Ask Liz Weston

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Liz Weston

Q&A: Don’t try evading Roth IRA requirements

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Dear Liz: My son is a student. He would like to maximize his Roth IRA at the annual $7,000 limit and has the money in savings to do so. However, his income from odd jobs, paid in cash, will probably be less than the $7,000 required to make this maximum contribution. Can he report additional income on his income tax beyond what he earned, pay the associated additional income taxes and thus meet the $7,000 income requirement?

Answer: Your son’s enthusiasm for retirement savings is commendable, but filing fraudulent tax returns is not. He can’t contribute more than he legitimately earns.

This week’s money news

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This week’s top story: Getting a second opinion can help ward off misdiagnosis. In other news: What to know about pet insurance, 6 tips for the FAFSA delay, and questions you aren’t asking, but should during open enrollment.

Getting a Second Opinion Can Help Ward Off Misdiagnosis
Each year, diagnostic error leads to about 371,000 U.S. deaths. A second opinion is one potential cure.

Adopting a Rescue Dog? Here’s What to Know About Pet Insurance
Pet insurance isn’t right for everyone. For example, it can be pricey if you’re adopting a senior dog.

Applying to College Early Decision? 6 Tips for the FAFSA Delay
With the timing and size of financial aid packages in question for the 2024-25 academic year, consider early action or regular decision instead.

Questions You Aren’t Asking (but Should) During Open Enrollment
From drug coverage to deductibles, here are the things to consider when you’re choosing health insurance for 2024.

Someday your boss could help you save for emergencies

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When I wrote about employer-provided emergency savings accounts four years ago, the idea was still pretty novel. Some companies were experimenting with ways to help their workers save for short-term needs, but the concept wasn’t even on the radar for many employers.

What a difference the pandemic made. Millions were thrown out of work with little warning, and few had the financial reserves to survive even a few months of unemployment. Big employers, and lawmakers, took notice, says Claire Chamberlain, global head of social impact for investment manager BlackRock. The result: Hundreds of thousands of workers now have options to build emergency savings through their employers, and Congress passed laws to encourage more companies to add short-term savings options.

In my latest for ABC News, learn how your boss could help you save for emergencies someday.

This week’s money news

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This week’s top story: How to protect yourself from student loan scams as bills resume. In other news: Increased commuting costs, how Disney turned Halloween into a money-making machine, and 3 steps to booking holiday travel.

How to Protect Yourself From Student Loan Scams as Bills Resume
If you get a random text or call about your student loans, it’s likely a scam.

Commuter Snapshot: Most Workers Hit the Roads as Costs Increase
Lower relative wages make increased commuting costs tough to handle.

How Disney Turned Halloween Into a Money-Making Machine
With after-hours parties and seasonal treats, Disney has thoroughly capitalized on the spooky season.

Ask a Travel Nerd: 3 Steps to Booking Holiday Travel
Book in October and consider traveling on off days to avoid high prices and overwhelming crowds.

Q&A: Finding an affordable fee-only financial advisor

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Dear Liz: You always advocate hiring a fee-only financial advisor. But where do you really find one? I found those who say they are fee-only are really “assets under management” advisors when you dig down deep, and the cheapest fee-only advisor I’ve found costs $6,000. I just want them to look over my financial plan and help craft a retirement investment portfolio.

Answer: The “assets under management” model — where the advisor charges 1% or so of your portfolio in exchange for financial advice — is probably the most common fee-only arrangement. But there are others. The Garrett Planning Network, for example, represents planners who charge by the hour. XY Planning Network and Alliance for Comprehensive Planners offer referrals to planners who charge retainer fees.

You also might consider talking to an accredited financial counselor. These fee-only, fiduciary professionals typically charge less than a comprehensive financial planner does and could be a good fit for those with simpler needs. You can get referrals from the Assn. for Financial Counseling & Planning Education.

Q&A: You might have unclaimed retirement benefits. How to find them

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Dear Liz: My wife recently received from the Social Security Administration a notice of “Potential Private Retirement Benefit Information.” It cites a 401(k) account with a previous employer with a relatively small balance and states the “year reported” as 1992. My wife does not have any recollection of ever cashing out this account. Should the account still be accessible or are 401(k) accounts subject to abandoned property laws?

Answer: Keep in mind that many small accounts in that era were simply cashed out. The company sent the departing worker a check with a certain amount withheld for taxes, and that was that.

Still, even a small account could have grown substantially in the meantime, so it’s worth trying to find out if it might still exist somewhere. A couple of places to check first would be the National Registry of Unclaimed Retirement Benefits, which allows you to search using your Social Security number. Another site to check for missing money of all sorts is the National Assn. of Unclaimed Property Administrators.

If nothing turns up, your wife should try to find the plan’s administrator. If she has any old statements or paperwork from the plan, the administrator or plan provider would be listed. If not, and her former employer is still in business, she can call the human resources department to find out what company administered the plan.

If that doesn’t work, her next stop would be the Department of Labor’s efast system to look for the plan’s Form 5500. Employee benefit plans have to file these annual reports and include contact information. FreeErisa is another site to check for Forms 5500.