As you know the retirement investment landscape is ever-changing as discussed with the proposed Secure Act. Make sure you know the rules so you don’t unknowingly cross the line and subject your account to penalties. There’s a reason they make this stuff confusing. Here Fidelity explains what you can do with an old 401(k): Key takeaways 4 options for an old 401(k): Keep it with your old employer, roll over the money into an IRA, roll over into a new employer's plan, or cash out. Make an informed decision: Find out your 401(k) rules, compare fees and expenses, and consider any … [Read more...]
Follow this Rule to Secure Your Family’s Investment Success
When it comes to fiduciary responsibility, you always, always want to work with a registered investment advisor. As an investment advisor, I am required by law to act in the best interest of my clients. Stock brokers, wealth managers, CFP’s, and any other acronym are not if they’re not a registered investment advisor. They follow a mushy “suitability” law. When it comes to mis-direction and confusion, this industry is shameful. Remember, for you and your family, the key words here are “required and fiduciary”. Take the SECURE Act currently in the meat grinder of Congress. It … [Read more...]
Part II: The IRS is Coming for Your IRA
As you know from my recent post on the SECURE Act, Congress is pulling a fast one on the savers of America. If passed, the “Stretch IRA” will be eliminated for children, grandchildren and other non-spousal heirs. It will require IRAs to be fully distributed (fully taxed) within ten years—no longer over a lifetime. A granddaughter in her mid-20s, for example, will not be able to “stretch” the distributions over her life expectancy and more fully harness the power of compound growth. Anyone and everyone with a tax deferred savings account should be livid. This toxic waste applies to … [Read more...]
Trump Orders Treasury to Lower RMDs for IRAs and 401Ks
In an August 31 presidential order, President Trump asked the Treasury Department to consider increasing life expectancy rates for retirement accounts. The move could lower the required minimum distributions from those accounts, and leave more money leftover for heirs. Allyson Versprille reports for Bloomberg: If Treasury increases those rates, which haven’t been updated since 2002, it would strengthen an estate-planning strategy known as the “stretch IRA,” in which an owner extends the ability to postpone paying taxes on money in his or her IRA by passing it to a non-spouse beneficiary, such … [Read more...]
You Need to Know that Changes are Coming to Your Savings Plan
Congress is actively seeking ways to encourage more small businesses to use retirement savings plans. That's a good thing for America's savers. But be wary that the bill may also encourage greater use of annuities, which I have warned readers about repeatedly (see here, here, and here for a sample). The bill will also encourage greater use of 401(k)s, which like annuities, can also come bearing hefty fees. For many savers too, borrowing against the money in their 401(k) account can be a tempting but risky option. Richard Rubin and Anne Tergesen report on the bill in The Wall Street … [Read more...]
Are State-Run Savings Plans a Good Idea?
Of course this sounds like a great idea, because saving early and often is the best way to secure a comfortable retirement. However, there are some drawbacks to a savings system with the government so closely involved. Anne Tergesen writes at The Wall Street Journal: Opponents—including some company owners, a trade group for small businesses and the main mutual-fund trade association—have lined up against the state initiatives. They argue that state-run programs may encourage companies to scrap 401(k) plans. They also say that lower-income workers who participate may wind up in worse … [Read more...]
A Lawyer Fights Exorbitant 401(k) Fees
Investors' performance can be quickly sliced down when advisers and managers take hefty fees off the top. Fee abuse has been especially rampant in 401(k) programs, where employees sometimes aren't paying enough attention, or operating procedures are opaque. Fed up with this assault on employee savings, lawyer Jerome Schlichter of St. Louis has begun suing for clients. At first, no one took him seriously. Anne Tergesen writes: When Jerome Schlichter started filing 401(k)-fee lawsuits against big companies a decade ago, the personal-injury lawyer from St. Louis wasn’t taken seriously. “We … [Read more...]
Make Sure You’re Not Part of This Disturbing Trend in 401(k) Saving
According to the Investment Company Institute, a disturbing trend is growing among employees with 401(k)s, about a fifth of participants with access to 401(k) loans take them. American companies are trying to stem the tide, but borrowing against the cash is hard for some participants to resist, and for others it’s necessary to survive. Anne Tergesen writes: American companies are trying to stop employees from raiding their 401(k)s, in an attempt to ensure that older workers can afford to retire and make room for younger, less-expensive hires. Employers of all types—from Home Depot Inc. HD … [Read more...]
A Trump Reality Plan for Federal Workers
Your retirement savings plan, the 401(k) or any other defined contribution plan, is the product of cost cuts. For years now, in the private sector, the 401(k) has replaced defined benefit products such as pensions. In the public sector, where job security is supposed to mean less pay, employees continue to receive both, life-time job security and golden pensions. It’s time taxpayers had a say in the matter. Here are some workable solutions that help level the playing field courtesy of my friend Chris Edwards, director of tax policy studies at Cato Institute. Freezing Hiring: … [Read more...]
Do the Words “Retirement Plan” Make You Calm, or Stressed?
Sometimes the best thing you can do for your investments is to create a plan. Easy for me to say I know. One way that's easy is to get a fresh start. Break bad habits. Start by consolidating with Fidelity, named by Kiplinger as the #1 online broker. Begin by rolling over that 401(k) into an IRA. Here's some of what you get by rolling over. What do you get with a Fidelity Rollover IRA? Help building a plan that keeps up with a changing market and can adapt as your needs change A wide range of investment options, including Fidelity and non-Fidelity funds, plus help choosing them An … [Read more...]