Q. I am retiring soon, and I will have the option of rolling over my 401(k) to an IRA. Also, I am not sure whether I should be converting some or all of my account to a Roth? If I use a financial planner to help answer these questions, how do I get a reliable one?
A. You are facing some very important decisions, and a competent financial planner should be able to assist you. I believe you should consider a fee-only planner. You can use one either on a one-time basis or a recurring basis. Contact Ed Slott’s group at www.irahelp.com and request a list of financial planners in your geographic area.
Q. A relative of mine recently learned that she was entitled to Social Security benefits based on her prior marriage and divorce. When she contacted Social Security, a representative told her that because she had not contacted Social Security earlier, she was no longer eligible for Social Security benefits based on her prior marriage. Is that correct?
A. As far as I know, there is no statute of limitations regarding requesting Social Security benefits based on a prior marriage and divorce. You should ask your relative to set up an appointment with her local Social Security office and bring proof of the marriage and divorce. If the representative indicates she is not eligible for additional benefits because she did not apply on time, have her ask to speak to a supervisor. If that approach doesn’t work, notify me, and I will recommend other options.
Q. I am 64 and currently receive a disability benefit from Social Security. I have been told that eventually my benefit will be switched based on my work record rather than disability and I will no longer be receiving a disability benefit. Do I have to contact Social Security? Will my benefit change?
A. When you reach your full retirement age, Social Security will automatically enroll you. You do not have to contact Social Security. Your benefit amount will not change from the benefit you are now receiving.
Q. I applied for benefits from Social Security when I reached my full retirement age a few years ago. I still work. I was under the impression that if I continued to work, my Social Security benefits would increase. Why hasn’t that happened?
A. It is true that your benefit could increase if you continued to work under Social Security. However, your benefit is based on the highest 35 years you work under Social Security. If your earnings in a recent year are larger than one of the 35 years that was used to compute your benefit, then that year would replace one of the 35 years that was used to compute your benefit. It will increase only if your earnings in a recent year replace a prior year taking inflation into consideration.
Q. Does it pay to open a CD with a bank that offers cash bonuses if you also open checking accounts at the same time?
A. Generally, when a financial institution offers bonuses of this sort, the answer depends on how long you have to keep the new accounts open and whether you receive any income from the new accounts. Generally, you only receive the bonuses if you maintain high balances for an extended time, and you may not receive much income, if any, from the new accounts. So, you have to weigh the value of any bonus you receive against the potential income you will lose by tying up high balances in new checking or business accounts.
Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.
