Carrie Eritano, EA, RFC®Presidentceritano@moneyconcepts.comwww.moneyconcepts.com/ceritano

April 2018

College Saving: How Does a 529 Plan Compare to aRoth IRA?

Four Points to Consider When Setting a RetirementIncome Goal

What are some tips for creating a budget andsticking to it?

What are some strategies for paying off credit carddebt?

Settling an Estate: Executors Inherit Important Title

See disclaimer on final page

Being named as theexecutor of a familymember's estate isgenerally an honor. Itmeans that person hasbeen chosen to handlethe financial affairs ofthe deceasedindividual and istrusted to help carry

out his or her wishes.

Settling an estate, however, can be a difficultand time-consuming job that could take severalmonths to more than a year to complete. Eachstate has specific laws detailing an executor'sresponsibilities and timetables for theperformance of certain duties.

If you are asked to serve as an executor, youmay want to do some research regarding thelegal requirements, the complexity of theparticular estate, and the potential timecommitment. You should also consider seekingthe counsel of experienced legal and taxadvisors.

Documents and detailsA thoughtfully crafted estate plan withup-to-date documents tends to make the jobeasier for whoever fills this important position. Ifthe deceased created a letter of instruction, itshould include much of the information neededto close out an estate, such as a list ofdocuments and their locations, contacts forlegal and financial professionals, a list of billsand creditors, login information for importantonline sites, and final wishes for burial orcremation and funeral or memorial services.

An executor is responsible for communicatingwith financial institutions, beneficiaries,government agencies, employers, and serviceproviders. You may be asked for a copy of thewill or court-certified documentation that provesyou are authorized to conduct business onbehalf of the estate. Here are some of thespecific duties that often fall on the executor.

Arrange for funeral and burial costs to bepaid from the estate. Collect multiple copies ofthe death certificate from the funeral home orcoroner. They may be needed to fulfill various

official obligations, such as presenting the willto the court for probate, claiming life insuranceproceeds, reporting the death to governmentagencies, and transferring ownership offinancial accounts or property to thebeneficiaries.

Notify agencies such as Social Security andthe Veterans Administration as soon aspossible. Federal benefits received after thedate of death must be returned. You shouldalso file a final income tax return with the IRS,as well as estate and gift tax returns (ifapplicable).

Protect assets while the estate is beingclosed out. This might involve tasks such assecuring a vacant property; paying themortgage, utility, and maintenance costs;changing the name of the insured on home andauto policies to the estate; and trackinginvestments.

Inventory, appraise, and liquidate valuableproperty. You may need to sort through alifetime's worth of personal belongings and list ahome for sale.

Pay any debts or taxes. Medical bills, creditcard debt, and taxes due should be paid out ofthe estate. The executor and/or heirs are notpersonally responsible for the debts of thedeceased that exceed the value of the estate.

Distribute remaining assets according to theestate documents. Trust assets can typicallybe disbursed right away and without courtapproval. With a will, you typically must waituntil the end of the probate process.

The executor has a fiduciary duty — that is, aheightened responsibility to be honest,impartial, and financially responsible. Thismeans you could be held liable if estate fundsare mismanaged and the beneficiaries sufferlosses.

If for any reason you are not willing or able toperform the executor's duties, you have a rightto refuse the position. If no alternate is namedin the will, an administrator will be appointed bythe courts.

Page 1 of 4

College Saving: How Does a 529 Plan Compare to a Roth IRA?529 plans were created 22 years ago, in 1996,to give people a tax-advantaged way to savefor college. Roth IRAs were created a yearlater, in 1997, to give people a tax-advantagedway to save for retirement. But a funny thinghappened along the way — some parentsadapted the Roth IRA as a college savings tool.

Tax benefits and use of fundsRoth IRAs and 529 plans have a similar taxmodus operandi. Both are funded with after-taxdollars, contributions accumulate tax deferred,and qualified distributions are tax-free. But inorder for a 529 plan distribution to be tax-free,the funds must be used for college or K-12education expenses. By contrast, a qualifiedRoth distribution can be used for anything —retirement, college, travel, home remodeling,and so on.

In order for a distribution from a Roth IRA to betax-free (i.e., a qualified distribution), a five-yearholding period must be met and one of thefollowing must be satisfied: The distributionmust be made (1) after age 59½, (2) due to aqualifying disability, (3) to pay certain first-timehomebuyer expenses, or (4) by your beneficiaryafter your death.

For purposes of this discussion, it's the firstcondition that matters: whether you will be 59½or older when your child is in college. If theanswer is yes (and you've met the five-yearholding requirement), then your distribution willbe qualified and you can use your Roth dollarsto pay for college with no tax implications orpenalties. If your child ends up getting a grantor scholarship, or if overall college costs areless than you expected, you can put those Rothdollars toward something else.

But what if you'll be younger than 59½ whenyour child is in college? Can you still use Rothdollars? You can, but your distribution will notbe qualified. This means that the earningsportion of your distribution (but not thecontributions portion) will be subject to incometax. (Note: Just because the earnings portion issubject to income tax, however, doesn't meanyou'll necessarily have to pay it. Nonqualifieddistributions from a Roth IRA draw outcontributions first and then earnings, so youcould theoretically withdraw up to the amount ofyour contributions and not owe income tax.)

Also, if you use Roth dollars to pay for college,the 10% early withdrawal penalty that normallyapplies to distributions before age 59½ iswaived. So the bottom line is, if you'll beyounger than 59½ when your child is in collegeand you use Roth dollars to pay collegeexpenses, you might owe income tax (on theearnings portion of the distribution), but you

won't owe a penalty.

If 529 plan funds are used for any otherpurpose besides the beneficiary's qualifiededucation expenses, the earnings portion of thedistribution is subject to income tax and a 10%federal tax penalty.

Financial aid treatmentAt college time, retirement assets aren'tcounted by the federal or college financial aidformulas. So Roth IRA balances will not affectfinancial aid in any way. (Note: Though the aidformulas don't ask for retirement plan balances,they typically do ask how much you contributedto your retirement accounts in the past year,and colleges may expect you to apply some ofthose funds to college.)

By contrast, 529 plans do count as an assetunder both federal and college aid formulas.(Note: Only parent-owned 529 accounts countas an asset. Grandparent-owned 529 accountsdo not, but withdrawals from these accountsare counted as student income.)

Investment choicesWith a Roth IRA, your investment choices arevirtually unlimited — you can hold mutual funds,individual stocks and bonds, exchange-tradedfunds, and REITs, to name a few.

With a 529 plan, you are limited to theinvestment options offered by the plan, whichare typically a range of static and age-basedmutual fund portfolios that vary in their level ofrisk. If you're unhappy with the marketperformance of the options you've chosen,under federal law you can change theinvestment options for your existingcontributions only twice per calendar year(though you can generally change theinvestment options on your future contributionsat any time).

Eligibility and contribution amountsUnfortunately, not everyone is eligible tocontribute to a Roth IRA. For example, yourincome must be below a certain threshold tomake the maximum annual contribution of$5,500 (or $6,500 for individuals age 50 andolder).

By contrast, anyone can contribute to a 529plan; there are no restrictions based on income.Another significant advantage is that lifetimecontribution limits are high, typically $300,000and up. And 529 plan rules allow for largelump-sum, tax-free gifts if certain conditions aremet — $75,000 for single filers and $150,000 formarried joint filers in 2018, which is equal tofive years' worth of the $15,000 annual gift taxexclusion.

529 plan assets surpass$300 billion mark

As of September 2017, assetsin 529 plans totaled $306billion.

Source: Strategic Insight, 529College Savings & ABLE, 3Q2017 529 Data Highlights

Note

Investors should carefullyconsider the investmentobjectives, risks, charges, andexpenses associated with 529plans before investing. Specificinformation is available in eachplan's official statement. Keepin mind that there is the riskthat 529 plan investments maynot perform well enough tocover costs as anticipated.Also consider whether yourstate offers any 529 plan statetax benefits and whether theyare contingent on joining yourown state's 529 plan. Otherstate benefits may includefinancial aid, scholarship funds,and protection from creditors.

Page 2 of 4, see disclaimer on final page

Four Points to Consider When Setting a Retirement Income GoalNo matter what your age or stage of life,targeting a goal for monthly retirement incomecan seem like a daunting task. Following arefour considerations to help you get started.

1. When do you plan to retire?The first question to ponder is your anticipatedretirement age. Many people base their targetretirement date on when they're eligible for fullSocial Security benefits, and for today'sworkers, "full retirement age" ranges from 66 to67. Other folks hope to retire early, while stillothers want to work as long as possible. As youthink about your anticipated retirement date,keep the following points in mind.

If you plan to retire early, you'll needsignificant resources to provide income forpotentially decades. You can typically tap youremployer-sponsored retirement plan withoutpenalty as early as age 55 if you terminate youremployment, but if you try to access IRA assetsprior to age 59½, you will be subject to a 10%early withdrawal penalty, unless an exceptionapplies. In both cases, regular income taxes willapply. Also consider that you generally won't beeligible for Medicare until age 65, so unless youare one of the lucky few who haveemployer-sponsored retiree medical benefits,health insurance will have to be funded out ofpocket.

If you plan to delay retirement, consider thatunexpected circumstances could throw awrench in that plan. In its 2017 RetirementConfidence Survey, the Employee BenefitResearch Institute (EBRI) found that currentworkers plan to retire at a median age of 65,while current retirees reported a medianretirement age of 62. And although four in 10workers plan to work until age 70 or later, just4% of retirees said this was the case. Why thedifference? Nearly half of retirees said theyretired earlier than planned, with manyreporting unexpected challenges, including theirown health concerns or those of a familymember.1

2. How long will your retirement last?The second important consideration, whichbuilds on the first, is how long your retirementmight last. Projected life spans have beenlengthening in recent decades due in part toadvancements in medical care and generalhealth awareness. According to the NationalCenter for Health Statistics (NCHS), a65-year-old woman can expect to live 20.6more years, while a 65-year-old man can

expect to live 18 more years.2 To estimate yourown life expectancy based on your current ageand health profile, visit the online longevitycalculator created by the Society of Actuariesand American Academy of Actuaries atlongevityillustrator.org.

3. What will your expenses look like?The third consideration is how much you willneed to meet your basic living expenses.Although your housing, commuting, and otherwork-related expenses may decrease inretirement, other costs — including health care —will likely rise.

In 2017, EBRI calculated that Medicarerecipients with median prescription drugexpenses may need about $265,000 just to payfor basic medical expenses in retirement.3 Andthat doesn't even include the potential forlong-term care. According to the Department ofHealth and Human Services (HHS), 52% ofpeople over age 65 will need some form oflong-term care during their lifetimes, whichcould add another $69,000, on average, to theout-of-pocket costs.4

In addition, remember to account for the impactinflation will have on your expenses over time.For example, say you need an estimated$50,000 to cover basic needs in your first yearof retirement. Ten years later, at a 3% annualinflation rate (the approximate historicalaverage as measured by the consumer priceindex), you would need more than $67,000 tocover those same costs.

4. How much can you accumulate?This is perhaps the most importantconsideration: How much can you realisticallyaccumulate between now and retirement basedon your current savings rate, timeframe,investment portfolio, and lifestyle? Once youproject your total accumulation amount basedon current circumstances, you can gaugewhether you're on track or falling short. And ifyou appear to be falling short, you can begin tothink about how to refine your strategy, eitherby altering your plans for retirement (e.g.,delaying retirement by a few years), savingmore, or investing more aggressively.1 EBRI Issue Brief, March 21, 2017

2 NCHS Issue Brief, Number 293, December 2017

3 EBRI Notes, January 31, 2017

4 HHS, "Long-Term Services and Supports for OlderAmericans: Risks and Financing Research Brief,"February 2016

Although there are certainlyno guarantees that anyfuture plans will pan out asexpected, taking time nowto assess these four pointscan help you positionyourself to pursue acomfortable retirement.

All investing involves risk,including the possible lossof principal, and there is noguarantee that anyinvestment strategy will besuccessful.

Page 3 of 4, see disclaimer on final page

Carrie Eritano, EA, RFC®Presidentceritano@moneyconcepts.comwww.moneyconcepts.com/ceritano

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018

All Securities Through MoneyConcepts Capital Corp., MemberFINRA / SIPC11440 North Jog Road, PalmBeach Gardens, FL 33418 Phone:561.472.2000Copyright 2010 Money ConceptsInternational Inc.

Investments are not FDIC or NCUAInsuredMay Lose Value - No Bank orCredit Union Guarantee

What are some strategies for paying off credit carddebt?Nowadays, it's easier thanever to get caught up in thecycle of credit card debt. Infact, it's become a growing

problem for many Americans. According to theFederal Reserve, total U.S. credit cardpayments reached 111.1 billion in 2016, up7.4% from 2015.1

If you find that you are struggling to pay down acredit card debt balance, here are somestrategies that can help eliminate your creditcard debt altogether:

Pay off cards with the highest interest ratefirst. If you have more than one card thatcarries an outstanding balance, prioritize yourpayments according to their interest rates.Send as large a payment as you can to thecard with the highest interest rate and continuemaking payments on the other cards until thecard with the highest interest rate is paid off.You can then focus your repayment efforts onthe card with the next highest interest rate, andso on, until they're all paid off.

Apply for a balance transfer with anothercard. Many credit card companies offer highlycompetitive balance transfer offers (e.g., 0%

interest for 12 months). Transferring your creditcard balance to a card with a lower interest ratecan enable you to reduce interest fees and paymore against your existing balance. Mostbalance transfer offers charge a fee (usually apercentage of the balance transferred), so besure to do the calculations to make sure it'scost-effective before you apply.

Pay more than the minimum. If you only paythe minimum payment due on a credit card,you'll continue to carry the bulk of your balanceforward without reducing your overall balance.As a result, try to make payments that exceedthe minimum amount due. For more detailedinformation on the impact that making just theminimum payment will have on your overallbalance, you can refer to your monthlystatement.

Look for available funds to make alump-sum payment. Are you expecting anemployment bonus or other financial windfall inthe near future? If so, consider using thosefunds to make a lump-sum payment toeliminate or pay down your credit card balance.1 Federal Reserve, 2017

What are some tips for creating a budget and stickingto it?It's a common problem formany individuals — wonderingexactly where your paycheckgoes each month. After paying

expenses, such as your mortgage, utilities, andcredit card bills, you may find little left to puttoward anything else.

Creating a budget is the first key to successfullymanage your finances. Knowing exactly howyou are spending your money each month canset you on a more clear path to pursue yourfinancial goals. If you become sidetrackedwhen it comes to your finances, consider thesetips for creating a budget and staying on theright path.

Examine your financial goals. Start out bymaking a list of your short-term goals (e.g., newcar, vacation) and long-term goals (e.g, yourchild's college education, retirement) andprioritize them. Consider how much you willneed to save and how long it will take to reacheach goal.

Identify your current monthly income andexpenses. Add up all of your income. Inaddition to your regular salary and wages, besure to include other types of income, such as

dividends, interest, and child support. Next, addup all of your expenses. Sometimes it helps todivide expenses into two categories: fixed (e.g.,housing, food, transportation) and discretionary(e.g., entertainment, vacations). Don't forget tofactor in any financial goals you would like topursue.

Evaluate your budget. Once you've addedyour income and expenses, compare the twototals. Ideally, you should be spending lessthan you earn. If this is the case, you're on theright track, and you'll need to look at how wellyou use your extra income toward achievingyour financial goals. On the other hand, if youare spending more than you earn, you shouldmake some adjustments to your budget. Lookfor ways to increase your income or reduceyour expenses, or both.

Monitor your budget. Finally, you shouldmonitor your budget periodically and makechanges when necessary. Keep in mind thatany budget that is too rigid is likely to fail. Keepyour budget flexible as your changingcircumstances demand.

Page 4 of 4