds.” Many corporate bond issues are rated by various companies including Moody’s, and Standard & Poor’s. The ratings go from AAA (Excellent), all the way down to D. Typically, bonds rated BB or lower are considered junk bonds. See my review about Rakuten rebates. Fed Buying Fallen Angels The Fed isn’t headed out to buy the most fragile of corporate bonds. Rather, the Fed is looking at buying the so-called fallen angles. Bonds that were rated investment-grade — B or higher — on March 22, but have since fallen into junk territory are eligible for Fed intervention. The idea is that there are several otherwise decently capitalized and secure companies out there that have been downgraded into junk territory not through any fault of their own, but rather due to the bottom of the economy falling out from under them due to the coronavirus. Many …

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Citibank Rewards Catalog

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There are tons of Citibank rewards credit cards. Like most other credit card rewards programs, there are a wide range of items that you can redeem your credit card miles for, ranging from travel items like free airline tickets to discount car rental or free hotel room nights. In addition, you can redeem your Citi rewards points for merchandise, gift cards and even get cash back from your Citibank MasterCard or Citibank Visa rewards card.  One popular card is the Citibank Rewards Premier Credit Card. The Citibank Rewards catalog is a great way to look through what you can redeem your miles for. Citibank Rewards Catalog Travel A while back, the Citibank travel rewards were changed from flat-rate awards to awards based upon the actual cost of the airline ticket. The current rate is approximately 100 points for every dollar the plane tickets costs. So a free airline ticket reward for a round-trip fare that costs $300 would require redeeming 30,000 points.   Note that in order to redeem Citibank ThankYou rewards for free airline tickets, you must book the plane tickets through the Thank You rewards website which always seems to have fares that are slightly higher than the …

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2023 Required Minimum Distributions

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2023 Required Minimum Distributions 1

If you have an IRA or 401k and you are over 70 1/2-year-old, you need to take a required minimum distribution, or RMD, from your retirement account each year. However, with the coronavirus pandemic, Congress passed specific relief for certain kinds of retirement accounts creating different rules for your 2023 RMD. New 2023 RMD Rules Normally, taxpayers over the age of 70 1/2 years old have to take money out of their retirement accounts like IRAs and 401k plans. The reason is simple. The IRS doesn’t want that money sitting there untaxed forever. So, when you get into retirement, it wants to tax that money that you enjoyed paying no taxes on for all of those years. With the coronavirus pandemic of 2020, however, Congress looked to provide some relief to taxpayers in the form of $1,200 payments, small business loans, and relaxing the rules on accessing and using retirement plan money. One of those benefits is the suspension of required minimum distributions, or RMDs, for 2020. All RMDs, regardless of the owner’s age, or how many required minimum distributions have already been taken are suspended for 2020. In other words, there are no required distributions during 2020. If you …

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US Savings Bonds Series E Savings Bonds

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e bonds

US Saving Bonds and World War II Bonds issued by the US Government are low-risk investments issued in order to finance the national debt. There are numerous types of Government bonds. Each bond has specific features that determine how much interest is paid to the bond holder, how long the bond’s term is, and how the bond is purchased. The different kinds of bonds are known by their “series” letters. Series E bonds are one of the kinds of US Savings Bonds. The last of the Series E Savings Bonds stops earning interest in 2010, which means that anyone still holding Series E Bonds is losing out on interest payments. Series EE Savings Bonds replace the retired Series E Savings Bonds. Smart financial planning tips from many experts suggest re-evaluating Savings Bond advantages and disadvantages before automatically rolling them over into new Savings Bonds like the current Series EE Savings Bonds. Remember, although there is no time when savings bonds expire, taxes are due on interest paid when the savings bond matures. History of Series E Savings Bonds Series E bonds, or Government E Bonds, were first issued to fund World War II efforts. The bonds were commonly known as …

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What Are Pre-Tax Dollars?

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pretax dollars

Financial advisors and other financial professionals throw around certain terms like, pre-tax dollars, like everyone already knows what they mean. In some cases, they are right, and in other cases, most people only have a partial grasp on what exactly certain financial terms mean. In many cases, knowing the complete definition of a word or phrase makes all the difference. What Does Pre-Tax Mean? Pre-tax dollars is a phrase that is often used in conjunction with retirement planning and 401k contributions. In fact, one of the benefits of a 401k plan is that contributions are made with pre-tax dollars. But, what is the definition of pre-tax dollars, anyway? When an employee gets paid, there are numerous deductions that get taken out of their paycheck. These payroll deductions range from income tax withholding to FICA taxes to voluntary contributions for things like health insurance or cafeteria plans (Section 125 plans). Some of the deductions from your paycheck, like federal tax withholding, are computed based on how much you are paid. Pre-tax means that the deduction occurs before that withholding is calculated. This is why many financial writers and other financial experts point out that contributing to your 401k plan doesn’t actually …

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