401 v 10oin heck ab oomers - Retirement Planning...

Christopher Hammond

www.RetirementPlanningMadeEasy.comwww.rezume.co.uk

401(k) Rollover 10-Point Checklist For Baby Boomers

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Before doing a 401(k) rollover, make sure you go through this 10-Point Checklist.Let’s get started!

Talk to your employer’s 401(k) plan administrator to know your options.

Some 401(k) plans will let you make distributions into a personal IRA after a certain age even while still working for your employer (called an In Service Withdrawal).

However, not all employers will allow this. Some may require you to retire before you can withdraw from your 401(k). Each employer 401(k) plan will have different rules. Talk to you plan’s administrator to know the rules for your specific 401(k).

Lesson: check with your plan’s administrator toknowyouroptions.

Decide which distribution option works best for you.

You typically have 4 choices whenretiringfromanemployer.

1. Leave your 401(k) where it is

2. Withdraw the money in a lump sum and pay all the taxes on it (Really!? Do you really want to do that to yourself?!)

3. Roll the 401(k) over into an IRA

4. Transfer the 401(k) to another employer’s retire-ment plan (if you’re not going to another employ-er this isn’t an option for you)

Determine if the option to leave your 401(k) with your former

employer is right for you.

The pros to keepingyourfundsinyouremployer401(k) is you can delay required minimum distributions beyond age 70 ½ if you are still working. With an IRA you must take required minimum distributions after age 70 ½.

The pros of rollingthe401(k)overtoanIRA include more investment choices. You are not limited to the few investment options in your 401(k) plan. Also, you have more flexibility with beneficiary designations in an IRA than you do in a 401(k). You can list multiple beneficiaries, and they can take advantage of the “stretch IRA” technique to manage taxes on withdrawals. You won’t have this flexibility with your 401(k)

Do Not Take a Lump Sum Distribution

Think long and hard before taking a full lump sum distribution. If you take a lump sum distribution you will pay taxes on the entirety of your 401(k).

This is going to hurt you financially in most circumstances for 2 reasons.

1. You lose tax deferral on your funds.

2. You may go into a higher marginal tax bracket. With marginal taxes, the more you make, the higher your tax rate. When you withdraw a lump sum off your 401(k) you’ll be showing a lot of “income” as far as the IRS is concerned. This may push you into a higher tax bracket, causing you to pay even more to the government than you usually do.

Think long and hard before you choose this option.

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Do the 401(k) Rollover

A 401(k) rollover to an IRA is your next option to consider. (And the most popular option.)

A rollover is just a transfer of funds from one qual-ified plan (like a 401k) to another qualified plan (like an IRA).

When done properly the funds continue to be tax deferred (very important). When done improperly the funds could be taxed.

Which brings us to number 6 on the checklist.

Do the 401(k) Rollover the Right Way

You have 2 ways to do a rollover: The direct rollover and the indirect rollover. For simplicity let’s call the direct rollover the “smart way to do it.” And let’s call the indirect rollover the “not-so-smart way to do it.” (my apologies to anyone that has ever done an indirect rollover) Here’s why:

1. The direct rollover is a “plan-to-plan transfer.” Your funds are transferred directly from your 401(k) plan into an IRA. You never receive the funds, therefore there is no taxable event. That means your tax deferral status of your funds remains intact.

2. Using an indirect rollover, the funds are distribut-ed to the individual (that would be you). You have 60 days to deposit these funds into an IRA to keep them tax deferred. If you miss that deadline all the distributed funds will be taxed.

Lesson:DotheDirectRolloverandbesmart.

Open Up A Rollover IRA Account

You need a place to roll your funds in to. Just like a monkey swinging from a vine, you don’t let go of one vine until you have a hold of the next one.

There are many custodians to use, such as Fidelity, TD Ameritrade, Charles Schwab, Vanguard, and many more. I personally use the first 3 for my clients. Also, you have the option of putting your funds in an IRA annuity with an insurance company.

First, create the account(s) you want to move your funds into. You can roll your 401(k) into multiple IRA accounts if you want.

Once you have your new account(s) set up, get the account number for it. If the account is an annuity, get the policy number of it. Also, get the overnight mailing address of the new company you want your funds transferred to. That is where your 401(k) check will be mailed to.

Contact Your 401(k) Plan Administrator

To Request A Direct Rollover

You can do this step on your own, or your advisor can help you. Contact your administrator and tell them that you want to perform a direct rollover from your 401(k) into your new account(s). You will then tell them the account number of where you want your funds to go.

Example: You want to transfer funds from your 401(k) to a Fidelity account. You would tell your 401(k) administrator to make out a check to Fidelity, FBO: [your name / Fidelity IRA account number].

(The “FBO” stands for “For Benefit Of”)

That’s why you need to know your account number before doing the transfer. Your 401(k) plan administrator may require that they mail this check to you directly. If they’ll mail it directly to the new account custodian, then let them do so. If they mail it to your address, then you will mail this check to your new custodian.

Note:Justbecausethereisaphysicalcheckcomingtoyou,thisdoesnotcountasanindirectrollover.Aslongasthecheckismadeouttoanotherinstitutionforyourbenefit,itdoesnotcountasifyouhadtakenataxabledistribution.Thisisjusttheway401(k)plansarerolledover.

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Invest Your IRA In Suitable Investments

Now that you have transferred your 401(k) into an IRA you want to make sure that your investments are suitable for you. If you are a risk averse individual, then you don’t want to be in highly volatile investments.

A general rule of thumb is, “The older you get the more conservative you should be with your investment portfolio.”

If you are not comfortable with managing your retirement nest egg on your own, then you may want to talk with an advisor to help you with this part.

1009 Do An Annual Review On Your Portfolio

Once you have gone through the first 9 steps, be sure that you watch your IRA. You should at least do an annual review on your financial situation. Most advisors will perform an annual review with their clients. But if you are doing this all by yourself, make sure that you force yourself to do an annual review on your investments.

Christopher Hammond



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What Do You Do Now? – Next StepsNow that you have gone over the 10-Point 401(k) Rollover Checklist, you know about some of the options that are available to you. And now I want to give you an additional benefit. And this benefit is for 2 different types of people. Maybe you are one of these:

1. You will soon be retiring and you don’t know what to do with your 401(k) at your current employer. You are wondering what to do and feel overwhelmed and a little worried that you will make a mistake that you will later regret.

2. You are considering rolling your 401(k) over into an IRA but you are unsure about what to invest it in. There are so many options and you would like some advice.

If you are in either situation, then I have a special benefit just for you.

Before you roll over your 401(k) and purchase a different financial product or investment, you need to answer the 4 following questions:

1. How will this purchase affect my overall portfolio?

2. How will this purchase affect my income level in retirement?

3. How will this purchase affect the overall risk my portfolio takes?

4. How will it affect the overall return of my portfolio?

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You need to know these things before making a purchase.

The sad truth is that many people don’t take an all-inclusive look at their finances before making a decision. And it’s not all their fault.

Unfortunately there are many financial advisors who don’t bother taking the time to look at all the other stuff that is going on in your financial life. This can lead to you owning a hodge podge of investments, instead of having a well thought out portfolio that is based on a plan.

Well, that doesn’t have to happen to you.

That’s why I want to give you one more free benefit. I will give you an answer to the 4 questions listed above. If you are thinking about rolling your 401(k) into another investment, I will tell you how it will affect your overall financial picture.

I’ll also compare your current investments against whatever is the new financial product you are considering purchasing. That way you will know if it is better to just keep your money in your 401(k) compared to what you are thinking about doing.

Maybe you don’t have a definite plan in mind that you would like me to evaluate for you. If that’s the case, here is what I’ll do for you:

I will look at your existing investments in your 401(k) and tell you what level of risk you are taking with those. Then I will show you how to build a comparable portfolio using low-cost Vanguard funds that you can purchase on your own: no financial advisor required.

I’ll also show you, using your current investments, what your probability of success is of not running out of money in retirement. We can even look at different investment ideas you may have, and how adding those to your portfolio will affect your probability of success.

I do this by using financial planning software that calculates 1,000 scenarios of possible returns on your existing portfolio. We can even include ideas you may have in our scenarios and see how they will affect your portfolio.

I call this a “Results In Advance” plan, because we can look at the historical performance of your investments over the last 10 years, see what the returns and volatility of them were, then we can use that information and run 1,000 different scenarios that show possible results going forward for your portfolio.

Using this type of a plan you can get the 4 above questions answered BEFORE you make a decision.

You can even bring me a proposal that another financial advisor has given you, and I can tell you how it will fit into your entire portfolio. I can tell you how it will affect your overall financial picture.

Then you can take that information and decide if it is in your best interest to follow that advisor’s recommendation.

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Who Is This For?But a “Results In Advance” plan isn’t for everybody. And maybe that’s a bit controversial, to say it’s not for everyone, but it is true. I want to help people that are serious about improv-ing their overall financial picture.

Also, the plan is for people that have at least $250,000 or more in their investment portfo-lio. It doesn’t have to all be in your 401(k) either. This can include other investable assets outside your 401(k), such as your IRA, CD’s in a bank, annuities, non-qualified brokerage accounts, etc.

In other words the software we use needs to have a certain minimum to show much in impactful results.

Also, there is no obligation. There will be nothing for sale. We simply crunch the numbers for you and we deliver an actual document to you we call the Results In Advance Plan.

How Do I Get This Plan?So I’ll tell you how to have your free Results In Advance Plan done. Again I can’t think of a reason why you wouldn’t have it done because I can promise you we’re not going to try to sell you anything. In fact, we guarantee a couple of things. First, we guarantee that you are not going to try to be sold. No one wants to be sold anything. So we first guarantee that we won’t do that to you.

Second, if you invest the time to have this Results In Advance Plan done for you, and we don’t show you a report that you think is worth at least $10,000 of value to you… just let us know and we’ll donate $100 on the spot to the charity of your choice, as long as it’s a real actual non-profit.

So if you don’t think that free plan we give you is worth at least $10,000 to you in financial benefit or economic benefit, just let us know and we’ll donate $100 on the spot to the char-ity of your choice.

And the reason we do this is because we want to put our money where our mouth is. It is so important for you to have the right planning for retirement. It’s important for you to avoid investment mistakes in retirement. And we don’t want you to feel like there’s anything to be afraid of by having this done.

Christopher Hammond



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So if you want to have this done, then here is what to do.

You can go and directly claim a spot on my calendar for a 20 minute phone conversation with me to see if we could work together. All you have to do to get on my personal calendar is visit:

www.meetme.so/chrishammond

and find a free block of time on my calendar. That way I’ll know to clear my calendar for that time so I can help you out.

So if you want to take the next steps, then go ahead and claim that spot on my calendar for a 20 minute phone call.

And if you are not ready to do so, then I want to thank you for going over the checklist. I sincerely hope that it helps you make a more informed decision about what to do with your 401(k).

And I hope you continue to enjoy the articles and videos that I post on our website www.RetirementPlanningMadeEasy.com.

You should be on my mailing list if you signed up for this checklist, so I will keep you posted when new retirement videos and articles go up on the website.

So thanks for reading. And for those of you who are ready to take the next step, I look forward to seeing you on my calendar.

Best of luck!

Christopher Hammond

PHONE: 731-925-8351

WEBSITE: www.RetirementPlanningMadeEasy.com

EMAIL: [email protected]

P.S. – I would love to hear your thoughts on this checklist (good and bad). It helps me offer better educational materials to my clients and to the public. Send your comments or questions to me at:

[email protected]

http://www.meetme.so/chrishammond

http://www.RetirementPlanningMadeEasy.com

Christopher Hammond



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About The Author

Christopher Hammond helps his clients prepare for retirement. Most of his clients are retired or will be retiring within 5 to 10 years. Most of his clients are fairly conservative investors that value safety in their investment plan. They put less emphasis on taking high risk in an effort to generate maximum return.

Chris has found that clients in this category have very unique challenges they face in retirement. These challenges include:

Â Making sure they don’t run out of money in retirement

Â Minimizing risk and volatility in their investment portfolios

Â Planning for their income needs in retirement

Â And minimizing tax expenses

To help them overcome these obstacles Chris prepares customized retirement plans for his clients on a regular basis. He helps them find the right retirement and financial products that will most efficiently accomplish their goals.

His clients are most concerned with doing the best they can with the resources that they have. They want to enjoy some good investing in a portfolio that is managed properly, that doesn’t take more risk than they are comfortable with. They want this so that they can focus on the important things in life, like their family, grand kids, hobbies, and traveling.

As an Investment Advisor Representative, Chris acts as a Fiduciary for his clients. This means he has a legal obligation to put his clients’ interests far before his own in all recommenda-tions he makes.

Chris believes in educating people on the important issues surrounding retirement. That is why he founded the website www.RetirementPlanningMadeEasy.com, where he regularly posts videos, articles, and the latest news about retirement.

Chris is married to his wife, Julia. He and his wife have four kids. When Chris is not working he enjoys spending time with his family, reading financial books (yes, that’s a bit nerdy), working out, and kayaking.

Christopher Hammond



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Disclosures

Christopher Hammond is an Investment Advisor Representative with Retirement Wealth Advisors, Inc. (RWA) 501 Baldwin Street, Suite 203, Jenison, MI 49428. (800) 903-2562. RWA and Tri-State Insurance & Financial Services, and Tri-State Financial Group are not affiliated. RWA, Christopher Hammond and Tri-State are not affiliated with any state or federal government agency, including Veterans Administration, Social Security, Medicare or Medicaid.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.

This information is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Tri-State and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.

Fixed annuities may be useful retirement tools for some people. However, fixed annuities may not be suitable for all. Please consult a licensed insurance agent regarding your age, financial objectives, short and long term financial goals, liquidity needs, risk tolerance and overall financial situation to determine if a fixed annuity is right for you. You should thoroughly review all brochures, specimen contracts, buyer’s guides and disclosure forms before purchasing any fixed annuity.

Fixed annuity earnings are tax deferred until withdrawn. Use of annuities with qualified type plans (401K, IRA, 403(b)) may not provide any additional tax benefits above those you already receive in such a plan. Withdrawals may be subject to income tax and a 10% federal income tax penalty if taken before age 59 ½. Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer.

Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims-paying ability of the issuing company and are not offered by Retirement Wealth Advisors.

Investment Advisory Representative of Retirement Wealth Advisors Inc. (RWA). Investment Advisory Services are offered through RWA. RWA and Tri-State Financial Group are not affiliated.

Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by Retirement Wealth Advisors.

Christopher Hammond is an Investment Advisor Representative with Retirement Wealth Advisors, Inc. (RWA) 89 Ionia Ave NW Suite 600, Grand Rapids, MI 49503. (800) 903-2562. RWA and Tri-State Insurance & Financial Services, and Tri-State Financial Group are not affiliated. RWA, Christopher Hammond and Tri-State are not affiliated with any state or federal government agency, including Veterans Administration, Social Security, Medicare or Medicaid.

401 v 10oin heck ab oomers - Retirement Planning...

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