Bridgeriver LLC - August 2020

Bridgeriver LLC - August 2020

Nest Egg

THE

AUGUST 2020

The Bigger Picture on Roth IRA Conversions

When the market crashes, people with traditional IRAs quickly become interested in converting their IRA into a Roth IRA. It’s not a bad plan. There are many reasons to convert an IRA to a Roth IRA — and there are many misconceptions, too. But there is one major Roth IRA misconception I see a lot, especially when it comes to retirement planning. A lot of people don’t think it’s worth it, that the benefits just aren’t there. Some people will go to their financial advisor to talk about converting their IRA to a Roth. But in so many cases, financial advisors are not experts in taxes. Just as tax specialists, such as certified public accountants (CPAs), aren’t experts in financial planning. Estate planning advisors aren’t necessarily experts in either financial planning or taxes. Going to one of these specialists to talk about a Roth conversion will only give you one part of the bigger picture. Why do I bring this up? I’ve seen instances where someone will go to a CPA to discuss a Roth conversion only to have the CPA tell them to avoid making the conversion. The CPA will say there aren’t any real benefits to the conversion. Here’s why: A CPA will focus most of their attention on the tax side of the conversion, failing to look at the bigger picture. So, what is that bigger picture? Let’s look at how money gets into a Roth IRA. Basically, there are two ways you can put money into a Roth. Keep in mind, too, that the money you put in after establishing the Roth account will have already

been taxed. As long as you follow a few rules, any money you take out of your Roth during retirement comes out tax-free. This is something to keep in mind for long-term planning. The first way to get money into a Roth is through contributions. Say you already have a Roth IRA set up. Every year, you contribute to the account. If you are 50 or older, the contribution limit is $7,000 per year. If you are under 50, the limit is $6,000 per year. This is for the 2020 tax year. The second way is through a conversion. As you know, traditional IRAs, 401(k)s, and other employer-sponsored plans are all taxed as you withdraw the funds. Depending on how much you withdraw, it can influence your income tax bracket, for better or worse. It can cause headaches in retirement if not properly planned for. Once money is in a Roth IRA, there are three layers: your contributions, any further conversions, and returns on money that is in the account. Then, as you withdraw the funds, they come out in that same order: First is the money you contributed, second are any conversions you made, and third is the growth of those contributions and/or conversions — your returns or earnings. There are also a couple five-year clocks to be aware of when it comes to Roth IRAs. One clock begins the second you convert a traditional IRA into a Roth IRA. You cannot touch that

newly converted money for five years or until you turn 59 1/2, whichever is longer. However, remember that contributions are the first layer to be withdrawn and are always tax- and penalty-free. The second five-year clock works a little differently. In order to avoid paying penalties on withdrawing funds from a Roth IRA, you must have any Roth open for a minimum of five years. If you have multiple Roth accounts, for example, if one of those accounts has been open for five or more years and you open a new one, you don’t have to worry about this. Another thing to keep in mind is that you must be over 59 1/2 in order to withdraw any earnings, otherwise you will be hit with penalties. Roth IRAs don’t have to be confusing. If you are considering converting an IRA into a Roth IRA, work with someone who is going to look at the big picture and who can help guide you through the proper steps to ensure you don’t end up paying penalties or taxes when it comes time to withdraw.

248.785.3734 1 -Dan Casey If you have any questions about Roth conversions or Roth IRAs in general, give us a call and we’ll get your questions answered!

GET THE MOST OUT OF YOUR TRIP WITH THE EXPERT ADVICE OF A TRAVEL AGENT

THEY CAN LOWER COSTS. Enlisting the help of a travel agency isn’t as expensive as the average customer might think. Travel advisors receive a small commission from airlines and hotels when they book your trip, which allows them to keep your travel costs down. Every agency charges different fees based on the package you purchase, but on average, you can expect to pay around $75 per traveling person for an agent to book your trip. With all the added experiences and deals they can find, this cost easily pays for itself and then some. THEY SIMPLIFY THE COMPLICATED PROCESS. The No. 1 reason people use a travel agency is because planning a trip can be overwhelming. You have to research the location, book flights, plan ground transportation, secure lodging, discover activities, and find restaurants. If you don’t travel often or are going to a destination you’re unfamiliar with, then tackling everything yourself leaves room for mistakes, stress, and disappointment. A travel advisor makes the entire process as simple as possible so you can enjoy your vacation to the fullest.

Once upon a time, you couldn’t plan a vacation without using a travel agent. They would book your flights and hotels, provide information about local activities, and point you to the best sites to see. But with

the advent of the internet, it seemed travel agencies would become obsolete. However, these services are actually far from disappearing: Nearly 20% of travelers still use an agency. Because the COVID-19 pandemic changed the way people travel for the foreseeable future, travel advisors, as they’re now called, are more valuable than ever. THEY GIVE EXPERT ADVICE. If you want to get the most out of your trip, then you should talk to someone who knows exactly how to give you that. Travel advisors undergo training and gain experience with different policies, customs, and travel regulations to get you where you want to go. They will be your go-to experts for what you should do when you get to your destination, especially if you’re traveling to a foreign country or overseas.

CELEBRATES THOSE WHO BRING COMMUNITIES TOGETHER Restaurants have had an especially tough time staying afloat during the pandemic. Most eateries had to discontinue dine-in service, and those that couldn’t adapt to offering takeout or delivery may still be questioning NATIONAL CHEFS APPRECIATION WEEK

restaurant, there are plenty of other ways to celebrate. Continue having food delivered or picking up curbside from your favorite places. Whether dining in or carrying out, remember to tip well! You can also post about your favorite dishes on social media or leave a glowing review for your favorite eatery on Google or

whether they’ll ever be able to open their doors again. During the pandemic, it became clear to many of us just how important a role our favorite restaurants play in providing not just tasty chow, but also a sense of comfort and community. Celebrating National Chefs Appreciation Week is a great way to let the chefs who run those eateries know just how much they mean to us. WHAT IS IT? Since the holiday’s inception in 2013, it has most commonly occurred during the third week of August; this year, it’s August 16–22. Restaurants, patrons, and home cooks alike can show appreciation for the art and dedication chefs bring to their craft every day. Several restaurants across the country celebrate with special events and menus, and patrons flock to their favorite places for great food and company and to support the chefs who bring their communities together. HOW CAN I CELEBRATE? Now that many restaurants are opening back up for service at a limited capacity, it’s possible to dine in and further support the chefs who make the food you love. But, if you’re still not comfortable eating at a

Yelp. The beauty of this holiday is that celebrating includes doing activities you probably already do, so it’s easy to participate. Chefs play a significant role in the evolution of culture, protection of tradition, and

construction of community. Their food brings us together, fills our stomachs, and brightens our moods. We may not have fully recognized all they do for us until recently, but now that we have, we can truly celebrate Chefs Appreciation Week to the fullest.

2 www.BridgeriverLLC.com

Are you thinking about donating your kids’ old clothes or that slow cooker you haven’t used in months? Though donating your unwanted items is a great thing to do, amid the pandemic, many people have not considered the future of secondhand shopping and charity-based thrift stores like Goodwill. In 2018, Goodwill funded nearly $5.3 billion in charitable services, like educational assistance, job training, and work placements. But now, Goodwill and similar organizations are facing a unique problem: They’re receiving too many donations. To prevent your items from ending up in a landfill, consider the following before you donate. Under the circumstances, this situation is understandable. Thanks to nationwide stay- at-home orders, many took advantage of their newfound spare time to spring-clean and subsequently donate unwanted items to charity. However, with the confusion about how long the COVID-19 virus can live on clothing, secondhand shoppers have been staying home, worried about the health risks of buying used goods. Famously, thrift stores still keep unsold goods out of landfills. Up to 75% of Goodwill’s merchandise, for example, isn’t sold in their stores. Instead, it’s sent to discount outlets and then into global

markets. However, Mexican traders, who account for

30% of business at thrift stores close to the U.S. southern border, and Kenya, the world’s largest buyer of unsold secondhand clothes, have stopped buying during the economic shutdown. Meanwhile, some good-intentioned Americans are leaving their goods outside thrift stores’ front doors, not realizing that without enough space to house the excess donations, many of these thrift stores will have to pay disposal fees, costing the business potential revenue and sending your items into local landfills. However, Goodwill still wants your donations! You just might have to hold on to your items for a little bit. Check to see if your local thrift stores are open for donations. Many recommend waiting until the influx slows down, but others have expanded their inventory storage and are ready to keep up. Just make sure to follow their guidelines on acceptable items because any broken or worn items only add to their costs. Happy donating!

ARE YOUR THRIFT STORE DONATIONS BEING THROWN AWAY?

HAVE A LAUGH

Restaurant-Style Fettuccine Alfredo

Ingredients

Inspired by The New York Times

• • • • • •

Salt

2 tbsp butter

• • • •

1 cup freshly grated Parmigiano-Reggiano

1 clove of garlic, finely chopped

Freshly ground pepper, to taste Fresh parsley, chopped, to taste

1 1/2 cups heavy cream

1 large egg yolk

1 lemon wedge

1 lb fresh fettuccine

Directions

1. In a large pot, bring 6 quarts of generously salted water to a boil. 2. In a large, deep skillet, while the water heats, melt butter over medium-high heat. Add garlic and sauté until fragrant and sizzling (about 2 minutes). 3. In a bowl, whisk heavy cream and egg yolk until blended and pour into garlic butter. 4. Reduce heat to medium-low. Stir until hot, not boiling. Keep warm on low heat.

5. In the large pot, cook pasta until al dente. (The pasta will float once it’s done.) Reserve about 1/2 cup pasta water and drain pasta. Pour hot pasta into cream mixture and toss to coat on low heat. 6. Add Parmigiano-Reggiano and keep tossing gently until cream is mostly absorbed. If the sauce is absorbed too much, toss with extra pasta water. Season with salt and pepper to taste. 7. Serve with parsley and a squeeze of lemon. 3 248.785.3734

PRST STD US POSTAGE PAID BOISE, ID PERMIT 411

40900 WOODWARD AVE., STE. 305 BLOOMFIELD HILLS, MI 48304

248.785.3734 WWW.BRIDGERIVERLLC.COM

INSIDE This Issue

Are You Confused by Roth Conversions? Why We Still Need Travel Agencies Celebrate National Chefs Appreciation Week Are Your Thrift Store Donations Being Thrown Away? Restaurant-Style Fettuccine Alfredo Rob Kenney Is a Father to Many

‘DAD, HOW DO I?’

How 1 Father Is Passing Along Life Lessons

Being abandoned by a parent is one of the most devastating things that can happen to a child. Rob Kenney experienced this trauma firsthand when his father said he no longer wanted any of his eight children. Kenney was only 12 years old when his father walked out of his life. In an interview with Q13 News in Seattle, Kenney explained that after that experience, he decided that when he had children of his own, he would raise them into good adults and make sure they didn’t have a fractured childhood. But he didn’t stop there. Now 50, Kenney has a 29-year-old daughter and 27-year-old son who are living successful lives thanks to that decision he made many years before. However, even with an empty nest, Kenney realized he still had life lessons to pass on. After thinking about other young people in the world who have gone through the same unfortunate experience as he did, he decided to do something about it. In early April 2020, Kenney created a YouTube channel called “Dad, how do I?” and uploaded his first video, titled “How to tie a tie.” In the video, he

gives a helpful hint for choosing a tie. Then he talks viewers through the process of how to tie a tie while demonstrating it on himself. As April progressed, Kenney uploaded a number of videos on other seemingly simple tasks, including how to unclog a sink, check the oil in a car, install a shelf, and even how to shave. As he continued uploading videos, he started to include dad jokes along the way. “So today I’m going to show you how to use a stud finder,” Kenney begins in one video. “If you came here looking for help finding a boyfriend, that would be a different stud finder.” Kenney hopes that, by uploading these videos, he can be there for someone who doesn’t have a parent around to teach them these things. And in the course of just two months, it looks like he is already doing just that. At the end of May, Kenney’s channel had over 2 million subscribers and thousands of people have reached out to Kenney to share their own similar experiences and express their gratitude and appreciation for everything he’s doing.

4

www.BridgeriverLLC.com