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Distributions - misc

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[Official Guidance] Text of IRS Instructions for 2018 Forms 1099-R and 5498: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (PDF)
25 pages. "What's New: ... [1] A conversion of a traditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a Roth IRA, made after December 31, 2017, cannot be recharacterized as having been made to a traditional IRA.... [2] Special rules apply to retirement plan distributions made to employees affected by certain natural disasters that occurred in 2016 and 2017." (Internal Revenue Service [IRS])
Hardship Withdrawals After the Bipartisan Budget Act of 2018
"While there is no change to current rules for 2018, the rules with respect to hardship distributions are going to change significantly beginning in 2019. Beginning in 2019, participants may legally take hardship distributions from QNECs and QMACs and earnings on 401(k) contributions, QNECs and QMACs, if the plan permits them to. Sponsors will want to review their hardship distribution policy and consider whether they wish to extend it to these amounts. There will also be new rules (of some sort) for determining whether a participant has a hardship." (October Three Consulting)
How to Deal with Improper Roth Contributions
"Option 1: Make a corrective distribution.... Option 2: Recharacterize.... Although the Tax Cuts and Jobs Act of 2017 eliminated the ability to recharacterize Roth conversions, the recharacterization option still exists for regular contributions to traditional or Roth IRAs ... Option 3: Accept the excess contributions penalty for one year and move on." (Natalie Choate, in Morningstar Advisor)
IRS Confirms that Safe Harbor Hardship Distributions Cannot Be Taken for Repayment of Student Loans
"The IRS confirmed in [Information Letter 2018-1] that because a safe harbor hardship distribution may be made only for the prospective payment of education expenses, it cannot be made for the repayment of student loans. The IRS suggested that as an alternative to taking a hardship distribution, the participant may be able to get a loan from the plan." (Drinker Biddle)
[Guidance Overview] 401(k) Plan Sponsors: Time to Revisit Your Hardship Withdrawal Provisions
"Will a plan be treated as satisfying the regulatory safe harbor if it retains the 6-month suspension period for purposes of making elective deferrals and employee contributions? What happens to participants whose 6-month suspension period has not yet expired when the change to eliminate the suspension period becomes effective? Will a plan be treated as satisfying the regulatory safe harbor if it retains the requirement that a participant must first obtain any available plan loan before taking a hardship withdrawal?" (Verrill Dana LLP)
Most Retirees Only Withdrawing Required Minimum Distribution
"Sixty-eight percent of retirees are only taking the required minimum distributions (RMDs) from their retirement accounts, [according to] a survey of more than 1,000 retirees with at least $100,000 in investable assets. Only 21% feel confident about taking money out of these accounts.... The survey also found that the median savings these retirees have is $839,000.... 25% said they were not sure if their retirement savings will last throughout their lifetime.... 25% fell short of their retirement savings goal by $250,000 or more." (planadviser)
Three Misleading IRS Forms
"Form 5498 for inherited IRA ... [N]obody has the responsibility to tell the beneficiary about this [RMD] obligation.... Form 5329: Missed RMD 'shortfall' ... if you want a waiver of the penalty, you must ignore the instructions on Form 5329 itself ... file the form along with your explanation of reasonable cause and how you remedied the shortfall and you have a chance at getting an IRS waiver.... Form 1099-R: Where's my QCD? ... [T]he Form 1099-R ... will show a total ... IRA distribution ... with no mention whatsoever that any of it went to a charity, or that there even was a QCD at all." (Natalie Choate, in Morningstar Advisor)
Expressing Projected Accumulated Savings as Lifetime Retirement Income
"[The Actuarial Lifetime Retirement Income Estimator (ALRIE)] is a more robust tool for retirement plan providers (including [DC] plan sponsors, DC plan administrators and brokerages) who want to give plan participants a better idea of how much lifetime retirement income their account balances may provide." (Ken Steiner, FSA Retired)
Lump Sums Are Most Common Payment Option for Participants in Defined Contribution Retirement Plans
"As workers approach retirement, they might wonder how their retirement savings will be paid out. Among private industry workers in defined contribution plans in 2017, most participated in savings and thrift plans (73 percent). Other common plan types include deferred profit sharing (25 percent) and money purchase pensions (18 percent). A lump sum was the most common payment option available to workers in these plans. A lump sum provides retiring workers the full amount of their retirement savings and earnings with no further benefits received from the plan." (U.S. Bureau of Labor Statistics [BLS])
Some Risks Can't Be Modeled
"The shortcoming of [Monte Carlo] simulation is not that it will create unrealistic scenarios -- quite the opposite -- it won't generate many highly unlikely outcomes. So, even after we test retirement plan risk with simulation we still don't know much about the effects of low-probability catastrophic events.... [At] some point we must face the fact that our retirement plan can't manage every risk by relying on good fortune in the stock market.... The best spending rules won't eliminate these risks." (The Retirement Cafe)
How Living Longer Will Impact Your Retirement
"Rather than quit the workforce at age 65, many Americans continue to work either to supplement their retirement income or because they miss the routine of the workplace.... Health care costs may eat up funds.... In the past, pulling out 4 percent of a fund's principal each year was considered safe. However, that rule of thumb may not work anymore.... [M]oving investment money upon retirement into conservative funds, such as those based on bonds or cash, may no longer make sense." (U.S. News & World Report)
[Opinion] The Actuarial Approach to Retirement Spending
"[The authors] believe that the [actuarial budget benchmark (ABB)] is a powerful spending algorithm that is much more robust than any strategic withdrawal plan (SWP) or spending algorithm built into typical Monte Carlo models, and the Actuarial Approach is a time-tested process to keep spending on track over time. Despite these positive features, however, the actuarial profession appears to be reluctant to even discuss the Actuarial Approach, much less endorse it." (Ken Steiner, FSA Retired)
The 4% Withdrawal Rate: Is It Still the Rule of Thumb?
"[If] $40,000 of retirement income is needed outside of pension and/or social security, an individual would need to save $1 million to be safe under the 4% rule. However, if that individual were to save $1.5 million, he/she will likely be safe, even if the 4% rule were to fail. So, don't just aim to meet savings goals -- smash them! ... If an individual is not tracking expenses and budgeting now, it is going to be far more difficult to do so in retirement. And tracking/budgeting now can also have the effect of lowering current expenses, which can result in more retirement savings -- and thus, more income in retirement!" (Cammack Retirement Group)
The Search for Certainty in the Uncertain World of Personal Retirement Financing
"Since it is based on real market information for relatively low-risk investments, the [actuarial budget balance (ABB)] can be used to properly calibrate the assumptions used in the Monte Carlo model for more risky investments.... If you invest in risky assets and the Monte Carlo model indicates that your sustainable spending level is significantly higher than your ABB ... this can also be an indication that the Monte Carlo modeling assumptions may not reflect investment risk properly. If the current spending level produced by the [Monte Carlo] model differs significantly from your ABB, it is a worthwhile educational exercise to discover why this is the case." (Ken Steiner, FSA Retired)
Retirees Get a 401(k) Withdrawal Headache
"More than half of boomers approaching retirement have no money in a 401(k).... For those who do have savings, paralysis is the more common reaction.... Miscalculations can wreak havoc on retirement finances ... [N]ot many people can do the complex calculations required to find an optimal rate of withdrawal.... To preserve their finite resources, retirement experts recommend that boomers ... [1] Track spending and review sources of retirement income.... [2] Delay Social Security.... [3] Carefully plan a withdrawal strategy." (Squared Away Blog, by the Center for Retirement Research at Boston College)
How Six Types of Retirement Income Are Taxed
"[1] Tax-deferred accounts. Prepare to feel pain.... [2] Profits from the sale of investments, such as stocks, bonds, mutual funds and real estate, are taxed at capital gains rates, which vary depending on how long you've owned the investments.... [3] Roth IRAs. Give yourself a high five if your retirement portfolio includes one of these accounts.... [4] Many retirees are surprised -- and dismayed -- to discover that a portion of their Social Security benefits could be taxable.... [5] Payments from private and government pensions are usually taxable at your ordinary income rate ... [6] If you purchased an annuity that provides income in retirement, the portion of the payment that represents your principal is tax-free; the rest is taxable." (Kiplinger)
Asset Decumulation or Asset Preservation: What Guides Retirement Spending? (PDF)
"[W]ithin the first 18 years of retirement, individuals with less than $200,000 in non-housing assets immediately before retirement had spent down (at the median) about one-quarter of their assets ... Retirees with at least $500,000 immediately before retirement had spent down only 11.8 percent within the first 20 years of retirement at the median. While some retirees do spend down most of their assets in the first eighteen years following retirement, about one-third of all sampled retirees had increased their assets over that period." (Employee Benefit Research Institute [EBRI])
Do Stochastic Models Necessarily Do a Better Job of Helping You Determine How Much You Can Safely Spend This Year?
"While ... it is important to employ a 'good model' of the future when developing a retirement plan, [the authors] are not convinced that it is absolutely necessary to use a model that employs simulations.... [A] 'good model' for determining how much you can safely spend in the current year ... is one that: [1] Does a reasonably good job of forecasting future experience, [2] Adequately addresses your retirement risks, and [3] Helps you to make informed financial decisions with some degree of confidence." (Ken Steiner, FSA Retired)
Tax Cut and Jobs Act Loosens Certain Restrictions on Hardship Distributions from 401(k) and 403(b) Plans (PDF)
"The Act directs the Department of the Treasury to modify the existing regulations to remove the 6-month prohibition on employee contributions within one year of the enactment of the Act. The revised regulations will apply to plan years beginning after December 31, 2018 and will apply to both 401(k) and 403(b) plans." (Boutwell Fay LLP)
[Guidance Overview] February Federal Budget Deal Revisits Previously Proposed Changes to Qualified Retirement Plan Rules
"[S]ince both the plan loan and six month suspension are part of the IRS 'safe harbor,' deciding not to make theses change will impact hardship administration (e.g., the new relaxed IRS substantiation guidelines only applies to safe harbor hardship distributions).... Employers wishing to continue to rely on the safe harbors (as opposed to making individual hardship determinations) should plan to adopt these provisions." (Baker McKenzie)
[Guidance Overview] Draft Instructions for 2017 IRS Form 8915A: Qualified 2016 Disaster Retirement Plan Distributions and Repayments (PDF)
"Use 2017 Form 8915A if you were adversely affected by a 2016 disaster listed in Table 1 ... and you received a distribution that qualifies for favorable tax treatment. For distributions for qualified 2017 disasters, see Form 8915B and its instructions." (Internal Revenue Service [IRS])
Simplify Your Retirement with These Money Tips
"Select primary accounts.... Pay off all debts.... Consolidate investment funds.... Eliminate paper.... Downsize or move to a newer home ... Rent ... Cut subscriptions and recurring expenses.... Consider an annuity." (U.S. News & World Report)
How to Generate Retirement Cash Flow by Rebalancing
"A trap some retirees can fall into when it comes to retirement income planning is limiting their strategy to interest and dividends and neglecting the power of rebalancing to capture portfolio growth as an additional income source." (Charles Schwab)
[Guidance Overview] Budget Act Includes Hardship and Other Retirement Plan Relief
"[P]lan sponsors and third party administrators should update their hardship procedures before the 2019 plan year.... IRS guidance would be helpful to clarify the scope of these changes -- and the impact if a plan sponsor chooses to retain the current more restrictive hardship provisions (or elects to retain the existing provisions for pre-2019 hardship distributions) (e.g., possible loss of safe harbor hardship status and/or loss of safe harbor 401(k) or 401(m) plan status)." (Groom Law Group)
Developing a Sustainable Spending Plan vs. Using a Systematic Withdrawal Plan
"A [Systematic Withdrawal Plan (SWP)] isn't coordinated with the amount or timing of income the retiree (or retired couple) may have from other sources (IFOS).... [A]dding the SWP withdrawal to the IFOS for the year may be consistent with the individual's spending goals.... [T]he SWP only focuses on recurring spending needs and does not consider non-recurring spending needs the retiree may have, such as unexpected expenses, long-term care costs or specific bequest motives." (Ken Steiner, FSA Retired)
How to Avoid Penalties on Unpaid 401(k) Loans
"Let's say you leave your job in June, while still owing $2,000 on a 401(k) loan. If you extend your tax return for that year until October, you'd have about 16 months to pay back your loan; that's $125 per month.... Because it is unclear what type of documentation the IRS will require, make sure to keep all forms and communication you receive and consult your tax professional to help you reflect this process on your tax return. Keep in mind that this process could take a few back-and-forth letters with the IRS, due to the timing of when the 1099-R and Form 5498 are mailed." (Financial Finesse)
Save More for Retirement? Nah, I'll Just Work Longer
"[I]ncreasing your savings ... lowers your current spending budget and gives you a smaller spending target to replace in retirement.... The years just prior to your desired retirement will, in many cases, be your best opportunity to save.... You (or your spouse) may not be able (or want) to continue to work at a job that will pay you the same level of earnings (or more) as you age." (Ken Steiner, FSA Retired)
Where Do IRAs Fit in Your Retirement Distribution Plan?
"Why is sequencing withdrawals a key component of successful retirement portfolio management? Because it helps you save on taxes. To the extent that a retiree has both taxable and tax-sheltered assets like IRAs and company retirement plans, it's best to spend the taxable money first. The assets with the most generous tax treatment, meanwhile, should be last in a retiree's spending queue, thereby stretching out the tax benefit for the longest possible period of time." (Morningstar Advisor)
[Official Guidance] Text of 2017 IRS Form 8915A: Qualified 2016 Disaster Retirement Plan Distributions and Repayments (PDF)
"Attach to 2017 Form 1040, 2017 Form 1040A, or 2017 Form 1040NR." (Internal Revenue Service [IRS])
Unraveling Retirement Strategies: Variable Spending from a Volatile Portfolio
"We have two basic choices in portfolio-drawdown strategies: spend a predictable amount annually and risk depleting our portfolio or spend an unpredictable, possibly painful, amount annually to avoid portfolio depletion.... Regardless of which of these strategies you choose, you will spend the amount you need to spend after retiring.... There are many variable spending strategies." (The Retirement Cafe)
[Guidance Overview] Bipartisan Budget Act of 2018 Brings Changes for Retirement Plans
"The Act ... expands the sources from which employees may take hardship distributions.... [It] is not clear that these ... changes will apply to 403(b) plans without a change to the 403(b) regulations ... since the 403(b) regulations specifically prohibit distributions from earnings.... Plans sponsors who would like to allow the repayment of amounts wrongfully levied upon by the IRS to their plans should consider amending their plan language to expressly permit these contributions." (Ice Miller LLP)
[Guidance Overview] Congress Eases Restrictions on Hardship Withdrawals
"None of these changes are mandatory. And they won't apply to a plan unless the plan is amended to reflect them.... [O]ne could argue that facilitating such withdrawals is actually bad for participants -- because it undermines their retirement readiness.... [S]ponsors and administrators of these plans may want to consider whether these new rules simplify plan administration." (Spencer Fane)
New Tax Law Creates Uncertainty for Some Hardship Distributions
"One option is to deny a hardship request for repair to a primary residence if the loss occurs on or after January 1, 2018 and is outside of a federally declared disaster area. To account for this change, a plan may need to modify the instructions provided as part of hardship request materials as well as the guidelines used for reviewing and approving hardship requests. Alternatively, a plan could opt to ignore the section 165 amendment -- and maintain the status quo -- when determining hardship eligibility, unless and until the IRS issues guidance to the contrary." (Conduent)
Budget Bill Affects Retirement Plans and Retirees -- Plan Amendments Expected
"[T]he Bipartisan Budget Act of 2018 ... provides expanded tax relief for victims of natural disasters, relaxes the rules for hardship distributions from employer plans, makes slight changes to portability rules, and requires the IRS to create a simplified tax return for filers age 65 or older." (Ascensus)
[Guidance Overview] Impact of Recent Legislation on 401(k) Hardship Withdrawals
"When a plan document specifically cross references deductibility under Section 165, permitting a withdrawal for expenses that result from an isolated incident could now be contrary to the plan's terms.... It isn't clear whether Congress intended to narrow the circumstances in which a hardship withdrawal may be taken when enacting the change to Section 165, and it's possible that the IRS will publish guidance obviating the need to impose the Federally-declared disaster requirement in the hardship context." (Mayer Brown)
[Guidance Overview] Liberalized Hardship Withdrawals and California Wildfire Relief in Budget Act
"The Bipartisan Budget Act of 2018, which President Trump signed into law [February 9], makes several changes affecting retirement plans.... [E]limination of six-month suspension following hardship withdrawals.... Elimination of requirement to take available loans before a hardship withdrawal.... Expansion of amounts available for hardship withdrawals.... Participants affected by recent wildfires in California [have] greater access to retirement funds.... Tax-favored withdrawals.... Repayment for home purchases.... Loan relief.... Extended amendment deadline." (Mazursky Constantine LLC)
Should Increasing Your Investment Risk Increase Your Current Spending Budget?
"If future experience is more favorable than assumed in the budget calculations, future spending budgets determined under the Actuarial Approach will increase relative to current spending budgets. If future experience is less favorable than assumed, future spending budgets will decrease relative to current spending budgets." (Ken Steiner, FSA Retired)
[Official Guidance] Text of IRS Notice 2018-14: Guidance on Withholding Rules (PDF)
10 pages. "This Notice ... provides that, for 2018, withholding under section 3405(a)(4) on periodic payments when no withholding certificate is in effect is based on treating the payee as a married individual claiming three withholding allowances." (Internal Revenue Service [IRS])
[Official Guidance] Text of 2017 IRS Publication 721: Tax Guide to U.S. Civil Service Retirement Benefits (PDF)
33 pages, Jan. 25, 2018. "This publication explains how the federal income tax rules apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. These benefits are paid primarily under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS)." (Internal Revenue Service [IRS])
Stanford Center for Longevity Proposes New Strategy for Retirement Income
"For the solutions they analyzed, the solutions using the [IRS] required minimum distribution and fixed index annuities did the best job of keeping up with inflation. The analyses also show retirement income solutions with a high withdrawal percentage -- 7% -- naturally spend down savings more quickly than a 3% withdrawal rate." (planadviser)
[Official Guidance] IRS FAQs on Recharacterization of Roth Rollovers and Conversions
"A Roth IRA conversion made in 2017 may be recharacterized as a contribution to a traditional IRA if the recharacterization is made by October 15, 2018. A Roth IRA conversion made on or after January 1, 2018, cannot be recharacterized." [Updated Jan. 18, 2018 to clarify effective date of the Tax Cuts and Jobs Act.] (Internal Revenue Service [IRS])
How to 'Pensionize' Any IRA or 401(k) Plan (PDF)
19 pages. "This research provides a framework for assessing different retirement income generators (RIGs) and navigating the many tradeoffs that older workers face when making retirement income decisions.... [This] project examined 292 different retirement income strategies[.]" (Stanford Center on Longevity)
House Approves Retirement Plan Tax Relief for California Wildfire Victims
"The Senate did not consider the legislation before adjourning for the year. In general, the legislation provides relief from the 10% early withdrawal penalty for qualified distributions up to $100,000 made on or after Oct. 8, 2017, and before Jan. 1, 2019. Distributions must be made by an individual whose principal place of residence was in a wildfire disaster area and who sustained an economic loss due to the wildfires." (National Association of Plan Advisors [NAPA])
It's Time to Perform Your Annual Actuarial Valuation
"The purposes of this exercise are to: [1] Review how well you did in 2017; [2] Develop 2018 spending budget 'data points'; [3] Finalize your 2018 calendar year spending budget (or spending/savings budget for pre-retirees); [4] Document the assumptions, data and adjustments used to determine your final 2018 spending budget; and [5] Collect and save information that may be useful for your future actuarial valuations." (Ken Steiner, FSA Retired)
IRAs, SEPs, SIMPLEs and Qualified Charitable Distributions
"Aside from the philanthropical aspect of making a [qualified charitable contribution (QCD)], a QCD is excludable from taxable income, plus it may count towards the individual's required minimum distribution (RMD) for the year, and may lower taxable income enough for the person to avoid paying additional Medicare premiums.... Where an individual has made nondeductible contributions to his or her traditional IRAs, a special rule treats amounts distributed to charities as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions." (National Association of Plan Advisors [NAPA])
Navigating Pension and Annuity Payments: General Rule and Taxation Guidelines
76-slide PowerPoint presentation. Topics: [1] sources of distributions (employer contributions, employee deferrals, Roths, after-tax contributions, and rollovers); [2] restrictions on how early and how late distributions can be taken; [3] penalties on early withdrawals; [4] taxation of lump sum distributions; [5] taxation of withdrawals and partial distributions; [6] taxation of annuities and other periodic payments; [7] plan withholding and reporting; and [8] participant reporting. (Venable LLP)
Recreate the Certainty of a Pension in a 401(k) World
"[R]etirees that crave certainty may want to consider a fixed return portfolio combined with a variable withdrawal, rather than a fixed annual withdrawal.... The benefit in choosing a variable annual withdrawal (based on a percentage of the portfolio's value at the end of each year) is that you will still have money remaining after 40 years.... The real key is, how much money do you need each year? If withdrawing 4% of the portfolio balance will be sufficient, then a diversified, multi-asset variable return portfolio is very compelling." (Financial Planning)
Qualified Plan Beneficiary Rules, Part 3
"[A] surviving spouse has the option of rolling the funds into his or her own IRA or to a qualified plan, if the qualified plan accepts rollovers. However, many factors determine how and when the rollover should occur." (PenChecks)
Why IRA Holders Need to Scrutinize IRS Form 5498
"The major of piece of information to review on Form 5498 is the prior year-end 'fair market value' of the account (Box 5). If you are subject to taking required minimum distributions ... this is the value the IRS would look at first to figure out whether you took your full RMD.... The trouble is, Form 5498 may not arrive until after you've already filed your tax return." (Morningstar)
Tax Reform: Comparison of Current Law with House-Passed and Senate-Passed Versions (PDF)
9-page chart compares current employee benefits and executive comp law with provisions included in House and Senate bills. (Groom Law Group)
Senate Approves Tax Reform with Differences from House Version (PDF)
"On December 2, the Senate narrowly approved its own version of the Tax Cuts and Jobs Act. Earlier, the House approved a different version of this legislation ... The House has adopted a resolution to send the bills to a conference committee of members of both the House and Senate to resolve differences between the two versions." [7-page chart has side-by-side comparison of current law with the provisions of each bill, with comments.] (Mazursky Constantine LLC)
Spending in Retirement ... or Not?
"Something unexpected has been the shared experience for our most recent generation of retirees. The vast majority haven't been spending their retirement savings -- leaving nest eggs mostly untouched and living on ready sources of income instead. However, future retirees may be less fortunate." (BlackRock)
Modeling Deviations from Assumed Future Experience
"[A] reasonable amount of risk assessment and risk mitigation can be helpful in facilitating achievement of your long-term financial goals.... In addition to making assumptions about the future and periodically balancing your assets with your spending liabilities, ... periodically stress-test important planning assumptions ... so that you can possibly mitigate negative outcomes if actual future experience punches you in the mouth." (Ken Steiner, FSA Retired)
[Guidance Overview] Puerto Rico Treasury Department Issues Post-Hurricane Rules for Qualified Retirement Plan and IRA Distributions and Loans
"As a result of [Administrative Determination No. 17-29], employers must decide whether to amend their plans to incorporate these special rules. Notably, in the event that the employer decides to amend the plan accordingly, AD 17-29 is silent as to which procedure a participant must followed to receive a favorable tax treatment, in the event he/she has already received Eligible Distributions within the Eligible Period prior to the effective date of AD 17-29." (Littler)
New Tax Reform Bill: Major Changes to Executive Compensation Lead Impact on Benefits and Compensation Practices (PDF)
9 pages. "Employers that have used nonqualified deferred compensation plans to attract and retain highly compensated employees ... would need to consider alternatives to achieve their goals ... With the possible exception of incentive stock options, there would appear to be no reason for employers to grant stock options or stock appreciation rights.... [R]ule changes would ease the ability of employees to take hardship withdrawals and would reduce some of the complexity in administering hardship withdrawals.... As a taxable contribution, [Dependent Care FSAs] would be effectively eliminated as they would have no value to employees.... The Tax Bill does not eliminate Health Care Flexible Spending Accounts." (Mazursky Constantine LLC)
[Opinion] Common Misperceptions About Using the Actuarial Approach for Personal Financial Planning
"[The authors] have concerns about stochastic models that promise higher levels of spending without properly quantifying the additional risk. [They] also have concerns about blindly relying on the results of these models, particularly over extended periods of time without adjustment. And while no one knows what future investments will earn, we do know how much insurance companies are currently charging to provide income for life based on life annuity quotes.... [T]his 'known' market pricing information can be useful in developing a low-investment-risk Actuarial Budget Benchmark that you can use in combination with the other approaches you are using to make better financial decisions." (Ken Steiner, FSA Retired)
Structuring Your Retirement Portfolio for Your Income Needs
"The first aspect of [a] three-pronged approach to generating retirement income is creating a plan.... [Y]our next step should be to determine your portfolio allocation. Lastly, you'll make a plan for withdrawing from your portfolio in retirement. The portfolio allocation step is all about choosing the right mix of investments. Here's a guide for how to approach it." (Charles Schwab)
Bob Kaufman Retires After 20 Years of Writing Railroad Retirement Benefits Q&A Column
"Since December 1, 1997, I have posted more than 1,000 Q&A's in my Q&A column on BenefitsLink, and an estimated 5,000 questions I've answered by direct e-mail. Times have changed, and the Railroad Retirement Board has developed an excellent web site, which you can use to find answers to questions about the Railroad Retirement System. I just turned 78. I think it's time to enjoy my retirement and my six grandchildren!" [Send Bob a note of thanks or congratulations! -- Editor] (Robert S. Kaufman on BenefitsLink)
Spousal Rollover Rules for Inherited Roth and Traditional IRAs
"Ultimately, the good news is that spousal beneficiaries have the option to make either choice, and even have flexibility about the timing -- allowing a decision to maintain an inherited stretch IRA for the spouse initially, and completing a spousal rollover later (after he/she turns age 59-1/2). Nonetheless, it's important to carefully consider the choices and trade-offs... especially since a spousal rollover, once completed, is irrevocable and cannot be undone after the fact!" (Nerd's Eye View)
Workers Want Lifetime Income But Aren't Sure How to Get It
"When it comes to retirement income, 62 percent of Americans say they would pick $2,700 a month for the rest of their lives and 30 percent say they would prefer $500,000 all at once... [O]nly 16 percent say they're very familiar with annuities and 51 percent say they're not familiar with them.... Employers offering retirement plans should be aware of this disparity and try to use it to inform how they talk about saving for retirement and spending money in retirement[.]" (Bloomberg BNA)
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