For clients, equally important to saving money is learning how to withdraw money in retirement at a sustainable rate. This topic is important not only for retirees, but also for pre-retirees. In the attached chart, a hypothetical portfolio illustrates how long assets may last given different withdrawal rate scenarios. Some clients may discover they are
When it comes time to withdraw money in retirement, many investors choose to take money from accounts in the following order: taxable, tax deferred, and tax free. The motivation behind this conventional wisdom is often to preserve tax-deferred assets for as long as possible. However, depending on an individual’s tax situation, the conventional wisdom may
It’s not too late to discuss charitable giving strategies with your clients. The recent passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 also extended a program that allows retirees to take tax-free withdrawals from IRAs and to take a 2010 deduction for donations made by the end of January
With the extension of the Bush tax cuts being signed into law, a certain provision of Roth IRA conversions may become more attractive. Clients who convert a Traditional IRA to a Roth IRA before the end of 2010 may choose to pay the tax on the conversion either in its entirety this year or to
It’s important for clients to follow the rules in taking required minimum distributions from retirement accounts or they will face steep penalties from the IRS. Regular distributions are generally required from retirement accounts such as IRAs and 401(k)s beginning no later than April 1 following the year the client reaches age 70-1/2 (some participants in
For some clients, required minimum distributions are simply that: a requirement. Many wealthy clients may not rely on these funds to cover expenses in retirement, and the money only serves to increase their taxable income for the year. But clients may put this money to work for them in a tax–free way and at the
The IRS estimates there are more than 20 million sole proprietors in the United States, and some business owners may not be aware that they can realize immediate tax benefits by setting up an Individual 401(k) plan. As the year-end approaches, it can be an opportune time to discuss setting up an Individual 401(k), which
When discussing a possible Roth IRA conversion with clients, typically the primary barrier is identifying funds to pay the tax bill. Clients understand the benefits that a tax–free Roth can provide in retirement and to potential heirs, but are challenged by reporting additional income generated from a conversion. Using business–related tax losses to offset a
Many investors have at least one major concern about retirement: running out of money. And rightly so, according to a recent study by the Employee Benefit Research Institute that found that nearly half of early baby boomers are at risk of running short of money in retirement. Talking about retirement income with clients can help
This is not only a great way to help your clients avoid potential mistakes, but also to uncover other retirement accounts for consolidation. Approximately $1 trillion held within employer retirement plans is eligible for rollover into an IRA. This represents roughly 25% of all retirement plan assets. Discussing beneficiaries with clients can help spur them