5 tips to help teens master their money

(BPT) – For most teens, high school is an exciting time, one that offers the opportunity to set their own path and make some of their own decisions. However, with this added independence comes additional responsibility, especially regarding money.

Today teens are spending $260 billion a year in the U.S., yet only 17 states require completion of at least one financial literary course for high school graduation.

“So many teens don’t realize how important saving is,” says Angel Carter, an Atlanta teen who was selected by Boys & Girls Clubs of America to serve as national ambassador for its financial education program called Money Matters: Make it Count, created in collaboration with Charles Schwab Foundation. “They don’t understand the importance of saving for their future needs and tracking or prioritizing their purchases.”

Taking part in this program had a profound impact on Carter, along with more than 725,000 other Club teens who have completed Money Matters. And because April is Financial Literacy Month, now is the perfect time for Carter to offer a few tips she learned to help others manage their money.

* There’s no such thing as “too young” or “too much.” Because of the way compound interest works, the earlier you begin to save, the less of a burden it is. For example, regularly saving 10 percent of your income is a good savings goal if you’re in your 20s or younger; however, if you wait until your 30s to start saving, that number increases to 20 percent in order to reach the same long-term goal. And if you wait till your 40s, it goes up to 30 percent. So it’s better to start putting money away as early as possible. Talk to your parents or another adult you trust about setting up a savings account, and how much you should regularly set aside.

* Recognize needs vs. wants. Being smart about money doesn’t mean you can’t enjoy life, or do fun things with your hard-earned cash; but it does mean you need to plan for them. An easy rule of thumb is to figure out how much you need to set aside in order to meet your expenses, including savings, every month. Anything left over is for having fun. It might seem contradictory, but knowing ahead of time how much spending money you have available helps you know when you can comfortably say “yes,” and when you’re better off passing on an event or an impulse purchase.

* Know where your money goes. It may not be particularly fun, but tracking where and how you spend money is just one of those healthy habits that’s good for you, like eating spinach and exercising. You can record this information with a notebook or an app, but just remember to log your purchases, including all those “small” ones. Being aware of every dollar you spend will help you understand yourself and your spending habits — and can help you find ways to reduce your spending and save even more.

* Credit is like social media. You know how parents and teachers are always telling you to watch what you post on social media channels, because someday you’re going to have to apply for a job? Good credit is to your future purchasing what a clean social media history is to job applications: it takes time and commitment to build, and only moments to lose. A good credit score and a history of responsible spending give you options, which is priceless when you want to buy or lease a car, or apply for an apartment or even buy a house later on. How do you build good credit? Manage your checking account carefully, always pay your bills on time, and if you do choose to get a credit card, never charge more than you can afford to pay off in full every month.

* Keep it real. In today’s economy, managing money responsibly is a tall order, but it is possible, especially if you take control! Think about the kind of lifestyle you want to live, and figure out how much it takes to support yourself in those circumstances. Once you’ve done that, it’s simply a matter of solving for “x.” One good way to be astute about finances is to look for a financial education program geared for teens, one that covers budgeting, goal setting, and planning for the future. Some programs, like Money Matters, even offer virtual reality games to practice for the real world without real-life risk.

These tips are just a few Carter learned through the Money Matters program at her local Boys & Girls Club. A new component of the program, the digital game $ky, is now available to all teens. The game challenges teens to navigate financial decisions in a fresh, fun way that will keep them thinking prudently about their finances not only in April but in the months and years ahead.

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Spring cleaning to make money: Don’t toss these 5 hidden sources of extra cash

(BPT) – Before we soak up the summer sun, we need to think about spring cleaning. As you clear out your closets and drawers, be on the lookout for these five often overlooked sources of money:

1) Gift Cards: About $1 billion in gift cards goes unused each year, so instead of digging change out of your couch cushions or car seats, try looking through your junk drawer, email inbox or even your wallet for gift cards and egifts that you may have forgotten about. Instead of letting the funds go to waste, sell the gift card to a gift card exchange like Cardpool.com at close to the face value or to receive an Amazon gift card.

You also can look to a gift card exchange site to buy your preferred brand of gift card. After the holidays, gift card exchange sites are often stocked with gift cards ready to be sold at hefty discounts—up to 35 percent off. So, if you’re planning a trip and want to use airline or hotel gift cards to save money, or if a discounted gift card to a lawn and garden store would help to spruce up your yard, now is the time to buy.

2) Clothes: Cleaning out the closet can also mean money in your wallet. Sites like ThredUp buy and sell quality, name-brand clothes. ThredUp will even ship you a “clean out” bag, so you can fill it up at home, ship it back and receive payment for the clothes the company purchases. With this particular site, you can choose for the company to donate what they don’t purchase or send it back to you. If you prefer to sell your apparel in-person, take your gently used brand name clothes to a nearby consignment store where they’ll often pay cash on-the-spot.

3) Books: When clearing out the bookshelf, consider selling some of your old favorites on Amazon. When you create a seller account on Amazon, you can name your price and choose to fulfill orders yourself or via Amazon fulfillment.

4) Furniture: While Craigslist remains a popular avenue for unloading furniture you no longer need, if you have chic vintage furniture or décor that you’re ready to sell, check out Chairish.com. Chairish will list your furniture and décor for sale and will even coordinate all shipping needs for the seller to the buyer.

5) Electronics: From old iPhones or laptops to tablets and video games, sites like NextWorth or Gazelle will buy the electronics you no longer use for cash. Check each site to get a quote for what your electronics are worth and send them in to earn extra cash.

While de-cluttering can be cathartic on its own, leveraging the right tools to earn extra cash on items you may have otherwise tossed can make spring cleaning a rewarding experience, too.

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How PMI can make your dream of home sweet home a reality

(BPT) – In the 2017 housing market, those who choose to pursue the dream of owning a home face several important decisions, such as how much to put toward a down payment. Twenty percent down is typically recommended by most lenders.

While 20 percent is not a requirement, paying less can have a big impact on the amount you pay monthly. It is important for home buyers to know that when seeking a conventional loan with less than 20 percent down of the sales price or appraised value of the home, lenders will often require Private Mortgage Insurance (PMI).

This article takes a deeper look at PMI by answering the most common questions on the topic.

What is PMI?

PMI is a type of mortgage insurance. Like most other types of mortgage insurance, it protects the lender in the event the borrower is unable to repay the remainder of the loan. In many cases, PMI is required on conventional loans when the buyer has a down payment of less than 20 percent.

Some lenders may offer conventional loans that require a smaller down payment without PMI, but the tradeoff can typically be a higher interest rate.

How does PMI affect your loan?

PMI can affect your loan in several different ways depending on the loan type and the lender. In some cases, the PMI will be required in a lump sum at the time of closing. This PMI payment type is called an upfront premium.

Other PMI plans call for monthly payments where the total value of the PMI is divided and factored into your monthly mortgage payments. The PMI can generally be cancelled under certain conditions once 20 percent of the amount borrowed has been reduced from the principal balance, or amount borrowed.

Finally, the lender may also opt for a plan that requires both upfront and monthly PMI payments. In this case a portion of the PMI is paid at the time of closing, and then the remaining PMI is paid as part of the monthly mortgage payment.

Alternatives to PMI

Some government-backed loans offer alternative options to buyers paying less than 20 percent down on a home loan. There are several of these loans and each has a different approach to handling down payments and mortgage insurance. By being educated on the different types of loans you will have an easier time finding which best suits your needs.

Learning more about PMI

While PMI is an additional fee, it helps those with less than a 20 percent down payment realize their dreams of home ownership.

To learn more about financing options that can make your dreams of homeownership a reality, visit VMFhomeloan.com.

NMLS Disclosure

Vanderbilt Mortgage and Finance, Inc., 500 Alcoa Trail, Maryville, TN 37804, 865-380-3000, NMLS #1561, (http://www.nmlsconsumeraccess.org/), AZ Lic. #BK-0902616, Loans made or arranged pursuant to a California Finance Lenders Law license, GA Residential Mortgage (Lic. #6911), Illinois Residential Mortgage Licensee, Licensed by the NH Banking Department, MT Lic. #1561, Licensed by PA Dept. of Banking.

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6 tips for decoding college financial aid award letters


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(BPT) – Whether you’re a high school senior or an adult looking to change careers, a college degree can be the key to a bright future. As acceptance letters arrive in the mail, another important document is not far behind: financial aid letters.

“College is a major investment, and many people require financial assistance to pay for it,” says Harlan Cohen, New York Times best-selling author and creator of the Naked Financial Minute. “It’s vital to understand financial aid so you can make informed choices and avoid surprises in the future.”

The average cost of tuition and fees for the 2016–2017 school year is $33,480 at private colleges, $9,650 for state residents at public colleges, and $24,930 for out-of-state residents attending public universities, according to the College Board.

In order to find out what aid you qualify for, you should start by filing your Free Application for Federal Student Aid (FAFSA). After your information is processed, and you’ve applied to the colleges of your choice, you’ll receive financial aid award letters in the mail with the results from each school where you were accepted.

Not all financial aid letters are the same, so deciphering and comparing them can be confusing. To help get you started, the experts at College Ave Student Loans share tips and tricks for how to easily understand your financial aid letter.

Look carefully at symbols and terms: College award letters may use different wording and abbreviations. For instance, rather than spelling out the word “loan” you could see “L” or “LN”. You might also see “net price” and “net cost.” Look carefully at how each school calculates these amounts. Some schools will subtract loan amounts from these figures. Just remember that loans need to be paid back, usually with interest; loans can help you spread the cost of college over time, but they don’t eliminate the expense.

Know the difference between gift aid and loans: Gift aid is money that is awarded to qualifying students that isn’t expected to be paid back. Gift aid includes things like scholarships, grants, and housing or tuition waivers. Not all applicants will qualify for gift aid, but most will be eligible for federal loans. As a general rule, you should expect that you’ll need to pay loans back, usually with interest.

Be aware of the impact of outside scholarships: If a student is awarded a private scholarship, the financial aid letter may list its effect on the amount of money offered by the school or in federal aid because the student’s financial need has already been partially covered. This could impact gift aid, loan amounts, or both.

Keep an eye out for work-study offers: If you indicated an interest during the FAFSA application, your financial aid letter may list approval for a work-study job that provides money toward your studies and fits with your class schedule. The money you earn is typically applied directly to your school expenses.

Understand your expected family contribution (EFC): Depending on your personal circumstances, there may be a line item for expected family contribution. This is the amount of money your family is expected to contribute toward your college education based on their tax and savings information. This will impact your overall award package.

Think about additional costs: Your financial aid letter may not include all of the costs associated with going to school. Think beyond tuition and make sure you have an idea of what you’ll be spending on housing, food, transportation, books, supplies, additional fees, and other living expenses.

If you find the amount of financial aid provided isn’t enough (including the amount offered in federal loans), families may want to research and explore private student loans as an option to cover the additional expenses. Look for competitive interest rates and flexible repayment options that match your budget. College Ave Student Loans also offers a calculator that showcases how much families can save with various loan options at www.collegeavestudentloans.com.

Finally, if you’re still unclear about the terms and conditions of any college award letter, it’s important to reach out to the school to ask for clarification or discuss your options. You don’t want to leave any money on the table.

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Control mobile data costs by connecting to Wi-Fi at home

(BPT) – American’s use of computers has shifted dramatically in the last five years. In the past, desktop computers were the main tools for accessing the Internet and communicating with others. Today, mobile devices like smartphones and tablets are taking over.

The use of mobile devices has skyrocketed, with nearly 7 out of 10 U.S. adults (68 percent) having a smartphone, up from 35 percent in 2011, according to the Pew Research Center. Tablet computer ownership is growing too, with 45 percent of adults owning this type of mobile device.

Mobile devices are popular because they provide instant access to virtually anything a person wants to do. From watching videos to online shopping and interacting on social media, mobile makes any task easy — and it’s all within an arm’s reach.

Along with this move to mobile devices comes a sharp increase in mobile data usage. Many Americans are quickly learning how expensive data on mobile devices can be.

One easy way to control mobile data costs is to connect mobile devices to your Wi-Fi network at home. Simply go into your devices’ settings, select Wi-Fi and make your home connection your default option. Most mobile devices will then automatically connect to your Wi-Fi when at home and reduce your mobile data consumption.

This is a useful technique, but what if you live in one of the 18 million households across the United States that does not have access to “traditional” wired Internet or are stuck with a slow connection?

The best solution for these households is satellite Internet. Hughes, the inventor of satellite Internet, has recently announced their new HughesNet Gen5 service. HughesNet Gen5 is the first and only U.S. satellite Internet service to offer Federal Communications Commission (FCC) defined broadband speeds — 25 Mbps download and 3 Mbps upload — from coast to coast. HughesNet Gen5 high-speed satellite Internet even comes with built-in Wi-Fi making it easy to connect wireless devices at home.

For these 18 million households, HughesNet Gen5 is a major breakthrough, providing speeds much faster than the slow DSL that many of these consumers are currently using.

In addition to fast speeds and built-in Wi-Fi, HughesNet Gen5 also comes with generous, affordable service plans. It is no longer necessary to rely on mobile data at home. Get the most out of your devices with a reliable, high-speed connection. HughesNet Gen5 lets you do more of what you love online, wherever you live. Learn more about HughesNet Gen5 at www.hughesnet.com.

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5 mistakes to avoid when buying your first home

(BPT) – Buying a home for the first time is comparable to the first time you ride a bike. You can learn about how it works from your parents and observe it from a distance, but you really won’t know the ins and outs until you actually sit down on the bicycle and start riding.

Like most beginners, first-time homebuyers will likely make a few mistakes as they initially go through the home-buying process in the upcoming year. Here are five mistakes first-time homebuyers often make, and how to best avoid them.

1. Waiting too long to make an offer

One of the biggest mistakes first-time homebuyers will make in 2017 is simply waiting too long to get into the real estate market, according to Jay Carr, a senior loan advisr for RPM Mortgage in Newport Beach, California. Because the rates look like they’re going to continually increase over the year, it’s important for buyers to get in as early as they can so that they can avoid paying more later on. If you see a home that you’re interested in and you have been thinking about entering into the market for some time, don’t hesitate too long.

2. Trying too hard to get less than the asking price

Many first-time buyers are younger, tech-savvy and are comfortable researching homes on their own. Overall, these are positive traits in a buyer. However, because these buyers are typically self-sufficient when it comes to other purchases, they often think they know best when it comes to what price they want to offer.

“Buyers rely too much on what they see on the internet instead of the good advice of what they would hear from a real estate agent,” Carr says.

Of course sometimes it pays off to be bold in an offer (in that you get to pay a lot less than the asking price), but often it can end up that the buyers are negotiating themselves out of a deal. It’s important to pay attention to your real estate agent, who is a seasoned professional, when it comes to putting in an offer so you don’t offend the seller and lose the house you want.

3. Not exploring all your financing options

Carr says many first-time buyers have grown up thinking that they need to save up for a 20 percent down payment before they can enter the housing market. While it is always great to have as much money to put down as possible before you purchase a home, it’s important to consider many of the new options available today.

One option is a home ownership investment such as the Unison HomeBuyer program, which typically provides up to half of the down payment you need. The money is an investment in the home, not a loan, so there are no interest charges or monthly payments. This new type of financing — which works in combination with a traditional 30-year mortgage — can offer greater flexibility and control to the home buyer. It allows you to cut the time needed to save for a down payment in half, lower your monthly payments and avoid mortgage insurance, or increase your purchasing power so you can buy the home you want.

4. Wanting the dream house right away

Everyone has a picture in their minds of what their first home will look like. Whether you envisioned a craftsman bungalow near all your favorite bars and restaurants or a classic ranch-style home with tons of land and no neighbors, chances are you’re going to have to trade up to that dream home from your first starter home.

“If you really like the house, you probably can’t afford it. If you think the house is just kind of below what you want it’s probably right in your price range. Get in the market rather than wait to get the dream house,” Carr says.

Carr advises those in the hunt for their dream home to focus on becoming homeowners now and to wait on their dream home until they have built up equity and have higher incomes in the future.

The median tenure of a homeowner in 2017 is about 10 years, but for the 20-year period before that it was only six. Believing that this won’t be your last house can take a bit of pressure off the home being perfectly suited for you.

5. Not having your own representation

Another mistake a first-time homebuyer can make is not having their own representation (meaning that they use the seller’s agent as their own buyer’s agent). While this is not always a bad situation, Carr cautions buyers to be careful that they have selected a good and trustworthy real estate agent that is looking after their best interests. In other words, you don’t want to pay an unfair price because someone is looking after their own best interest.

To learn more about the Unison HomeBuyer program and how it could help you, visit www.unison.com/homebuyer.

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Husband and wife talking about finances

5 reasons why talking about money can enhance a relationship

(BPT) – Thinking about combining finances with your significant other? Whether you’re getting married or just thinking about getting serious, talking about money can help couples understand each other and avoid unhappy surprises down the road. Here are five reasons why talking about money can enhance a relationship.

It makes couples happier.

Talking about things like spending, saving and debt may sound business-like and unromantic, but financial experts agree that money is a frequent topic of arguments in many relationships. In fact, according to a survey by the American Psychological Association, almost a third of adults with partners reported that money is a major source of conflict in their relationship.

“What I see when talking with couples is that learning how to resolve money disagreements – and there will be disagreements – helps build important relationship skills,” says Daniel Prebish, director of Life Event Services with Wells Fargo Advisors. “Those skills will be valuable both at the beginning of a relationship and likely for a couple’s entire time together.”

It helps couples connect by understanding what’s going on.

Couples should discuss pros and cons of combining finances versus keeping finances separate. According to research by Wells Fargo & Company, about half of couples choose to combine accounts, while the other half prefers separate accounts. Regardless of where you and your significant other fall in this spectrum, both people in a relationship should understand how their financial habits impact – positively or negatively – the life they are building together.

It helps couples track their short and long term financial goals.

Be open with your significant other about your full financial picture. Questions that can help open the door to meaningful conversations include:

1. Are we paying ourselves first?
2. Do we have a safety net?
3. Are we paying all our bills on time, every time?
4. Have we reviewed our insurance needs in the last year?
5. Do we track our spending to know where our money is going every month?
6. Are we paying down high-interest-rate debt first?
7. Do we know where our credit stands?
8. Are we saving for retirement?

It helps couples afford the “extras” that make life fun.

Building a solid financial future shouldn’t mean forsaking enjoying life. When couples have a common understanding of how they’ll prioritize and manage their day-to-day finances like housing costs, grocery and utility bills, it’s easier to figure out where splurges fit in.

It helps avoid financial surprises.

Hearing your friends shout, “happy birthday” is a welcome surprise. What’s not welcome is suddenly discovering you can’t afford to pay this month’s bills or that retirement is farther away than a pot of gold at the end of the rainbow. Being up front about money issues and sharing complete financial information with your significant other helps avoid financial surprises that can add unnecessary stress to a relationship.

While discussing money may not feel romantic, it certainly is emotional. So how do you get started? Here are tips:

1. Admit the conversation can feel awkward, but commit to having it anyway.

2. Pick a mutually agreeable time. Your candle-lit Valentine’s dinner may not be the right setting. Pre-arranging the conversation will help ensure both people are mentally prepared.

3. Be open with your significant other. Share your values and opinions about spending and savings habits and goals you would like to achieve together.

4. Work at it. Commit to an annual meeting to talk about money, credit and whether you’re on track to achieve your financial goals.

By opening the lines of communication, you can get on the same financial page before joining financial forces.

(This article was written by Wells Fargo Advisors and Consumer Lending)

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company. Wells Fargo Consumer Lending Group provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.

Findings were a part of the 2016 Wells Fargo &Company’s “How American Buys and Borrows” survey. Over 2000 American adults ages 18 and older were surveyed. Survey results were not published in their entirety.

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4 reasons you should review your beneficiary designations

(BPT) – Baby boomers have been planning and saving for retirement for decades. They are also planning their legacy — creating wills, trusts and other sophisticated estate planning strategies to transfer their wealth to the next generation.

However, most people may not realize their IRAs and qualified retirement plans — a large part of their estate — are not subject to probate nor affected by the terms of a person’s will. These assets will pass to the next generation determined solely by the client’s beneficiary designation form. Accordingly, the beneficiary designation form is one of your client’s most important estate planning documents but it is often overlooked when creating a legacy plan.

Here are some common beneficiary designation mistakes to avoid:

Estate as a beneficiary

Many clients unintentionally name their estate as beneficiary of their retirement accounts. Some clients will actually direct their retirement assets to be paid “pursuant to the terms of my will.” Other clients simply fail to complete their beneficiary designation form or forget to name a new beneficiary after a beneficiary dies. When this happens, the assets are usually paid to the client’s estate by default, which is probably the worst beneficiary for IRAs and retirement plans.

IRAs and qualified retirement plans — assets that normally avoid probate — will become subject to probate when paid to the estate. The probate process can be long, cumbersome and expensive. Further, these assets may have to be liquidated and paid to the estate within five years after the client’s death. While individual beneficiaries can elect to have IRA assets paid over their lifetime, thereby “stretching” their tax liability over many years, estates cannot.

Finally, estates are subject to a much higher income tax rate than individuals. This can result in more money going to the IRS than necessary. To avoid this mistake, make sure your clients have an up-to-date primary and contingent beneficiary designated for all their retirement accounts.

Trust as a beneficiary

Many attorneys like to use trusts to facilitate an effective transfer of wealth and maximize all available gift, estate and generation skipping tax exemptions. However, there are several dangers to having retirement assets paid to a trust.

First, the IRS generally requires the assets to be paid to the trust within five years after the death of the client. The “stretch” rules generally do not apply to trusts unless the trust is drafted to be a “look through” trust. If the trust is a “look through” trust, the IRS permits you to “look through” the trust and “stretch” the IRA to the trust over the life expectancy of the oldest trust beneficiary. Trusts that fail to be a “look through” trust include those that have beneficiaries that are not individuals, such a charity, estate or another trust.

Second, it can be expensive to establish and maintain these trusts. If an IRA is “stretched” to a “look through” trust, a lifetime of legal, trustee and administrative fees can significantly reduce the amount the ultimate beneficiaries will receive.

Third, trusts become subject to the 39.6 percent tax rate (currently the highest) as soon as the income exceeds $12,400. By comparison, married taxpayers filing jointly do not reach the 39.6 percent tax rate until their income exceeds $366,950. That means if the IRA is worth more than $12,400, more than a third can be lost to the IRS. Unless there is a compelling non-tax reason to name a trust as beneficiary of an IRA or retirement plan, you should help your clients avoid making a costly mistake. Encourage your client to speak with their estate planning attorney about the pros and cons to naming a trust as a beneficiary of a retirement account.

Ex-spouse as a beneficiary

Few people really intend to leave IRA and retirement assets to an ex-spouse, but this happens all the time. People fail to update their beneficiary designation form after a divorce. Often, they are under the mistaken belief the divorce decree will automatically negate their prior beneficiary designations. Divorce decrees, court orders and wills generally have no affect on a beneficiary designation.

“Per Stirpes” or “Per Capita”

IRA and retirement assets are not always distributed as intended. Most IRAs will allow the owner to designate multiple beneficiaries. For instance, it is common for an IRA owner to designate his or her children as equal beneficiaries. If one beneficiary predeceases the owner or “disclaims” the inheritance, the remaining primary beneficiaries will generally receive the balance of the IRA and not the children of that deceased beneficiary.

For instance, assume Dad has an IRA he wants to leave to his two children Sue and Tom. Sue and Tom also have children of their own. If Tom were to die before Dad, Sue would inherit Tom’s share and nothing would go to Tom’s children. This is called a “Per Capita” distribution. If Dad wanted to make sure Tom’s share will benefit Tom’s family, Dad should make a “Per Stirpes” designation. This means Tom’s half will be shared equally by Tom’s children.

By conducting a review of your clients’ IRAs and retirement plans, you can help your clients avoid costly mistakes and assure the right beneficiaries inherit these hard-earned assets.

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