Financial FAQs

At The Priebe Wealth Management Group, we believe that everyone deserves financial planning and guidance. It is our mission to educate our clients, so they are able to make well-informed, confident decisions regarding their financial future. We are committed to helping individuals and families plan for their own personal, financial independence.

Have questions about financial planning or products? You are not alone. In fact, we have compiled a list of our most popular questions below and highlighted answers for your review. We welcome you to call and set up an appointment to discuss in more detail.

What is a traditional IRA?

A traditional IRA or an Individual Retirement Account is an account set up as a retirement savings strategy. Contributions made toward an IRA may be fully tax deductible, depending on qualifying circumstances. Withdrawals made before the age of 59 ½ are considered early distribution and a 10% tax penalty will incur, in addition to the account owner’s current income tax rate. Withdrawals made after the age of 59 ½ are treated as current income. At the age of 70 ½, a required minimum distribution (RMD) must be taken to avoid tax penalties.

What is a Roth IRA?

A Roth IRA is an Individual Retirement Account that allows an individual to make contributions with after-tax income. At any time, you may make tax-free withdrawals on the Roth, if the dollar amount is equal or less than your original investment. A tax penalty applies, if you are under the age of 59 ½ and withdrawals are made in excess of the original amount invested (gains on the investment). These gains are considered profit and will be taxed as income and with a 10% tax penalty.

The Roth IRA offers tax deferral on any earnings in this account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10%IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

What is a beneficiary IRA?

A Beneficiary IRA or Inherited IRA is an Individual Retirement Account that has been assigned a beneficiary. If an individual inherits a traditional IRA from a spouse, they may treat the account as their own. Generally, the beneficiary will not be taxed on assets in the IRA, until time of distribution. Life expectancy payments begin the year after the death of the original owner. Life Expectancy Payments are distributed as ordinary income, without a 10 percent penalty, even if you are under age 59 ½. Contact us for more information regarding Beneficiary IRA options.

What is a trust account?

A Trust account is an account controlled or managed by a third party for the benefit of the individual or group (beneficiaries). Traditionally, it is utilized for managing estate taxes and helps beneficiaries avoid going to probate. There are many different types of Trust accounts. You must work with an attorney when setting up a Trust for your estate.

What is an individual account?

An individual account is an account managed for one individual. An investment individual account can also be set up with a TOD or Transfer on Death option, which adds beneficiaries to the account.

What is a joint account?

Most joint accounts come with what's called the "right of survivorship," meaning that when one co-owner dies, the other will automatically be the sole owner of the account. When the first owner dies, the funds in the account belong to the survivor, without going to probate. Mutual fund joint accounts can also be set up with a TOD or Transfer on Death, so beneficiaries can be added to the account.

What is an annuity?

An annuity is a contract between an individual and an insurance company and is often suggested as part of an overall retirement strategy. There are several types of annuities, along with options for distribution. Contact us to see if an annuity strategy is appropriate for your retirement goals.

Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon the withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.

What is a SEP?

A SEP IRA or a Simplified Employee Pension is a type of Individual Retirement Account designed specifically for small business owners, independent contractors, freelance professionals, and self-employed individuals. Certain rules and contribution limits apply based on annual income and the amount contributed into employees’ SEP IRA. To learn more or to set up a SEP account, contact us.

What is a simple IRA?

A Savings Incentive Match Plan for employees is also known as a Simple IRA. A Simple IRA offers small business owners (100 employees or less), an option of contributing funds toward their retirement and their employees retirement accounts. A Simple IRA also offers eligible employees the opportunity to contribute a portion of their pretax income toward the plan, allowing contributions to be tax deferred until the time of distribution.

What is a 401(k)?

A 401(k) is a retirement savings opportunity that allows employees to invest a pre-taxed portion of their paycheck into a retirement account, which often is matched by the employer. Contributions are made at each pay period and grow tax-deferred, as they are not taxed until distribution. For more information on opening a 401k plan or on 401k rollovers, contact Priebe Wealth Management to set up an appointment.

What are options for college savings?

College can be a very exciting time for families. It can be an expensive time as well. Fortunately, with proper planning, there are options available to financially prepare for the college years.

What is a 529 plan?

A 529 Plan is a tax-exempt savings account that offers individuals and families, the opportunity to invest pre-taxed dollars toward the expense of college/higher education.

Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.


A UTMA account (Uniform Transfer to Minor’s Account) or UGMA account (Uniform Gift to Minor’s Account) is set up a by an adult, as a custodian for the minor’s account. The custodian makes decisions on the account, until the child reaches the age of majority in their resident state. This type of account belongs to the minor and the dollars in the account must be used for the benefit of the minor. These accounts are commonly used for educational expenses, including high school and college purposes, but are not limited to tuition specific costs.

I’ve changed jobs. What do I do with my 401(k) from my previous employer?

A plan participant leaving an employer typically has tour options (and may engage in a combination of these options), each choice offering advantages and disadvantages.

  • Leave the money in his/her former employer's plan, if permitted
  • Roll over the assets to his/her new employer's plan. if available and rollovers are permitted
  • Roll over to an IRA
  • Cash out the account value

Contact Priebe Wealth Management to learn more about your options for 401(k) rollover.

What percent of my income should I save each year?

When it comes to the amount of income an individual should save annually, the 50/30/20 rule is recommended. This rule states that 50% of your income is dedicated to necessities, 30% is discretionary, and 20% will go into a savings account. Individual savings goals should be reviewed and set with the advice of an investment professional.

When can I retire?

Setting a date for retirement is a very personal decision and can be challenging to determine without setting up goals and a proper financial strategy. You should work with a financial professional to put a plan in place to help you pursue your financial goals, based on what age you want to retire.

What is my full retirement age per social security?

For a more information or a current age bracket listing of eligibility guidelines to receive full Social Security benefits, visit At Priebe Wealth Management, it is our mission to help individuals and families plan for their financial future. Call today to set up an appointment with a financial planning professional.

What age should I start collecting social security?

At age 62, you may start collecting social security benefits, but at a permanently reduced benefit. The only way to receive 100% of your social security benefits is to wait until full retirement age, which is based on your birth year. To make an informed decision, based on these factors, it is recommended that you speak with one of our financial advisors.

How much income can I earn while collecting social security?

If you have reached your full social security retirement age, there is no limit on income earned. If you have not reached full retirement age, the limit on earnings for 2017 is $1410 per month. If you exceed that limit, social security benefits are reduced until the month you reach full retirement age.

What is a required minimum distribution?

A Required Minimum Distribution is an amount of money that is required by the federal government to be withdrawn each year from qualifying retirement plans, once you reach age 70 ½. If you fail to take out your Required Minimum Distribution, a 50% tax penalty could apply. RMDs are figured based on the Uniform Life Expectancy Table, which can be found at

What is a life expectancy payment?

Inherited or Beneficiary IRA owners are required to take a life expectancy payment from the account no later than the end of the year following the original IRA owner’s death. Income from the account is based on the beneficiary’s life expectancy. This allows for the new owner or beneficiary to spread the income tax liability over a longer period of time, versus taking out a lump sum with one large income tax payment.

How long should I keep my financial statements and tax documents?

The recommended time frame to keep tax documents is 7 years. It is a good rule of thumb to keep monthly/quarterly financial statements, until a year-end statement is available. Once a year-end statement is available, the monthly/quarterly statements are no longer necessary to keep on file. It is also recommended to keep year-end financial statements on file for at least 7 years as well, since year-end financial statements are filed along with tax documents.

What is the cutoff each year for funding IRA’s (Traditional, Roth, SEP, etc.)?

The cutoff for making contributions toward retirement accounts is April 15th of each year for the previous years contribution.

What are capital gains?

Capital gains occur when an investment increases value over the original purchase value. Tax on a capital gain depends on the length of time the investment is held, short-term (less than a year) or long-term (more than a year). Contact us with any personal questions you may have on capital gains.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

What is financial planning?

Financial planning offers individuals and families the opportunity to work with financial advisors and wealth management professionals to outline and implement financial strategies. Financial advisors educate clients on retirement strategy options and products, so they make confident, informed decisions about their financial future.

What percent of my pre-retirement income will I need to retire comfortably?

The percent of pre-retirement income recommended for retirement is typically 70 to 80 percent, which may include income from Social Security, retirement savings, pension, and any other retirement income you may have.

How many months of income should I have saved in my savings account?

It is recommended to have a minimum of 3-6 months’ worth of living expenses set aside as savings for emergency. The necessary living expenses to consider would be housing, insurance, healthcare, utilities, vehicle costs, groceries, etc. If you are retired, work seasonally, or at risk for job loss, you may consider saving more than 6 months’ worth of expenses.

How should I pay down my debt?

Do you carry a lot of credit card debt? If so, you are not alone. While credit card debt can be overwhelming, there are steps to take to pay off what you owe. To start, pay off the credit card with the highest interest rate. Whenever you can, pay more than the minimum payment amount. Setting up a monthly budget and sticking to it will also help you pay down debt. Once a card is paid off, get rid of it! Set up an appointment with a Priebe Wealth Management financial advisor to help you lay out a plan to eliminate debt and work toward financial independence.

What are the different types of life insurance?

There are many different life insurance policies to choose from based on your personal needs and financial goals, such as Term, Whole or Permanent Life, Universal Life, Variable Life, 2nd to Die policies. A Priebe Wealth Management Financial Advisor is more than happy to discuss, educate, and guide you to determine the appropriate option.

What is long-term care insurance?

Long-term care insurance (LTC or LTCI) is a type of insurance policy designed to help individuals cover long-term care expenses. Long-term care expenses can include services such as skilled nursing care, assisted living, at home care, adult daycare, etc. Long-term care policies are purchased before care is needed. Many states have partnership programs in place that work with qualifying policy owners to help protect assets.

Who needs a long-term care policy?

A long-term care policy covers expenses for future long-term care. Those not covered by a long-term care policy will pay out of pocket expenses for long-term care, diminishing personal assets to a certain level before becoming eligible for Medicaid relief. Anyone who has assets they want to protect may want to consider a long-term care policy. A Priebe Wealth Management expert can review the cost details and state partnership programs to help you decide if a long-term care policy is appropriate for you.

How do I pay for long-term care if I don’t have a long-term care policy?

If an individual has not purchased a long-term care insurance policy, long-term care service expenses are paid out of pocket, until assets reach a minimum amount. At that point, Medicaid helps individuals with long-term care expenses. It is important to understand that many long-term care services and facilities do not accept Medicaid coverage, but require coverage from eligible policies or out of pocket payment.

What is Medicaid? How do I qualify for Medicaid?

Medicaid is a health insurance program designed for qualifying, low-income individuals and families and is based on family size and income level. The Medicaid program is jointly funded through both the Federal and State government. For more information regarding Medicaid and to find out if you qualify for low or no cost care, visit for detailed information on your state.

What is Medicare? What does Medicare cover? What doesn’t it cover?

Medicare is a health insurance program that offers healthcare coverage to individuals 65 years or older or individuals with qualifying circumstances. Both the federal and state government fund the Medicare program. Medicare covers eligible legal U.S. citizens or permanent residents of the U.S. (residing in the U.S. for 5 or more consecutive years). For more information or to see if you qualify, visit to find information specific to your state and situation.

When should I apply for Medicare?

Individuals eligible to enroll for Medicare benefits must be age of 65 years or older or meet qualifying circumstances. Automatic enrollment at 65 may apply for those receiving Social Security or Railroad Retirement Board benefits. For more information on Medicare enrollment -

How much money can I gift each year?

As of 2017, a person may gift $14,000 or less to an individual or several individuals, without tax penalty. If a person does gift an individual or individuals more than $14,000 per year, they must file a Federal gift tax on their tax return. The gift exclusion may be combined between spouses, with a total of $28,000 to gift to individuals, without tax penalty.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Can I send my required minimum distribution directly to a charity or my church?

At age 70 ½ years or older, individuals are eligible to gift their required minimum distribution to a church or a qualifying charity. Whatever portion you gift, will not be included as an IRA distribution for tax purposes. Please contact us for more information.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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