Ask An Expert Hotline Answers Questions About Retirement, Investing, Debt – Orlando Sentinel

Callers to the annual Ask An Expert hotline, held on October 16 this year, got advice from certified financial planners on retirement, investments, debt and many other financial issues.

Here are some of the questions from the event sponsored by the Orlando Sentinel and the Financial Planning Association of Central Florida.

Q: We have sold all of our mutual funds and moved to cash due to current market conditions. Was it a good idea? —JD, Orlando

A: As the markets are falling, I think it’s a good time to buy rather than sell. If you have five or more years of work left, staying invested in quality investments is a better idea than cashing in. But your risk tolerance will dictate your behavior. — Nancy Hecht, Chartered Financial Group, (407) 869-9800

Q: I have Series E bonds that are nearing maturity. I’ve heard that if the bonds are used for post-secondary education expenses, the interest may be tax exempt. Is it correct? — RT, Orlando

A: Yes, interest earned on Series E bonds used to pay tuition and certain other tuition fees may be exempt from tax if you meet certain income and tax status conditions. — Sylvia C. “Chris” Presley, SC Presley and Company Inc., (407) 331-7665

Q: How much can I contribute to my 401(k) this year? —TB, Orlando

A: An employee can contribute up to $20,500 in 2022. If you are 50 or older, you can add an additional $6,500 as a catch-up contribution. — Mike Salmon, Moisand Fitzgerald Tamayo LLC, (407) 869-6228 ext. 112

Q: I need $25,000 to do some home improvements. I hope to retire soon. Should I refinance my home or take out a home equity line of credit? My current interest rate is 3% and the house will be paid off in 2030. —MS, Orlando

A: I suggest working until your full Social Security retirement age and trying to meet some of your home improvement goals before you retire. The rising interest rate environment means your new rate could be double on a new mortgage or HELOC. Eventually, rates might come back down, and if you still need to refinance, it might be at a lower rate. — David Blount, Investment Planning and Insurance Services LLC, (407) 719-0940

Q: I wish I had learned financial planning when I was in school. —JS Sanford

A: Help is on the way. The Legislature this year passed a law requiring all Florida high school students to take a semester-long personal financial literacy course, starting next fall. — Charlie Fitzgerald III, Moisand Fitzgerald Tamayo LLC, (407) 869-6228 ext. 102

Q: My brother died two years ago leaving behind two children aged 18 and 25. Can they get my brother’s social security benefits? — RJ, Ocoee

A: Children can only benefit from these social security benefits if they are considered disabled or minors. — Christopher Dale, Financial Planning for Life After Bereavement, (407) 917-1913

Q: Should I take advantage of a balance transfer offer on my credit card? —MH, Orlando

A: Such offers can be a good way to save on interest, consolidate credit card debt, and possibly pay off debt faster. However, promotional offers are for a limited time and may incur charges. It is important to understand the terms and continue to make payments. — Derrick Chandler, Moisand Fitzgerald Tamayo LLC, (407) 869-6228 ext. 105

Q: My parents want to contribute to the education of my 12 year old daughter. I already have a prepaid plan in Florida. What else can we do? —SF, Orlando

A: Uniform Minor Transfer Accounts and 529 Plans provide an investment in a child’s education. Consider the restrictions and tax implications of both. — Gregg Collier, Collier Financial Solutions Inc., (352) 385-0073

Q: Should I create an emergency fund or pay off my credit card debt? —AC, Orlando

A: Make at least minimum payments on your credit cards to avoid late payments and defaults. Save at least three months of expenses in a separate savings account for emergencies. Then start making additional principal payments on your credit cards. — Jessica Hall, Chartered Financial Group, (407) 869-9800

Q: I’m retiring in 2-3 years. I’ve always invested aggressively in my 401(k), but it’s come down quite significantly. Should I reallocate now when the market is down? — JS, Winter Garden

A: You may only contribute for another 2-3 years, but you could live more than 20 years beyond that. If you don’t need the money for a few years and you don’t feel uncomfortable with your account’s performance, you can stay the course. Talk to an advisor about your particular situation. — Dennis Nolte, Seacoast Investment Services, (407) 506-2173

Q: I’m 62 and still working, but I would like to start collecting social security. I don’t need the money today and I saved through my 401(k). Does it make sense for me to start collecting Social Security now? —JG, Port Orange

A: Your full retirement age is 67. Until you reach this age, you are limited in the amount of your income. I recommend that you continue to defer your Social Security until at least age 67 or even 70. Your benefit will continue to increase by approximately 8% per year. — John West, III, Spraker West Wealth Management Inc., (407) 478-7899

Q: I want to buy gold bars. How do you know if buying online from a company is safe? —South Africa, Lake Panasoffkee

A: Check out the Better Business Bureau and read reviews left by other buyers. If you can’t find anything about the company, then I would hesitate to do business with them. — Rhonda Shurtleff, Stonebridge Financial Planning Group, (407) 695-7100

Q: Can I do anything from a tax standpoint to take advantage of the drop in my IRA value this year? — HY, winter garden

A: You might be a good candidate for a Roth conversion. You will pay income tax now on the money that goes to the Roth, but then it will grow tax-free and you can withdraw the contribution and growth tax-free after age 59½. Talk to a tax professional about your particular situation. – Tommy Lucas, Moisand Fitzgerald Tamayo, LLC, (407) 869-6228 ext. 116

Q: I just got married and we are expecting a baby. Should we put extra money in a Roth IRA or start a 529 plan? —SA, Orlando

A: Since providing for your child’s college education is a priority for both of you, I recommend that you fund 529. The money can be used for any qualified college-level expenses for your nominee. — John Cash, Cash and Associates, Pennsylvania, (407) 781-4400

Q: I have an annuity worth $875,000. It all started with $500,000. If I cash it in, will I have to pay income tax on the gain? —RC, Sanford

A: Yes, you would have to pay income tax on $375,000. I suggest talking to a financial planner to understand the other options. — Chris Toadvine, Certified Financial Group, (407) 869-9800

Q: We received money for my 12 year old who was in a car accident, and we don’t want him to have that money until he is 20 years old. What can we do? —KD, Orlando

A: One option is to open a uniform law on transfers to minors for the benefit of the child. Assets belong to the child with one parent acting as guardian and decision maker. — Casandra Garrett, Moisand Fitzgerald Tamayo LLC, (407) 869-6228 ext. 118

Q: I’m about to retire at 65 and I’m concerned about the cost of health insurance. My income is about to drop. Can I do anything to reduce my premium? — BB, Orlando

A: File an SSA-44 form with Medicare that states that you had an income-related, life-altering event. This could potentially lower your health insurance premium. — Colby Winslow, Creative Planning Inc. (407) 280-3029

Q: My sister added me as the owner of her house before she died. I sell the house. Do I have to pay sales tax? —GA, Kissimmee

A: Yes. When your sister added you to her act, she actually gave you the house. You therefore do not receive a basic increase. You have to recognize her base price when she bought the house in 1995. — Helen Von Dolteren-Fournier, AEGIS Financial Advisors Inc., (407) 539-3939

Q: My dad has an annuity, and the company sent a letter saying it’s due next month because he’s 95. They said he could withdraw the money or get payouts. What should he do? — LM, Mount Dora

A: If he chooses a lump sum, the amount above the base will be subject to income tax. If he receives payments, they will have a taxable part and a non-taxable part. — John Pinkley, Raymond James and Associates, (407) 246-4973

Hhave a question? E-mail [email protected]. Include your name (only your initials will be printed), hometown and phone number. Certified financial planners from the Financial Planning Association of Central Florida answer questions. The answers are for educational purposes only; you should also consult a financial professional. Look for the Ask an Expert feature each week on the Monday business page.