Headlines about "Distributions - misc"

Gathered from the web by the editors at BenefitsLink.com.
Helping Plan Participants to Choose Between Annuities and Lump Sums
"If his main retirement goal is to be happy, have him take the pension or a similar lifetime annuity. A 2012 report ... found that among retirees of similar wealth and health, those with annuitized incomes were happier than those without annuities. Any financial adviser worth her credentials would argue that this happiness is likely to be short-lived, though.... There's another angle. Pensions don't generate commissions or asset management fees; rollovers do. So how do you help clients make informed decisions and manage the inherent conflict of interest?" (Reuters)

Knowing Your Account Value Isn't Enough
"The rule of thumb in the retirement industry is that, assuming you remain well invested, you can withdraw about 4%-5% of your initial savings each year and have a good chance that the money will last for the rest of your life.... But only 27% of our survey participants got that right ... More than one-fourth said they didn't know, and about half guessed too high.... More than one-third of our respondents said you could withdraw 10% or more." (Alliance Bernstein)

[Guidance Overview] FINRA's 'Reminder' About Rollovers Is News to Many
"[R]egulators believe that industry practices encourage retirees to make rollovers without a full understanding of their options and the relative costs for each option.... Couched as a 'reminder,' FINRA's year-end Regulatory Notice 13-45 describes practices that many broker-dealers and their registered representatives will find difficult to implement.... The guidance lists ... factors that broker-dealers and their registered representatives must consider and evaluate to determine whether a recommendation to take a distribution and rollover is suitable. In practice, broker-dealer firms and their representatives will have a difficult time obtaining this information." (DrinkerBiddle)

What to Do With Your 401(k) When You Retire
"The ability to invest in nearly anything is a central attraction of an IRA ... as is the chance to get away from the extra administrative costs and pricey fund options that dog some 401(k) plans. Other respondents said they chose to roll over multiple 401(k) accounts from multiple employers to a single IRA for convenience and simplicity.... Several respondents said they had in fact chosen to stay put in their high-quality, low-cost plans, citing extra creditor protections and the ability to pick up a bit of extra yield in a stable-value offering." (Morningstar)

How Delaying Social Security Can Be the Best Long Term Investment or Annuity Money Can Buy
"The decision to delay Social Security isn't just about the value of delaying, but also about the money that must be spent from the portfolio to sustain spending in the meantime, and/or the decision to allocate money towards delaying Social Security and not towards other fixed income investments or a commercially available lifetime immediate annuity. Yet a deeper look reveals that when viewed from an investment perspective, the decision to delay Social Security actually represents an astonishingly valuable 'investment' return[.]" (Michael Kitces in Nerd's Eye View)

Why Younger Workers Might Want to Borrow From a 401(k)
"Instead of cashing in your 401(k), one tremendous option to potentially fund a new business is to set up your new corporation and create a Solo 401(k) plan. Since after leaving your employer you will not be able to borrow against your 401(k), rolling over your old employer-sponsored plan over to your new company Solo 401(k) will reopen your window to borrow your own cash." (The Wall Street Journal; subscription may be required)

Getting Real: How Much Do Retirees Spend?
"[O]ver time, retiree spending drops substantially. Households headed by people over the age of 75 spend just 72 percent of what households headed by people between the ages of 65 and 74 do, and they spend just 63 percent of what households headed by people 55-64 do ... [F]ewer than 2 percent of retirees make it to 70 before they start drawing on Social Security ... Most retirees don't spend blithely at a pre-conceived rate until their larders are empty and the money's all gone. They constrain their spending more gradually to match their resources." (Linda Stern for Reuters)

The Case of the Missing Retirement Income
"[If] once or twice a year you take some money from your retirement account, put it into a transaction checking or savings account, and then spend it, either immediately or gradually, this spending is not considered retirement income by the Census Bureau. If it's not a regular payment, it's not retirement income.... The old notion of income, as a monthly payment, is giving way to other forms of income, including ad hoc or aperiodic withdrawals from retirement accounts. We all need to adjust our thinking. And on a practical level, for plans seeking to retain participants in the post-retirement phase, modifying plan rules to allow ad hoc withdrawals (and not just systematic payments) by participants is a first and obvious step." (Vanguard)

How 'WEP' Could Upset Your Retirement Plans
"When you have contributed to both Social Security at one job and a pension plan at any job where you didn't pay Social Security taxes, the monthly Social Security benefit you receive will fall short of what your annual statements project -- and you're unlikely to know it until you file for Social Security benefits. This applies mostly to workers who began federal, state and local government jobs before 1984 or have worked abroad. It also affects public-service workers in more than a dozen states who still pay into a pension fund rather than Social Security, as it does some people working for nonprofit agencies that don't contribute to Social Security." (The Wall Street Journal; subscription may be required)

How to Make $1 Million Last Through Retirement
"[E]ven if you have $1 million or more set aside for retirement, figuring out how much to withdraw each year is a challenge.... Should I follow the 4% rule? ... Are there better alternatives to the 4% rule? ... What's a good investment mix?" (Fidelity)

An Analysis of JP Morgan's Dynamic Withdrawal Strategy
"[B]ased on [specific] assumed investment experience, the JP Morgan strategy produces a spending budget that is somewhat more volatile (when measured in inflation adjusted dollars) than the Steiner Actuarial Approach. Because it is more aggressive ... it produces higher spending budgets each year and therefore lower remaining assets at the end of the five year period.... If comparable assumptions are used, results under the two methods can be comparable, and the smoothing algorithm in the Steiner Actuarial Approach results in more real dollar stability in the retiree's spending budget from year to year." (Kenneth A. Steiner, FSA Retired)

Are Some People Rolling Into IRAs in Order to Make Tax-Advantaged Withdrawals? (PDF)
"[A]mong traditional IRAs that received a rollover, 21.9 percent also had a withdrawal, and of those traditional IRAs that experienced a withdrawal, 9.4 percent also received a rollover. Moreover, the percentage of those with a rollover that also had a withdrawal increased with the owner's age ... from 16.1 percent for those owned by younger-than-50-year-olds to 29 percent for those age 60-69.... [T]here may be tax reasons to first rollover from a 401(k)-type plan to a traditional IRA, and then to take a withdrawal from the IRA. As an example, a withdrawal from a traditional IRA taken before age 59-1/2 for a first-time home purchase ($10,000 maximum) is not subject to the 10 percent early withdrawal penalty that an identical withdrawal for this purpose from a 401(k)-type plan would be." (Employee Benefit Research Institute [EBRI])

Breaking the 4% Rule
"A dynamic model adapts withdrawal rates and asset allocations in response to changes in economic and market environments and shifts in personal circumstances. This approach appears to offer greater probability of retirement funding success by measuring the amount of overall satisfaction retirees derive from their withdrawals. Understanding the emotional aspects of investing can help draw meaningful -- if at times counterintuitive -- conclusions about optimal retirement income strategies. Case studies suggest the dynamic framework provides a potentially more even balance between generating and withdrawing enough from portfolio assets to maintain sustainable post-retirement living standards, while avoiding the risk of running out of money." (J.P. Morgan Asset Management)

Section-by-Section Summary of Republican-Proposed Tax Reform Act of 2014 (PDF)
Internal Revenue Code changes related to retirement plans include elimination of the ability to establish new SEPs or new SIMPLE 401(k)s; elimination of deductible contributions to IRAs; modification of the required distribution rules; elimination of ability to undo a Roth IRA recharacterization; reduction in minimum age for allowable in-service distributions; modification of rules governing hardship distributions; and inflation adjustments for qualified plan benefit and contribution limitations. Changes related to welfare benefits include repeal of education assistance plans, termination of deductions and income exclusions for contributions to Archer Medical Savings Accounts, and a new limitation on the exclusion of employer-provided housing from an employee's income. (Committee on Ways and Means, U.S. House of Representatives)

Crafting a Withdrawal Policy Statement for Retirement Income Distributions
"Similar to an Investment Policy Statement, the goal [of a 'Withdrawal Policy Statement'] is to articulate a series of parameters and guidelines about how retirement withdrawals will be funded from the portfolio, to clarify how to respond when a market calamity strikes and determine, in advance, what steps will be taken to keep the plan on track.... [We] might all say we have a plan to deal with a market decline, but is it really a plan if the guidance about how to fund withdrawals in the midst of market volatility hasn't been written out in advance?" (Michael Kitces in Nerd's Eye View)

Text of Amicus Brief Addressing Treatment of Inherited Retirement Accounts in Bankruptcy (PDF)
"[C]ertain types of accounts, such as IRAs, are taxed in a manner to encourage individuals to save funds in those accounts for retirement ... [I]nherited IRAs are taxed in precisely the opposite manner from IRAs.... [I]nherited IRAs are better characterized as anti-retirement funds: they are structured so as to require immediate consumption of the funds rather than to promote future savings. Accordingly, they are not 'retirement funds' under the Bankruptcy Code." [Clark v. William J. Rameker, Trustee, et al., No. 13-299, on appeal from the 7th Circuit.] (Prof. Seymour Goldberg; brief prepared by Jenner & Block)

The Importance of Being Earnest: Implications of Saving, Investing and Future Policy Changes on Today's Retirement Investor (PDF)
"Many Americans live for two to three decades after they retire. Without adequate planning, some may struggle to create sufficient savings and post-retirement income and suffer declines in lifestyle. This paper examines post-retirement dynamics for median income families that are heavily affected by the availability and use of qualified retirement plans, the balance between savings and consumption, and the level of portfolio risk they choose over time." (J.P. Morgan Asset Management)

One in Four Older Workers Has No Plan for DC Plan Assets Once Retired
"27 percent of U.S. workers, ages 55-64, say they do not know how they will use their defined contribution (DC) plan savings after they retire. Women are much more likely than men not to have planned how they will use their DC assets (38 percent vs. 19 percent).... two-thirds of workers ages 55-64 planned to make withdrawals - either directly from their DC accounts or after rolling over the assets into an IRA. Only 1 in 6 say they plan to convert some or all of their balance into a guaranteed lifetime income." (LIMRA)

Borrowing from the Future: 401(k) Plan Loans and Loan Defaults
"Most active 401(k) plan participants have the option of borrowing from their retirement accounts, and nearly 40 percent do so over a five-year period.... [E]mployers' loan rules have a strong endorsement effect on borrowing patterns; that is, in plans allowing multiple loans, participants are more likely to borrow and take out larger loans. While the liquidity-constrained are most likely to borrow, better-off employees take out larger loans when they do borrow. [The authors] also provide a new estimate of loan default 'leakage' at $6 billion annually." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)

Cashing Out Can Derail Retirement: Employees in Transition Need Help (PDF)
"[O]ne out of three job changers cashed out some or all of their workplace savings potentially causing a long-term impact to their retirement security.... [Y]ounger, lower compensated, lower balance participants are cashing out at the highest rates, a trend that has remained consistent over the last 5 years.... [T]he percentage of participants between the ages of 20 and 29 who cashed out some or all of their plan assets is 44%. Cash-out rates for those in their thirties and forties are at 38% and 33%, respectively." (Fidelity Investments)

The 401(k) Cash-Out: A Brewing Retirement Savings Crisis?
"[Recent data from] Fidelity Investments shows that 35 percent of all participants in plans it administers cashed out their 401(k) balances when leaving their jobs last year, and the trend was even worse for young and lower-income workers. Four out of 10 workers (41 percent) age 20 to 39 cashed out, and 51 percent of workers who left jobs grossing under $30,000 cashed out.... HelloWallet ... analyzed Federal Reserve data and found that $60 billion was cashed out from workplace plans in 2010, up from $36 billion in 2004." (Reuters)

Tax Court Takes Restrictive View of One Year Limitation on Indirect IRA Rollovers (PDF)
"The Tax Court simply held that the first distribution ... was a tax-free indirect rollover, but as the second distribution was made within a year of the first, it was a taxable distribution ... The court did not consider any [prior IRS] 'guidance' -- nor did it review the private letter rulings in this area that similarly support a per-IRA interpretation. Instead, it focused on the plain language of the statute and the broad legislative history intended to limit repeated shifting of nontaxable income in and out of retirement accounts." [Bobrow v. Comm'r, T.C. Memo. 2014-21 (Jan. 28, 2014)] (Groom Law Group)

Overall IRA Withdrawal Rates Follow RMD Rule Rates
"Just over 16 percent of traditional and Roth IRA accounts had a withdrawal in 2011, including 20.5 percent of traditional accounts. This percentage was largely driven by activity among traditional IRAs owned by individuals ages 70-1/2 or older where the individuals were required to make withdrawals from their tax-qualified accounts. Looking at accounts that have both a withdrawal and a rollover ... nearly a third (29.5 percent) of those having both a rollover and a withdrawal took a withdrawal at least equal to that of the rollover." (Employee Benefit Research Institute [EBRI])

Survey Results: DC Plan Participants' Activities During First Three Quarters of 2013 (PDF)
"Only 1.4 percent of DC plan participants took hardship withdrawals during the first three quarters of 2013, the same share as in the first three quarters of 2012.... Only 2.5 percent of DC plan participants stopped contributing in the first three quarters of 2013, compared with 2.1 percent during the first three quarters of 2012 and 2.2 percent during the first three quarters of 2011.... DC plan participants' loan activity continues to remain elevated compared with five years ago." (Investment Company Institute [ICI])

Retirees' Untapped Tax-Deferred Savings Face Big Hit
"At 59 1/2 years, account owners can start taking out money with no tax penalty. At 70 1/2, they must withdraw a minimum amount each year. But in the years between these milestones, many are in a low tax bracket that allows them to take money from a tax-deferred account relatively painlessly. The goal of creative planning is to keep the account from getting so big that it becomes a tax burden later on, and to build wealth outside of it." (The Wall Street Journal; subscription may be required)

Mastering Retirement Decumulation
"[W]ithdrawal management is not a set-it-and-forget-it endeavor. This is in distinct contrast to the accumulation phase, when putting a plan in place and sticking to it can be a primary determinant of success. But when it comes to decumulation ... 'no plan survives contact with the enemy.' Any strategy put in place should be subject to change based upon market conditions, investment results, and changes in personal circumstances." (CapTrust)

One in Three Americans Say Guaranteed Income Is Top Retirement Priority
"A new study by TIAA-CREF shows that more than one-third (34 percent) of Americans who participate in a retirement plan say the primary goal of their plan is to generate guaranteed monthly income. Another 40 percent want to ensure their savings are safe regardless of what happens in the financial markets. Yet 72 percent of respondents either do not have or are unaware if their retirement plan has a lifetime income option, which can help provide the retirement security they seek." (TIAA-CREF)

[Guidance Overview] Hardship Distributions: Rules, Documentation and Limits (PDF)
"[A]uthorizing a plan distribution that does not meet the requirements can disqualify the entire plan and lead to adverse tax consequences for plan participants and for the plan sponsor. It is important for sponsors to understand the hardship rules and to have procedures in place for making distributions and documenting a participant's need in a manner that will satisfy the IRS in case the plan is chosen for examination." (Kravitz)

[Guidance Overview] Benefit Plans and Plan Distributions Exempt from New 'Net Investment Income' Tax (PDF)
"Highlights of the final rules are summarized [in this article], in question-and-answer format, as they apply to compensat[ion]-related and retirement income items (and earnings thereon). The final rules carry forward the general exemption of all benefit plan related income, and clarify several issues affecting ESOP distributions.... [T]he recently released draft instructions to new Form 8960 (which is used to calculate the new tax) could do a better job of making this clear -- the exemption for retirement plan amounts is noted only briefly in 19 pages of very dense instructions to the 1-page form." (Groom Law Group)

[Opinion] Systematic Withdrawal Strategies Examined in Recent Stanford/SOA Study Leave Much to Be Desired
"[T]he paper encourages defined contribution plan sponsors to take steps to make annuity and systematic withdrawal options available to their plan participants. This is a well written paper that makes some excellent points and suggestions. While ... the arguments set forth for including annuity options in DC plans are somewhat more compelling than including specific systematic withdrawal strategies, the only real bone [the author has] to pick with the paper is the choice of systematic withdrawal strategies it [chooses] to discuss and examine." (Kenneth A. Steiner, FSA Retired)

Why Qualified Charitable Distributions from IRAs Are Often Not Best for Year-End Contributions
"[While Qualified Charitable Distributions (QCDs)] from IRAs do have favorable tax treatment, they are generally still less favorable than donating appreciated securities to satisfy charitable goals. While the former allows for entirely pre-tax charitable contributions (directly from an IRA), the latter effectively provides a 'double tax' benefit, as contributions are deductible (making them pre-tax) and donations of appreciated securities permanently avoid taxes on the associated capital gains." (Michael Kitces in Nerd's Eye View)

DC Plan Participant Distribution Decisions: Implications for Target Date Fund Design, Retirement Income Payment Options
"The overwhelming majority of retirement-age defined contribution (DC) plan participants leave their employer's retirement plan within five years of separation from service, mostly for a rollover individual retirement account (IRA). The Great Recession and more recent financial market volatility did not appear to have had an impact on the distribution decisions made by retirement-age plan participants. This finding has implications for the 'to versus through' debate in target-date fund design, as well as for the demand for in-plan versus out-of-plan retirement income programs." (Vanguard)

State of the Insured Retirement Industry: 2013 Review and 2014 Outlook
"Key trends coming out of 2013 into 2014: [1] After industry-wide sales decreased in 2012, annuity sales have stabilized as equity markets increased, interest rates rose, and companies instituted new risk management strategies.... [2] New research has questioned [the 4%] rule of thumb and reveals a changing mindset toward asset drawdown strategies during retirement.... [3] While interest rates remain at historically low levels, the rise in interest rates has helped ease macroeconomic headwinds facing the industry.... [4] Deferred income annuity (DIA) sales are likely to exceed $2 billion in 2013, a doubling of sales over the previous year." (Insured Retirement Institute [IRI])

More Participants Saving -- Not Spending -- Their Retirement Plan Distributions (PDF)
"[T]he percentage of lump-sum recipients who used the entire amount of their most recent distribution either for another employment-based plan or an IRA has increased sharply since 1993: well over 4 in 10 (45.2 percent) of those who received their most recent distribution through 2012 did so, compared with 19.3 percent of those who received their most recent distribution through 1993." (Employee Benefit Research Institute [EBRI])

[Official Guidance] Text of IRS Notice 2013-74: In-Plan Rollovers to Designated Roth Accounts in Retirement Plans (PDF)
11 Q&As. Excerpt: "This guidance is in addition to the guidance provided in Notice 2010-84. Part A addresses the applicability of Notice 2010-84 to in-plan Roth rollovers of otherwise nondistributable amount s. Part B provides additional guidance relating to in-plan Roth rollovers of otherwise nondistributable amounts. Part C provides guidance relating to all in-plan Roth rollovers.... [To] give plan sponsors sufficient time to adopt such an amendment and thereby enable plan participants to make in-plan Roth rollovers of otherwise nondistributable amounts before the end of the 2013 plan year, the [IRS] is extending the deadline for adopting a plan amendment ... to the later of the last day of the first plan year in which the amendment is effective or December 31, 2014, provided the amendment is effective as of the date the plan first operates in accordance with the amendment. Thus, in the case of a 401(k) plan that has a calendar-year plan year, in order for the plan to permit an in-plan Roth rollover of an otherwise nondistributable amount during 2013, a plan amendment providing for that option must be adopted no later than December 31, 2014." (Internal Revenue Service)

Asset Allocation During Retirement: Rethinking Withdrawal Strategies
"[1] At a 4% withdrawal rate, the results for different asset allocations and glide-path strategies are remarkable similar.... [2] At a 5% withdrawal rate, a higher stock allocation is critical.... [3] At the lower withdrawal rate, ... a rising glide path looks reasonable once stocks make up at least a large minority of assets.... [4] There's certainly enough in the [Wade Pfau and Michael Kitces] paper to suggest that current institutional practices should be re-examined." (Morningstar Advisor)

Supreme Court to Chart Fate of Inherited IRAs in Bankruptcy
"The nation's highest court ... said it would hear arguments in Clark v. Rameker in a fight over whether Heidi Heffron-Clark and her husband, Brandon Clark, can keep creditors from going after $300,000 in an IRA inherited from Heffron-Clark's late mother. The hearing should clear up a split among lower courts ... and could impact retirement and end-of-life planning." (Reuters)

How Should the 401(k) Fiduciary Address 'Leakage'?
"What could a plan sponsor do to cut back on leakage? 'Hardship withdrawals are not subject to Internal Revenue Code section 411(d)(6) anti-cutback provisions,' says [employee benefits attorney Jack Towarnicky]. 'As a result, a plan that previously offered hardship withdrawals can eliminate them. In-service withdrawals and post-separation withdrawals are subject to those tax code provisions -- so, prospective changes are necessary. Limiting withdrawals need not create any issue so long as the plan allows loans -- and specifically, loans where administration and structure are designed to prompt repayment in almost every situation.'" (Fiduciary News)

[Guidance Overview] IRS 2013 Tax Forum Presentation: New Roth Conversion Opportunities and Other Retirement Curveballs (PDF)
23 presentation slides. Topics include: [1] Within Plan Roth Conversions: Prior Law and New Law; [2] Qualified Roth Distribution; [3] Impact on Unearned Income Medicare Contribution; [4] Maximum Contribution Comparison; [5] Distributions After Death, Retirement Plan or IRA; and [6] Social Security Strategies. (Internal Revenue Service)

[Guidance Overview] IRS 2013 Tax Forum Presentation: Grab the Money and Run? Retirement Plan Loans and Hardship Distributions (PDF)
23 presentation slides. Topics include: [1] What are loans and hardship distributions? [2] What kinds of plans can allow loans and hardship distributions? [3] Should your plan allow loans and hardship distributions? and [4] Tax Rules for Plan Loans. (Internal Revenue Service)

[Opinion] Flaws in Vanguard's Modification of the 4% Withdrawal Rule
" As is the case for most 'safe' withdrawal rate strategies, [the Vanguard approach] defines success as not outliving accumulated assets. It does not adequately address the risk of under spending. It doesn't attempt to provide constant real dollar spendable income in retirement. It doesn't coordinate with other forms of retirement income such as immediate or deferred annuities and it doesn't reflect bequest motives." (Kenneth A. Steiner, FSA Retired)

Payout Options for Retirement Income from Defined Contribution Plans: The Plan Sponsor's Perspective
"[It] is clear that it is to the participant's advantage to have an annuity option available as a retirement risk management tool. For sponsors, however, the question remains: does the annuity option (or do the annuity options) have to be available inside the plan?" (October Three Consulting)

Payout Options for Retirement Income from Defined Contribution Plans: The Plan Participant's Perspective
"[This article addresses] the issue of how a 401(k) balance can or should be paid out at retirement, from the participant's point of view.... [T]here are (at least) three significant risks the retiree faces ... The participant does not know how long she will live.... The participant does not know how much money she can/will earn on her account balance between retirement and death.... Inflation risk.... [T]he critical distinction with respect to each will be: what is happening with these risks -- in effect, what are the tradeoffs the strategy implements between taking and not taking one of these risks?" (October Three Consulting)

Lump-Sum Distributions at Job Change, Distributions Through 2012
"The average amount of [lump sum distributions (LSD)] in 2012 dollars was $20,781, with a median (mid-point) amount of $12,355. In terms of the value at the time of the distributions, the average amount was $15,934 and the median amount was $10,000. Preservation of benefits appears to have improved after 1986, with some evidence it has continued to improve through 2012. Moreover, recipients who did not use their LSD for tax-qualified savings were more likely to use it to improve their financial condition, paying down debt or buying a home, rather than spending it on pure consumption." (Employee Benefit Research Institute [EBRI])

Macroeconomic Determinants of Retirement Timing
"[T]he fraction of partially retired workers has risen dramatically [from 1960 through 2010] (from virtually zero to 15 percent for 60-62 year olds), and [the] duration of partial retirement spells has been steadily increasing.... Workers who are partially retired show a differential response to a high unemployment rate: younger workers increase their partial retirement spell, while older workers accelerate their transition to full retirement. We also find that high inflation discourages full-time work and encourages partial and full retirement." (University of Michigan Retirement Research Center)

[Guidance Overview] Seminars from the 2013 IRS Nationwide Tax Forums Now Available Online
"The IRS ... reminds tax professionals that they can earn continuing professional education credits online through seminars filmed at the 2013 IRS Nationwide Tax Forums. The 14 self-study seminars are now available[.]" [Benefits-related seminars from 2013 include: 2013 New Roth Conversion Opportunities & Other Retirement Curveballs and Grab the Money and Run? Retirement Plan Loans and Hardship Distributions] (Internal Revenue Service)

The Impact of Taxes on the Safe Withdrawal Rate
"[W]hile taxes do drag on the growth of a portfolio, safe withdrawal rate research also assumes that in the worst case scenarios, clients will dip into their starting principal as well ... as a result, the impact of taxes is limited, as principal liquidations remain a tax-free return of basis.... [In] scenarios where the safe withdrawal rate must be relied upon ... there is often little tax impact, for the simple reason that there aren't many (or any) big gains on the portfolio in the first place!" (Michael Kitces in Nerd's Eye View)

Defined Contribution Plan Participants' Activities, First Half 2013 (PDF)
"In 2013:H1, 2.1 percent of DC plan participants took withdrawals, the same pace as in 2012:H1.... Only 0.9 percent of DC plan participants took hardship withdrawals during 2013:H1, the same share as in 2012:H1.... Only 1.5 percent of DC plan participants stopped contributing in 2013:H1, compared with 1.6 percent during 2012:H1 and 1.6 percent during 2011:H1.... At the end of June 2013, 18.1 percent of DC plan participants had loans outstanding, compared with 17.9 percent at the end of March 2013, 18.2 percent at year-end 2012, and 15.3 percent at year-end 2008." (Investment Company Institute [ICI])

The Top 'Must-Have' Feature for Annuities
"70% of annuity professionals said [guaranteed lifetime withdrawal benefits] were 'must-have' features on the annuities they've sold over the past 12 months. By comparison, just 11% of respondents said a combination of benefits were a must-have feature in annuities, and just 6% of respondents said their clients were demanding principal preservation income riders." (ThinkAdvisor)

House Passes Bill to Delay Fiduciary Definition at SEC and DOL
"The bill, which was approved in a 254-166 vote, has virtually no chance of becoming law, after the White House late Monday threatened to veto the measure. Its passage, however, marks yet another symbolic effort by Republicans to express their discontent over the sweeping new regulations that stem from the 2010 Dodd-Frank Wall Street reform law." (Reuters)

[Guidance Overview] 2013 Q&As: DOL Meeting with ABA Joint Committee on Employee Benefits, May 8, 2013 (PDF)
7 pages. Topics include: whether a prohibited transaction occurs when a service-provider makes charitable contribution to a plan sponsor, unreasonableness of certain fees for handling QDROs, Form 5500 reporting of a service-provider's prohibited transactions under the fee disclosure rules, whether a participant in a defined benefit plan has standing to seek enforcement of fiduciary standards, and applicable fiduciary standards when purchasing annuity contracts for distribution to participants. Note: "The responses reflect only unofficial, nonbinding staff views as of the time of the discussion, and do not necessarily represent the official position of the DOL." (Joint Committee on Employee Benefits, American Bar Association)

Thousands of Federal Employees Withdrew Retirement Investments During Shutdown
"Nearly 3,000 more feds withdrew from their Thrift Saving Plans during the shutdown than did in October of 2012 ... Employees who made the withdrawals had to prove negative monthly cash flow or extraordinary new expenses, such as medical or legal bills, and are now banned from contributing to their accounts for six months. This means they will also lose their agency's matching contributions for that time period." (Government Executive)

When Working Longer Is the Best Option
"A 2013 research study ... looked at the impact of deferring retirement on a hypothetical retiree. In [this] scenario, delaying retirement by just a single year increased the probability of success for a retirement portfolio by nearly 10.6%.... [W]hat strategies can encourage clients to delay retirement without decreasing their standard of living and overall life[?] One strategy is to free up additional cash in order to enhance the individual's lifestyle in the years prior to retirement, making delayed retirement more palatable." (InvestmentNews)

Retirement Portfolios: Shifting from Accumulation to Distribution
"What [the accompanying] chart clearly demonstrates is, during the distribution phase, systematic portfolio withdrawals exacerbate losses due to the compounding effects of negative cash flow. Furthermore, to recover from such losses requires a materially more robust -- and unlikely -- future investment return. The resulting reduced capital base, therefore, can result in unrecoverable losses and financial failure.... Here's the point: sequence matters! Over varying time periods or with different withdrawal rates, the sequence of returns will have a major effect." (Paladin Research & Registry)

A More Dynamic Approach to Spending for Investors in Retirement (PDF)
"Of the many challenges investors face when deciding how to spend from their retirement savings, one of the most important is that of choosing a portfolio spending strategy that best balances investors' two competing goals: [1] maintaining their desired level of current spending; and [2] increasing or preserving their portfolios to support future spending. This paper reviews two of the most common spending strategies and introduces ... a hybrid ... that [the authors] view as a more dynamic approach.... [A] simulation analysis ... highlight[s] the trade-offs of these strategies." (Vanguard)

Healthcare Help from a Financial Adviser
"Most financial advisers spend years developing expertise in the likes of asset allocation and investment fund selection. Until recently, they barely addressed the second-largest budget item of their older clients: health-related costs. This is beginning to change, though, as demand for help with health-care planning drives more advisers to add another line to their resume: Medicare consultant." (MarketWatch)

[Opinion] How Much Can I Afford to Spend in Retirement? Enough Already with the 4% Rule
"[T]he 4% Rule is far from an optimal decumulation strategy. And making unspecified modifications to it to address some of its flaws does not make it appreciably better. Rather than rely on set and forget strategy that is supposed to be 'safe' with respect to the risk of outliving one's assets (but may result in significant underspending), you need to periodically crunch your numbers based on your situation. The spreadsheets and actuarial process set forth in [the author's] website make this task relatively easy." (Kenneth A. Steiner, FSA Retired)

[Guidance Overview] The Seven '403(b) Administrative' Sins (Part 1)
"Sin #1: Many plans have provisions to force out small amounts.... This becomes a problem with multiple providers involved because all plan assets count.... Sin #2: Most people are familiar with the retirement plan loan limitations of 50% of account balance, or $50,000 if less. Yet not everybody knows that the $50,000 amount must be reduced by the highest outstanding loan balance in the prior 12 months.... A service provider may deal directly with plan participants and grant loans against balances held within a contract, without taking into account other retirement plan assets." (The Principal Blog)

Taking a Life-Only Pension Payout and Buying Life Insurance to Protect a Spouse Comes with Risks
"[P]ension max plans are often based on assumptions that may not pan out. [Some plans] provide just a 20-year term life insurance policy on the worker's life. If the husband lives longer, 'he will have to buy term life insurance in his 80s, and that will be phenomenally expensive' ... Some strategies use insurance with death benefits that grow based on market assumptions. If the market grows at a lower rate, the death benefit could be too low to cover the survivor's expenses. Also, pension max plans often don't account for taxes." (DailyFinance)

[Guidance Overview] IRS Waives 60-Day Rollover Requirement Where Gambling Addict Withdrew IRA Funds Without Knowledge or Consent of IRA Owner
"The IRS has waived the 60-day IRA rollover rule for a spouse whose husband withdrew funds from her individual retirement account (IRA) without her knowledge or consent, according to an IRS letter ruling.... The husband told the IRA trustee that he was acting in his capacity as his wife's power of attorney and that he needed the funds for his wife's medical expenses. After discovering that her husband had a gambling problem, she revoked the power of attorney she had given to her husband." (Wolters Kluwer Law & Business)


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