William Kring, CFP is regularly sought after as a valuable resource to the nation’s leading financial media outlets.

Understanding the New Roth 401(k) (September 2005)
There are plenty of ways to save for retirement. Come January 2006, there will be a new tax-sheltered retirement investing option—the Roth 401(k). William Kring, CFP’s latest column for the Financial Planning Association helps investors decide if this new investment strategy is right for them.

Exploring Identity Theft (September 2005)
Our online information age requires investors to take new precautions in safeguarding their vital information from identity criminals. William Kring, CFP offers a few tips on tightening your online security and advises on steps to take when your privacy has been compromised.

Don’t Believe the Hype (August 2005)
Many investors are anxious to enter the white-hot real estate market as growth potential hits record highs. Forbes Personal Finance Editor Scott Reeves taps KFM’s William Kring, CFP for reasons why over-reliance on residential investment can be a risky proposition for those looking to break into this intensely growing market.

Press Release: William Kring Admitted to the Paladin Registry (August 2005)

Roth IRA Still Not Widely Understood (June 2000)
MSN MoneyCentral consults KFM’s William Kring on the misunderstandings concerning Roth IRAs. Many experts thought they would be a hit, but they were wrong.

Retirement Investing Easy With a 401(k) (June 1999)
The Atlanta Journal-Constitution outlines seven recommended steps for investors looking into their retirement plans.

The Retirement Question (March 1999)
Determining how much money to save now is a tricky question. KFM’s William Kring, CFP offers a few quick tips.

Seminar Designed to Offer a Wide Range of Advice (September 1998)
The Atlanta Journal-Constitution reports on KFM’s Money & More Investment Seminar. Presented in conjunction with the Georgia Society of the Institute of Certified Financial Planners, the seminar promises something for everyone.

Sell at a Loss to Get a Break at Tax Time (August 1998)
Have your investments gone down this tax season? There are ways to benefit from this situation, and KFM President William Kring, CFP shows readers a few ways how in this article.

Index Fund Investing Questioned (August 1998)
The Atlanta Journal-Constitution’s Hank Ezell seeks out KFM President William Kring, CFP in his examination of the pros and cons of index fund partial ownership of a larger glass office building. The only requirement today is that the property be for investment or business use.

Understanding the New Roth 401(k)
September 2005

There are plenty of ways to save for retirement. And come January 2006, many Americans will be faced with evaluating and deciding whether to use a new tax-sheltered way of investing for retirement -- the Roth 401(k).

Starting next year, employers sponsoring 401(k) and 403(b) plans will be able to offer “it” to participants as an added option, in accordance with the Economic Growth and Tax Relief Reconciliation Act of 2001, which President Bush signed into law on June 7 of that year and which was much better known for its major income tax reductions. While the Treasury Department has yet to release its final regulations, major elements of Roth 401(k)s are known, based on the 2001 act, on the Treasury’s proposed regulations which were released for public comment last March 2, and on the retirement plan concepts long associated with the terms, “Roth” and “401(k).”

“Roth” IRAs were named in honor of the late Sen. William V. Roth, Jr., (R-DE), chairman of the Senate Finance Committee from September 1995 to January 2001, at whose initiative they were made available to individuals in 1998 as an alternative to traditional IRAs. Traditional IRAs generally permit individuals to (1) invest a sum of their pre-tax earned income, which means they may be able to deduct the contribution from their current taxable income, and (2) let the money grow tax-deferred, but (3) require them to pay taxes on withdrawals at then-prevailing tax rates (and with potential penalties for withdrawals before age 59 ½). Roth IRAs, on the other hand, enable individuals to (1) invest after-tax earned income (no tax deduction on contributions), (2) let it grow tax-deferred, and (3) take entirely tax- and penalty-free withdrawals (provided certain conditions are met). One additional major difference between a traditional IRA and a Roth IRA is that owners of a Roth IRA do not have to take required minimum distributions or RMDs. Those are the distributions that traditional IRA owners must take after reaching age 70 ½.

401(k) plans, long available to eligible employees of companies that offer them, more closely resemble the traditional IRAs. Participants may (1) have pre-tax income withheld to invest in employers’ stock and/or a menu of mutual funds and other alternatives (employers may partially match contributions but the matched funds will be taxed as traditional 401(k) contributions), and (2) enjoy tax-deferred growth in their accounts, though they must pay taxes on the total amount of their pre-tax deferrals and any account growth at the time of distribution. 403(b)s, also known as Tax-Sheltered Annuities (or TSAs), are available to employees of schools and universities, churches, public hospitals, and charitable tax-exempt organizations. Some 403(b)s allow for employers to match contributions (similar to a 401(k) plan.)

Participants in these plans may be able to contribute (and deduct from taxable income) significantly more than the current $4,000 ($5,000 if age 50 or older) they are generally permitted when investing in IRAs. Thanks to the 2001 law, they may contribute and deduct $15,000 in 2006—up from this year’s $14,000—plus an additional $5,000 under a “catch-up provision” for individuals 50 or older.

Employers interested in sponsoring Roth 401(k) and 403(b) plans are presently (as of August 31, 2005) waiting for the Treasury to issue its final regulations—after completing its review of comments on its proposed set—so that they can know all they need to know to complete their plan designs and ensure that payroll and recordkeeping systems are ready for the additional work.

How many are likely to add Roth 401(k)s to their plans? No one knows, of course, but surveys of two overlapping groups of 450 and 200 large employers by Hewitt Associates, a major human resources services firm, have indicated that about 30 percent are somewhat or very likely to add such accounts to their plans in January. A Vanguard survey of its 401(k) plan clients indicates a similar level of interest.

Who should consider using a Roth 401(k)? Candidates include those who want to avoid required minimum distributions and those who predict that using the Roth will produce tax savings after factoring current and future income and current and future tax rates. In essence, participants – especially younger employees and low- to middle-income employees (those taxed at 10 or 15 percent) – who expect their tax rates to be higher during retirement (when they are likely to take a distribution from a retirement plan) could benefit from a Roth 401(k). Older employees who may be in the peak earning years and those who expect to be in a lower tax bracket during retirement might consider using the traditional 401(k), which allows them to defer taxes at high rates now and pay them at lower rates in the future. Of note, a person can contribute in aggregate no more than the $15,000 (in 2006) maximum allowed, no matter which account is used - Roth 401(k) or traditional 401(k). But you can invest a portion of your deposits in both types of accounts, if both are available. Also of note, the Roth 401(k) has RMDs, but a rollover to a Roth IRA would avoid the RMD requirement.

According to the Vanguard Center for Retirement Research, participants who do get the chance to evaluate whether to use a Roth 401(k) may fall into other categories, including:

• Maximum savers, mostly earning high-income or having high net worth, who will be contributing at the limit of $15,000 (or $20,000 including the age 50 catch-up of $5,000) and who may account for 10 percent of 401(k) participants. By keeping the maximum limits the same for pre-tax and Roth plans, Congress has effectively increased the savings that individuals can shelter from taxes in their retirement plans.
• Participants who are well prepared for retirement by saving more than the 6 percent median contribution rate, who are likely to be in the same tax bracket in retirement as today, and who face a risk of being in a higher bracket, in part because withdrawals from pre-tax plans would accelerate taxes due on Social Security benefits.

Those broad categories notwithstanding, 401(k) participants faced with the opportunity to use a Roth 401(k) should definitely consult a financial planner, asking them to prepare an analysis that incorporates likely tax rate and income scenarios. To be sure, the Roth 401(k) is likely to be an excellent retirement savings vehicle. But using it without proper analysis could lead to unintended consequences, namely this: choosing to make after-tax deposits now (i.e., paying taxes immediately) to get tax-free growth in the future may be a losing proposition if you’re actually going to be in a lower tax bracket in the future - you will have voluntary paid high tax rates to avoid low ones. In a nutshell, the choice boils down to paying taxes now (Roth IRA or 401(k)) or paying taxes later (Traditional IRA or 401(k)), with the variable being what the individual thinks their tax rates will be in the future compared to now.

This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by William Kring, CFP, a local member of the FPA.

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Exploring Identity Theft
September 2005

It used to be enough for financial planners to help clients minimize losses by making them aware of the risks inherent in various financial assets—even securities backed by the U.S. Treasury—and by steering them away from imprudent asset allocation and unsuitable investments.

If these seemed like challenges, they were relatively easy to defend against when compared with the potential for losses of money and credit standing which virtually anyone may face today when Social Security numbers or other personal data fall into the hands of criminals and are used for illegal gains at their owners’ expense.

“Identity theft” is, to boil down the definition of the 1998 law that made it a federal criminal offense, the unauthorized transfer or use of “a means of identification of another person with the intent to commit…any…activity (which violates federal, state, or local law).”

It can result in losses of money and reputation which may not be discovered for weeks and which may require more time, at possibly significant costs, to recover, if possible at all.

Increasingly vulnerable to such dire circumstances, clients of financial planners have much to do to help themselves, of course, but would surely welcome advice from planners going beyond their traditional responsibilities when opportunities arise.

To help clients to be protected against identity theft, it is important for them to have a sense of the many ways in which it may occur.

Incidents typically involve the unauthorized use of Social Security, bank account, credit card, charge account, driver’s license, and telephone calling card numbers; Personal Identification Numbers (PINs), user IDs and passwords, whether unknowingly given to the wrong people or obtained in other ways. A mother’s maiden name, a favorite pet’s name, or the last four Social Security digits, which are often used to verify identity, are also subject to abuse.

They may be copied from plastic cards, statements (presumably including financial planners’ statements), charge slips, or other documents. They may be discerned when criminals watch people punching numbers into ATMs or public telephones, or when they eavesdrop on people giving numbers over phones. They may be retrieved from discarded checks, statements, other records—or discarded forms sent with “pre-approved” credit cards, which are activated without the recipients’ knowledge.

According to a U.S. Justice Department advisory on identity theft, the Internet has become an appealing place for criminals to obtain identifying data, such as passwords or banking information. Many people respond to unsolicited e-mail that promises them some benefit, but requests identifying data.

“With enough identifying information about an individual, a criminal can take over that individual’s identity to conduct a wide range of crimes: for example, false applications for loans and credit cards, fraudulent withdrawals from bank accounts, fraudulent use of telephone calling cards, or obtaining other goods or privileges,” says the Justice Department advisory.

Criminals’ e-mails also “lure their targets into a false sense of security by hijacking the familiar, trusted logos of established, legitimate companies,” says a Securities and Exchange Commission advisory.

Whatever the technique, illegally obtained personal information can result not only in withdrawals of money or in large debts but also in crimes that are traced to the victims. How can such incidents be minimized?

• Do not give anyone—on the phone or Internet—a Social Security or other personal number unless sure that the request is legitimate.
• Do not carry your Social Security card or number with you. If your state uses your Social Security number on your driver’s license, ask them to change it to a random number.
• Be cautious when pressing ATM or telephone buttons or dictating numbers on telephones in public.
• Retrieve sales and charge slips, safely retain them, and shred them before discarding them.
• Check statements for charge, bank, brokerage, and other accounts for unauthorized transactions, retain them, and shred them when they are no longer needed.
• Shred unneeded cancelled checks and “pre-approved” credit card offers.
• Delete unsolicited e-mails requesting information from firms you do not know, and verify—by phone, not by e-mail response—the legitimacy of those appearing to be from firms you know.
• Log out when finished with a secure Web site before going to the next.
• Consider using a lockable mailbox or a P.O. Box.
• For optimum security, a crosscut shredder should be used (not any shredder will do).
• Contact the credit bureaus to opt out of solicitation credit offers via the mail.
• Do not offer personal information over the phone, unless you initiated the call, and the number called is from a reliable source.
• Make your computer safer. There are free programs that can do the trick. For a firewall, zonealarm (www.zonealarm.com) is free. For spyware, adware (www.lavasoftusa.com) or spybot search and destroy (www.safer-networking.org) are both free. A firewall can keep intruders from pulling information from your hard drive. Spyware is necessary because there are spy programs that can track the Web sites you visit and track your keystrokes on those sites.
• Also, do not carry a checkbook in your wallet or purse.

If identity theft occurs, notify:

• The fraud department of one of the three major credit bureaus (Equifax, 800.525.6285; Experian, 888.397.3742, and Trans Union, 800.680.7289), the police (and obtain a copy of their report), and the Federal Trade Commission (877.438.4338).
• Postal Inspection Service, if an unauthorized change of address form has been filed to redirect mail.
• Social Security Administration (800.269.0271), if a Social Security number has been fraudulently used.
• Creditors and financial institutions, if fraudulent transactions are suspected.

The definitive source for identity theft information on the web: www.consumer.gov/idtheft/.

This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by William Kring, CFP, a local member of the FPA.

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William Kring Has Been Admitted to the Paladin Registry

Atlanta , GA (August 16, 2005) Kring Financial Management announced that William Kring, CFP has been awarded a five star rating and been admitted to the Paladin Registry.

The Registry is an online service that documents and validates the credentials of high quality financial professionals who rank in the top 10% of their profession. Investors use this free service to find, evaluate, and select advisors who have the knowledge and ethics to help them achieve their financial goals.

Jack Waymire, Paladin founder and author of Who’s Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor said this website solves three major problems for investors who rely on financial professionals. “First, advisors don’t have documented track records. They compete with credentials when they have them and sales skills when they don’t. Because individuals don’t want sales reps investing their assets, they need a way to select advisors with the best credentials. Second, investors have trouble finding competent professionals they can trust. Advisors who call them are usually sales reps and the professionals who have the knowledge to help them do very limited marketing. Third, it’s not enough for investors to find someone they hope is an expert. They need proof the advisors are every bit as good as they say they are. That’s what the Registry does. It documents the credentials and integrity of advisors, then validates the documentation with a rating.”

Waymire acknowledged that Paladin admittance requirements are designed to exclude bad advisors. His company’s independent documentation of advisor credentials and integrity reduces the number even further. The result is a directory of high quality professionals that’s the first to provide the following combination of services:

• High admittance standards that protect investors from bad advisors
• A quality rating for each advisor that validates competence, integrity and risk of bad advice
• Online access to documentation for professional credentials
• Full disclosure for compliance records, compensation, investment expenses, and potential conflicts of interest
• Advisor agreements that put investor interests first

About Paladin Registry, LLC

Paladin is an information services company that provides free profiles, ratings, and education services over the Internet to investors who rely on investment advisors to achieve their financial goals. Paladin services help investors avoid bad advisors and select competent, trustworthy professionals who provide high quality wealth management services.

About William Kring, CFP

William Kring is President and Founder of Kring Financial Management, Inc., a Registered Investment Advisor and financial planning practice in Atlanta, Georgia. Kring serves the needs of individuals with written financial strategies, investment and stock-option services, fee-based asset management, IRA rollovers and pension distributions, tax planning, retirement and estate planning, insurance, inheritance and wealth transfer issues.

A Certified Financial Planner (CFP) licensee and graduate of the Indiana University School of Business, Kring is the past president of the Institute of Certified Financial Planners-Georgia Society and past chairman of the Financial Planning Association of Georgia. He is a registered representative of Triad Advisors, Inc., an independent brokerage firm and NASD/SIPC member, and holds licenses in health, life, accident and sickness in Georgia. William has addressed many organizations including the Atlanta Chamber of Commerce, the Atlanta Bar Association, and major Atlanta corporations.

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Roth IRA Still Not Widely Understood
June 20, 2000

ATLANTA - A lot of experts believed Roth individual retirement accounts would be a big hit by now. They were wrong.

A Roth IRA offers a tremendous tax break for people who can put away $2,000 a year and let it grow. It has big advantages for people who are planning how they will pass their money along to their heirs. But only 7 percent of U.S. households own Roth IRAs. Research suggests that most of the money in those accounts came not from newly inspired savers but from stock market gains and rollovers from other accounts.

“I am surprised at some of the questions I get about it,” said William J. Kring, a certified financial planner in Atlanta. “There is a lot of confusion out there.”

Befuddlement is not the only reason Roths are lagging. Another is that many families are putting their retirement dollars into the more attractive 401(k)s. That's because most employers match a portion of what their employees put into the plans. “Faced with a choice, they're following the money,” said Dallas Salisbury, president of the Employee Benefit Research Institute.

Income limits separate other families from Roth accounts. At the low end, there may not be enough money for investments. In a recent survey, 23 percent of respondents told EBRI that they couldn't afford to save. That was the most common reason. At the high end, both traditional and Roth IRAs have income ceilings that discourage or ban IRA contributions. To add to the confusion, limits are different for traditional and Roth IRAs.

But for many other families, the blocks are emotional. They arise from attitudes, not from legal restrictions.

The Roth IRA doesn't offer an immediate tax break. “That turns them off,” said Kring. “Until someone explains it, they just don't see the benefit. It's hard to understand the value of coming out tax-free 30 years from now.”

That is one of the major attractions of a Roth: When you withdraw the money, you pay no income taxes at all. If your investments have been compounding for several decades, the tax break will be huge. Traditional IRAs do provide a deduction for your contribution. But that benefit disappears if your income exceeds certain amounts. If you can get a deduction for a full contribution of $2,000, you will save $560. That assumes the middle-class tax rate of 28 percent.

The question is whether you would rather grab the $560 now or take the Roth and escape taxes on a much larger amount later. People believe that Congress will realize how much money is involved and cancel the program.

“I can see that five or 10 years from now they might say, ‘This program is too expensive. Let's stop,’” Kring said. “I don't believe they will roll back the benefits for people who have already taken advantage of it.'' That's what happened with traditional IRAs. The program is still there, but income limits have made it less attractive to new savers.

People just don't understand Roth IRAs. “As long as the law stays as complicated as it is, which discourages advertising by financial institutions and discourages understanding by consumers, we're going to have relatively low utilization,” Salisbury said.

Indeed, the IRS instruction booklet about IRAs is 84 pages long. But the basics of Roth IRAs are fairly easy to understand. You can contribute up to $2,000 a year as long as you have that much in taxable income and your income is below certain limits. If you are married filing jointly, the ceiling is $160,000. If you are close to that limit, check the details. You get no tax deduction now. But you owe no taxes later, assuming you held the account for at least five years and you are now at least 59 1/2 years old. There are loopholes, including death, disability and first-home purchases. You are not required to start taking the money out after age 70 1/2.

Some families just haven't made the commitment to save. In the EBRI's survey, half the respondents who are not saving for retirement said that they could save $20 a week , but they are not doing it. “They don't understand the magic of compounding and how quickly assets can grow if you just save consistently,” said Salisbury.

HOUSEHOLDS THAT OWNED IRAS IN 1999
Traditional IRA 25.5 million 25%
Roth IRA 7.1 million 7%

WHAT THEY OWN
Traditional Roth IRAs/IRAs
Stock mutual funds 49%/53%
Individual stocks 34%/28%
Money markets/CDs 28%/14%
Variable annuities 22%/16%
Money market mutual funds 19%/13%
Bond mutual funds 18%/15%
Fixed annuities 17%/13%
Balanced mutual funds 12%/7%
Individual bonds 11%/5%

Note: Totals exceed 100% because many households invest in several categories.

COMPARING THE IRAS
Roth investors are somewhat more aggressive. They are younger than traditional IRA investors (44 vs. 49). In addition, fewer Roth investors are retired (11% vs. 22%). Roth investors have lower financial assets ($100,000 vs. $150,000). But Roth investors have tucked away more of their assets in their IRAs ($40,000 vs. $34,000).

Source: Investment Company Institute

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