These are the kind of financial questions we get asked daily. What’s your question?

You are right to be concerned about the eventual resale liquidity in the event the company remains private. You should ask for and be provided with a first right of refusal contract from the company, especially if you’re thinking of making this purchase in the retirement plan. If the company eventually goes public, you could receive a windfall and the markets would provide the liquidity to make it possible for you to sell.

Are they Non-Qualified (NQ) options or Incentive (ISO) Options? Most NQ employee stock options have a life of 10 years or less. If they are NQ options, the strike price is the price at which you may buy the shares but you’re not obligated to make a purchase right away (You have the “option” to make a purchase) If you have options, it’s important to know if the company provides for a “cashless” exercise procedure which would allow you to periodically liquidate the shares associated with the options and receive the difference between your strike price and whatever the company determines the current valuation is. That profit would be taxed as ordinary income at exercise and would be subject to payroll taxes including Federal, State, FICA and Medicare.

If what you have are Incentive Options, you could exercise them and hold them for long-term tax treatment but be cautious because any gain you realize on the exercise is subject to the Alternative Minimum tax (AMT). Find out if the plan has a vesting period before which, your options would not be exercisable.

If you are exercising and selling Non-Qualified employee stock options as part of a “cashless exercise”, the use of a limit order could cause you to miss out on a market price spike or other event you are seeking to take advantage of. I’d recommend just selling your shares at the market in this scenario.

If you are selling shares associated with a previous exercise of Incentive Stock Options, your tax basis has already been established so you have some room to wait for a limit price, provided you pay attention to any restrictions imposed by your employer on the timing of your trade. A stop order is a good idea to protect your downside, if you are holding this kind of shares. Take note that if you are using software associated with the administration platform for your plan, an unexecuted limit order is likely to be cancelled if the company imposes a blackout due to some significant news.

If you are selling shares associated with the vesting of Restricted Shares, you may be tempted to enter the order at the price on the vesting date, since that represents your cost basis. I’d caution you against being too particular about the price. Remember, other employees and the market as a whole all know the date of this vesting event. Unless there is some sort of news to drive the stock price higher, the selling by others will likely produce downward pressure on the price in the days around the vesting. Again, if you have time to wait, a limit price could work but you could also miss out.

Everyone can learn from the advice about how to prepare for end-of-life. Here is a simple 10-item checklist of the things you should have in order:

1. Make sure your will is up to date. If it is your wish to have your estate divided between your adult children, make sure that’s what your will instructs. Have a meeting with your family members so they will know what is going on and what to expect.

2. Be careful about who you name as your personal representative (executor). It may seem logical to name one of your children but you should ask them first to see if they are up to the task. If not, you can find a corporate representative through your bank. A corporate estate administrator will, of course, charge a fee. Either way, the beneficiaries should know about and have a copy of your will.

3. Review and update your IRA beneficiaries. Account with beneficiary designations or Pay-On-Death (POD) instructions will not have to go through probate but the beneficiaries will have to present themselves to the institution where the various accounts are held to make arrangements for the assets to be transferred to them or registered in their name.

4. Make sure the heirs know where the deed to the house is so that it can quickly be transferred or sold. Household items that have material value like a piano, art or collectables should be listed in the will.

5. Consider selling or donating stuff that you don’t really need or that you are sure your heirs won’t want. I suggest to clients that they use any proceeds they get from selling their stuff to do something nice for themselves. Take a tax deduction for the things you donate.

6. Unless your individual estate is over $5.45 million, don’t let anyone sell you a trust or other planning device…you don’t need it.

7. If you have a mortgage or any other debts. These, if any, can perhaps be settled with the balance from your savings account.

8. If you have begun taking Required Minimum Distributions (RMD) from your IRA, make sure the one for this year is taken promptly and you may want to take the one for 2017 early so that your beneficiaries don’t have to deal with it. They will have the choice to inherit your IRA balance and will be required to make distributions of their own beginning in the year following your passing. This is another source of fund that you could use to treat yourself to something fun like a trip or retreat…do it!

9. If you have a tax professional, let them know what’s going on too. Your family may want to use this person to do your final tax return.

10. Devastating health news has a way of focusing the mind. 30 years of financial advisory has allowed me to be part of many family plans like the one you are getting ready for. I suggest you make the most of what time you have. Tell your children your plans and then do whatever it is. In my experience, the kids will encourage you to live!

It’s impossible to make a blanket statement covering all brokerage firms because pricing policies change regularly but most charge some sort of nominal annual maintenance fee to cover the cost of sending you required correspondence which includes a quarterly statement and an annual tax report. Other correspondence costs includes forwarding proxy materials and sending annual privacy notices. Many brokerage firms will reduce and some will eliminate the fees if you agree to receive correspondence electronically. Others will waive the fee if your account is “active” which can have a variety of definitions, depending on the firm you choose.

The only way to know for sure is to carefully read the account agreement. Look for terms like “Account Minimums”, “Other Fees”, “Inactivity Fee” and “Transfer Fee”. Schwab, Fidelity, Scotttrade, E*Trade and TD Ameritrade all advertise no-maintenance fee, basic accounts. Commissions at these firms vary from as low as $4.95 to $9.99 per trade.

There really isn’t an “ideal” number of stocks to have in a portfolio, but there are a few guidelines that make portfolio management work to your advantage.

First, in order to be considered diversified, an Investment Company must limit its exposure to any one security in a portfolio to 5%. A portfolio that had 20 stocks all representing 5% would meet the definition. If the portfolio strategy seeks to over-weight securities in sectors of the economy, or of a particular type, while under-weighting other stocks that are believed to be somewhat less attractive or more risky, half and quarter positions could add to the total number.

Standard & Poor’s (S&P) divides the economy into 11 Sectors and Industries: Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Information Technology, Materials, Real Estate, Telecommunications Services and Utilities. A portfolio that wanted to always have some exposure to all of these and remain diversified would need perhaps as many as 40 positions to avoid reliance on one or two stocks in each sector.

Bear in mind that the richest man in the world, Bill Gates, has only one stock in his portfolio.

As of this answer (June 20, 2017) it’s too late to contribute to an IRA for tax year 2016. But here’s the rule: If you are covered by and contribute to an employer-sponsored retirement plan, like a 401(k) for any portion of a tax year, you must test your income to determine if IRA contributions can be deducted. For joint filers like you and your spouse, the income limit for a fully deductible IRA contribution, for 2015 was $98,000. It remains the same for 2016.

If it has been less than 60 calander days since the reported dated of your profit sharing distribution, you can roll over the remaining balance to an IRA. You will owe tax on that portion you spent paying off debts and the mortgage. Tax withholding was probably taken from your distribution when your company disbursed your plan balance to you. This withholding is both a tax credit and an amount that will add to the total of your taxable distribution. Here’s an example (Assumptions 25% withholding on distribution, 15% taxpayer marginal tax bracket):

Profit Sharing Account Balance: $40,000 – Tax Withholding of $10,000 (25%) = Net Distribution of $30,000

Pay off Debts: $ $20,000

Amount available for rollover to IRA if time elapsed is less than 60 days: $30,000 – 20,000 = $10,000

Taxable Distribution: $10,000 + 20,000 = $30,000

Tax Due in 15% marginal tax bracket: $30,000 X 0.15 = $4,500

If more than 60 days have elapsed since the recorded date of your distribution, you still would be able to make a deductible IRA contribution of $5,500 ($6,500 if you are over 50) to an IRA, if your annual taxable earned income is more than the contribution and below $61,000, for 2016. If you file jointly, your spouse can also make a deductible contribution, if your joint income is more than your joint contributions and below $98,000, for 2016.

Joint filing taxpayers who have Modified Adjusted Gross Income under $184,000 in 2016 can make a full ROTH contribution of $5,500 ($6,500 if you are over age 50).

Millennials are not that much different than generations that proceeded them in their concern about the dangers of getting financial advice. The financial markets have been through other turmoil that influenced the behavior of investors and potential investors, in the past. The Great Depression of the 1930’s fundamentally changed the way markets in the US and the rest of the world were regulated. The recent Credit Crash in 2008-09, to which you refer, has resulted in additional regulations to attempt to reign in the financial industry which grew to be gargantuan in the period between the end of WWII and the present day. Young investors are wise to be careful about managing their money. The complexity that characterizes modern global markets is part of the reason markets crashed like they did and also makes understanding the markets more difficult than in the past. Finding a qualified advisor to help isn’t easy.

The business of giving financial advice grew out of the sales practice of trading shares of stocks, often in the shares of companies the potential buyers knew little or nothing about. Financial advice has come a long way in the last 40 years. Today there are numerous designations among the people who offer advice to investors. Many of the designations have no real meaning. Some, like representative, agent, planner…are abbreviated descriptions of actual professional designations.

There is no statutory, regulatory or industry definition of the term “Financial Advisor” as you have used it. Many people who hold themselves out as financial advisors are what the Securities and Exchange Commission (SEC) call “Registered Representatives”. You and most of the public call them stock brokers. They commonly have both a state and federal securities license and work for a brokerage firm which does business under both federal and state regulations. The brokerage industry is largely self-regulated by the Financial Industry Regulatory Authority (FINRA). The firm who employs a representative may or may not be in the business of making and selling financial products like mutual funds, unit trusts and structured products. These representatives may also have an insurance license which allows them to represent insurance companies that make and sell insurance products like annuities and life insurance. Insurance is regulated by each state in which an agent is registered. The states also regulate Registered Investment Advisors (RIA) who offer investment management for a fee, but do not collect commissions or other sales concessions in their capacity as RIAs. These advisors may also hold another license that allows them to collect these. If they do, they may not identify themselves “fee only”.

Choosing a financial advisor is complicated and very personal. Who you choose is likely to be the result of some planning on your part before you ever talk to an advisor, some of it will include those mundane topics like budgeting you referred to in your question. FINRA has an extensive guide to beginning the process on their website at: http://www.finra.org/investors/prepare-invest.

There is also no regulatory definition of the term “Wealth Advisor” although many big bank and brokerage institutions hold their representatives out to be wealth advisors, private wealth advisors and private wealth managers. There is a Colorado based organization, the Investment Management Consultant’s Association (IMCA), that sponsors a certification program titled the Certified Private Wealth Advisor (CPWA). These practitioners focus on managing money for wealthy executives, business owners and those who what to plan their estates and have passed a university-sponsored series of classes offered by the University of Chicago Booth School of Business.

Certified Financial Planners (CFP) are certificated by the CFP Board based in Colorado and Washington DC. Practitioners who hold this designation have taken a five-class series of college-level classes and passed a rigorous exam in order to earn the designation. CFP practitioners may also be securities representatives or hold another designation, like an insurance license. If they do, they can receive revenue from the sales of investment products and insurance. Alternatively, they may practice as “fee-only” planners who only compile, prepare and monitor individual financial plans.

Asset management is increasingly the way in which the financial sector of the economy generates revenue. Advisors of all stripes offer advice in the hopes of being trusted to manage assets. Asset managers may have a Chartered Financial Analyst (CFA) which is awarded to those who undertake a three to five year course of study and pass three university level exams covering a wide array of investment management topics. Most investors do not directly engage the services of a CFA but nearly all mutual funds, trusts, endowments and other large pools of capital are managed by them.

Taxes are something that every investor is concerned about. The leading designation for tax advice is the Certified Public Accountant (CPA). Representatives, Agents, Planners and Asset Managers do not usually give tax advice, but all of them need to have a working knowledge of the tax effects of the products and plans they recommend. Representatives and Agents must be sure their advice is suitable for the client they are advising. Planners and Asset Managers are held to a higher fiduciary standard when they work with clients.

Investing in a cash account is considered safer. It certainly is more simple. If you invest $10,000 and your holdings rise to $13,000, you’ve made 30%. [ $3000 / $10000 = 30% ] If you invest on margin, you’re borrowing up to half of the funds you’re using to make the investment. So, you can buy the same $10,000 of investments with $5,000. If you get 30% appreciation, your return on cash is 60% [$3000 / $5000 = 60% ] minus the cost of borrowing (currently between 4% and 8% at most brokers)

This demonstrates the power of leverage but there is a risk…let’s say the investments you choose don’t work out as you hoped and instead of appreciating by 30%, they fall by 40%. In that scenario, you lose 40% on the cash investment but the margin investment loses in two ways: First, you must maintain a minimum collateral balance for your account. If your investment falls below $6250, your broker will ask you for more money (a margin call) just to keep the investments from being liquidated to pay back the $5000 you borrowed. Or secondly, if you sell, when the investment is worth only $6000, after you’ve paid back the $5000 loan, you’ll only have $1000 (minus any interest you paid) of your original investment left…that’s at least an 80% loss.

Margin can be used wisely. If you invest with all cash and, over time receive a decent return, you may be reluctant to sell, even if you need some of your investment funds for some other purpose. The capital gains taxes may not be appealing to you, you may feel the investments can still appreciate or you may enjoy receiving the dividend the portfolio provides. In this case, you might choose to margin your investments in order to take out cash. If your original cash $10,000 investment has risen to $25,000 over a period of years, you could borrow up to 12,500 against your holdings from your broker without the tax consequences of a sale.

You may want to choose the margin feature of your brokerage account but plan to initially invest with all cash. The agreement does not obligate you to borrow. Good luck!

Once you separate from service, you can no longer participate in your former employer’s retirement plan. This is generally true, even if you are rehired as an independent contractor for the same company, doing the same job. If you have an outstanding loan against your plan balance, you will need to either pay it off or accept the tax consequences of treating the loan balance as a distribution. You may be able to leave the balance in the plan but it might be in your best interest to roll it over into an IRA so that you can easily keep track of it.

As a self-employed person, you may want to establish and contribute to an individual IRA which may or may not be the same one into which you roll your 401(k), a Simplified Employee Pension plan (SEP) or an Individual 401(k). The determination of which plan is best for you depends on how much you earn, how you organize yourself and your company, and whether or not you have employees or plan to hire some in the future.

There are a few issues you should consider before you take a big distribution from your retirement plan. The first is, you’re not yet 59 1/2 so withdrawals will generally be subject to both ordinary income tax and a 10% penalty. There is a rule that allows up to $10,000 to be withdrawn, without a tax penalty, from a retirement plan for a first-time home purchase. Without good credit, $10,000 wouldn’t make much of a dent in what you may need to qualify for a mortgage. Typical down payments these days are in the neighborhood of 20% which in your example of a $300,000 home purchase, could be something like $60,000. There is no way to tell from the information you’ve provided if this would be enough to qualify.

If you withdraw a big lump sum from your 401(k), you will owe ordinary income tax and a 10% penalty on most of it. It’s not clear if you are currently collecting Social Security because you imply that you are still working but if you are receiving Social Security benefits, you may find that you will also owe tax on up to 85% of your Social Security in the year of the withdrawal.

Assuming you are not yet 59 ½ years old, married, file taxes jointly, use the standard deduction, take two personal exemptions, do not currently collect Social Security and that you have the average income of a U.S. household which is $51,750.00…In order to have enough, after tax, to pay $300,000 cash for a house, you’d need to withdraw about $465,000 from your 401(k) because you’ll be paying about $165,000 in taxes and penalties on total income of $516,750 ($465,000 withdrawal + $51,750 earned income). Waiting until you are over 59 ½ , would save the $45,500 tax penalty ($465,000 – $10,000 = $455,000 X 10% = $45,500) and reduce the total size of your needed withdrawal to around $415,000, because you wouldn’t pay as much tax in the highest (39.6%) bracket.

I don’t know how much rent you pay but the U.S average is around $995 per month. For this amount, you could make the interest payment on a $125,000, 15-year mortgage at the current national average interest rate of 3.92%. This might be a good alternative if you wait until you are over age 59 1/2, then make a $175,000 down payment…which would reduce the amount you’d need to take out of your retirement plan by about half because you wouldn’t be pushed into the 33% tax bracket and you wouldn’t pay a tax penalty.

Regardless of the circumstances, withdrawals from a 401(k) are taxable as ordinary income. If you are over 59 1/2 years of age, you can avoid the 10% tax penalty but you will still owe federal (and possibly state, depending on where you live) tax on the distribution. There is a provision for first-time home buyers but that doesn’t sound like you and the provision only waives the penalty, not the tax.

There is no current tax advantage to rolling your 401(k) into a ROTH IRA because even though you will be allowed tax-free accumulation on the ROTH balance in the future, you will pay ordinary income tax on the amount of the conversion in the present.

You should inquire to see if your 401(k) plan provides a loan provision. The maximum loan allowable is 50% of your account balance or $50,000, which ever is less. A loan that is taken for the purpose of purchasing a principal residence may be able to be paid back over a period of more than the 5 years usually required. If the idea is to reduce the amount you have to borrow to finance your home purchase, a loan from your retirement plan may not be the best strategy, especially at today’s low interest rates.

If you take a loan from your 401(k), your employer will require you to set up a repayment plan. The loan must be repaid within five years, unless the loan is for the purpose of making a first-time home purchase, in which case your plan may provide for a longer payoff period . The maximum you can borrow is 50% of your plan balance or $50,000. The loan is tax free if you repay it entirely before you separate from service from the employer. Any balance left on your loan if you quit, get fired or leave for another reason, becomes taxable on your date of separation and your employer will withhold the tax at the statutory rate. If you pay the outstanding balance into a rollover IRA within 60 days, you can avoid the tax. If you are under age 59 1/2 when you separate, you may also owe a 10% early withdrawal penalty. The payments you make are deducted from your paycheck and are returned to your account pre-tax.

A loan against your 401(k) account balance will be charged interest. Read the plan to see what rate you will be charged. You will also be required to set up a repayment plan. Again, read the plan to see how this works in your particular situation. The loan is not taxed unless you leave your employer without repaying the loan. If you separate from service with a loan balance, it will be taxed as ordinary income. You may also be subject to a penalty if you are under age 59 1/2.

Yes, you can roll your husband’s retirement plan distribution into an IRA. You can also elect to withdraw a portion of the rollover. The order in which you do this does not affect the tax treatment. Any amount you withdraw from the distribution will be subject to federal and state income tax and, potentially, a 10% penalty if you are under age 59 1/2. There are a few exceptions to the penalty, including using the money for a first time home purchase and qualified education expenses.

If you are employed and your employer sponsors a 401(k), you may be able to roll your entire distribution into your plan at work. If the plan allows loans, you may be better off borrowing the funds from your rolled-over 401(k) and paying the retirement plan loan off over 5 years, through payroll deduction. This way, you will avoid the tax and potential penalty. It’s also possible that the interest rate charged by the retirement plan is lower than the debt you seek to pay off.

Your choices are to either withdraw or roll over your 401(k) balance. Withdrawing the money will subject you to ordinary income tax and, possibly, a 10% penalty, if you are under age 59 1/2.

Since your new job does not sponsor a retirement plan, perhaps you should consider rolling your 401(k) balance over into an IRA and begin making tax deductible contributions to it. The annual contribution limits are $5, 500 ($6,500 if you are over age 50).

I think what you’re asking is, “Why do I need to choose something other than the S&P 500 fund for my 401(k)?” By diversification, I think you mean one fund choice instead of a variety of funds from those offered in your plan, right?

First of all, an S&P 500 fund is diversified. It includes fund allocations to 500 different large-capitalization stocks. If you were to choose a Small-Cap and a Mid-Cap fund to accompany your Large Cap choice, you would begin the process of building an “Asset Allocated” portfolio. Asset allocation differs from diversification in that it spreads risk over a broad portion of multiple markets while diversification spreads that risk over multiple issues within the same market. The two terms are often interchanged but for portfolio managers, the difference is important because, over market cycles (which can range from 3 to 7 years) different asset classes display different return characteristics while issues within a class tend to move in unison. For example, in the later stages of the tech boom in the 1990’s, mid and small-cap stocks accelerated while large cap stocks produced modest returns. A portfolio that had all three classes of stocks did better than one concentrated in just the S&P 500. When the stock market turned negative, bonds began to rise. If a portfolio had been allocated partially to bonds, the decline over the next several years would have been made less severe.

Your underlying assumptions about long term returns and the low cost of choosing an index fund may be correct for long, multi cycle returns but those 10, 15 & 20 year averages include years where the index is down by significant double digits, sometimes for multiple years. If an investor would like to smooth out the returns, over time, asset allocation has been shown to be an effective way to accomplish it. On the other hand, if you are absolutely positive that no amount of market volatility will cause you to want to exit the market and that you will continue to take advantage of periodic market declines by continuing to contribute to your index fund and if the markets behave the same way in the next 10 or 15 years as they have for the last 40, then those average returns will be realized…but that’s a lot of maybes. Those maybes are why institutional and professional investors make a wide variety of market allocations and those allocations are diversified.

You don’t say how old you are, what type of account the proposed investments would be made in or anything about your tolerance for risk so there is no “Rule of Thumb” that would be appropriate to apply. In spite of all that, there are some characteristics of dividend-paying stocks (which may or may not qualify as “value” stocks) and of growth stocks.

Historically, dividend paying stocks, as a group, have had a very dependable track record of capital appreciation. This does not mean that all dividend payers are created equal. Those with very high earnings to payout ratios can be volatile. Large, established, “name brand” companies with decades-long histories of dividend payments and dividend increases are among the best total return investments, rivaling even many growth stocks, over the long run. Among these are General Mills (GIS), Johnson & Johnson (JNJ), Kimberly Clark (KMB), Coca Cola (KO) and Procter & Gamble (PG). A portfolio of dividend payers should be carefully watched because even huge companies can fall on hard times, decline dramatically in price and cut or eliminate their dividend. This happened to CitiBank (C) in the late 1980s after paying a dependable dividend for 200 years!

Growth stocks are attractive, as a group, because some fraction of the universe of growth stocks will have spectacular performance. Think about Intel (INTC) and Motorola (MOT) in the 1990s or Amazon (AMZN) last year. Many stocks that may fall into the growth category will rise and fall dramatically. For instance, Cisco Systems (CSCO) lost 75% of its value in 2000-2001. Successful growth companies will someday become mature dividend payers like Microsoft (MSFT) has. Because a portfolio of growth stocks can have more losers than winners, it should be managed with an eye toward stopping losses.

The mix between dividend paying stocks and growth stocks is a choice that should be made on the basis of an investor’s willing to take risk. Generally speaking, growth stock investing will incur more risk and volatility than will dividend investing. Even when a dividend payer drops in price, the dividend, if it’s not at risk for the same reason the stock is falling, continues. If a growth stock falls, it may never get back up and nobody is paying you to wait and see.

Dividend paying stocks have, for some investors, become a substitute for bonds because of low interest rates. Not only do many stocks pay a dividend higher than you can get from a high quality bond but, if the company’s earnings continue to rise dependably, as is the case with many consumer products, health care, energy and utility company stocks, and the dividend will too. A portfolio with a rising dividend income stream is a good hedge against rising prices. It also helps that, under current tax law, investors receive favorable tax treatment on qualified dividends.

The Rule of 72 is a quick way of estimating the rate at which a stated rate of return will double the value of an investment. The number 72 is divisible by 2, 3, 4, 6, 8,9, and 12 so it’s a simple way to do the calculation that most people (Even those with limited arithmetic skills) can do. An 8% return will double your investment in nine years. [ 72 / 8 = 9 ]. So in your example, you should have $400,000.

The short answer is, Yes. For tax purposes, the dividends are considered to be distributed as cash. These are reported to you at the end of the year on Form 1099-DIV. When you reinvest the dividends, you create new cost basis for the shares purchased this way, separate from the principal shares from which the dividends were distributed.

Your original purchase plus all the reinvested dividends create your total basis. If you were to sell all your shares, this total is compared the proceeds of the sale to determine if there is a gain or loss. Gains and losses are reported by you, to the IRS on Schedule D. The sale will be reported to you on Form 1099-B. If you only sell a portion of your holdings, you’ll need to adopt an accounting convention to match purchases with sales. If you do not tell the custodian of your fund or shares which method to use, most will assume a first in-first out (FIFO) method for you and show the shares on Form 1099-B based on that convention.

Yes, you can do this. Because you are over age 59 1/2, you may withdraw any amount, at any time from your IRA without incurring the 10% penalty. You will, of course, be subject to ordinary income tax on the withdrawal. The first Required Minimum Distribution (RMD) from an IRA is required to be made by the end of the first quarter of the year after one turns 70 1/2. If you turned 70 1/2 in June of this year, your first RMD is necessary by the end of March, next year. You can take all or a portion of it at any time between now and then. Next year, you will also be required to take an RMD by year-end.

Sorry, but Required Minimum Distributions (RMDs) are just that…required. They must be made from the qualified (annuity in this case) account. You are required to withdraw the minimum in the tax year you reach age 70 1/2. This means, in your case, 2016 because you turned 70 1/2 in January. There is a special provision in the rule for the first distribution which you may defer into the first quarter of the next tax year. So, you could make both your first and second RMD in 2017. The distribution must come from the qualified account. You will owe ordinary income tax on the annual distributions for the remainder of your lifetime. You may not substitute a withdrawal from somewhere else because the tax treatment on your bank account isn’t the same as it is for your qualified annuity.

No, your qualified plan distribution is not taxed twice. If you elected to withdraw the balance owed to you by your former spouse, subject to a Qualified Domestic Relations Order, the amount distributed from the plan has tax withholding subtracted from it. This withholding will be reported as a tax credit by the plan to the taxpayer (your former spouse?). The gross withdrawal be reconciled on line 15 of the 1040 (Line 11 on Form 1040-A) tax form.

In the event that the taxpayer is in a bracket higher than 20% (the percentage that was withheld form the distribution), additional tax may be due but only enough to make up the difference in the bracket.

Yes, provided you are at least 70 1/2 years old, the contribution is less than $100,000 and is made by the end of the year to a Qualified Public Charity, not a private foundation or donor-advised fund. The contribution is not tax-deductible but it can satisfy your Required Minimum Distribution (RMD). The rules for this were made permanent at the end of 2015. [IRC Section 408(d)(8)]

Here’s how to do it:

First, your Qualified Domestic Relations Order (QDRO) distribution should be deposited into an IRA in your name. Instruct your financial institution to make a distribution directly to the Qualified Charity, not to you. Make sure you instruct the financial institution to NOT withhold any taxes. Instruct the Charity to cash the check before the end of the current year.