Joe Anderson
ABOUT Joseph

As CEO and President, Joe Anderson has created a unique, ambitious business model utilizing advanced service, training, sales, and marketing strategies to grow Pure Financial Advisors into the trustworthy, client-focused company it is today. Pure Financial, a Registered Investment Advisor (RIA), was ranked 15 out of 100 top ETF Power Users by RIA channel (2023), was [...]

Alan Clopine

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

Published On
December 17, 2016

Hosts answer listeners’ questions on-air. Questions include “Will a financial adviser give me an unbiased opinion?” and “What’s the difference between a TSP and a Roth IRA?” Find out the answers + more in this hour.

Do you have any burning personal finance questions? Ask Pure here.

0:54 “A stretch IRA is a way for your children, when they inherit your IRA, to stretch it over their lifetime…this may go away…if it goes away, we will go back to old rules which means all money in the IRAs needs to be withdrawn within five years, which could put your kids and grandkids in much higher tax brackets.”

5:17 “A Roth IRA will grow 100% tax-free. There is no required minimum distribution in a Roth IRA. If you pass with a Roth IRA, then your kids can take those dollars out tax-free. So, it grows tax-free you’re your life, your spouse’s life and the kids’ lives. It’s very powerful if you do this right.”

6:54 “This is one of the most important times ever to be doing conversions; the unfortunate thing is you have to do it before December 31st for this year.”

13:52 “If you’re broke, you can always pull out your Roth contribution regardless of what age you are – no tax, no penalty.”

Q1 (15:08) “I’m in a 30 year fixed mortgage with Wells Fargo. There have been several financial criminal incidents regarding Wells Fargo this past year. Could my mortgage be negatively affected by this as well as the interest rate hike?”

A1 (15:26) “The answer is absolutely not. A fixed mortgage is a fixed contract so whatever the interest was when you took it out is your interest rate for thirty years regardless of the institution.”

15:44 “How long do you think the banks keep that paper on their books? That’s the second point – they probably don’t even own it. They’re probably servicing it but it’s probably part of a mortgage-backed securities, an investment we can buy.”

16:25 “The contract that you signed with Wells Fargo is a fixed contract; you have a fixed interest rate, there’s absolutely no way to change it and plus Wells Fargo probably doesn’t even own the loan anyway. What about the interest rate hike? That will probably affect future borrowers, but not yours. That’s the whole point of getting a fixed mortgage.”

17:10 “[It’s likely that] mortgage rates will go up and if you’ve got a variable rate, you might want to get a fixed rate loan right now – that’s the takeaway [here].”

Q2 (23:03) “I recently changed my job. My new employer offers a 401(k) plan, but only after I have worked a certain number of hours. So technically, I cannot contribute towards any retirement account. So as to reduce the tax, can I contribute towards my spouse’s 401(k), and max out his contributions?
We file taxes jointly.”

A2 (23:25) “You can’t directly contribute to your spouse’s, but what you can do is have your spouse put more into their 401(k), reducing his or her paycheck and then you have more coming out of your paycheck and you just balance it out that way. The only caveat with that is you have to ask if your spouse is fully funding your 401(k) plan. If they’re maxing out the 401(k) plan, you cannot piggyback off of his or her plan.”

24:48 “As long as your joint income is less than $184,000, (as long as you’re not in a pension plan) you can either do a Roth contribution for $5,500 or a regular IRA contribution and take a deduction.”

Q3 (25:09) “Will a financial advisor provide an unbiased assessment of a financial plan I already have in place? I already have an Investment Advisor connected with an insurance company who handles our investments. I would like to have an independent financial advisor who can provide an unbiased assessment of our financial plan and investments. Is it possible that an advisor would provide this service and what fee might be expected?”

A3 (25:39) “There are advisors who are fiduciaries, meaning they’re required by law to act in your best interest, and then there are advisors that fall under the suitability standard which means they can sell you anything that’s suitable for you, which isn’t as strong a standard as a fiduciary.”

26:02 “What they’ll charge you will vary, it’s all over the place. Some will take a look at your situation for free, hoping that you’ll change and use them as the advisor; others will charge you. The best financial plans you can get from an independent fiduciary advisor you’ll need to pay for, because then it really is unbiased.”

Q4 (33:33) “Can I move money from a retirement account to a Roth IRA and what is the process like? Tax ramifications? Do I have to move all of it?

A4 (34:04) “If it’s an IRA, you can convert that at any time. If you have a retirement plan that you’re still an active participant in, then you’d have to have an in-service withdrawal if you’re over 59 ½ but the concept is this; we’ll make it simple – if your money is an IRA then yes, you can convert it to a Roth IRA. The ramifications are that you have to pay ordinary income tax on what you convert. If you convert too much and put yourself in a higher tax bracket, you can re-characterize all or part of that, and finally, you do not have to convert the whole thing. You can convert any dollar amount you want to.”

Q5 (34:36) “I am a government employee and have a TSP. What is the difference between that and a Roth IRA? A civilian Roth IRA and TSP?”

A5 (34:47) “A TSP is a thrift-savings plan that’s offered to government employees. It’s exactly like the 401(k) plan. You could do a Roth TSP – that’s an after-tax contribution that grows 100% tax-free. A Roth IRA is an individual retirement that you can contribute to tax-free. The contribution limits are different for each. On a TSP plan, you can contribute $18,000 if you’re over 50; in a Roth IRA it’s $5,500 if you’re over 50 and another $1,000 if you’re 65. You have the full universe of choices in the IRA. The TSP has four or five choices. The four or five choices in the TSP however, are very cheap good investments and low-cost. You can do both – if you want to put money in the TSP into a Roth IRA, you can absolutely do that as well.”

*Questions 1-3 are derived from Investopedia Advisor Insights