Today Money financial expert Sharon Epperson joined us for a live Web chat Wednesday to answer your questions.

Here’s one of her answers to questions from the live chat. (See below for the full Q&A and video of Sharon’s TV appearance this morning.)

Amey asked:

“I just had a baby (4 months). I want to start saving money for him but not exactly sure of the best place to save. I was thinking about the 529 savings plan but I wasn’t sure if it HAD to be used for college. Of course I’d like him to go to college, but what if he doesn’t. what happens to that money?”

Sharon replied:

“You are so smart to start saving for his education NOW. 529 college savings plans are great ways to force you to save for college – but you must use those funds for qualified higher education expenses or pay a penalty fee when you withdraw the money. It’s like a 401k or IRA in the sense that you can take the money out without penalty if it’s used for its intended purpose – otherwise you pay a penalty. the good news is that even if your child does not go to college, the money can go to another beneficiary — you, another child, family member, friend, anyone. If you’re not sure if your child will go to college, hedge your bets. put some money in the 529 plan and some in a Roth IRA. You can use the Roth IRA for your own retirement or use the contributions you’ve made to the Roth college if needed. Actually, Roth contributions can be taken out at any time TAX-FREE, making them another great way to save.”

Here’s the full chat archive and Sharon’s TV appearance:

If you have a question for our TODAY Money experts, submit it here. 

To sign up for an e-mail reminder for our next chat, click here.

With 2011 coming to a close, we are all shifting our focus to 2012 and asking what we can do to improve. Whether you want to call them resolutions, goals, or anything else, we all want to make next year even better than this year.

since nobody is here to talk about eating healthy or fitness regimens; what is your financial resolution and how are you going to do it? Max out your IRA/401k? Build up your savings? Start day trading? Learn about options or something new? Buy a home? cut back on your morning latte?

no matter how big or small, as long as it is a step in the right direction you will be glad you did it.

Also, if you have any tips to help others on their goals, feel free to chime in.

I guess I’ll start. mine is to replenish my savings account. Having a few months salary in the bank can be a lifesaver and offers piece of mind, especially in a turbulent economy. Even if that level is unattainable, something is better than nothing.

If you’re trying to decide where to stash your nest egg, here’s another tool.

After we flagged T. Rowe Price’s decision-making chart for retirement-account contributions, we got a reminder of the free program for weighing traditional IRAs v. Roths at the Analyze Now retirement-planning website. Go to “Computer Programs” and click on “Link to should I convert my IRA to a Roth?”

The site’s founder, Henry K. “Bud” Hebeler, a 78-year-old former top executive at Boeing who retired more than 20 years ago, offers insight to people weighing the decision:

Of course, it’s not just the tax vehicle (taxable, qualified, tax-exempt) that you use, it also makes a big difference where you put your stock investments because of their tax advantage. I put the majority of stocks in taxable accounts instead of qualified accounts. I’d put all of my stocks into a Roth except that’s where I put my TIPS so that Uncle Sam doesn’t tax my inflation growth.

He also advises making charitable contributions from the right account to get the most benefit:

Since I make significant charitable contributions every year, there are tricks I’ve learned about that too. for example, I also have a 401(k). to take advantage of the fact that you can make a tax-free contribution to a church from an IRA but not a 401(k), I take my [required minimum distribution] from the 401(k) and then roll over a significant amount more into an IRA so that when I take my RMD from it, it can all go to charity.

What’s your experience using IRAs or 401(k)s, and traditional accounts or Roths? do you have any tax strategies that you’re willing to share?

DEAR BRUCE: I am 84 years old and have two CDs worth about $230,000. I have my three adult children registered as equal principal beneficiaries. What are their options upon my demise? can their shares be rolled over into their IRAs, and the required minimum withdrawal be based upon their reaching 70½? Or must their withdrawal be based on my age? Is there a time limit for them to withdraw their shares? Where can I find an explanation of such benefits?

DEAR F.D.: I?m assuming that your $230,000 is in some type of tax-sheltered environment: IRA, 401(k), 403(b), etc. there are various regulations with regard to how such money has to be distributed — taxes paid, etc.

Failing that, if these are just ordinary CDs and they have your children’s names on them and have been properly set up (payable on death or something similar), the money will be split three ways upon your demise and taxes, if any, will have to be paid. the attorney advising the executor of your estate can determine precisely what your children’s rights are.

Without the specifics of this money and perhaps other monies that are in your name, it is difficult to give a very specific answer. the research involved and the costs should be minimal. I would do this immediately. it?s much easier for you to straighten out problems now than it will be for your estate after your demise.

DEAR BRUCE: I have an opportunity to collect two full pensions on my 55th birthday. I am now 49. 1) What do you think about forgoing the spousal survivor benefit and compensating with a term life insurance policy with my wife as the beneficiary? 2) Is there a rule-of-thumb formula to determine how much money to insure myself for? the total pension will be a minimum of $4,200 per month, without the spousal survivor benefit, and the mortgage will be paid off on the same date. My annuity will provide around $300,000, but we will have to purchase our own health insurance. Thank you.

DEAR D.P.: the proposal that you are making is very common, but it does have one important item that is not unique to all of us, and that is good health and insurability. the idea of forgoing the spousal survivor benefit — in other words, leaving your wife with a lower income until her death, is often not the best choice. there is no rule of thumb that I know of. you will have to do the math, looking at your income on the two benefits.

The other variable in this situation is that if you pass away, your wife will have the entire amount that the difference would have purchased, which is often more then would come to her with the survivor benefit. Further, if she passes away very quickly, that amount of money would be in her estate, which could be passed along to whomever she chooses.

I would elect to go with the insurance. Buying the insurance now at age 49 would give you a lower premium, even though the net cost would be higher. you will be developing some cash value in the policy, but more important is that you have no way of knowing whether you will be insurable six years from now. If you are insurable now and you wish to pursue this, consider taking out the insurance and guaranteeing the availability.

DEAR BRUCE: please explain the gift tax. When does it apply? who pays the tax? Thank you.

M.C., Inverness, Fla.

DEAR M.C.: the amount that you are allowed to give without any tax implications to you or the receiver is $13,000 per year, per person. In other words, every individual can give anyone else, without regard to their relationship, up to $13,000 without any tax implications. If you are a married couple and you want to give more to one of your children, each of you (assuming you file a joint return) can give that same amount of money with no tax consequences. If you wish to give more, you can claim against your lifetime estate. you would not be allowed to leave as much tax-free after your death, but you would likely not exhaust the exemption. the death tax, however, is under consideration for change by Congress. If you give away more than the exclusion available when you pass away, there would be some estate tax.

DEAR BRUCE: I would like to know if, when a person goes to a nursing home and has CDs that list either/or on the CD, whether those CDs have to be included when stating the person’s net worth. My mother has some CDs that have either/or on them with my brother’s and sister?s plus my name on them. I am not sure whether I asked this question right. Thank you.

DEAR JANICE: If your mother goes into a nursing home, she?ll have to fill out a financial form. If she applies for Medicaid, all monies up to a very small amount must be spent on her behalf. If assets remain upon her death and she has collected Medicaid, the state has an option of going after those assets. Many people scurry around and try to shelter this money from Medicaid. the best way to insure that is to give away funds exceeding the look-back period, which is 36 months. If your mother is not going to be in a nursing home after that look-back period, and she?s comfortable with giving the money to you guys knowing that you will spend it on her behalf, that?s OK. the reality is that most people who do go into nursing homes seldom live more than three years. If you or your siblings dissipate the funds, you will put yourself in some peril.

DEAR BRUCE: My wife and I are planning on setting up a will or living trust but are undecided on what would be better. We own our home and some other real estate. Stocks and mutual funds have transfer-on death beneficiaries on the accounts. can a legal assistant create wills and living trusts legally under Florida law?

DEAR J.W.: you can write your own will, and as long as a legal assistant or some other person doesn?t hold themselves out to be an attorney, they can help you draw a will or a trust. you can even buy forms in office-supply stores. That said, I think the only intelligent thing to do is to have your will set up by an attorney. In the event there are no other things to be considered — real estate, personal items, cash, etc. — the will need not be filed.

Whether you are better off with some combination of trusts and a will is another matter. If your estate is substantial, you really should sit down with a qualified planner who can tell you some of the peculiarities of the law and how you can best arrange for the least painful way to transfer those things you have acquired in life.

A lot of people seem to fear probating a will. this is not a painful process. Trusts, however, can offer a couple of benefits. one is privacy, as a will is a public document. second, if the trust has been set up properly with a professional, it?s possible that expenses that might otherwise be charged to probate the will would exceed the costs of setting up the trust. you should make sure that (in most cases) the trusts are fully revocable, which means you can cancel them as long as you are alive and competent, change beneficiaries or eliminate them altogether if you so choose. If you set up a trust and that person predeceases you, there is a question as to whether their beneficiaries would benefit from the trust or it would simply cease to exist and go back into your general estate. obviously, this can get rather complicated.

DEAR BRUCE: My husband recently transferred $20,000 to one of my accounts, unaware that this could cause tax implications for us. will this amount be subject to any federal or state taxes? We have since made the account a joint one. — N.M.. via email

DEAR N.M.: I?m a bit confused. you say that your husband put money into one of your accounts. why would this cause tax implications? Assuming that you file jointly and you haven?t separated your funds, I know of no reason why a husband and wife can?t give money to each other without any tax implication. there may be something I?m overlooking, and, if I am, I?m confident my readers will be generous and let me know, which I will address in a future column and will respond back to you.

(Interested in buying or selling a house? Let Bruce Williams’ “House Smart” be your guide. Price: $14.95. Price includes shipping and handling. Send check or money order payable to Radio Merchandise to P.O. Box 7150, Hudson, FL 34674.

Send your questions to: Smart Money, P.O. Box 7150, Hudson, FL 34674. E-mail to: . questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.)

(EDITORS: For editorial questions, please contact Gail Borelli at )

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Miami, FL (PRWEB) November 11, 2011

on November 8, 2011, the Internal Revenue Service (“IRS”) announced in IR-2011-103 the cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2012. in general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. with respect to the solo 401K plan, the elective deferral contribution for 2012 will be increased from $16,500 to $17,000. This increased elective deferral contribution limitation will apply to all employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings plan. in addition, the catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.

“The increased elective deferral contribution for 2012, will make the solo 401(k) plan even more popular amongst the self-employed,” stated Adam Bergman, a tax attorney with IRA Financial Group. “The significance of the elective deferral contribution increase is that participants of a solo 401(k) plan will be able to defer annually up to $49,500 if they are under 50 and $55,000 if they are over 50,” stated Mr. Bergman.

One of the major advantages of using a solo 401K retirement plan over an IRA is the high contributions that one can make on an annual basis. Unlike an IRA, a solo 401k plan allows a plan participant to make high annual contributions to the plan. the contributions can be in the form of pre-tax or Roth type contributions (after-tax).

The annual solo 401k contribution consists of two components, an employee salary deferral contribution and an employer profit sharing contribution. in 2012 the total contribution limit for a solo 401k plan participant would be $49,500 or $55,000 if age 50 or older. the total allowable contribution limits are combined to get the maximum Solo 401k contribution limit.

With respect to the employee deferral component, a solo 401K plan participant can contribute up to $17,000 per year to the plan. in addition, an additional “catch-up” contribution of $5,500 can be contributed for persons over age 50. Thus, an individual under the age of 50 can make an annual employee deferral of up to $16,500, whereas, an individual over the age of 50 can make an annual employee deferral of up to $22,500.

With respect to the employer profit sharing contribution component, the employer – not the individual – is permitted to make a tax-deductible contribution on behalf of the employee equal to an amount up to 25% of the participant’s self- employment compensation. Note – the percentage is actually 20% in the case of a solo proprietorship and a single member LLC once the tax return calculations are complete.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading “checkbook control Self Directed IRA Facilitator. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at irafinancialgroup.com or call 800-472-0646.

Read the full story at prweb.com/releases/2011/11/prweb8954229.htm

I have several IRA's that are all funded with after tax contributions and have not been deducted from any tax return. can I convert then in 2010 to a Roth without any penalty or tax payments?

While the non-deductible contributions are not taxed upon conversion, any gains in the IRAs is fully taxable. Your records must support the non-deductible portion of the contributions.

after tax IRA's, aren't they already Roths?