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The Potential Benefits of Roth IRAs for Kids

The Potential Benefits of Roth IRAs for Kids

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    Most teenagers probably aren’t thinking about saving for retirement, buying a home, or even paying for college when they start their first jobs. Yet a first job can present an ideal opportunity to explain how a Roth IRA can become a valuable savings tool in the pursuit of future goals.

    Rules of the Roth

    Minors can contribute to a Roth IRA as long as they have earned income and a parent (or other adult) opens a custodial account in the child’s name. Contributions to a Roth IRA are made on an after-tax basis, which means they can be withdrawn at any time, for any reason, free of taxes and penalties. Earnings grow tax-free, although nonqualified withdrawals of earnings are generally taxed as ordinary income and may incur a 10% early-withdrawal penalty.

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A withdrawal is considered qualified if the account is held for at least five years and the distribution is made after age 59½, as a result of the account owner’s disability or death, or to purchase a first home (up to a $10,000 lifetime limit). Penalty-free early withdrawals can also be used to pay for qualified higher-education expenses; however, regular income taxes will apply.

In 2024, the Roth IRA contribution limit for those under age 50 is the lesser of $7,000 or 100% of earned income. In other words, if a teenager earns $1,500 this year, his or her annual contribution limit would be $1,500. Other individuals may also contribute directly to a teen’s Roth IRA, but the total value of all contributions may not exceed the child’s annual earnings or $7,000 (in 2024), whichever is lower. (Note that contributions from others will count against the annual gift tax exclusion amount.)

Lessons for life

When you open a Roth IRA for a minor, you’re giving more than just an investment account; you’re offering an opportunity to learn about important concepts that could provide a lifetime of financial benefits. For example, you can help explain the different types of investments, the power of compounding, and the benefits of tax-deferred investing. If you don’t feel comfortable explaining such topics, ask your financial professional for suggestions.

The young people in your life will thank you — sooner or later.

For questions about laws governing custodial Roth IRAs, consult your tax or legal professional. There is no assurance that working with a financial professional will improve investment results.

Securities offered through Fenimore Securities, Inc. Member FINRA/SIPC, and advisory services offered through Fenimore Asset Management, Inc.

Past performance is not indicative of future results. All investing involves risk including the possible loss of principal. Before investing, carefully read the fund’s investment objectives, risks, charges, and expenses. FAM Funds’ prospectus or summary prospectus contains this and other important information about FAM Funds and should be read carefully before you invest or send money. To obtain a prospectus or summary prospectus and performance data that is current to the most recent month-end for each fund as well as other information, please go to fenimoreasset.com or call (800) 932-3271.

Neither this presentation nor any of its contents may be distributed or used for any other purpose without the prior written consent of Fenimore. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation, or an offer to enter into any transaction with Fenimore or any of their affiliated funds. This presentation may contain statements based on the current beliefs and expectations of Fenimore’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice.

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Coverdell ESA

Coverdell ESA

Help the child in your life achieve a bright future.

A Coverdell education savings account (ESA) may be an easy way to start saving for a child’s education.
Contributing to a child’s ESA will help jump‑start his savings—and give him tax‑free money later—to pay for education expenses.

With an ESA, individuals can make annual nondeductible contributions on behalf of a child until the child reaches age 18. The earnings generated remain tax deferred while in the ESA. When the child uses the ESA assets to pay for qualified education expenses, the contributions and the earnings come out tax free.

Anyone—family member or nonfamily member—can contribute to a child’s ESA, as long as their modified adjusted gross income (MAGI) is less than or within the applicable IRS limits.

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COVERDELL ESA
IMPORTANT FENIMORE ASSET MANAGEMENT DISCLOSURES

This brochure has been purchased through Ascensus, LLC.

The views and opinions expressed in this article are those of Ascensus and do not necessarily reflect the views of Fenimore Asset Management or its officers. Fenimore Asset Management or its officers have no editorial control over the content of the article or subject matter, and is independent of Ascensus.

The information herein is subject to change and is not intended to be complete or to constitute all of the information necessary to evaluate adequately the consequences of investing in any securities or other financial instruments or strategies described herein. These materials also include information obtained from other sources believed to be reliable, but Fenimore does not warrant its completeness or accuracy. In no event shall Fenimore be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction.

In part, the purpose of this presentation may be to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds.

We undertake no duty or obligation to publicly update or revise the information contained in this presentation. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of Fenimore funds, or information about the market, as indicative of future results.

All projections, forecasts and estimates of returns and other “forward-looking” information not purely historical in nature are based on assumptions, which are unlikely to be consistent with, and may differ materially from, actual events or conditions. Such forward-looking information only illustrates hypothetical results under certain assumptions and does not reflect actual investment results and is not a guarantee of future results. Actual results will vary with each use and over time, and the variations may be material. Nothing herein should be construed as an investment recommendation or as legal, tax, investment or accounting advice.

Clients or prospective clients should consider the investment objectives, risks, and charges and expenses carefully before investing. You may obtain a copy of the most recent mutual fund prospectus by calling 800-932-3271 and/or visiting www.fenimoreasset.com.

There is no guarantee that any of the estimates, targets or projections illustrated in this summary will be achieved. Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. An investor could lose all or substantially all of his or her investment. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice.

Fenimore Asset Management Inc. is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made.


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Inherited IRA

Inherited IRA

Understand your beneficiary distribution options.

As an IRA beneficiary, you have some choices.
If you’ve inherited an IRA, make sure you understand your options.

Because of the IRS rules, your options as an IRA beneficiary depend on certain factors.
First, answer this question…When did the IRA owner die?

  • Before January 1, 2020: Continue the same method of payment that you previously elected. If you have not yet made an election, consult with the financial organization holding your IRA or review the IRA document for your options.
  • On or after January 1, 2020: See the distribution options described in this brochure. Because there may be exceptions to these options, consult further with a competent advisor or with the financial organization holding the IRA.

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INHERITED IRA
IMPORTANT FENIMORE ASSET MANAGEMENT DISCLOSURES

This brochure has been purchased through Ascensus, LLC.

The views and opinions expressed in this article are those of Ascensus and do not necessarily reflect the views of Fenimore Asset Management or its officers. Fenimore Asset Management or its officers have no editorial control over the content of the article or subject matter, and is independent of Ascensus.

The information herein is subject to change and is not intended to be complete or to constitute all of the information necessary to evaluate adequately the consequences of investing in any securities or other financial instruments or strategies described herein. These materials also include information obtained from other sources believed to be reliable, but Fenimore does not warrant its completeness or accuracy. In no event shall Fenimore be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction.

In part, the purpose of this presentation may be to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds.

We undertake no duty or obligation to publicly update or revise the information contained in this presentation. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of Fenimore funds, or information about the market, as indicative of future results.

All projections, forecasts and estimates of returns and other “forward-looking” information not purely historical in nature are based on assumptions, which are unlikely to be consistent with, and may differ materially from, actual events or conditions. Such forward-looking information only illustrates hypothetical results under certain assumptions and does not reflect actual investment results and is not a guarantee of future results. Actual results will vary with each use and over time, and the variations may be material. Nothing herein should be construed as an investment recommendation or as legal, tax, investment or accounting advice.

Clients or prospective clients should consider the investment objectives, risks, and charges and expenses carefully before investing. You may obtain a copy of the most recent mutual fund prospectus by calling 800-932-3271 and/or visiting www.fenimoreasset.com.

There is no guarantee that any of the estimates, targets or projections illustrated in this summary will be achieved. Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. An investor could lose all or substantially all of his or her investment. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice.

Fenimore Asset Management Inc. is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made.


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IRA and Retirement Plan Distributions

IRA and Retirement Plan Distributions

Is it time to cash in on your retirement savings?

Be sure you understand the rules and possible tax consequences of taking IRA and retirement plan distributions.
Whether your retirement is close or still a ways off, you may be ready-or required-to put your savings to use.

With a retirement plan, you must satisfy certain requirements before taking a distribution, but with an IRA, you can withdraw your IRA assets anytime (subject to possible tax and penalty).

Ideally, you will be able to start drawing from your retirement savings around the time you retire, but there may be reasons for accessing the funds sooner. And once you reach a certain age, you may be required to start withdrawing money from these plans. Required minimum distributions (RMDs) are a must for the
following types of accounts.

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IRA AND RETIREMENT PLAN DISTRIBUTIONS
IMPORTANT FENIMORE ASSET MANAGEMENT DISCLOSURES

This brochure has been purchased through Ascensus, LLC.

The views and opinions expressed in this article are those of Ascensus and do not necessarily reflect the views of Fenimore Asset Management or its officers. Fenimore Asset Management or its officers have no editorial control over the content of the article or subject matter, and is independent of Ascensus.

The information herein is subject to change and is not intended to be complete or to constitute all of the information necessary to evaluate adequately the consequences of investing in any securities or other financial instruments or strategies described herein. These materials also include information obtained from other sources believed to be reliable, but Fenimore does not warrant its completeness or accuracy. In no event shall Fenimore be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction.

In part, the purpose of this presentation may be to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds.

We undertake no duty or obligation to publicly update or revise the information contained in this presentation. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of Fenimore funds, or information about the market, as indicative of future results.

All projections, forecasts and estimates of returns and other “forward-looking” information not purely historical in nature are based on assumptions, which are unlikely to be consistent with, and may differ materially from, actual events or conditions. Such forward-looking information only illustrates hypothetical results under certain assumptions and does not reflect actual investment results and is not a guarantee of future results. Actual results will vary with each use and over time, and the variations may be material. Nothing herein should be construed as an investment recommendation or as legal, tax, investment or accounting advice.

Clients or prospective clients should consider the investment objectives, risks, and charges and expenses carefully before investing. You may obtain a copy of the most recent mutual fund prospectus by calling 800-932-3271 and/or visiting www.fenimoreasset.com.

There is no guarantee that any of the estimates, targets or projections illustrated in this summary will be achieved. Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. An investor could lose all or substantially all of his or her investment. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice.

Fenimore Asset Management Inc. is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made.


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Transfers, Rollovers and Conversions

Transfers, Rollovers and Conversions

Move your retirement savings without losing tax benefits.

When moving money between your IRAs and retirement plans, be sure you understand the rules.

Your retirement savings accounts are portable.

  • IRA-to-IRA
  • IRA-to-retirement plan
  • Retirement plan-to-IRA
  • Retirement plan-to-retirement plan

There are many reasons for moving your retirement assets to another retirement savings account. Perhaps you’ve left a job, your financial circumstances have changed, or you’re looking for ways to better maximize
your retirement savings. Whatever the reason, there are portability options available. Some preserve the tax-deferred nature of your assets, and some may have tax consequences.

Consider visiting with your competent tax or financial advisor about what’s best for your financial situation before moving your IRA or retirement plan money.


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TRANSFERS, ROLLOVERS AND CONVERSIONS
IMPORTANT FENIMORE ASSET MANAGEMENT DISCLOSURES

This brochure has been purchased through Ascensus, LLC.

The views and opinions expressed in this article are those of Ascensus and do not necessarily reflect the views of Fenimore Asset Management or its officers. Fenimore Asset Management or its officers have no editorial control over the content of the article or subject matter, and is independent of Ascensus.

The information herein is subject to change and is not intended to be complete or to constitute all of the information necessary to evaluate adequately the consequences of investing in any securities or other financial instruments or strategies described herein. These materials also include information obtained from other sources believed to be reliable, but Fenimore does not warrant its completeness or accuracy. In no event shall Fenimore be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction.

In part, the purpose of this presentation may be to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds.

We undertake no duty or obligation to publicly update or revise the information contained in this presentation. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of Fenimore funds, or information about the market, as indicative of future results.

All projections, forecasts and estimates of returns and other “forward-looking” information not purely historical in nature are based on assumptions, which are unlikely to be consistent with, and may differ materially from, actual events or conditions. Such forward-looking information only illustrates hypothetical results under certain assumptions and does not reflect actual investment results and is not a guarantee of future results. Actual results will vary with each use and over time, and the variations may be material. Nothing herein should be construed as an investment recommendation or as legal, tax, investment or accounting advice.

Clients or prospective clients should consider the investment objectives, risks, and charges and expenses carefully before investing. You may obtain a copy of the most recent mutual fund prospectus by calling 800-932-3271 and/or visiting www.fenimoreasset.com.

There is no guarantee that any of the estimates, targets or projections illustrated in this summary will be achieved. Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. An investor could lose all or substantially all of his or her investment. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice.

Fenimore Asset Management Inc. is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made.


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Bridging the Gaps & Celebrating Women’s History Month

Bridging the Gaps & Celebrating Women’s History Month

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    As we celebrate National Women’s History month, we want to take the time to acknowledge our female investors, friends, and colleagues at Fenimore Asset Management. We believe women have never been in a better position to achieve financial independence for themselves and their families.

    The Fenimore team is currently 43% female comprising of women employees across all departments including members of the management team as well as Deb Pollard, Fenimore’s President. We are very proud of this statistic as we all move towards bridging the gaps in the financial services industry.

    Our team knows firsthand some of the unique challenges women can face.

    Some women have handled the family’s finances all along, while others may be new to the world of investing. No matter your level of expertise, there’s always room to learn more and adjust your plan based on your current circumstances:

  • Andrew Boord, Portfolio Manager - Fenimore Small Cap Strategy

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If you are a beginning investor:

  • Decide what you are saving for and how much you can afford to invest. Consider dollar cost averaging and increasing your savings each year. Dollar cost averaging is investing a fixed dollar amount over regularly scheduled intervals over time.
  • Don’t postpone getting started. The financial cost of waiting could be significant over time.
  • Don’t be afraid to ask questions. It is important to understand the risk, objectives and fees associated with your investments. There are also various account types to consider that may offer different tax treatment.

If you are a more experienced investor:

  • Review your investment strategy to ensure it aligns with your financial goals, time horizon, and risk tolerance. The key is to try to maximize investment returns at a level of risk that you’re comfortable with.
  • Understand what you own and what role each investment plays in your portfolio.
  • Consider the impact of taxes, fees, trading costs, and inflation.

The team at Fenimore Asset Management is here to help.

Contact us at 1-800-932-3271 or  

Email Us


Fenimore Asset Management does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

There is no guarantee that any of the estimates, targets or projections illustrated in this summary will be achieved. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. An investor could lose all or substantially all of his or her investment. Clients or prospective clients should consider the investment objectives, risks, and charges and expenses carefully before investing. You may obtain a copy of the most recent mutual fund prospectus by calling 800-932-3271 and/or visiting www.fenimoreasset.com.

Fenimore Asset Management Inc. is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made.

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Common Cents Planning

COMMON CENTS
PLANNING

  • SAFETY NET

    In an ideal world, investors should have at least six months, and as much as two years, of living expenses set aside before they invest in stocks. Although you may not be there yet, it is a worthwhile goal. Having a sufficient cash reserve – in good times and bad – should provide flexibility and allow you to make rational, unforced financial decisions. The first step is to create a budget so that you can make saving a habit. The amount of this emergency fund should be based on your circumstances.

    YEAR-END GIFTING

    For 2023, you can make a tax-free gift of up to $17,000 ($34,000 if you and your spouse elect to split gifts on your federal tax return) to an unlimited number of individuals. A gift of an appreciated security is also a great way to transfer wealth while possibly reducing your future tax liability.

  • Senior man with grandaughter gardening in the backyard garden.


HSA: A TRIPLE-TAX ADVANTAGE

A Health Savings Account (HSA) is only offered in conjunction with a High-Deductible Health Plan (HDHP) – the plan type, if available, you elect during your employer’s health insurance open enrollment period. An HSA can offer much more than just an interest-bearing account to help cover out-of-pocket medical costs. It should be considered as a potential long-term vehicle to cover future medical expenses. Automatic payroll deductions present an excellent way of forced savings into an HSA and the HSA offers a triple-tax advantage: 1. Tax deduction 2. Tax-deferred growth 3. Tax-free withdrawal if used for medical expenses There are more advantages to consider. Additionally, it is good to check with the HSA’s trustee to review your investment options.

ESTATE PLANNING REVIEW

It is a sound practice to review your estate planning documents and account beneficiaries regularly to ensure that they reflect the desired distribution of your affairs. These documents include health care proxies, powers of attorney, last will and testament, and trusts. If you have not had these documents prepared or reviewed by an estate planning attorney, we encourage you to do so to ensure that your objectives will be fulfilled.

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