RE/MAX 440
John F. O'Hara

John F. O'Hara
731 W Skippack Pike  Blue Bell  PA 19422
Phone:  610-277-4060
Office:  215-643-3200
Cell:  267-481-1786
Fax:  267-354-6973

My Blog

Homeowners: Beware of Post-Disaster Housing Scams

January 22, 2016 1:03 am

Scams are often the furthest thought from the mind of a homeowner in the wake of disaster—and fraudsters time and again use this vulnerability to their advantage, preying on those impacted. Common post-disaster fraud practices, according to the Federal Emergency Management Agency (FEMA), include:

- Bogus Pleas for Post-Disaster Donations
- Fake Offers of State or Federal Aid
- Fraudulent Building Contractors
- Phony Housing Inspectors

To avoid hiring a fraudulent building contractor for repairs, look for licensed local contractors backed by reliable references. Demand that contractors carry general liability insurance and workers’ compensation, and don’t pay more than half the costs of repairs upfront.

To avoid hiring a phony housing inspector, who may claim to represent FEMA, verify that the inspector has your nine-digit registration number (given to all disaster relief applicants). Keep in mind FEMA inspectors never require banking or other personal information, and that they do not hire or endorse specific contractors to fix homes or recommend repairs. They also do not determine eligibility for assistance.

Source: FEMA

Published with permission from RISMedia.


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Nearing Retirement? How to Navigate Pension Payouts

January 21, 2016 1:03 am

Those fortunate enough to have pension plans have payout options come retirement. It’s important to understand those options in order to make informed decisions—and choosing the right option for you can help ensure financial security in retirement.

“Retirees are increasingly being faced with the difficult one-time choice to either take their pension payments in a lump sum or as a lifetime income stream,” says Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB). “Clear information about the trade-offs they face can help consumers make the right financial decision for their retirement security.”

Many employees in the private sector are covered by defined benefit pension plans in which retirement benefits are typically based on years of service and earnings, and paid out in the form of lifetime monthly payments. Increasingly, employers are giving consumers eligible for retirement benefits the option of a one-time payment for all or a portion of their pension, commonly known as a lump-sum payout.

The monthly payment option offers steady lifetime income, which substantially reduces the risk of running out of money later in life. This is especially important if you or your spouse is in good health, or if either of you have a family history of longevity. A lump-sum payout, however, might make sense if you or your spouse is terminally ill or in critically poor health, or if you already have sufficient income to cover basic living expenses.

If you choose a lump-sum pension payout instead of monthly payments, the responsibility for managing the money shifts from your employer to you. In the monthly payment option, you don’t need to worry about a lack of investment skills, or how your financial management skills may change as you age. In contrast, a lump-sum payout can give you the flexibility of choosing to pay off large debts, where to invest or save the money, and when and how much to withdraw.

Keep in mind that pensions are typically insured by the Pension Benefit Guaranty Corporation (PBGC). In the event your company declares bankruptcy or otherwise cannot make its pension payments, the PBGC guarantees those payments up to a certain amount. Pension payments are also protected against certain creditor claims or debt collectors. With a lump-sum payout, you lose these protections.

If you elect the lump-sum option, it’s important to check for calculation errors. Many factors determine a lump-sum payment amount, including age, years of work, earnings history, taxes withheld, and the terms of the plan. You can detect errors by taking a look at your most recent pension statement, or by contacting a pension counselor for assistance or to resolve errors.

The lump-sum option also means you’ll have to pay taxes on the payout. This money is generally treated as ordinary income for that year. For this reason, an employer is required to withhold 20 percent on the amount.

In addition, you may have to pay a 10 percent early withdrawal penalty tax if you have not reached age 59½. You can defer income taxes on your lump sum by rolling over the funds into a qualified retirement account.

Source: CFPB.gov

Published with permission from RISMedia.


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