Can I Take a Periodic Distribution From My Cash-Balance Plan?
Periodic distributions are one of the main ways that former employees enjoy the benefits of a Cash Balance plan. Yes, you can take periodic distributions from your cash-balance plan. As opposed to the other option (lump-sum distribution), opting for the periodic distribution can help you sleep better at night, knowing that you have a fixed stream of income for the rest of your life. This Life Annuity option is mandated by law to be an option to participants of a cash balance plan. Continue reading...
If I Retire, Can I Keep the Health Plan My Employer Offered?
Some employers will offer legacy employees continued health care coverage even after retirement, but it is not very common these days. The costs of health care are rising too quickly for most corporations to keep up. Some corporations will continue to pay a percentage of premiums for their retirees, but more often than not it is up to the retiree to obtain their own health care. Following employment, most people are eligible for COBRA, and then later in life you can purchase plans through Medicare and Medicaid. Continue reading...
What is the Form 6251: Alternative Minimum Tax, Individuals?
IRS Link to Form — Found Here The Form 6251 is used to calculate the alternative minimum tax (AMT) for individuals who may have high income but relatively low taxes due after deductions. The individual first computes his or her adjusted gross income, which does not allow for some deductions that may have been taken for the tax filing. If the AMT is higher than the taxes already paid, the individual will have to pay the difference. Continue reading...
What is a Life Annuity?
Annuities are primarily designed to pay a substantially similar sum at regular intervals until the annuitant dies. Life insurance companies write these contracts since they are designed as a kind of longevity insurance. A lifetime income annuity, sometimes called a life annuity, is a stream of guaranteed payments for the duration of the annuitant’s life, based on the sum used to purchase the lifetime income and the age of the annuitant at the time of purchase. Life annuities can also be joint-life, meaning the contract will pay an amount to either of two people as long as one is alive. Continue reading...
What is the Ascending Triangle (Bearish) Pattern?
The Ascending Triangle pattern has a horizontal top line (1, 3, 5) representing a resistance level, and an upward-sloping bottom line (2, 4). The Breakout can either be up or down, and the direction of the Breakout will determine whether the Target Price is higher or lower. This pattern is commonly associated with directionless markets, since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. When the price of a security consolidates around highs it might indicate that a significant downtrend is ahead. Continue reading...
What is the Falling Flag (Bearish) Pattern?
The Falling Flag (or Bearish Flag) pattern looks like a flag with the mast turned upside down (the mast points up). The pattern forms when falling prices experience a consolidation period, and the price moves within a narrow range defined by the parallel lines through points 2-4 and 3-5. After the consolidation, the previous trend resumes. This type of formation happens when anticipation of a downtrend is high, and when a pair’s price consolidates during a broader decline. It may indicate growing investor concern of an impending downtrend. Continue reading...
What is Unlevered Beta?
Unlevered beta measures the Beta (a volatility indicator that denotes how closely an investment follows movements in the market as a whole) of a company when the effects of debt (leverage) are removed, allowing investors to gauge risk strictly as a function of company assets. The beta of a company’s equity stock is a measure of volatility relative to the rest of the market, impacting Price-to-Earnings (P/E) calculations and other valuations. When beta increases, the cost of equity increases, and results in a higher P/E. Unlevering the beta can give a clearer picture of the market risk of a company’s equity shares, as higher debt relative to equity usually constitutes more risk to investors. Continue reading...
What is a Breakeven Price?
There will be a premium paid by investors for the right to establish positions using options. The price of the underlying security must move to a certain point for the options position to become profitable. The strike price of an options contract names the price that an investor can use to buy or sell the underlying security, but the breakeven price will be the strike price plus the amount of the investor’s premium or net debit. Breakeven price can apply to a multi-option strategy such as a spread, or to a single option position. Continue reading...
What is Appraisal Fraud?
Appraisal Fraud is the intentional misrepresentation of the value of a home using an appraiser’s statement. Appraisals are necessary for large loans and real estate transactions, and appraisal fraud is common. Fraud can be committed in this manner by the appraiser or by a person falsifying an appraiser’s statement. A common example would be overstating the value of a home so that a borrower can get a larger home equity loan. Continue reading...
What is a Stop Limit Order?
A Stop-Limit Order basically automates the preferences of an investor or trader, to reduce exposure to price uncertainty even after a trade ticket is entered, by stipulating a price at which the search for a bid/ask price is to begin, but limiting the range of prices at which an order can actually be entered or executed. A Stop-Limit Order has two parts: the Stop Price and the Limit Price. The stop price is like an amendment or contract rider on a security that is held which stipulates that if the price of the security crosses the Stop price, the search for an agreeable price begins. Continue reading...