What's Your Financial Identity? Client Logins Schedule Free Appointment
Fish and Associates

How to make Sense of the Alphabet Soup of Retirement Savings Plans

How to make Sense of the Alphabet Soup of Retirement Savings Plans 

  

401k, 403B, 457, SEP IRA Roth…….. It’s an alphabet soup of terminology. In this blog I will try to simplify this for you. 

What is a Qualified Retirement Plan?

Chances are, you have heard about qualified retirement plans and found yourself wondering exactly what these plans do. Fish and Associates understand that this terminology can be confusing. So let’s clarify what a qualified retirement plan is and what it guarantees.

A qualified retirement plan is a plan created by a company in which the employee’s contributions are usually not taxed until money is withdrawn from the plan. There are two types of qualified retirement plans. A “defined benefit” plans give employees pre-determined payouts based on earnings, service, and age. If you work for a state, local or federal government, you likely have a defined benefit plan. Defined contribution plans allow the company to set aside a certain percentage of money each year for employees. If you work for a corporation, large or small you likely have a 401K, which is a “defined contribution” plan. You put your own money into a 401k, and you employer may match that contribution. For example your company may match dollar for dollar up to 5% of your salary

Qualified retirement plans typically include certain types of investments, such as mutual funds, real estate, and other securities. They typically specify when an employee reaches an age at which they qualify for retirement benefits. Under certain circumstances, employees can take distributions before reaching the general qualification status or can borrow from the plan. However, there are often strict guidelines in place for borrowing. Employees who borrow from qualified plans might be subject to time-specific repayment plans or will accrue interest on the loan. An employee who borrows from their retirement plan might have to repay the remaining loan balance upon leaving the job or being involuntarily terminated.

Qualification factors might vary based on where you live. For example, under the Tennessee Consolidated Retirement System, service requirement qualifications are that an employee must be 60 years of age or older or worked for 30 years. Early retirement is possible at age 55, and 25-year service retirement is possible for teachers and state employees.

Life circumstances change, and retirement plan jargon can be confusing and frustrating. If you are unsure about the qualification factors outlined in your retirement plan or are considering whether to borrow from your plan, do not hesitate to contact Fish and Associates. A friendly associate is on hand to assist those with your retirement planning questions and concerns.

 

 

 

 

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments that may include past performance are not intended to be forward looking and should not be viewed as an indication of future results.

What you need to know about Estate Planning

 

                                     What you need to know about Estate Planning

 

It is a misconception that estate planning is only for those who have very large estates and extensive assets. The truth is, estate planning is something that everyone should do to protect themselves and their families in order to prepare for the future.

Proper estate planning consists of managing your assets while you are alive in a manner that can help to not only potentially reduce taxes, but also allow a friend or loved one to make financial and healthcare decisions if you are incapacitated. In addition to addressing financial issues while you are living, an estate plan allows for the passing of your assets when you die, to who you want to receive them.

Avoiding Probate And Excessive Taxation:

The main reasons for estate planning are to distribute your assets according to your will or trust, establish beneficiaries, set up specific bequests, give to charities that you want to support and avoid excessive taxation. By creating specific legal documents, such as a Last Will or a Living Trust, an individual or couple can guide how their assets are distributed after they die and/or manage them more easily while they are alive.

Probate costs can be expensive, and the time it takes to process a probate case through the court system can take a year or more, depending on the complexity, and at a minimum 6-9 months. Probating an estate places a burden on your executor (or executrix) and may involve a significant amount of time, travel and money. An estate plan utilizing a living trust can potentially avoid probate altogether, if privacy is a concern to you.

Work With A Professional:

Every year federal and state laws change regarding estate planning. It is very important that you seek professional help when planning your estate to ensure that you are in compliance with the laws, and taking advantage of what you are entitled to by law. Simple mistakes could cost you and your family large amounts of money.

If you are ready to plan your estate, we encourage you to speak with one of the CERTIFIED FINANCIAL PLANNERS™ at Fish and Associates. Our experienced and knowledgeable staff can help you navigate and plan so you make the right decisions to help protect your family now and in the future. Once a plan is created, we can refer you to an estate planning attorney who can draft the proper documents for your family’s situation.

 

 

 

 

 

 
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments that may include past performance are not intended to be forward looking and should not be viewed as an indication of future results. Trusts should be drafted by an attorney familiar with such matters in order to take into account income, gift and estate tax laws (including generation skipping transfer tax). Failure to do so could result in adverse tax treatment of trust proceeds.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you. Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS and Kestra AS are not affiliated with Fish and Associates. Kestra IS and Kestra AS do not provide tax or legal advice.


This site is published for residents of the United States only. Registered representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the Kestra IS compliance Department at 512-697-6000.


Check the background of this investment professional on FINRA's BrokerCheck.


FISH AND ASSOCIATES 633 Oakleaf Office Lane, Memphis ,TN 38117
©2014 FISH AND ASSOCIATES All Rights Reserved