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How to Get Good Financial Information

by Ouida on April 9, 2010


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I was reading 7 Steps to Get Your Finances Back on Track from the April 1st CNN Money.  Digging the article I was just about to Tweet it when I ran across this statement:

Tap the power of a Roth.
What if you’re hard-pressed to come up with the extra cash? Redirect a portion of the money you’re saving for retirement. Put only enough in your 401(k) to get the full company match; put the rest into a short-term bond fund in a Roth IRA. Unlike a 401(k), contributions to a Roth can be tapped without penalty in an emergency because you’ve already paid taxes on that money. But earnings withdrawn from a Roth before age 59½ will typically be taxed and hit with a 10% penalty.

I added the emphasis.  I thought the law was that the account seasoned at least 5 years or age 59 1/2 and earnings could be withdrawn without penalty. I was wrong, but being wrong got me thinking.  What can we do to make sure the financial information we get is correct?  One of the things that I did was go to the IRS website and find the IRA publication number 590.  It has a great flow diagram that I am including here about qualified distributions from a Roth IRA.  Qualified distributions are the distributions that qualify to be withdrawn tax and penalty free.

As I have written in other posts, I am very concerned that the 401K may not be appropriate for all individuals depending on their financial resources and that under certain circumstances it is preferable to maintain present-day liquidity.

Financial writers and bloggers alike are human.  We make mistakes but when I am unsure, I go to the source.  Qualified savings plans were created by the US Government, the IRS site has free, easy-to-understand publications devoted to those savings plans.  The US Treasury has an easy-to-navigate site that explains its bond programs and how to buy them.  Fannie Mae produced a several hundred dollar, several hundred page tome on mortgage backed securities.  I could not understand them so I never invested in them.  The Fannie Mae site, however, emphasized the possibility of investment loss when purchasing mortgage-backed securities.  I thought that was a clue.  For real estate investments I consult real estate investors, not retail agents.

It is always important to have a network of unimpeachable sources that you can go to for reliable financial information.

What sources do you use?  Please comment.

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