RMD Precautions & Options

A reminder about mandatory withdrawals from IRAs & other retirement plans.                   

Just what is an RMD? After you turn 70½, the IRS requires you to withdraw some of the money in most retirement savings accounts each year. These withdrawals are officially called Required Minimum Distributions (RMDs).1

You must take an RMD from a traditional IRAs after you turn 70½, even if you are still working. If you don’t, a severe financial penalty awaits – you may have to pay a 50% tax on the amount not distributed. You are not required to take RMDs from a Roth IRA during your lifetime.2,3 

You must also begin taking annual RMDs from SEP and SIMPLE IRAs, pension and profit-sharing plans and 401(k), 403(b) and 457 retirement plans annually past age 70½. If you are still employed, you may be able to delay taking RMDs from a profit-sharing plan, a pension plan, or a 401(k), 403(b) or 457 plan until you retire. The exception: you must take RMDs from these types of accounts after you turn 70½ if you own 5% or more of a business sponsoring such a retirement plan.2,3 

The annual RMD deadline is December 31, right? Yes, with one notable exception. The IRS gives you 15 months instead of 12 to take your first RMD. Your first one must be taken in the calendar year after you turn 70½. So if you turned 70½ in 2013, you can take your initial RMD any time before April 1, 2014. However, if you put off your first RMD until next year you will still need to take your second RMD by December 31, 2014.3 

Calculating RMDs can be complicated. You probably have more than one retirement savings account. You may have several. So this gets rather intricate.

Multiple IRAs. Should you own more than one traditional, SEP or SIMPLE IRA, annual RMDs for these accounts must be calculated separately. The IRS does give you some leeway about how to withdraw the money. You can withdraw 100% of your total yearly RMD amounts from just one IRA, or you can withdraw equal or unequal portions from each of the IRAs you own.3

401(k)s & other qualified retirement plans. A separate RMD must be calculated for each qualified retirement plan to which you have contributed. An exception: if you have multiple 403(b) TSAs, you can optionally withdraw the sum of all of the RMDs for them from one 403(b) TSA. RMDs for qualified retirement plans must be paid out separately from the RMD(s) for your IRA(s).3

This is why you should talk to your financial or tax advisor about your RMDs. It is really important to have your advisor review all of your retirement accounts to make sure you fulfill your RMD obligation. If you skip an RMD or withdraw less than what you should have, the IRS will find out and hit you with a stiff penalty – you will have to pay 50% of the amount not withdrawn.2

Are RMDs taxable? Yes, the withdrawn amounts are characterized as taxable income under the Internal Revenue Code. Should you be wondering, excess RMD amounts can’t be forwarded to apply toward next year’s RMDs.3,4

What if you don’t need the money? If you are wealthy, you may view RMDs as an annual financial nuisance – but the withdrawal amounts may be redirected toward opportunities. While putting the money into a savings account or a CD is the usual route, there are other options with potentially better yields or objectives. That RMD amount could be used to…

>> Make a charitable gift. (With enough lead time, a charitable IRA rollover may be arranged; the IRA distribution meets the RMD requirement and isn’t counted as taxable income).

>> Start a grandchild’s education fund.

>> Fund a long term care insurance policy.

>> Leverage your estate using life insurance.

>> Diversify your portfolio through investment into stock market alternatives.1,4

There are all kinds of things you could do with the money. The withdrawn funds could be linked to a new purpose.

So to recap, be vigilant and timely when it comes to calculating and making your RMD. Have a tax or financial professional help you, and have a conversation about the destiny of that money.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – jklasser.com/articles/taking-your-required-minimum-distributions/ [3/19/13]

2 – irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics—Required-Minimum-Distributions-%28RMDs%29 [9/4/13]

3 – irs.gov/Retirement-Plans/RMD-Comparison-Chart-%28IRAs-vs.-Defined-Contribution-Plans%29 [4/16/13]

4 – foxbusiness.com/personal-finance/2011/03/23/meeting-ira-withdrawal-rules/ [3/23/11]

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, Raytheon, ING Retirement, AT&T, Qwest, ExxonMobil, Glaxosmithkline, Chevron, Bank of America, Hughes, Northrop Grumman, Merck, Pfizer, Verizon, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

 

A Debt Deal Emerges

The fix is merely short-term, but it is certainly welcome.

A bipartisan deal emerges from the Senate. After weeks of contention, a bill to reopen the bulk of the federal government and avert an unprecedented U.S. default appears headed toward President Obama’s desk. Senate Democrats and Republicans reached an accord on October 16, and as House Speaker John Boehner has promised an expedient vote on any bill crafted in the Senate, the measure seems poised for quick passage. “From our side [in the Senate], I don’t see any evidence of delay,” Sen. Rand Paul (R-KY) told the New York Times Wednesday morning.1

In a sense, Congress merely kicked the can down the road. The measure would fund the federal government through January 15 and extend America’s borrowing authority through February 7. A bipartisan negotiating committee would face a December 13 deadline to create a federal spending and tax blueprint for the next ten years.1,2

The Senate bill includes only one alteration to health care reforms. The Affordable Care Act will emerge from this battle relatively unscathed. People who receive federal subsidies for their health insurance under the ACA will face a stricter income verification procedure, but the subsidies will remain in place. House Republicans had demanded a 2-year delay for the 2.3% tax on medical devices stemming from the ACA, but that effort was set aside Tuesday. Congressional Democrats had argued for a 1-year delay in the $63 per-person “reinsurance” fee slated to hit group health plans in 2014; they didn’t get it.1,3,4

The bill also arranges retroactive pay for furloughed federal workers. All federal employees sent home as a result of the shutdown are slated to receive delayed salary payments.2

The budget cuts passed into law in 2011 will remain in place. The $1.2 trillion in automatic federal spending cuts scheduled through 2021 will still be carried out, as mandated by the Budget Control Act of 2011 that brought an end to that summer’s debt ceiling fight. The 2013 sequester cuts represented the first step in this reduction of federal spending.2,5

Wall Street felt relief. By the middle of the trading day Wednesday, the S&P 500 was approaching its all-time peak. The DJIA, NASDAQ and S&P were all up more than 1% and three stocks were gaining on the NYSE for every one falling. Fitch Ratings had threatened to downgrade America’s credit rating late Tuesday; presumably, it will now refrain from doing so due to the deal reached on Capitol Hill.6

A short-term fix is better than none at all. You could argue that this deal simply postpones a solution in favor of a short-term truce on Capitol Hill. Even so, it beats the potentially catastrophic alternative of a U.S. default. Wall Street will now wait to see if Congress can provide a gift for the holidays – a larger-scale solution to trim future deficits. 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – nytimes.com/2013/10/17/us/congress-budget-debate.html [10/16/13]

2 – tinyurl.com/m94pmd5 [10/16/13]

3 – tinyurl.com/lsp6gkg [10/16/13]

4 – washingtonpost.com/blogs/wonkblog/wp/2013/10/15/delaying-obamacares-reinsurance-fee-would-be-a-win-for-insurers/ [10/15/13]

5 – washingtonpost.com/blogs/wonkblog/wp/2012/09/14/the-sequester-explained/ [9/14/13]

6 – marketwatch.com/story/stocks-surge-on-hopes-for-fiscal-agreement-2013-10-16 [10/16/13]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, ExxonMobil, Bank of America, Glaxosmithkline, Merck, Pfizer, Chevron, Hughes, Northrop Grumman, Raytheon, Verizon, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Albert Aizin is a Representative with FSC Securities and may
be reached at http://www.theretirementgroup.com.

 

 

The Government Shutdown


Basic information and frequently asked questions.
As you have no doubt heard, the United States government shut down at midnight (Eastern) October 1, 2013. There are many questions and concerns about this situation, but here are some basics.

What happened? In short, Congress did not pass any of their appropriations bills. These bills provide money to various to federal agencies. Federal law requires agencies without these funding laws in place to close.1

How long will this last? As with other shutdowns, this is largely up to the two major parties and their abilities to reach whatever deal is necessary to get the bills passed. If we look to history, the two most recent government shutdowns happened in the Clinton administration. One only lasted five days. The other lasted three weeks.1

What’s closed, what’s opened? Not every public service is shut down entirely, as not every agency requires appropriations to function. Social Security and Medicare are not affected, active duty military continue to function, as does the Department of Defense, as do intelligence, law enforcement, and our embassies overseas. Some are only partially closed; U.S. Courts will be open for 10 days, for instance.1,2

CNN has a frequently updated list of shutdowns at: http://www.cnn.com/interactive/2013/09/politics/government-shutdown-impact/index.html?iid=article_sidebar

How is this different from the debt crisis? They are different situations, but one can affect the other. The debt crisis relates to the separate matter of establishing how much money the U.S. Government can borrow in order to fund its various agencies and programs. However, Treasury Secretary Jack Lew says that the crunch is coming soon – no later than October 17.4

With the shutdown a fluid situation, it’s difficult to say when this will be resolved. Whether you are a government employee or an ordinary citizen, it’s only natural to be concerned. It may be a good time to contact a financial professional and inquire if and how the shutdown may affect you.
This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 – latimes.com/nation/politics/politicsnow/la-pn-government-shutdown-q-and-a-20130930,0,5564531.story [9/30/13]
2 – cnn.com/interactive/2013/09/politics/government-shutdown-impact/index.html?iid=article_sidebar [10/1/13]
3 – businessinsider.com/government-shutdown-debt-ceiling-obamacare-2013-9 [9/30/13]
4 – money.cnn.com/2013/09/25/news/economy/debt-ceiling-lew/index

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views  of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Bank of America,
 Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Albert Aizin is a Representative with FSC Securities and may
be reached at http://www.theretirementgroup.com.

Weekly Economic Update 10-7-13

WALL STREET FEELS EFFECTS OF SHUTDOWN

Even with the federal government mostly out of commission last week and a debt ceiling battle brewing, stocks didn’t fall too far. The NASDAQ actually rose 0.69% in five trading days, marking its fifth straight weekly advance; the S&P 500 lost only 0.07%. The CBOE VIX, unsurprisingly, rose 9.25% last week to settle at 16.89 Friday. COMEX gold hit its lowest level since August on Tuesday, and the dollar touched a one-month low against the yen on Thursday. The week ended with no resolution to the budget impasse. Last week, International Monetary Fund managing director Christine Lagarde cautioned that U.S. GDP could slip below 2% this year if the debt ceiling is not raised.1,2

ADP REPORT GAINS GREATER SIGNIFICANCE

As the Labor Department’s September employment report didn’t come out last week, the ADP National Employment Report took center stage. ADP said private payrolls expanded by 166,000 jobs last month; economists polled by Reuters had forecast an increase of 180,000. ADP compiles its report off of available data, as opposed to the fresh data presented by the Labor Department on the first Friday of each month. The official September jobs report will likely appear on the Friday after the federal government reopens.3,4

MANUFACTURING EXPANDS IN SEPTEMBER

The Institute for Supply Management’s purchasing manager index for the factory sector came in at a healthy 56.2 for September, up from 55.7 in August. The Institute’s non-manufacturing PMI fell 4.2 points in September to 54.4; even so, it showed the service sector growing for the 45th straight month.5

THIS WEEK: No major economic releases are scheduled for Monday. Quarterly results from Yum! Brands and Alcoa will kick off a new earnings season Tuesday. Wednesday offers earnings reports from Family Dollar and Costco, and the September 17-18 FOMC minutes. Thursday brings the latest initial jobless claims figures, plus a speech from European Central Bank president Mario Draghi at the Economic Club of New York. Wells Fargo and JPMorgan Chase report earnings Friday, and the preliminary October consumer sentiment index from the University of Michigan appears; the September PPI and September retail sales reports are also slated to be released.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+15.02

+11.03

+9.20

+5.75

NASDAQ

+26.11

+20.90

+19.11

+10.25

S&P 500

+18.53

+15.68

+10.76

+6.42

REAL YIELD

10/4 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.46%

-0.86%

2.18%

2.16%


Sources: cnbc.com, bigcharts.com, treasury.gov – 10/4/131,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

Citations.

1 – tinyurl.com/of5e7ad [10/4/13]

2 – marketwatch.com/story/the-debt-ceiling-issue-and-markets-in-6-charts-2013-10-04 [10/4/13]

3 – reuters.com/article/2013/10/02/us-usa-economy-employment-adp-idUSBRE9910IW20131002 [10/4/13]

4 – pbs.org/newshour/businessdesk/2013/10/did-we-really-add-166000-jobs.html [10/2/13]

5 – ism.ws/ISMReport/NonMfgROB.cfm [10/3/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F4%2F12&x=0&y=0 [10/4/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F4%2F12&x=0&y=0 [10/4/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F4%2F12&x=0&y=0 [10/4/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F3%2F08&x=0&y=0 [10/4/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F3%2F08&x=0&y=0 [10/4/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F3%2F08&x=0&y=0 [10/4/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F3%2F03&x=0&y=0 [10/4/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F3%2F03&x=0&y=0 [10/4/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F3%2F03&x=0&y=0 [10/4/13]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/4/13]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/4/13]

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com. 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, Hughes, ING Retirement, Qwest, GlaxoSmithKline, Chevron, Verizon, Raytheon, AT&T, Pfizer, Merck, Alcatel-Lucent, Bank of America, ExxonMobil, Northrop Grumman, or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.