how to become wealthy - straight talk (investopedia)

Retire Wealthy: The Millennial March to $1,000,000

Today I want to teach members of the Millennial population how to retire wealthy, perhaps with at least a million dollars. It is vital that Millennials understand how to use the power of time in their financial march to a million.

The Government Accountability Office (GAO) recently reported on how Americans are doing when it comes to saving for retirement. Unfortunately, it was not good news.

The GAO analysis discovered that almost half of households with members age 55 or older, had no retirement savings in a 401(k) plan or IRA, and nearly 29% have neither retirement savings nor a traditional pension plan. In about half of the households with members age 65 and older, Social Security provides most of the income.

Social Security? Do you really want to live on $1,500 a month in your later years? Of course you don’t.
So what can a 25-year-old Millennial – maybe still in school, working part-time or working a low-paying job – do about it? Is buying a lotto ticket or marrying someone from a wealthy family your only hope for attaining wealth in your retirement years?

The Two Key Personality Traits

The answer is no.
But your Millennial march to a million bucks requires you to develop two difficult personality traits:
You need to have self-discipline and you need to have patience.

When I mention self-discipline I am referring to the ability to defer immediate gratification and instead to think first about saving and investing your money.
It’s recommended that you save 15% of every paycheck, no matter how small or large it may be. If your company has a 401 (k) plan with a company match, sign up immediately for it. It doesn’t mean you have to work there forever. When you leave your job, you can take the money you've saved with you. (See article: Money Habits of the Millennials.)

The amount the company matches is like a 100% return on your money.
Plus, investing in a 401 (k) plan will lower your taxable income because the 401 (k) money comes off your full paycheck amount, and then you are taxed on only the remaining money.

So the march-to-a-million plan necessitates that you invest first and then pay your bills.
Any money that is left afterward becomes your spendable income, or fun money.
Most young people do just the reverse.
They spend on fun first, pay bills (often late) and then they invest…..well, nothing, since there’s no money left after the first two activities.
Then at age 65 they wonder where all the money they earned over the years has gone.

Next is where patience comes into play. You won’t get rich overnight by investing 15% of your salary. The wealth-building process is a slow, gradual one that takes place over decades. It’s the proverbial tortoise beating the hare over the long run. (See article: How Gen Y Can Avoid Working Forever.)

Where to Put Your Money

But what should you invest your money in? How do you know you won’t lose all your money?

In order to succeed in investing, you must gain some knowledge. Go to the library or buy several books – and read online – about stocks, bonds, real estate, precious metals and mutual funds. Read everything you can until you feel confident in your ability to choose the right assets to create a diversified portfolio.

Diversification is important because often one asset class will go up when another goes down,

so being diversified keeps you from losing a large portion of your portfolio at any time.

Now about that discipline again. You must stay out of debt if you want to march to a million bucks
in your lifetime. Debt will keep you a slave to your job and poor throughout your life,
especially if it is debt that’s attached to depreciating items, such as cars, boats, computers, cell phones,
and other technology. Debt means paying out additional money in the form of interest.
Never finance a new car. There’s nothing wrong with buying a top-quality car that is 2-5 years old; by year five that new car has depreciated by more than 60% of its original price.

Save enough money to buy a modest first home.
Find one that costs even less than what the mortgage company will allow you to buy.
Many bargain-priced homes can be found on auction sites such as Auction.com.
If you do this, owning will be far cheaper than renting. Over time, your equity in the house will grow.
Live in a home for two years or more and you pay no taxes on the profit you make when you sell.

However, another strategy is to move into your new home, but keep your first home as a rental property. Over time, your tenants will pay down your mortgage in full and then you will create additional income for yourself in retirement.

I have had Millennials tell me,
“I don’t want to make sacrifices while I’m young just so I can have more money in old age.
I want to be able to go on vacation and buy a nice car and clothes now.
What if I don’t even live to an old age?”

The problem with this mode of thought is that it is impossible for a Millennial to experience life
as an elderly person until they get there, so they have little knowledge of how impoverishment
will feel when they are 80 or 90. Personally I feel
there is nothing sadder than watching an elderly person, after a lifetime of work,
digging through their pockets in the supermarket to find that 10-cents-off coupon.
There is no need to live that way if we plan ahead and have self-discipline and patience.

While I’m sure there are senior citizens who regret not having had more fun in their youth.
I’m also certain that a much larger percentage of them, who are living on nothing more than
Social Security fixed incomes, wish they had saved and invested more over their lifetime.

The Bottom Line

The choice is yours.
But the sooner you start, the sooner – and likelier – you will arrive at retirement with a million bucks!
(For related reading, see article: Retirement Planning the Millennial Way.)

Don't Make Costly Mistakes with your Required Minimum Withdrawals (Ed Slott in Financial Planning)

Costly RMD aggregation mistakes

When it comes to taking required minimum distributions, the source matters.

Many clients have more than one retirement plan or account. When they reach age 70½ and have to start taking RMDs from their own, non-inherited accounts, the question arises as to which of these distributions can be combined and taken from just one plan.

Advisers and clients may think it doesn't matter which account makes the distribution, as long as the total calculated amount is taken from one of the accounts. They are wrong. There are specific rules for aggregating RMDs.

IRS rules state that an RMD should be calculated for each account separately. Then, where aggregation is allowed, those RMD amounts can be added together and the distribution can be taken in any proportion from one or more of the aggregated accounts.

It’s also important to remember that an RMD cannot be rolled over from any one account to another account, and the RMD is considered to be the first funds distributed from any retirement account during the year.

Thus, an IRA CD that comes due in March cannot be moved in its entirety as a 60-day rollover to another retirement account. The RMD amount must be subtracted from the amount that is subsequently rolled over.

The same is true when a distribution is made from an employer plan. All plan distributions are considered rollovers, even when they go directly from the plan to another retirement account.

Advisers must make sure the RMD is taken by clients. The new IRA custodian will not have any records of the RMD calculation, and will not have any automatic reminders for notifying anyone about the RMD in the year of the transfer.IRA RMDs can, however, be transferred from one account to another. A transfer is when the IRA funds go directly from one financial institution to another. The RMD can then be taken later in the year.

RMDs for one type of account can never be taken from a different type of account. For example, a 401(k) RMD cannot be taken from an IRA, and an IRA RMD cannot be taken from a 403(b). This is a very common mistake and must always be avoided.

IRA RULES
One of the benefits of IRAs is that RMDs for multiple IRA accounts can be aggregated. This includes SEP and SIMPLE IRA accounts. The RMD should be calculated for each account separately, but after that, the RMD amounts can then be added together and taken from any one or combination of accounts.

403(b) ACCOUNTS
A similar aggregation rule exists for 403(b) accounts. A client with more than one 403(b) account can calculate the RMD for each account and then add the RMDs together. The total can then be taken from one or a combination of 403(b) accounts.

EMPLOYER PLANS
RMDs from employer plans, not including 403(b) plans and SEP and SIMPLE IRAs, cannot be aggregated. A client with multiple 401(k), governmental 457(b) or other employer plans must calculate the RMD for each individual plan and take that RMD from that plan only.

There is no need to worry about whether or not Roth IRA RMDs can be consolidated, because Roth IRAs have no RMDs during the account owner’s life time. It can’t get much simpler than that.

Any plan making a series of substantially equal payments over a period of 10 years or more, or over life expectancy, cannot aggregate that payment with the RMDs from any other retirement account. The distribution from the account making these substantially equal payments is considered the RMD from that account only.

A PRACTICAL EXAMPLE:
Your client is approaching age 70½. He comes into your office to discuss his upcoming RMDs. Just as you asked him to, he brings in a list of all his retirement accounts. He has two old 401(k) accounts, an old Keogh account, three 403(b) accounts, four IRA accounts, a SEP IRA and two Roth IRA accounts. His plan is to add together all his RMD amounts and systematically take those distributions from his smallest accounts first.

Sounds like a great plan, right? Well, let’s take a look.

First things first – when you’re trying to figure out how many accounts a client needs to take an RMD from, you must first know how many different accounts you’re dealing with. In this case, we have 13 accounts.

Next, determine what type of accounts they are and how many there are of each type, keeping owned and inherited accounts separate. Make sure you have this information correct, because getting it wrong and missing a required distribution could subject your client to a 50% penalty for any missed RMDs.

Once you’ve got your information in order, you can start anywhere.

First of all, the client has two old 401(k) accounts. The RMD for each employer’s account must be calculated. Then he must take at least the total RMD amount for each 401(k) plan from that employer’s plan. He has two RMD distributions he must take, one from each 401(k) plan. These 401(k) RMDs cannot be combined with each other or with any other RMD distribution that he must take for the year.

There is one old Keogh account. The RMD for the Keogh account must be calculated and taken from there. It cannot be combined with any other RMD distribution for the year.

Next, the client has three 403(b) accounts. He must still calculate the RMD for each of the 403(b) accounts. But he can then add these together and take his total 403(b) RMD from any one or combination of the 403(b) accounts. The 403(b) RMDs must be taken from a 403(b) account.

He also has four IRA accounts at four different IRA custodians. He has a letter from each of them detailing what the RMD should be for each account. You should double check their computations. Your client can add these four RMDs together and take the total IRA RMD from any one or a combination of IRA accounts.

In addition to the four IRAs, the client has a SEP IRA. While a SEP IRA is considered an employer plan, it is also considered an IRA for RMD purposes. The client can calculate the SEP RMD and add it to the RMD amounts for his IRA accounts. The SEP IRA RMD can be taken from either the SEP account or any of the client’s other IRA accounts, but it cannot be taken from any other type of retirement account.

Remember how the client wanted to take only one RMD distribution? If we look back over what we have explained to him, we find that he must take at least five different RMD distributions.Finally, the client has two Roth IRA accounts. He can forget about these accounts – at least as far as RMDs go. Roth IRAs have no RMDs during the account owner’s lifetime.

WHAT HAPPENS WHEN A CLIENT GETS RMD AGGREGATION WRONG?
There are two potential penalties when clients make RMD aggregation mistakes: the penalty for excess contributions and the penalty for missed RMDs.

THE 6% PENALTY
RMDs that are rolled over to another retirement plan create an excess contribution in the receiving account, which must be corrected as soon as possible.

When an excess contribution is corrected by Oct. 15 of the year after the year for which the contribution was made, the amount of the excess, plus/minus gains/losses attributable to the amount of the excess contribution must be removed from the account as well.

Simply taking a distribution from the receiving account in the amount of the RMD later in the year does not correct this problem. The IRA custodian must be informed that the distribution is a return of an excess contribution. The coding on the 1099-R for the distribution will reflect that it is a return of an excess contribution. There will be no 6% penalty when the excess is corrected in a timely manner.

When the form is not filed, the statute of limitations does not start to run for the excess contribution. If the IRS discovers the problem at any later date, they can assess the penalty, plus interest, assess failure to file penalties, plus interest, and, if the amount is large enough, assess accuracy-related penalties, plus interest.Excess contributions that are not corrected are subject to a penalty of 6% per year for every year they remain in the account. Form 5329 should be filed with the IRA owner’s tax return to report the excess contribution and to calculate the 6% penalty. This form is considered a separate tax return, so it can be filed as a stand-alone return.

THE 50% PENALTY
When a distribution is taken from the wrong type of account, you have a missed RMD. For example, suppose a client accidently takes their 403(b) RMD from their IRA. This is against the rules. The client has a missed RMD in the 403(b). The penalty for a missed RMD is a steep one – it is 50% of the amount not taken.

It’s critical for advisers to understand which RMDs can be combined and which accounts must distribute their own RMDs, and to communicate this to their clients. There are too many mistakes made in this area, and incorrect advice often comes from the plan or custodian.Here’s the good news. The client can generally rectify this issue. First, they should immediately take the missed 403(b) RMD. Then, they should file Form 5329 to report the missed RMD and follow the instructions to request relief. Assuming the client can show reasonable cause for the mistake, there's a good chance the IRS will waive the 50% penalty.

Get Ready to Retire -- Straight Talk (Marketwatch)

6 ways to keep your dream retirement on track

By Andrea Coombes

Published: Nov 7, 2016 11:53 a.m. ET

You may be ready to retire, but your money may not be

Are you a retirement “do-it-yourselfer,” convinced you can plan for your own retirement without paying for a financial adviser? That’s all well and good, but given that money managers work with people in a variety of financial situations, their experiences with the problems that prevent people from retiring can offer insights into how to overcome those challenges.

I spoke to a few experts to find out how they handle that difficult situation: a client who wants to retire but whose financial picture suggests she shouldn’t yet do so.

Ideally, of course, advisers want people to seek financial advice early on, years before they plan to retire. “Then we have the ability to help you work towards your goals over a period of time and make adjustments as things change,” said Nancy Skeans, managing director of personal financial services at Schneider Downs Wealth Management Advisors in Pittsburgh, Penn.

But sometimes people don’t show up at the adviser’s office until they’re eager to leave the workforce for good. In those cases, she said, advisers sometimes are forced to deliver bad news.

“We just had that situation with an individual and his wife,” Skeans said. “He’s thinking about retiring in two to three years. It was very obvious to me when I looked at his balance sheet, coupled with what I backed out as to their spending, that if they retired immediately they would put themselves into a precarious situation.”

One red flag was that this couple hadn’t accounted for their retirement tax bill. “All of their assets were in tax-deferred accounts,” Skeans said. “Every dollar they spend is going to be a dollar plus the taxes. That means, if you’re trying to support a standard of living after tax, you’re going to have to gross that money up.”

So, one lesson is to remember that the government is going to take a bite out of your retirement account. Here are more lessons financial advisers say they’ve been forced to teach new clients:

1. Be disciplined about a budget

In 2008, Skeans said, a client who was about 64 years old was laid off. “He decided he wasn’t going to look for other work,” she said. “We ran the projection. Obviously, at that point in time the portfolios were down because of the market and I was deeply concerned.

“Fortunately the guy was a finance guy, a controller for a small company. He heard us loud and clear that the biggest thing he and his wife needed to do was stay within a budget,” she said.

At the time, Skeans talked with the couple about how to stabilize their finances through reduced spending. “He was very adamant he did not want to go back to work,” she said. “We were able to help him and his wife structure a budget and they have stuck to it and continue to do so.”

And now? “Eight years later, their portfolio is just slightly below where it was eight years ago,” Skeans said.

2. Take a practice run

People sometimes underestimate what they’ll spend in retirement, especially in the early years when they suddenly find themselves with plenty of free time and energy, said Tripp Yates, a wealth strategist at Waddell & Associates in Memphis, Tenn.

“I’ve seen it where people do a budget for retirement and they tell me, ‘OK, we’ve done all the numbers and we can live off $50,000 a year,’” Yates said. Too often, that’s a bare-bones budget that doesn’t take into account travel and other activities. “The first five to 10 years of retirement, people are probably going to spend more rather than less, because they’re in fairly good health and want to enjoy that time,” he said.

One way to get a good handle on your spending is to test-run your retirement budget, he said. In one recent conversation with a couple, he told them: “Maybe one spouse who really wants to retire can. The other spouse continues working and maybe we take six months to a year and try to live on that budget, practice, see if it’s actually doable before both husband and wife call it retirement,” Yates said.

3. Don’t focus on the market

Given the media’s attention on the market’s every move, it’s no surprise that people seeking help from an adviser often fret about what happen next. That’s the wrong focus, said Robert Klein, president of the Retirement Income Center in Newport Beach, Calif. (Klein is also a writer for MarketWatch’s RetireMentor section.)

“People read so much in the media about performance and that’s naturally their focus until you show them on paper it’s all about your goals and planning for those and controlling what you can control,” he said. While investors must make sure their investments are diversified, there’s no way of knowing when the market might take another steep plunge.

“You have to control what you can control and develop prudent strategies that are going to work no matter what the market does,” Klein said.

4. Be clear about your goals

Retirement planning is about more than “just having X dollars in income,” Klein said. Figure out what you want retirement to look like, and then work from that. “It’s about a lifestyle in retirement. What are they going to be doing day-to-day in retirement?” he said. “Then you can focus on the finances: ‘What is it going to take so I can do that?’”

For some people, a hard look at a retirement lifestyle leads them to choose to work longer, Klein said. “A lot of people are better off working longer even if they can afford to retire. They just don’t have the hobbies. It’s a whole different routine when you retire,” he said. “Phased retirement is really good for a lot of those people, so they can take baby steps into retirement,” he added.

5. Use software that provides a picture

If you’re planning your own retirement, are you using financial software that will create projections as a chart? “Most people don’t communicate with numbers, they communicate pictorially,” said Kimberly Foss, founder of Empyrion Wealth Management Inc. in Roseville, Calif.

Foss said she shows clients a simple chart depicting how long their money is likely to last if they retire now. In some cases, she might produce a second chart that shows how spending less might make their outlook improve, and then talk with the client about options, such as downsizing the house or refinancing, working longer or delaying the purchase of a new car.

For one couple, seeing those pictures and having that discussion made all the difference, Foss said. They wanted to spend the same amount of money in retirement that they’d been spending while they worked, but the size of their savings account didn’t support that goal. So, they switched from the country club to a lower-cost health club, refinanced into a cheaper mortgage and started cooking at home more rather than eating out.

Reducing those costs and others preserved their portfolio for the long haul. Said Foss: “It created the income so that they could retire.”

6. Get real with your adult children

In some cases, people retire but unforeseen expenses put their financial security at risk. Skeans said one client unexpectedly found herself supporting her adult daughter and grandson, who live in her home, even as she herself recently entered a care facility.

“She’s taken out enormous amounts of money to help her daughter and grandson,” Skeans said. “She’s supporting their household and she’s paying the cost of assisted living. I said, ‘If you continue at this pace, this portfolio is going to be gone in five years.’”

Skeans said if the client sells her home—that is, asks her daughter to find her own place—that money would bolster her finances. “She should be able to make it and still leave something to this daughter in the end,” Skeans said. “She said, ‘I’m going to talk to my daughter about that.’”

death tax - what are the worst states (Kiplinger)

10 States With the Scariest Death Taxes, 2016

Thinkstock

Federal estate taxes are no longer a problem for all but the extremely wealthy. In 2016, as much as $5.45 million in assets is exempt from federal estate taxes—double that for a married couple; in 2017, it will rise to $5.49 million.

However, state estate taxes, which kick in for estates valued at only $1.5 million or less in several states, could take a big bite out of your legacy. Your home and retirement accounts will be counted when your estate is valued for tax purposes, and proceeds from your life insurance could be counted, too, depending on how the policy is owned and who gets the money.

Fourteen states and the District of Columbia impose an estate tax, and six states impose an inheritance tax, which can force certain heirs to give up a portion of their inheritance. The good news is that a growing number of states are increasing their estate-tax exemptions in an effort to dissuade well-off retirees from moving to more tax-friendly jurisdictions.

Tennessee’s inheritance tax was eliminated in 2016, so it's no longer on our list. New Jersey will increase its estate tax exemption to $2 million in 2017; no longer the worst state for your estate, it now ranks fifth on our list here. The new least-friendly place to die? Take a look.

By SANDRA BLOCK, Senior Associate Editor | October 2016

States With the Scariest Death Taxes

10. New York

istockphoto

Exemption level before state estate tax kicks in: $4,187,500 for fiscal year 2016-2017

Estate tax rates: 5.6% - 16% (on estates valued at more than about $10 million)

Exempt from estate tax: Spouses only

Inheritance tax: No

The Empire State is gradually increasing its estate-tax exemption, and, as of January 1, 2019, it will match the federal threshold. But beware, because New York’s estate tax contains a very scary feature: if If your estate exceeds the threshold by 105%, the entire estate will be taxed.

States With the Scariest Death Taxes

9. Vermont

Thinkstock

Exemption level before state estate tax kicks in: $2,750,000

Estate tax rates: 9%-16%

Exempt from estate tax: Spouses only

Inheritance tax: No

Vermont's estate tax, along with steep income-tax rates, makes it particularly terrifying for wealthy people. The state is also number one on our list of least tax-friendly states for retirees.

States With the Scariest Death Taxes

8. Maryland

Thinkstock

Exemption level before state estate tax kicks in: $2 million in 2016; $3 million in 2017

Estate tax rates: 5.6% - 16% (on estates valued at about $10 million or more)

Exempt from estate tax: Spouses only

Inheritance tax: Yes

The Free State is gradually becoming a more tax-friendly place to die. Its estate-tax exemption will increase every year until 2019, when it will match the federal exemption.

States With the Scariest Death Taxes

7. Washington

istockphoto

Exemption level before state estate tax kicks in: $2 million

Estate tax rates: 15% - 19% (on estates valued at more than $9 million)

Exempt from estate tax: Spouses

Inheritance tax: No

The Evergreen State's estate tax rates are unusually high. But Washington offers an additional $2.5 million deduction for family-owned businesses valued at less than $6 million. Its estate tax exemption is indexed to inflation.

States With the Scariest Death Taxes

6. Connecticut

istockphoto

Exemption level before state estate tax kicks in: $2 million

State estate tax rates: 7.2% - 12% (on estates valued at about $10 million or more)

Exempt from estate tax: Spouses, civil-union partners

Inheritance tax: No

The Constitution State is the only state with a state gift tax on assets you give away while alive. You'll have to file Connecticut gift tax returns every year to identify any such gifts, but taxes are due (at rates ranging from 7.2% to 12%) only when the aggregate value of gifts made to any individual since 2005 exceeds $2 million.

States With the Scariest Death Taxes

5. New Jersey

istockphoto

Exemption level before state estate tax kicks in: $675,000 (but rising to $2 million on Jan. 1, 2017)

State estate tax rates: 4.8% - 16% (on estates valued at about $10 million or more)

Exempt from estate tax: Spouses, civil-union partners

Inheritance tax: Yes

New Money Market Fund Rules Roil Investors

www.institutionalinvestor.com/Article/3595019/Asset-Management/New-Money-Market-Fund-Rules-Roil-Investors.html

Asset Management

October 20, 2016

Several prime money market funds have started trading above or below $1.00 NAV, just days after new rules were enacted. Investors are grappling with how to adjust to the new landscape.

By Julie Segal

After years of heated discussions between asset managers and regulators over money market reform, new rules took effect October 14 that, among other things, will allow the net asset value (NAV) of one share of an institutional prime money market fund to float, meaning it will move in line with the value of underlying holdings so investors buy and sell shares based on accurate prices. Asset managers argued that this did not mean that money market funds would break the buck — that a share would drop below $1.00. That had historically been considered to be a nearly inconceivable occurrence — at least, before it happened to one large fund in 2008.

But after the new rules had been in effect for one day, one fund did just that. The value of the administrative share class of the Morgan Stanley Prime Portfolio, an institutional prime money market fund, dropped from $1.00 to $.9999 just 24 hours after new rules governing the money fund industry were implemented by asset managers on October 17. On October 18, 19, and 20, the administrative share class of the Prime Portfolio was $.9999 per share, according to the Morgan Stanley website. (Prime funds hold corporate commercial paper and other short-term debt.) A Morgan Stanley spokeswoman says the share class has very little in assets, adding, “It is not unusual for NAVs to differ slightly in multi–share class funds, especially in share classes that have nonmaterial AUM, like the administrative share class.”

Two other share classes of the Morgan Stanley Prime Portfolio are trading slightly above $1.00. One is at $1.0002 and the other at $1.0005. And Morgan Stanley has plenty of company. The NAV of the institutional share class of the Fidelity Prime Money Market Portfolio has moved to $1.0004, according to Fidelity Investments’ website. The NAV of Western Asset Management Co.’s Liquid Reserves fund was $1.0003, according to the company’s website. The fluctuations show that a variable NAV is, indeed, variable.

Under the Securities and Exchange Commission’s new money market reform rules, in addition to allowing the NAVs of prime money market funds to float, fund boards have the power to prevent withdrawals and charge redemption fees on prime funds under certain scenarios. At the same time, the SEC has allowed asset managers to operate more-conservative government money market funds, which hold Treasuries, repurchase agreements, and other securities, with a stable $1.00 NAV.

Although the changes in NAV are small, the evidence flies in the face of fund companies’ insistence that it would be highly unlikely that a money market fund would again drop below $1.00 after 2008 or that values would change at all. The Reserve Fund, a large money market fund, broke the buck when its Lehman Brothers Holdings investments lost value after the now-notorious investment bank filed for bankruptcy in September 2008. Sophisticated institutional investors like pension funds quickly redeemed their shares at $1.00, forcing Reserve to sell assets and leaving smaller savers with losses once the Reserve Fund adjusted the NAV down to $0.97. The floating NAV and other new rules for prime funds are designed to protect smaller investors from the actions of large institutions in times of market stress.

Investors have used money market funds to park cash since the 1980s, assuming the funds were as safe as bank accounts and certificates of deposit insured by the Federal Deposit Insurance Corp. Fund companies set the net asset value of money market funds at $1.00, meaning investors bought shares for $1.00 and got $1.00 back at any time. But the $1.00 NAV wasn’t a statutory requirement, even though fund companies generally assumed any small losses or gains because of price movements in the value of the underlying short-term investments.

The new rules are already reordering the industry, with the prospect of a floating NAV for prime funds scaring off some investors. Investors have pulled $170 billion from mostly prime institutional funds since September 28, according to the Investment Company Institute. That was on top of investors withdrawing $547 billion from prime funds between January 2015 and September 2016. Government funds gained an almost equivalent amount during the time period.

Eric Lansky, president of StoneCastle Cash Management, an institutional cash manager and investor in community banks — who wasn’t familiar with the Morgan Stanley fund’s NAV drop when interviewed — says most corporate treasurers and other money fund users are unprepared for a money fund with an NAV above or below $1.00. Treasurers may not be sure of the tax treatment of gains and losses or how to account for price changes. Lansky adds that treasurers are also considering alternative cash accounts that have higher yields than the money funds and maintain a $1.00 NAV. StoneCastle has seen, for example, a significant increase in demand for its federally insured cash account (FICA), a proprietary cash management account that offers full federal deposit insurance and next-day liquidity.

Lansky adds that treasurers are also considering whether to switch back to higher-yielding prime funds, even if they have a variable NAV, and whether to invest in separately managed accounts for longer-term cash, which are not subject to the same rules.

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how to become wealthy - straight talk (investopedia)

Retire Wealthy: The Millennial March to $1,000,000

The Two Key Personality Traits

The Bottom Line

Don't Make Costly Mistakes with your Required Minimum Withdrawals (Ed Slott in Financial Planning)

Get Ready to Retire -- Straight Talk (Marketwatch)

6 ways to keep your dream retirement on track

You may be ready to retire, but your money may not be

1. Be disciplined about a budget

2. Take a practice run

3. Don’t focus on the market

4. Be clear about your goals

5. Use software that provides a picture

6. Get real with your adult children

death tax - what are the worst states (Kiplinger)

10 States With the Scariest Death Taxes, 2016

By SANDRA BLOCK, Senior Associate Editor | October 2016

States With the Scariest Death Taxes

10. New York

States With the Scariest Death Taxes

9. Vermont

States With the Scariest Death Taxes

8. Maryland

States With the Scariest Death Taxes

7. Washington

States With the Scariest Death Taxes

6. Connecticut

States With the Scariest Death Taxes

5. New Jersey

States With the Scariest Death Taxes

4. Rhode Island

States With the Scariest Death Taxes

3. Minnesota

States With the Scariest Death Taxes

2. Massachusetts

States With the Scariest Death Taxes

1. Oregon

States With the Scariest Death Taxes

2015 Rankings: States With the Scariest Death Taxes

The New Money Market Rules are Now in Effect (institutional investor)

New Money Market Fund Rules Roil Investors

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