Information abounds on why and when you should contribute to a tax-deferred savings plan such as an Individual Retirement Account (IRA). Less is known about what happens in retirement when you have to take money out of these plans. For those who turned 70 1/2 years or older in 2013, pay attention, because it's distribution time.

The original idea behind tax-deferred savings was to provide Americans a tax break in order to encourage us to save towards retirement. Individuals could stash away money tax-free while they were working and then take it out again once they retired, when they were presumably earning less and at a lower tax rate. The government determined that once you reached 70 1/2 you have until April 1 of the next tax year to take your first distribution. If you are older than that, you only have until the end of the year.

Officially, it's called a Required Minimum Distribution (RMD) and applies to all employee-sponsored retirement plans. That includes profit-sharing plans, 401(k) plans, Self Employed Persons IRAs (SEPS), SARSEPS and SIMPLE IRAs, as well as contributory or traditional IRAs.

The individual owner of each plan is responsible for computing the MRD and taking it from their accounts. There are stiff IRS penalties (of up to 50 percent of the total MRD) levied on those who fail to comply. The RMD is calculated by taking the total amount of money and securities in each IRA, or other tax-deferred plan, as of December 31 of the prior year and dividing it by a life expectancy factor that the Internal Revenue Service publishes in tables. The document, "Publication 590, Individual Retirement Arrangements," can be easily accessed over the Internet.

As an example, let's say at the end of last year your IRA was worth $100,000. You are 72 years old. Looking up the life expectancy ratio in the IRS table for that age, which is 15.5, you divide your $100,000 by 15.5. Your RMD for this year would be $6,451.61 (100,000/15.5 = 6,451.61).

Remember that you must compute your RMD for every tax-deferred account you own. However, you can withdraw your entire distribution from just one account if you like. You can always withdraw more than the MRD from your accounts, but remember that whatever you withdraw is taxed at your tax bracket. If you make an error and withdraw too much in one year, it cannot be applied to the following year. And before you ask, no, you can't roll the RMD over into another tax-deferred savings account.

What happens if you forget or for some reason you cannot take your RMD in the year it is required? You might be able to avoid the 50 percent penalty if you can establish that the shortfall in distributions was the result of a reasonable error and that you have taken steps to remedy the situation. You must fill out Form 5329 and attach a letter of explanation asking the IRS that the penalty be waived.

For those who have an Inherited IRA, you too may have to take a RMD before the end of the year. The calculations and rules are somewhat different. Generally, if you have received the inheritance this year, as the beneficiary, you have the choice of taking one lump sum, taking the entire amount within five years or spreading out the distributions over the course of your life expectancy, starting no later than one year following the former owner's death. The IRS produces a table for use by beneficiaries in Publication 590 as well.

Many retirees have a hard time remembering to take their MRD each year. It is a good idea to ask your money manager or your accountant to handle the distribution or at least to remind you each year when the RMD is due. The last thing you want to do is give back to the IRS half your hard-earned savings each year.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

U.S. economic growth in the third quarter surged higher by 3.6 percent, while jobless claims plunged by 23,000 to 298,000 as layoffs slowed. That's great news, right, so why is the stock market falling?

If you are scratching your head about now, who can blame you? Americans have been waiting for years to see the economy finally transition from a slow, bumpy recovery with stubbornly high unemployment to something akin to more traditional economic recoveries. It appears we are finally hitting our stride but growth like this could mean the end of the Fed's open-ended quantitative easing, thus the decline.

Investors are afraid that the Fed may begin to taper as early as this month, given the good news. The implications are that interest rates would rise and the stock market would decline as the Fed withdrew support from financial markets. That's what you will hear and see in the financial press, but nothing could be further from the truth.

Let me tell you what is really going on. Don't listen to these pundits who worry about a stock market bubble, pointing to the Fed's easy money policy as the culprit. I disagree. The market rally, in my opinion, is wholly justified. It is based on expectations that the economy will pick up steam and unemployment fall. As I have said before, the markets anticipate events 6-12 months ahead of time. The market media has missed that fact. They are still harping about Fed easing/tapering when the data is telling us the gains are about the economy.

It is why I have been bullish all year and am getting increasingly bullish when looking at the future. The Fed's efforts to stimulate the economy have worked.

The private sector is now picking up the slack and the years ahead should see better and better growth not only here but worldwide. That's a long-term forecast consistent with my belief that we are in a secular bull market in stocks. However, that does not mean the markets will go straight up from here.

Two weeks ago, I warned investors that stocks needed a rest. We could easily see a pullback based on sentiment numbers, momentum and technical factors. Today, I remain cautious in the near term. I accept that there are factors that argue against a decline right now. Christmas is only three weeks away and the historical data suggest a Santa Claus rally happens more often than not. Investors have also become conditioned to buy the dip, no matter how small.

If the bulls can get the S&P 500 Index back over 1,800 then the rally continues and I'm wrong. But if the markets want to use good news as an excuse to drive the markets lower, so be it. I don’t care what triggers a decline; I only care that we need to consolidate gains before moving higher.

How low could we go? If I rely on technical data, we could easily fall to the 50-day moving average (DMA) on the S&P 500 Index. From peak to trough that would be a decline of a mere 3.5 percent. If the Fed does announce the beginning of a Taper this month then we might actually see a test of the 200 DMA. In that case, we're talking a decline of over 8 percent. I find it hard to believe that the Fed would take that action on the eve of transition with new Fed chief, Janet Yellen, taking the reins in January. In either case, a 3-8 percent decline in the markets happens several times a year. It would not be the end of the world and would simply set us up for continued gains into 2014.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Lobbyists for the big banks have been fighting to water down the so-called "Volcker Rule" for the last three years but it looks like they are going to lose this battle. Next week the U.S. government is expected to announce tighter bank regulations. It could make the financial markets a lot safer for all of us and cost the banks a bundle.

At stake for the banks are about 18 percent of industry sales, or $44 billion, generated by proprietary trading. That's a term used to describe the banking industry's practice of placing big speculative bets with their own money. During the financial crisis those speculative bets went sour and nearly drove the global financial system into a complete meltdown. We, the taxpayers, bailed them out.

In its aftermath, congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. It was a series of sweeping financial regulatory reforms that was intended to insure that certain Wall Street practices would "never again" be able to threaten the world. The centerpiece of that legislation was a rule suggested by former Federal Reserve Chairman Paul Volcker which would prohibit many aspects of proprietary trading.

Market-making is the business of using a firm's capital to buy and sell securities with customers. Sometimes they make a profit on the trade and sometimes they don't, depending on the price spread between the bid and the ask price of a security. Wall Street has been providing that service for its customers for a long, long time. It is the grease that insures liquidity in the market and without it the machine would probably freeze up.

However, over the past decade or so, the banks took that principle and ran with it, but they went a step too far. They started making bigger and bigger bets on their own and disguised them as customer hedges. They explained that these hedges were necessary to facilitate customer business when in fact the banks were simply speculating on everything from commodities to subprime mortgages.

The Volcker rule seeks to prevent banks with federally-insured deposits from making such trades that could threaten their stability (and ours).  Of course, the devil is always in the details.

Lobbyists, hired by the banking industry, argued that coming down hard on proprietary trading would severely curtail banks' and brokers' ability to provide market making for their customers. It would also put our banks at a severe disadvantage when competing globally with foreign banks that are not regulated by U.S. laws. Finally, it would deprive the sector of an important source of profit.

I suspect the last point carries the most weight within the halls of the nation's biggest banks. One would think that after their near-collapse, our banks would have learned a lesson and given up their most dangerous practices. In the past, when the financial community fouled up, they established some self-policing guidelines to avoid a repeat performance and head off government intervention.

Not this time. With nary an apology in sight for past practices, banks have stonewalled the public and government. Instead of addressing the conflicts of interest, the rewarding of dangerous trading practices by their employees and changing the culture of greed so apparent among these Big Banks, they have done the opposite since the crisis.

Readers need only recall the so-called London Whale trades that cost one of our top banks $6.2 billion in 2012. Disguised as a portfolio hedge against customer positions, the loss was the direct result of the kind of speculative betting that was so wide spread prior to the financial crisis and it continues today.

It seems clear that on their own, the banking sector is not about to change their ways. Although I hate the idea of even more government interference upon the private sector, I believe that without it, the financial sectors' speculative practices pose a threat to everyone's well-being now and in the future.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Over the last 20 years or so, the three days prior to Thanksgiving have always been positive for the markets as has the day after. This year they were accompanied by record highs.

All three averages inched up this week, with the Dow surpassing 16,000 and the technology-heavy NASDAQ breaking 4,000 for the first time since the turn of the century. The S&P 500 Index beat my year-end target of 1,800 and may actually reach 1,850 by New Year's.

It was a short week for traders, with the markets closed for Thanksgiving and only open half a day on Friday. Most of the news centered on how good or bad retail sales will be during the holiday season. This year there are six less shopping days available so big retailers are pulling out all the stops in their goal to boost sales by 4 percent over last year's results.

We enjoyed Thursday's repast with wonderful friends down the road. During dinner there was a great deal of grumbling amidst the turkey, sweet potatoes (and Hanukah latkes) over the retailers' decision to open their stores once again on Thanksgiving night. Our conclusion, that America's single-minded focus on pursuing the almighty buck has reached new and unfortunate heights, was the only negative in an otherwise wonderful holiday.

We only have three weeks of trading left before Christmas as well and just about everyone is expecting the traditional end of year "Santa Claus" rally. It usually kicks off a day or two before or after the holiday and extends through New Year's and into late January.

As usual, when everyone is expecting one thing, the markets tend to surprise you. That is why I am hoping for a short-term pullback now rather than later. That would set us up for the up move everyone is expecting. Unfortunately, the longer we go without a decline, the higher the risk investors will be getting coal in their stocking this year.

All year long the market has climbed a wall of worry. If it wasn't the deficit, it was the taper or any number of issues that kept us on our toes. Through it all, the markets forged ahead.

But suddenly, the skies have turned blue with nary a cloud to be seen. Even the nuclear stalemate in Iran appears to be unwinding. For the first time in a long time, there does not seem to be anything to fret about.

That should be a good thing, right? So why am I worried, call me a contrarian (or the Grinch) but when there is no wall of worry, I wonder how the market will maintain its upward momentum in the short-term?

If a pullback is to occur, it should happen over the next 2-3 weeks. As I said last week, if it does occur, do nothing. Over the long term, whatever decline we may get will be practically meaningless. Stay invested, turn off the television and enjoy yourself.

In the meantime, take a look at this coming week's column on secular bull and bear markets, if you have a chance. Some of the smartest people I know on Wall Street are convinced that we have entered a new secular bull market. They are definitely a minority, but I happen to be in their camp. If I am right, and we have entered a new long-term bull market, there will be many more cheerful holidays in your investment world.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Over the last four years, the stock market has gained over 100 percent. Some think we've hit the top, while others believe we are just getting warmed up. The difference of opinion centers on whether you think we are in a cyclical or secular bull market.

What's the difference? When you hear "cyclical," whether bull or bear, you should think short-term; a couple years at best, secular, on the other hand, can last from 5 to 20 years.

In secular bull markets, stocks rise more than they fall with any declines made up by subsequent increases in stock prices. In secular bear markets, the overall trend is down. It is a period of wealth destruction in which stocks decline more than they advance over a long period of time.

Within these long-term secular markets, stocks can perform counter to the trend for several years. These are called cyclical bear and bull markets. The period 1982 through 2000 was considered the greatest economic expansion in global history and a textbook example of a secular bull market. Yet, there were short recessions and several times when the markets declined during that period. As an example, the Crash of 1987 occurred during that secular bull market.

A secular bear market began in 2000. Yet, 2003-2007 were bullish up years followed by a devastating decline into 2009 (brought on by the financial crisis). Today's disagreement centers on whether the end of this secular bear market occurred with the lows seen in 2009.

Those who think that is the case date the new secular bull market as beginning as 2009. Although the gains have been steep, they believe the markets still have over a decade of growth ahead of us.

Others disagree. They argue that the last four years was simply a case of another cyclical bull market rally within a secular bear, like 2003-2007. Most believe that will end this year. They argue that this bear market won't be over until at least 2018.

Most of their argument rests on the passage of time. Statistically speaking, if you took all the bull and bear markets periods over the last 132 years and measured their average duration you would arrive at an average of 17.4 years. But statistics have a way of turning fact to fiction.

As another example, there has also been more secular bull years (80) than bear years (52) with the average gain of all secular bull market rallies equaling 415 percent, while the average losses of secular bear markets has been minus-65 percent.

All of these statistics are neat and clean but entirely unrealistic as an investment tool.

Consider: there were only three periods since 1877 when the duration of secular markets were even close to a 17.4-year time span and all of them have been since 1968. It is true that secular bulls provided far more gains than the bears caused losses, but the gains at times were only half the historical average.

Some of the smartest people I know on Wall Street are convinced that we have entered a new secular bull market. They are definitely a minority, but I happen to be in their camp.

After several years of worldwide governmental stimulus, both fiscal and monetary, the global economies are beginning to grow. I believe that global growth will accelerate in the years ahead.

The markets, in my opinion, are looking backward, focusing on the Fed's stimulus program.

They fail to realize that the Fed's quantitative easing has already accomplished its objective. All that's left is to let the markets begin to work on their own. That will happen early next year.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.