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Distributions - misc

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Are You Being Too Frugal During Retirement? The Actuarial Budget Benchmark Can Help You Decide
"Now researchers are telling us that many retirees are being 'overly cautious' with their investment and spending strategies. [A] recent analysis ... shows, among other things, 'adults become less optimistic about future economic growth and financial health as they age and 'perhaps as a reaction to declining financial optimism, the average adult 60 years or older will trim their spending by about 2.5 percent every year, or by about 20 percent over a 10-year period.' " (Ken Steiner, FSA Retired)
[Discussion] 1099R Distribution Code for Roth Conversion Rollover
"A terminated participant in a 401(k) plan elected to receive her distribution from the plan (all non-Roth 401(k) pre-tax salary deferrals) as a Roth Conversion Rollover (to her Roth IRA). I understand that this money will be taxable income for the year, so I assume that box 1 and 2 will both be the amount of the distribution. What would the distribution code be? I'm thinking a code 1 because it's taxable income, but it's a Roth conversion rollover so I am confused -- I don't see how it can be code G for a rollover, because it's taxable income." (BenefitsLink Message Boards)
[Guidance Overview] Time is Right to Contact Recordkeepers About Hardship Substantiation
"The IRS's openness to substantiation in a summary form will be welcome news to many administrators and plan sponsors. But accepting summary substantiation will require careful review by the recordkeeper and, even with that review, administrators and sponsors will have to rely on participants to maintain records.... Plan sponsors should consider whether the efficiency from reduced documentation is worth the potential for headaches in an IRS audit." (Proskauer's ERISA Practice Center)
Software Solutions to Calculate Safe Withdrawal Rates
"[No] financial planning software solution has ever been created to illustrate the safe withdrawal rate approach.... [In] part, it's because the original safe withdrawal rate research used very simple assumptions -- from a two-asset-class portfolio, to ignoring the impact of fees, and a fixed 30-year time horizon -- which just doesn't hold for a wide swath of retirees. To fill the void, though, two new software solutions have recently emerged for financial advisors, specifically to illustrate the safe withdrawal rate approach, and be able to model the impact of varying assumptions, from a wider range of asset classes, to the impact of investment expense ratios and advisory fees, and time horizons that may be longer or shorter than 30 years." (Nerd's Eye View)
Income Illiteracy May Favor Simple Annuities
"Asset allocation, the 4 Percent Rule retirement portfolio withdrawal mantra, return on asset classes, tax implications, Social Security strategies -- many of these concepts in retirement finance are lost on millions of retirees. But talking to retirees about investing all or a portion of their $200,000 nest egg into an income annuity generating $700 a month for the rest of their lives? It doesn't get much easier than that[.]" (
Social Security Retirement Benefits and Private Annuities: A Comparative Analysis
"This issue paper explains some key features of Social Security retirement benefits, focusing on program funding; benefit payments to retired workers, their spouses, and survivors; and benefit taxation. It then discusses key features of private annuities, including funding and payments, types and features, and taxation. In addition, this paper gives examples of the premiums needed to replicate Social Security retirement benefits and discusses the variables that affect the amount of annuity income. Lastly, this issue paper explains some of the risks of both the Social Security program and the private annuity industry." (U.S. Social Security Administration [SSA])
[Opinion] It's Harder Than You Think to Spend Down Your 401(k) Account in Retirement
"[P]eople seem to have a psychological attachment to their pile; they have spent a lifetime building it up and may be reluctant to draw it down. Second, people are fearful about end-of-life health care needs and want to be sure they have enough money to cover their expenses. Finally, people seem to have a desire to leave a bequest ... So, without some guidance, chances are high that retirees will deprive themselves of necessities. One way to help may be to put more emphasis on the Required Minimum Distributions[.]" (Alicia Munnell, in MarketWatch)
Retirement Lump Sums Being Depleted Quickly
"More than one out of five workers who accepted a lump sum from their employer-sponsored retirement plan have depleted it ... Of the individuals who opted for the lump sum, 62 percent had money left over from the withdrawal, 21 percent had depleted their lump sum and 17 percent didn't know or couldn't recall ... Those who reported depleting their lump sum said it took them an average of five and a half years to burn through the money." (
What It Takes for Financial Advisors to Specialize in Retirees
"[E]ffectively managing a retirement portfolio, and the distributions that occur from it, is about more than just managing the investments themselves. Because retirement portfolios also have to face sequence of return risk -- the possibility that even if the portfolio generates the desired long-term return, if it achieves that return with an unfavorable sequence, ongoing distributions could catastrophically deplete the portfolio before the good returns show up! As a result, the best strategy for retirement income isn't necessarily the one that produces the best return." (Nerd's Eye View)
Withholding Requirements for 401(k) Plan Distributions
"Normally, any taxable distribution is subject to a mandatory federal income tax withholding of 20%. However, there are certain circumstances when a participant can choose not to have the 20% federal income tax withholding from their distribution.... Periodic payments ... Nonperiodic payments ... Distributions sent outside the United States to nonresident aliens ... Eligible rollover distributions." (WithumSmith+Brown, PC)
[Discussion] Are Participant Loans Really Taxed Twice?
"The author of the article purports that merely because the loan repayments are made with after-tax dollars, the compensation needed to repay the loan represents a double taxation (i.e., because every dollar of loan payments = $1.33 of comp). But the analysis does not take into account that the $10,000 of pre-tax money was received without paying any taxes." (BenefitsLink Message Boards)
[Discussion] Why Make a Plan-to-Plan Transfer?
"An employee terminates from Employer A and starts working for Employer B. They are unrelated employers. Both plans allow Plan-to-Plan transfers into and out of the plans. What is the benefit of this participant doing such transfer instead of a rollover?" (BenefitsLink Message Boards)
Find the 'Goldilocks' Solution for Spend-Down During Retirement
"[Sequence of return risk (SORR)] is generally not as significant of an issue with those who use more dynamic spending strategies that periodically adjust for actual investment experience. It is more of an issue with individuals and their financial advisors who disassociate spending decisions from actual investment performance. Rather than having faith that such a decoupling approach will work ... an actuarially determined spending budget [can] be determined each year and that the resulting amount be used as another 'data point' in making spending decisions." (Ken Steiner, FSA Retired)
Dynamic Programming Methods in Retirement Planning
"Ultimately, it's still not clear that there's one 'right' way to do retirement planning. Whether it is Monte Carlo versus historical ... goals-based versus cash flow-based ... or dynamic programming versus non-optimizing approaches ... all can provide different insights, which in turn can help guide decision for clients given the risks and sheer uncertainty they face in planning for retirement. But in the end, if the whole point of doing financial planning is at least in part to come up with an actual plan for how to handle an uncertain future, dynamic programming provides a unique toolset that isn't available in today's traditional financial planning software solutions ... at least, not yet!" (Nerd's Eye View)
Are 401(k) Loans Double Taxed?
"Many financial experts believe that 401k loans are not double taxed. They say that the overall tax treatment of the individual is the same whether he/she takes a 401k plan loan or a loan from somewhere else. An equivalent amount of taxes would be required to pay back a loan from any other lender.... However, that does not change the fact that a participant appears to experience a tax on the principal portion of 401k loans that is more than double his/her incremental tax rate." (Lawton Retirement Plan Consultants)
[Official Guidance] Text of IRS Publication 590-B: Distributions from IRAs (PDF)
60 pages, for use in preparing 2016 returns. "You can make only one rollover from an IRA to another (or the same) IRA in any 12-month period regardless of the number of IRAs you own. However, you can continue to make unlimited trustee-to-trustee transfers between IRAs because it is not considered a rollover.... If an RMD is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the RMD to you, or offer to calculate it for you.... For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan ... However, these distributions are taken into account when determining the modified adjusted gross income threshold." (Internal Revenue Service [IRS])
[Opinion] Continuing Saga of So-Called 'Safe Withdrawal Plan' -- Good News, Bad News
"[T]he good news in this research is that: it is a mistake to view portfolio withdrawals in isolation from other sources of income (as is the common practice), and risks retirees face in retirement can be mitigated by investing in guaranteed lifetime income sources and using dynamic rather than static spending strategies. The bad news ... is that Dr. Blanchett is even talking about utilizing safe withdrawal strategies with the implication that there are still financial planners out there who continue to use such strategies for their clients." (Ken Steiner, FSA Retired)
[Guidance Overview] (Mild) Relief for Safe-Harbor Hardship Administration
"The [memorandum to IRS EP employees] provides for some flexibility to employers and TPAs by allowing them to rely on summaries of information from participants. Employers and TPAs that currently require source documents to substantiate hardship distributions do not need to make any changes to their procedures. While they may want to consider whether collecting summaries might streamline their practices, their current practices assure that documentation is available upon an audit without having to rely on participants' recordkeeping abilities to satisfy any substantiation requests by the IRS." (Trucker Huss)
Because the Whole is Greater than the Sum of its Parts: Using the Actuarial Approach to Determine Spending During Retirement
"When comparing spending strategies, many retirement researchers make simplifying assumptions that individuals have Social Security and maybe one or two other lifetime income sources that are not deferred and, in total, are expected to be received linearly in constant real dollars over a retiree's lifetime planning period. They also assume that individuals will determine their annual spending by summing these individual sources of income and will spend exactly this amount each year.... The primary problem with summing individual sources of income to determine how much one can spend in a year is that it increases the odds that a retiree's spending strategy will be inconsistent with the retiree's spending goals." (Ken Steiner, FSA Retired)
Rollover Roulette: Rollover, Direct Rollover, Direct Payment, Direct Transfer or Transfer (Part 2: Potential Horrible Consequences)
"The only way that a beneficiary may move inherited eligible retirement plan monies to an inherited IRA is through a 'direct trustee-to-trustee transfer.' ... A 'direct rollover' is available only to plan participants (and their surviving spouses) and requires that the monies be paid directly to the plan participant's new employer's eligible retirement plan or IRA. A 'direct rollover' is not subject to the 60-day rule.... An IRA owner can also run into trouble if he or she confuses a 'rollover' with a 'transfer' and, as a result, does more than one rollover between IRAs in a 12-month period." (Morgan Lewis)
Communicating Your ESOP Distribution Policy
"Many companies [find] that a key challenge facing their ESOP participants is understanding the distribution policy.... Live meetings are the best way to answer any immediate questions participants may have. A short recorded webinar can be developed to provide an overview of the distribution policy, including the process and timeline.... Print materials are useful because participants can refer to them at a later date and can share them with spouses or financial advisors." (Principal Financial Group)
IRS Permits Self-Certification for Hardship Withdrawals from Retirement Accounts
"Be careful of inconsistencies such as a medical service invoice for services after a funeral date or an expense for a casualty loss prior to the date of the casualty ... In these circumstances, the agent will ask the employer or the TPA [third-party administrator] for the source documentation. This is where a potential risk exists for the employer and why the IRS has in the past been reluctant to accept self-certification." (Society for Human Resource Management [SHRM])
What to Collect When Processing a Hardship Distribution
"[This article provides] a list of specific documents that the employer must collect based on each type of hardship.... [1] Notifications that the employer/administrator must provide to the employee ... [2] General information for all hardship requests ... [3] Specific information on deemed hardships: [a] Medical care ... [b] Purchase of principal residence ... [c] Educational payments ... [d] Foreclosure/eviction from your principal residence ... [e] Funeral and burial expenses ... [f] Repairs for damage to principal residence." (Castle Rock Investment Company)
How Skillful RMD Planning Can Sustain Retirement Portfolios
"[T]he mathematics of the RMD virtually guarantee that a portfolio cannot be liquidated within 45 years. The required minimum withdrawal may be inadequate to meet the needs of the retiree in the later years, but that is a different matter. On the other hand, the stipulated RMD may be more than the retiree needs to spend that year, so the excess above their needs can be reinvested into a taxable investment account -- or simply stuffed in a mattress!" (Financial Planning)
Strategies to Make the Most of Your Retirement Assets
"In the future, if the government has to increase taxes one of the first doors they may knock will be these type of accounts.... One strategy to review if standard deductions go up is the benefit of converting a portion of your qualified retirement asset to a Roth IRA.... Another option to avoid paying higher taxes in the future is to position a portion of your qualified money into a QLAC.... If tax rates go down and standard deductions increase; delaying your Social Security benefit could prove to be a solid long-term tax play." (Slott Report)
[Guidance Overview] IRS Publishes Audit Guidelines for Hardship Withdrawals from 401(k) and 403(b) Plans
"The IRS audit guidelines only relate to the documentation requirements that apply to safe harbor hardship withdrawals, but are likely to also be relevant to non-safe harbor hardship withdrawals." (Miller Johnson)
[Guidance Overview] New IRS Audit Guidelines for Safe Harbor Hardship Distributions
"[M]any third party administrators offer streamlined hardship withdrawal services and do not maintain source documents or summaries. Employers using such services should ask the third party administrator if it will be modifying its services in light of the new IRS guidance. If not, the employer should maintain summaries to meet the new guidelines in the event of an IRS audit." (Wilkins Finston Friedman Law Group LLP)
[Guidance Overview] IRS Clarifies Permissible Substantiation Procedures for Hardship Withdrawals
"[B]efore relying on an employee's summary of the underlying documents, the plan must first [1] notify the requesting employee of various items of information, and then [2] obtain both general information concerning the participant and his or her request and more specific information concerning the event cited as justifying the hardship withdrawal.... Plans that have been relying on employee self-certifications should certainly do so. By providing the appropriate notice and obtaining the specified information, such self-certifications may be continued." (Spencer Fane)
[Guidance Overview] IRS Provides New Guidelines for Documenting Hardship Distributions
"The memorandum requests that field agents follow a 2-step approach in determining if a hardship distribution was made on account of a deemed immediate and heavy financial need ... [If] the notification provided to employees in Step 1 or the information reviewed in Step 2 is incomplete or inconsistent on its face, the agent may ask for source documents from the employer or third-party administrator." (EisnerAmper)
[Guidance Overview] IRS Views on Self-Certification of Financial Hardship
"In cases where any participant has received more than two financial hardship distributions in a single plan year, the guidelines advise agents to request source documents supporting those distributions if a credible explanation for the multiple distributions cannot be provided.... [P]lan sponsors may wish to consider limitations on the number of financial hardship distributions that a participant may take or to apply a more stringent process for approving requests for financial hardship distributions where more than two requests are made in any plan year." (Benefits Bryan Cave)
[Guidance Overview] IRS Issues Substantiation Guidelines for Safe-Harbor Hardship Withdrawals
"Although the guidance does not have binding legal or regulatory effect, it nonetheless highlights what auditors of plans offering safe-harbor hardship distributions will be looking for ... and reinforces that plan administrators should be regularly reviewing their record retention practices. It also emphasizes the need for proper documentation and internal controls for such distributions, including, to the extent applicable, understanding between TPAs and employer plan sponsors regarding their respective roles in the review and documentation process, as well as the importance of substantiation before distributions are made." (McGuireWoods LLP)
[Guidance Overview] Fiduciary Rules and 401(k) Hardship Distributions: The Latest
"An interesting byproduct of the regulatory process over the past several years is that both advisors and plan-related clients have been sensitized to many of the issues addressed -- albeit sometimes clumsily -- in the fiduciary regulation. For example, should a plan require that its investment advisor act as a fiduciary, even if the regulation ends up not requiring this? If not, why would a plan want to retain someone who is not required to act in the plan's best interest?" (Ferenczy Benefits Law Center LLP)
[Guidance Overview] New IRS Guidance Makes Substantiating Hardship Withdrawals Easier (PDF)
"While not intended to be a statement of law, the memorandum provides IRS examiners with insight as to how to evaluate a plan's hardship withdrawal program. Most importantly, the memorandum provides plan sponsors an alternative, and much less burdensome, process to meet their hardship substantiation obligations." (Lockton)
[Guidance Overview] 401(k) and 403(b) Plan Hardship Distribution Substantiation: What Will the IRS Be Looking For?
"In order to avoid potential unpleasantries on audit, plans that use an electronic or streamlined hardship distribution request process will need to take certain steps. First, the employer or TPA must provide the employee notice ... Second, the summary of information must include, at a minimum, the information specified in the [two recently issued IRS] memoranda ... Third, if a TPA administers hardship distributions, it should provide a report to the employer at least annually that describes the hardship distributions made during the year." (Jackson Lewis P.C.)
[Official Guidance] Text of IRS Memo: Substantiation Guidelines for Safe-Harbor Hardship Distributions from Section 403(b) Plans (PDF)
"This memorandum sets forth substantiation guidelines for EP Examinations employees examining whether a section 403(b) plan safe-harbor hardship distribution is 'deemed to be on account of an immediate and heavy financial need' pursuant to Section 1.401(k)-1(d)(3)(iii)(B) of the Income Tax Regulations.... [The Feb. 23, 2017] 401(k) Memorandum and Attachment are also applicable to hardship distributions from section 403(b) plans[.]" (Internal Revenue Service [IRS])
[Guidance Overview] Recent IRS Guidance for Hardship Distributions
"The Guidelines indicate that if the employer or administrator received a summary of source documents ... the IRS examining agent should inquire whether the employer or TPA had provided a specified notification to the participant prior to making the hardship distribution. Three of the four items on that notice are tax-related items ... The fourth item requires the participant's agreement to preserve source documents and make them available on request to the employer or administrator, without specifying the consequences of the participant's failure to comply with his or her agreement." (The Wagner Law Group)
[Opinion] Why Planning Fees Should Be Payable from Retirement Accounts
"[If] the aim of tax policy is to facilitate better outcomes for consumers, it's worth acknowledging that the current framework unintentionally exhibits poor behavioral characteristics by limiting the ability of consumers to pay for long-term financial planning advice from accounts that are ear-marked for long-term goals (or forcing those financial planning fees to be bundled with [assets-under-management (AUM)] fees or product commissions that may not be practical or feasible in all situations)!" (Nerd's Eye View)
[Guidance Overview] IRS Issues Memorandum on Substantiation Guidelines for Safe-Harbor Hardship Withdrawals from 401(k) Plans
"Although the Memorandum is not formal guidance, it does provide information on what the IRS considers sufficient substantiation and documentation for a hardship withdrawal.... [T]he Memorandum does not address substantiation of non-safe-harbor hardship withdrawals, although the employer should consider applying these standards for any hardship withdrawal." (Sherman & Howard)
Using Income Data from IRS to Examine the Transition to Retirement
"[M]ost individuals do not experience a reduction in inflation-adjusted spendable income after claiming Social Security... Examining the five-year period from one year before individuals first receive Social Security retirement benefits to three years after, 81 percent of individuals had income, either directly or through a spouse, from employer retirement plans, annuities, or IRAs; and another 8 percent had a Form 1099-R (indicating a retirement account transaction, such as a rollover, that did not generate income), a Form 5498 (indicating IRA ownership), or both." (Peter J. Brady, Steven Bass, Jessica Holland, and Kevin Pierce, Via SSRN)
The Consequences of Overestimating Retirement Expenses
"The actuarial approach anticipates that many things will change each year, and the client and financial advisor will meet periodically (I recommend annually) to revisit and recalculate the plan to reflect those changes. Some financial advisors, however, doubt their clients will like the potential budget variability under the actuarial approach. But this variability can be managed using rainy day funds, transference of funds between spending buckets or by smoothing the actuarially calculated budget." (Ken Steiner, FSA Retired, in Advisor Perspectives)
[Guidance Overview] Guidance to IRS Examiners on 401(k)/403(b) Hardship Withdrawals
"[A recent IRS memo to EP employees] is a welcome glimpse into the IRS's view of what might be acceptable in lieu of obtaining actual documentation upfront.... [E]mployers/TPAs should consider whether they prefer to continue requesting source documentation or align their programs with the memorandum. A possible risk with the alternative approach is the participant misplacing or being otherwise unable to produce the source documentation if requested." (Seyfarth Shaw LLP)
[Guidance Overview] Are You Keeping the Right Documentation for 401(k) Hardship Distributions?
"[In a Feb. 23, 2017 IRS memorandum, Employee Plans (EP) Examinations employees] are directed to obtain 'source documents' such as 'estimates, contracts, bills and statements from third parties.' Second, EP employees are directed to obtain a summary of the information contained in the source documents. The summary should include certain notifications made to the employee before the hardship[.]" (Bradley Arant Boult Cummings LLP)
[Guidance Overview] IRS Offers Easier Option for Substantiating Hardship Withdrawals
"Prior informal guidance set out the IRS position that plan administrators must retain financial information and documentation to substantiate the need for a hardship distribution. The new IRS memorandum [provides that] a plan administrator may retain a summary of information contained in source documents. To rely on such a summary, the employee obtaining a hardship distribution must be provided a notice containing information specified in the IRS memorandum, such as the tax consequences of a hardship distribution and the participant's obligation to preserve source documents relating to the hardship." (Husch Blackwell)
Monte Carlo Analysis vs. the Actuarial Approach
"Many financial advisors utilize Monte Carlo analysis (MCA) to help their clients develop financial plans in retirement.... [T]here are several potential problems with MCAs and some of these problems can be mitigated if financial advisors: stress that 'Clients should understand planning is not a one-time occurrence', 'Emphasize the importance of ongoing planning', and 'Present information in more than one way.' " (Ken Steiner, FSA Retired)
The Impact of Decreasing Retirement Spending on Safe Withdrawal Rates
"The conventional method for evaluating safe withdrawal rates assumes that retirees maintain a stable standard of living through retirement in real (inflation-adjusted) dollars.... [C]onstant real spending is not particularly realistic for most retirees. Instead, various studies are finding that real spending actually declines throughout retirement, by as much as 1% to 2% per year. And compounded throughout retirement, this discrepancy between standard industry assumptions and actual retiree behavior may be underestimating the safe withdrawal rate." (Michael Kitces in Nerd's Eye View)
[Official Guidance] Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, March 2017
"The March 2017 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for [February]  2017, these interest assumptions are unchanged." (Pension Benefit Guaranty Corporation [PBGC])
IRA Annuities: Beware of Death Benefit Taxation
"When an immediate annuity is purchased inside an IRA, the contract and the account step out of the regular minimum distribution rules ... Instead, the IRA becomes subject to the special separate RMD regime that applies to defined benefit pension plans and 'annuitized' defined contribution plans." (Morningstar Advisor)
How Does the Level of Household Savings Affect Preference for Immediate Annuities? (PDF)
20 pages. "[P]eople at the bottom-and top-ends of the savings distribution (those with the least and most assets) are more likely to buy annuities than people in the middle of the savings distribution.... A large majority (70.2 percent) of the current Social Security recipient households receive at least three-quarters of their income in annuities from Social Security, employer-provided pensions, and other annuity contracts. The fact that most retirees are already highly annuitized might help explain the lack of demand for additional annuity income." (Employee Benefit Research Institute [EBRI])
Another Question is Answered in the Railroad Retirement Benefits Q&A Column
"Should I start my Railroad Retirement annuity at age 62 (with monthly payments for life at 70% of the monthly payments I would receive if I wait to start at age 66), or should I wait until age 66?" (Robert S. Kaufman on BenefitsLink)
How Much Retirement Savings Will You Need to Feel Financially Secure?
"[1] Are you planning for just yourself or for your household? ... [2] When do you (and your spouse) plan to retire and when do you (and your spouse) plan to commence Social Security benefits or other sources of income? ... [3] What is the standard of living that you and your spouse are trying to replace in retirement? [4] How will you address long-term care costs and other non-recurring costs? ... [5] What are your assumptions for future investment return on your accumulated savings, length of retirement planning period and future inflation? [6] Is your estimate based on today's dollars or future inflated dollars?" (Ken Steiner, FSA Retired)
Tax Dangers of Retirement Plan Distributions
"One of the easiest ways to develop a relationship with a revenue officer is for a taxpayer to cavalierly treat their retirement distributions.... [P]lan administrators will normally only withhold 20% of the federal tax (unless told to do otherwise).... [W]ith upper graduated tax rates of 25% through 39.6%, the 20% withholding may not be enough to cover the actual amount due.... [M]any taxpayers forget to consider the effects of state taxes.... [S]ome folks are under the impression that some or all of their distributions are tax-free." (EisnerAmper)
[Official Guidance] PBGC Interest Rate Summary, January 2017
"In response to feedback from practitioners and plan participants, PBGC reorganized and enhanced the material included in this monthly summary.... [This report provides], in one place, a summary of current interest rates that relate to various calculations required under Title IV of ERISA. PBGC posts this summary each month, as soon as all of the new information is available." [Chart includes January 2017 rates for ERISA 4022 Lump Sum Interest Rates and Variable-Rate Premiums, as well as Q1 Rates for ERISA 4044 Annuities, Late Premium Payments, and Late Withdrawal Liability.] (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, February 2017
"The February 2017 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for January 2017, these interest assumptions are unchanged." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of IRS Publication 915: Social Security and Equivalent Railroad Retirement Benefits, for Use in Preparing 2016 Returns (PDF)
30 pages, dated Dec. 30, 2016. "This publication explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits.... This publication covers ... [1] Whether any of your benefits are taxable. [2] How much is taxable. [3] How to report taxable benefits. [4] How to treat lump-sum benefit payments. [5] Deductions related to your benefits, including a deduction or credit you can claim if your repayments are more than your gross benefits." (Internal Revenue Service [IRS], Social Security Administration [SSA], and U.S. Railroad Retirement Board [RRB])
[Official Guidance] Text of IRS Publication 575: Pension and Annuity Income, for Use in Preparing 2016 Returns (PDF)
43 pages, dated Jan. 4, 2017. "This publication discusses the tax treatment of distributions you receive from pension and annuity plans and also shows you how to report the income on your federal income tax return. How these distributions are taxed depends on whether they are periodic payments (amounts received as an annuity) that are paid at regular intervals over several years or nonperiodic payments (amounts not received as an annuity)." (Internal Revenue Service [IRS])
Another Call for a Paradigm Shift in Retiree Spending Budget Thinking
"Before you develop a spending budget for recurring annual expenses, you need to set aside assets for future expected non-recurring expenses, such as long-term care expenses, unexpected expenses and amounts desired to be left to heirs.... If you want to develop a recurring spending budget that is consistent with your retirement goals, you should spread the present value of your [income from other sources] over your expected retirement period, and add the result to your [strategic withdrawal plan (SWP)] amount for the year ... The simple answer for most individuals or couples, who don't live in a retirement researcher's artificial bubble, is to avoid SWPs." (Ken Steiner, FSA Retired)
How Long Do U.S. Retirees Live Compared to Peers in Other Countries?
"If you're an American retiree worried about outliving your savings, you may have an (unwanted) edge compared to retirees in other countries: U.S. retirees are expected to live shorter lives on average compared to citizens of most other developed nations.... [T]he U.S. ranks last or near last -- depending on the group being analyzed -- in one measure of life expectancy ... remaining life expectancy at age 65." (CBS MoneyWatch)
Squaring-the-Survival-Curve and Retirement Planning
"[W]hile overall life expectancies have been rising, most of the gains are attributable to people living closer to the maximum human lifespan (rising up towards about 115 years), and not as much from increases in the maximum age itself.... The significance ... is that retirement planning may need to adjust for a longer active phase of life... or more pessimistically, for prolonged periods of substandard health as what might have killed us in the past now simply slows us down!" (Michael Kitces in Nerd's Eye View)
Four Keys to Winning the Financial Security Game
"As individuals get close to retirement or reach retirement, their financial priorities generally shift somewhat. While they still must grow their assets (generally by investing them), they must also protect their (now presumably much more significant) assets to make sure that they last for the rest of their lives.... In addition to possibly investing their assets more conservatively than younger individuals, retirees and near-retirees will generally select different forms of insurance than younger individuals to protect against relevant risks." (Ken Steiner, FSA Retired)
Rise in Interest Rates Lowers the Cost of Retirement Income
"Today, investors are enjoying retirement income costs lower by as much as 14% versus a few months ago ... which helps investors estimate how much annual retirement income their current savings can generate starting at age 65." (planadviser)

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