Personal Finance FAQ’s

Mike Macioci
Mar 6, 2016 · 2 min read

Over the course of the last week I received several personal finance questions on various topics. So included three of them here.

1. Can I move money from my IRA to a 529 plan?

Two-part answer: Yes, you can; however, you probably don’t want to, due to the very adverse tax implications.

• It would be considered a taxable distribution,

• You would pay ordinary income taxes on the total amount of the distribution amount.

• It would adversely impact you on financial aid applications.

• If you have not yet reached the age of 59½, you would also face an additional 10 percent tax penalty on the early distribution.

Your best bet is to fund the 529’s out of your non-retirement accounts. If you have limited funds to work with, you may wish to discuss your options with a financial advisor or tax expert for guidance on using IRA distributions to pay for college expenses. You would still have to pay the taxes, but if done in accordance with IRS regulations, you could avoid the stiff tax penalty.

2 Are there any good websites that provide young children with some age- appropriate financial education?

Try this website: http://www.moneyasyougrow.org/

This site offers 20 essential, age-appropriate financial lessons — with corresponding activities — that kids need to know as they grow. Written in down-to-earth language for children and their families, Money as You Grow will help equip kids with the knowledge they need to live fiscally-fit lives. The lessons are based on more than a year of research, and drawn from dozens of standards, curricula, and academic studies.

3. What is a Self-Directed IRA? And are they new?

Self-Directed IRA’s have been around for a long time, so they are not new. In most ways, a Self-Directed IRA is not any different than other 401k or IRA plans. The real distinction is the available investment options that they offer.

Non-Self Directed IRA’s and 401k plans offer a variety of stocks, bonds, ETF’s, mutual funds, ETN’s, and Cd’s to invest in. Some offer more options than others.

A Self-Directed plan would allow you to invest in other types of investments, such as real estate, limited liability corporations, private stock offerings, leases and lease options, and joint ventures. Assuming you select good investments, it would provide the potential to reduce your risk by spreading your investments across more varieties of asset classes.

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Written by

B2B Sales veteran. Currently sales advisor/coach and personal finance trainer/educator.

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