1 / 41

Financial Focus Accessing Your Retirement Money

Financial Focus Accessing Your Retirement Money. Not FDIC, NCUA/NCUSIF insured * Not a deposit * No bank or credit union guarantee * Not insured by any federal government agency * May lose value. Today’s Agenda. The challenges of retirement today

tuyet
Télécharger la présentation

Financial Focus Accessing Your Retirement Money

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Financial FocusAccessing Your Retirement Money Not FDIC, NCUA/NCUSIF insured * Not a deposit * No bank or credit union guarantee * Not insured by any federal government agency * May lose value

  2. Today’s Agenda • The challenges of retirement today • Accessing and gaining control over your retirement money • Investment alternatives • What you can do

  3. In the early 1900’s most Americans died by age 47. • Today, life expectancy at birth is 77* • *Explaining Long Term Care, Ric Edelman, • Investment Advisor, January 2004. P. 94

  4. The Good News • You can look forward to the longest and healthiest retirement in history.

  5. The Bad News • You can look forward to the longest, healthiest and most costly retirement in history.

  6. How Long Will Your Money Last Calculations assume the growth rate is applied before any withdrawals are made. Withdrawals are a fixed percent of original investment capital. This chart is an educational tool and is not intended to predict future performance of any investment. Investors must be willing to assume a higher degree of risk in exchange for seeking a higher rate of return.Taxes are not included. Consult your investment counselor for information pertinent to your particular financial circumstances.

  7. Common Concerns • Inflation • $8,800 would have bought you a top-of-the-line Cadillac in 1970 • Today, $8,800 would not even buy you the lowest priced car • And a top-of-the-line Cadillac...well that’s going for about $50,000 – a 468% Increase.* • *The Week. July 23, 2004, p. 33

  8. Common Concerns • Managing Risk • Diversification:Spreads risk among many different securities • Asset Allocation:Spreads risk among many different types of investments Does not assure a profit or protect against loss in a declining market. 

  9. Accessing Your Retirement Money • Choice • Control • Flexibility

  10. Accessing Your Retirement Money • Retirement Plans That Offer A Way Out • Look in the “summary plan description” for the words “in-service, nonhardship withdrawals”

  11. Accessing Your Retirement Money • Lump Sum Distribution Check • 1. Cash it = Big Penalties and access to $ Or • 2. Roll into IRA = No Penalties and no access to $ Or • 3. ?

  12. Accessing Your Retirement Money • 72(t) Distributions • “What is a 72(t) distribution?”

  13. Accessing Your Retirement Money • Avoiding Penalties • Save 10%

  14. Accessing Your Retirement Money • 72(t) Distribution Strategy - SEPP • Money taken out in “substantially equal periodic payments” or SEPP • No minimum age requirement • IRS does not require any reason for withdrawals • Payments must continue for five years or until age 59 1/2 - whichever is longer • Payments generally cannot change during the five year period (or age 59 1/2, if later) - unless the change relates to the annual recalculation of the RMD method or due to switching from the amortization or annuity method to the RMD method. • If the payment schedule is changed and no exceptions apply, a 10% penalty plus interest will be applied to all payments taken

  15. Accessing Your Retirement Money • 72(t) Distribution Strategy - SEPP • Generate Cash Flow

  16. Accessing Your Retirement Money • 72(t) Distribution Strategy • Generate Cash Flow • No Rollover Direct IRA • Rollover • Amount of Distribution $300,000 $300,000 • Federal Taxes at 35% (105,000) $0 • 10% premature distribution penalty (30,000) $0 • Amount available for Investment $165,000 $300,000

  17. Accessing Your Retirement Money • The SEPP Solution • Maintain FlexibilityMaximize Growth • IRA # 1 IRA # 2 • $150,000 $150,000 • SEPP distributions Invest for retirement • Income-generating Growth-oriented • Investments investments

  18. Accessing Your Retirement Money • Need more cash • Initiate SEPP distributions from IRA # 2 • Or • Found a new job! No longer need the cash • Divert distributions to another retirement investment vehicle such as an annuity

  19. Accessing Your Retirement Money • Eligibility for SEPP • If you have an IRA you are eligible • If you have a qualified plan or 403(b) you generally must wait until you leave your employer

  20. Accessing Your Retirement Money • How are penalty-free distributions calculated using SEPP? • Required Minimum Distributions • Amortization • Annuitization or Mortality

  21. Accessing Your Retirement Money • How are penalty-free distributions calculated? • Required Minimum Distribution

  22. Accessing Your Retirement Money • How are penalty-free distributions calculated? • Required Minimum Distribution • Amortization

  23. Accessing Your Retirement Money • How are penalty-free distributions calculated? • Required Minimum Distribution • Amortization • Annuitization

  24. Accessing Your Retirement Money • 72(t) Distribution - SEPP • Customize a plan to take out the money you need while keeping the balance invested on a tax-deferred basis

  25. Accessing Your Retirement Money • Beneficiary IRAs • Prolong the tax benefits of a traditional IRA across multiple generations

  26. Accessing Your Retirement Money • What are the benefits of a beneficiary IRA? • Provides tax-efficient wealth transfer

  27. Accessing Your Retirement Money • What are the benefits of a beneficiary IRA? • Provides income tax-efficient wealth transfer • Helps you maintain control over your IRA

  28. Investment Alternatives • Have contributed to: • Your 401(k) or company retirement programs? • or • IRAs • What’s Next?

  29. Accessing Your Retirement Money • Annuities have two stages in their life cycle • Accumulation stage: • money is fully invested and earnings potentially grow and accumulate on a tax- deferred basis

  30. Accessing Your Retirement Money • Annuitization • The investment is converted into payments determined by account value, life expectancy and selected plan payment • A portion of each payment will be considered taxable and the remaining portion will be a non-taxable return of your investment in the contract, which is also called the “basis”. Once the investment in the contract is depleted, all remaining payments will be fully taxable. If the contract is tax-qualified, generally, all payments will be fully taxable. Payments taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.

  31. Accessing Your Retirement Money • Annuitization payment-plan options • Life • Joint Survivor • Period Certain • Period Certain with Life

  32. Investment Alternatives • Fixed Annuities • Earn a fixed interest-rate return • Principal guaranteed by issuing insurance company Based on the claims-paying ability of the issuing insurance company. • Tax-deferred growth of earnings • Additional fees may apply

  33. Investment Alternatives • Fixed Annuities • Surrender charges and tax penalties for early withdrawal may apply • Distributions taken prior to annuitization are generally considered to come from the gain in the contract first. If the contract is tax-qualified, generally all withdrawals are treated as distributions of gain. Withdrawals of gain are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.

  34. Investment Alternatives • Variable Annuities • Earn variable rates of return • Variable investment options • May offer additional inflation protection • Growth potential • Guarantee features vary – Additional cost may apply. Guarantees are based on the claims-paying ability of the issuing insurance company.

  35. Investment Alternatives • Variable Annuities • Tax-deferred growth of earnings • Additional fees may apply • Surrender charges and tax penalties for early withdrawal may apply • Distributions taken prior to annuitization are generally considered to come from the gain in the contract first. If the contract is tax-qualified, generally all withdrawals are treated as distributions of gain. Withdrawals of gain are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty.

  36. Investment Alternatives • Variable Annuities • Variable annuities are long-term investments designed for retirement purposes. You should carefully consider the investment objectives, risks, charges and expenses of the investment alternatives before purchasing a contract or investing money. These contracts have limitations and are sold by prospectus only. The prospectus contains details on the investment alternatives, contract features, the underlying portfolios, fees, charges, expenses and other pertinent information. Please read the prospectuses carefully before purchasing a contract or sending money.

  37. Investment Alternatives • Guarantees • What are my back-up choices? • Guarantees are based on the claims-paying ability of the issuing insurance company. • Additional fees may apply. • Allstate Advisor variable annuities are flexible-premium deferred annuities issued by Allstate Life Insurance Company; underwritten by Allstate Distributors, L.L.C., both of Northbrook, IL.

  38. Summing Up The Options • In-service, nonhardship withdrawals • 72(t) distribution - SEPP • Beneficiary IRAs • Annuitization

  39. Your Retirement Strategy Checklist How a Financial Professional can help you: • Prepare for the financial challenges in retirement. • Organize and actively manage my 401(k)s, IRAs and other retirement assets. • Determine what options are best for meeting my retirement goals. X X X

  40. Your Next Steps • Meet with your Financial Advisor because...

  41. ...YOUR FUTURE IS TOO VALUABLE TO RISK! • Thank you for attending

More Related