Do you have assets in plans sponsored by an
employer you no longer work for?
Most people, when leaving a job, clear
their desk, take all their belonging with them, some even take the stapler J, but they leave their most valuable asset,
their retirement plan with the old employer.
Do you have assets in an employer-sponsored
retirement plans (401K, 403B or profit-sharing plans) to which you are no
longer contributing?
The surest way to get
control of your retirement funds without the financial drawbacks is to roll
over your funds into an individual retirement account. In a direct IRA
rollover, the funds are sent straight from your 401(k) or other qualified
employer retirement plan into an IRA without you touching the funds.
Do you want to
continue benefiting from…?
Tax deferral
Growth potential
Enjoy the added
benefits of…
Protection from market downturns
Guaranteed lifetime income
Flexibility to customize income
Creating a legacy
- Potential Disadvantage of an IRA Federal law protects the money in 401(k) plans from most law suits, says CPA Ed Slott. But IRAs are protected by state law, “so you have to know what’s protected in your state,” he says. If law suits, judgments or collections are a concern, a quick phone call to your attorney should let you know if your IRA is shielded from creditors and up to what amount, he says.
- A large employer may have a plan that, because of the size of its assets, has access to low-cost “institutional” funds that may not be available to individual investors. “They could buy a fund of the same name (in an IRA, for example), but it will probably have a higher expense ratio.
Achieve your
retirement goals
Rolling over tax-qualified retirement
assets into an IRA can help you achieve your retirement goals. You may receive
additional benefits with certain plans.
A Rollover provides you with continued tax
deferral.
Certain plans offer index-based growth
potential and protection from market risk or losses for an income you can’t
outlive.
Contact us for more information.
A rollover can help
if you’re looking for…
- Continued Tax Deferral. Rollovers are tax-free as long as they follow IRS guidelines.
You don’t pay taxes on any growth in your
IRA account until you withdraw money.
- Growth Potential - Gain interest credits from interest crediting strategies based, in part, on the upward movement of a market index without exposure to market risk.
- Some options also provide you with Protection from Market Downturns
Protect your retirement nest egg. Remove
the risk and uncertainty from your plan.
Some plans guarantee you will not lose money
due to market losses - even during economic downturns or if you have years when
you have no interest credited to your contract. Your money is never in the
Stock Market, you simply get credited with interest based on certain indexes
performance. In exchange for this protection, indexed crediting strategies
limit the interest rate you can receive.
The limit can take the form of a Cap Rate
or an Annual Spread and Participation Rate. The insurance carrier declares the
Caps, Annual Spreads and Participation Rates before the beginning of each term
period.
Certain Rollover plans
offer Guaranteed Lifetime Income.
Enjoy benefits that can mirror the lifetime
income of a defined benefit pension plan and Social Security when the contract reaches
its maturity date and a lifetime income option is chosen. This means that you
can receive income you can’t outlive.
Flexibility-Customize your retirement income timing and amounts by
adding an optional income rider, available for a charge, to your contract.
A rider may also offer additional benefits,
such as inflation protection, benefits for confinement or terminal illness, and
a death benefit.
A Legacy for Your Loved Ones - Offer your loved ones a quick source of
funds to settle matters after your death. Your beneficiary is guaranteed to
receive your contract’s full Accumulated Value or Minimum Guaranteed Contract
Value, whichever is greater
3 myths.
An Individual Retirement Account (IRA) rollover
most commonly involves moving retirement assets from an employer-sponsored
retirement plan (i.e., 401(k), 403(b), profit-sharing plan) to an IRA.
Rolling assets to an IRA typically provides
more savings choices. It also allows the individual to keep savings
tax-deferred. In many instances, a direct transfer of funds from the existing
retirement plan to an IRA may be the best way to preserve tax deferral.
A 2014 study from Cogent Reports found that
over 50 percent of affluent investors with a balance in an employer-sponsored
retirement plan expect to roll the money into an IRA within the next 12 months.
The same report estimates up to $382 billion in rollover dollars in 2015.
Consider these three myths:
MYTH #1
Rollovers don’t amount to much.
Many agents think that rollovers do not
bring in a lot of assets. But the reality is quite different. According to data
from the Investment Company Institute, about half of households owning traditional IRAs said their IRAs
contained rollovers from employer- sponsored retirement plans. Of those, 8 in
10 rolled over their entire retirement account balance.
On average, households with IRAs that include
rollovers have $260,000 in financial assets. The average value of those IRAs is
$87,500.
MYTH #2
Rollover opportunities are rare and
difficult to predict.
Gone are the days when it was common for an
individual to spend an entire career with the same company. In fact, younger
baby boomers (or those born from 1957 to 1964) held an average of 11 jobs
between ages 18 and 44.4.
Each job change represents a potential
rollover opportunity. In 2014, 72% of households that rolled money into a
traditional IRA did so because of a job change, layoff or termination.
There are many potential rollovers from
recent and soon-to-be retirees. Nearly 7 in 10 IRAs opened by individuals age
60-64 are funded exclusively by rollovers. We can help these individuals effectively
transition to retirement by offering retirement products, which offer growth
potential, protection from market loss and guaranteed income.
MYTH #3
Individuals will opt to roll over assets to
an IRA offered by their previous employer’s plan provider. It would seem to
make sense. After all, plan providers have an advantage since they already have
a relationship.
Staying the course is the logical path of
least resistance.
But despite plan providers’ efforts to keep
assets, LIMRA studies suggest that only 26 percent of retirees who did IRA
rollovers kept the money with the same plan provider. Sure, many consumers may
think rollovers are a chore.
We provide valuable guidance and help navigate
the rollover process.
Who can benefit from
a rollover?
While every ones situation is different, we
have identified these common characteristics that may indicate who is
appropriate and suitable for a retirement asset rollover. We can help you find a solution that best
fits your needs.
People who have…
Retirement assets from one or more
employer-sponsored retirement plans (i.e., 401(k), 403(b), profit-sharing
plans) to which they are no longer contributing.
Such as a:
Someone who has changed jobs
Soon-to-be retiree
Recent retiree
People who are
looking for…
Continued tax deferral
Continued growth potential
Protection from market loss
Guaranteed lifetime income*
Ability to create a legacy Guide
What happens if you
need your money early?
Tapping an IRA early can be cumbersome and
expensive. You basically have two choices: Take the amount you want and, if
you’re under age 59½, pay a 10 percent penalty plus income tax on the
withdrawal. Or, set up a 72(t) distribution, which mandates regular withdrawals
for at least five years, but limits the amounts to a tiny slice of your
savings. But if you are laid off or take early retirement at age 55 or after,
you can tap your 401(k) without penalty, says Choate. “But that only applies to
company plans.”
What is an annuity?
Some times annuities are used for 401K Rollover.
I’ve heard different opinions about
annuities. Annuities aren’t good or bad.
Annuities are offered through insurance
carriers and are designed, like pensions plans, to provide insurance against
the risk that you’ll outlive your money after you retire. Annuities give you
the potential to grow your retirement savings and create a guaranteed income
stream to last a lifetime similar to Social Security or a pension. Some pension
plans use annuities to provide retirement income for their participants. An
annuity can be used for an IRA rollover when appropriate.
Annuities come in a few varieties and do
not all offer the same features nor are annuities suitable for everyone and
should not be used unless they work in your individual situation. We advise against
using certain annuities for this reason.
Fixed annuities, like bank CDs simply
provide a rate of interest for a period of time.
Variable annuities may allow you to invest
directly in the stock market through mutual fund type accounts. Like any investment,
you may lose money.
Some annuities however offer an opportunity
to “link” your money to an index, or get credited with interest on your money
based on the performance of an index. This does not require having to invest in
the stock market, it avoids stock market risk and mutual fund fees. You simply
get credited with interest if the index goes up and get no interest in years
when the market declines. You do not lose any of the interest credited
previously. The down side is that in order to get the safety you wish, you give
up some of the return.
While we do not feel there is any perfect
tool that fits every situation, we know there is a tool that may work in your
situation.
Most financial options are not good or bad.
They simply work or do not work for in a
certain situation.
No financial tool works for everyone.
Before making any financial decision, get
educated! We are frequently asked to explain these issues since they can be
complicated.
*Guaranteed lifetime income is backed by the
assets and claim paying ability of the issuing insurance carrier.
*Always consult with a professional
regarding tax issues or insurance products for suitability.
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