"The 4% rule ... has been widely adopted by financial advisors and individual investors.... Assuming that future market returns are lower than in the past, an initial withdrawal rate closer to 3.5% looks like a reasonable starting point."

"60% of Americans withdrew funds from their individual retirement account (IRA) or 401(k) in 2020.... [An] additional 27% borrowed against their 401(k) during COVID.... 41% of these account holders did so to pay medical expenses."

"[Dirk Cotton] boldly described ... 'The most important decision you will make in retirement planning is how much of your resources to allocate to the upside and floor portfolios'... As an homage to Dirk, in this post we are going to reiterate the relatively simple steps ... you can take to help you make this 'most important decision.' "

"Last year, in response to the COVID-19 pandemic, the United States Congress and the Puerto Rico Department of Treasury (Hacienda) granted favorable tax treatment to coronavirus-related distributions (CRDs) and participant loans from U.S.-qualified plans and Puerto Rico-qualified plans, respectively. Recently, both jurisdictions extended similar tax treatment to certain distributions, hardship withdrawals, and plan loans related to non-COVID-19 disasters."

"Although ubiquitous within the financial services industry, Monte Carlo analysis is likely an ineffective tool that wastes resources and distracts most investors from the essence of the problem.... Monte Carlo is wildly inaccurate in its predictions of how long a retiree's savings are likely to last and employs a methodology that is the opposite of what retirees want. Eliminating it from conversations should lead to safer, simpler, and more-personalized retirement-income portfolios for investors and help advisors create a brand of original thinking."

"[The authors] agree with Mr. Sandidge's concerns regarding Monte Carlo models typically used by financial advisors.... [A] planning approach, utilizing basic actuarial principles and processes (including periodic stress testing) and Liability Driven Investing principles can be a more effective retirement planning tool than Monte Carlo models and can lead to better financial decisions."

"[R]etrofitting 401(k) profit-sharing plans into vehicles for retirement income tests the Second Law of Thermodynamics. DC atomizes the collective pools of DB savings into individual accounts. To reverse that evaporation process will take a lot of work, imagination, and possibly new types of bonds from the US Treasury."

"Many people who retire early use the rule of 55 to avoid the 401(k) early withdrawal penalty.... You must leave your job the year you turn 55 -- or later.... You can only withdraw from your current 401(k).... You can still withdraw early, even if you get another job.... Other ways to avoid the 401(k) withdrawal penalty ... Should you use the rule of 55?"

"Retirement researchers recently have been touting the benefits of a so-called bridge strategy, whereby retirees front-load withdrawals from 401(k) plans and individual retirement accounts to delay claiming Social Security. For each year that a person delays claiming up to age 70, his monthly Social Security check goes up 7% to 8%.... This new idea ... calls on 401(k) plan sponsors to introduce a default 'bridge fund' into 401(k) plans that would use fund assets to deliver automatic monthly payments to anyone who retires in their 60s at a level equivalent to the monthly Social Security benefits that seniors would receive at full retirement age."

"Among those who should consider converting to a Roth are: Anyone who feels that when they retire they will have income that puts them in a higher tax bracket than their current bracket.... Anyone between the ages of 60 to 72 who is retired and on a limited income of Social Security.... Investors like the couple I am working with who want to leave a tax-free legacy behind for their heirs."

23 pages; Jan. 6, 2021. "What's New:  Safe harbor explanations for eligible rollover distributions. Notice 2020-62 contains the two model notices that may be provided to recipients of eligible rollover distributions to satisfy the notice requirements under section 402(f)."

"The new law does include retirement plan tax breaks for non-COVID-19 disaster declarations, like fires or hurricanes. Those breaks are the same breaks Congress provided in prior disaster relief legislation and in the CARES Act for CRDs.... The legislation also includes the same relief for plan loans made on account of a covered disaster that we saw in prior legislation.... [N]one of this relief applies to COVID-related distributions or loans taken in 2021. The new law also does not extend the waiver of required minimum distributions (RMDs) into 2021."

"[This article reviews] example calculations ... in Michael Kitces' and Derek Tharp's January 6 post, Why 50% Probability Of Success Is Actually A Viable Monte Carlo Retirement Projection.... [The authors] compare results using [their] Actuarial Budget Calculator (ABC) with results from the Kitces' Monte Carlo model to gauge how conservative their model results are. In summary, their model is less conservative (more aggressive) than the ABC with default assumptions, in that it produces higher initial total spending budgets."

"Were a plan terminating a defined benefit plan and addressing the issue of checks uncashed by missing participants to follow the PBGC's guidance, it would remit the full benefit amount to the PBGC and then seek a refund from the IRS of the taxes erroneously withheld.... [T]he PBGC's guidance and Rev. Rul. 2019-19 provide seemingly inconsistent guidance to plan administrators, in at least some missing participant situations. In light of this apparent possible conflict, the Council requests that the PBGC and the IRS address this issue in order to ensure uniformity in agency policy."

"[I]investment returns from [single premium life annuity] contracts fall short of the returns IRS mandates for [lump sum distribution] present values, and only recently have barely exceeded 30-Year Treasury Rates.... A rational investor can tolerate a fair amount of default risk to obtain higher investment returns and retain control of his retirement assets.... A retiree's best option may be to diversify his investments through a discount broker or through equity purchases directly from multiple public companies to minimize purchase costs."

"One concern when reporting Monte Carlo results to a client framed around 'probability of success' is that anything less than 100% can sound scary.... [T]his metric alone actually tells us nothing about how severe 'failure' is.... Moreover, adjustments can often save a 'failing' plan, so simply shifting a 50% probability of success framing to a 50% probability of adjustment can take a lot of sting out of that result.... [A] 50% probability of success means adjustment at any point in time in the future, and not necessarily even an adjustment in the near future."

"Nearly 60% of respondents took a withdrawal or loan from their retirement accounts in 2020. However, even as the stock market was touching new highs, investment mixes reported in the poll were very conservative. Stocks accounted for just 36% of the average allocation, and cash made up a whopping 24% of portfolios."

"The analysis shows that the 'Social Security bridge' provides the highest level of utility for households with median wealth ... Introducing such an option as the default in 401(k) plans would require no legislative or institutional changes and would greatly enhance the welfare of participants."

"[1] Paycheck Protection Program relief ... [2] Medical expense deduction floor reduced ... [3] Disaster relief: distributions and loans ... [4] Money purchase plans may offer coronavirus-related distributions ... [5] Partial plan termination relief ... [6] Qualified future transfer elections ... [7] Healthcare provisions ... [8] Education-related provisions."

"[The bill] includes a large surprise medical billing package, a health transparency and patients' rights package, various tax extenders and other tax and health provisions, and a few miscellaneous retirement provisions. This is the largest health care legislative package since the [ACA] and includes more than 10 new patient protections with rapid effective dates, suggesting a very busy health regulatory year in 2021 ... The package does not include relief for multiemployer pension plans facing insolvency or the single-employer defined benefit plan funding relief provisions previously included in the House-passed HEROES Act."

"The Act includes numerous provisions affecting health and welfare plans -- including, most notably, extensive group health plan requirements on surprise medical billing ... The Act requires plans and insurers to provide price comparison tools by telephone and through the plan's website.... Under the Act, for plan years ending in 2020, health flexible spending arrangements (health FSAs) and dependent care FSAs may permit participants to carry over any unused amounts or contributions from the 2020 plan year to the plan year ending in 2021.... The Act expands the ERISA Section 408(b)(2) service provider compensation disclosure rules to group health plans....

"The Act includes the following retirement plan-related provisions: [1] Permits distributions to individuals in certain industries during working retirement. [2] Provides temporary relief from the partial plan termination rules. [3] Provides special disaster relief for distributions and loans from qualified retirement plans. [4] Clarifies the applicability of coronavirus-related distributions and loans to money purchase pension plans. [5] Provides relief for defined benefit plans relating to certain 'qualified future transfers."

"Within [the Consolidated Appropriations Act, 2021] is The Taxpayer Certainty and Disaster Tax Relief Act ... [which] provides that the 10% early withdrawal penalty does not apply to qualified disaster distributions; that special rules apply to retirement plan distributions used for qualified disaster area home purchases; and for increases in the limit for retirement plan loans made because of a disaster."

"[K]ey provisions [of the SECURE Act] become effective in 2021: ... [1] Plans with eligibility provisions that exclude part-time employees must now expand eligibility for 401(k) contributions to include those employees; if they are credited with 500 hours of service in at least 3 years.... [2] Participants (and their spouse) who give birth to, or adopt a child are eligible to withdraw $5,000 on a tax-favored basis from their IRAs or retirement plans.... [3] The age at which RMDs must commence has been increased from age 70½ to 72.... [4] Significant new tax credits were created to encourage the establishment of new plans as well as the addition of Automatic Enrollment (effective in 2020)."

"The legislation extends to money purchase pension plans the option to permit coronavirus-related distributions (CRDs) ... Employers will be provided relief from partial plan terminations that could result from a reduction in workforce due to the COVID-19 pandemic.... Temporary special rules for health FSAs and dependent care FSAs ... Preventing surprise medical bills ... The legislation provides limited non-COVID-related disaster relief for certain federal disasters declared on or after January 1, 2020, and ending 60 days after enactment of this bill.... A CARES Act provision that permitted employers to provide student loan repayment benefits of up to $5,250 to employees on a tax-free basis has been extended to December 31, 2025." [Editor's note: As of Dec. 23, the bill has not yet become law; it's future is uncertain.]

"Households with income in the top 20 percent have nearly $770,000, on average, in retirement savings and other financial assets -- their taxes equal 11 percent of their total retirement income. However, limiting the households to the top 5 percent of the income distribution, the tax rate increases to 16 percent -- and the top 1 percent pays 23 percent. These estimates assume retirees start pulling money out of their taxable 401(k) and IRA accounts when the IRS' required minimum distributions (RMDs) kick in at age 70-1/2 -- this age will increase to 72 next year. The tax rates were very similar under alternate scenarios that assume retirees either start withdrawing savings prior to the RMD or buy an immediate annuity with a survivor's benefit."