YOUR RETIREMENT SAVINGS OPTIONS. Rep Name, Designation

Transcription

1 YOUR RETIREMENT SAVINGS OPTIONS Rep Name, Designation

2 [Advisor Disclaimer Here]

3 WHAT WE LL COVER TODAY Distribution Options Choices you have for your money How We Can Help Take Action

4 WHAT WE LL COVER TODAY Distribution Options How We Can Help Take advantage of a [Variable: based on advisor service offering] Informed decisions based on your specific situation Take Action

5 WHAT WE LL COVER TODAY Distribution Options What you need to do How We Can Help Take Action

6 YOU HAVE FOUR OPTIONS YOUR RETIREMENT SAVINGS Address current expenses Defer taxes CASH DISTRIBUTION LEAVE IN CURRENT PLAN NEW EMPLOYER S PLAN ROLLOVER IRA

7 TAKING A CASH DISTRIBUTION Key considerations Immediate access [Can take a partial cash distribution] 20% mandatory federal tax withholding 10% early withdrawal penalty (before age 59½)* Taxed as ordinary income in year distributed No more tax-deferred growth potential *Distributions prior to age 59½ from a retirement plan may be subject to a 10% early withdrawal penalty and income taxes. However, if you leave your employer after you turn age 55, you may not be subject to the 10% early withdrawal penalty. There are other limited situations when the 10% early withdrawal penalty may be waived, including, but not limited to, death, permanent disability and qualified reservist distributions.

8 CONSIDER THE COSTS Distribution amount $50,000 This is for illustrative purposes only. Tax withholding assumes a 25% federal tax rate and 6% state and local taxes. Penalties and taxes, other than mandatory withholding, are paid later; they are not taken out of your distribution. Your situation will vary.

9 CONSIDER THE COSTS Distribution amount $40,000 Less 20% mandatory federal withholding -$10,000 This is for illustrative purposes only. Tax withholding assumes a 25% federal tax rate and 6% state and local taxes. Penalties and taxes, other than mandatory withholding, are paid later; they are not taken out of your distribution. Your situation will vary.

10 CONSIDER THE COSTS Distribution amount Less 20% mandatory federal withholding -$10,000 $35,000 Less 10% early withdrawal penalty* -$5,000 *For distributions prior to age 59½. This is for illustrative purposes only. Tax withholding assumes a 25% federal tax rate and 6% state and local taxes. Penalties and taxes, other than mandatory withholding, are paid later; they are not taken out of your distribution. Your situation will vary.

11 CONSIDER THE COSTS Distribution amount Less 20% mandatory federal withholding -$10,000 Less 10% early withdrawal penalty* -$5,000 $32,500 Less additional ordinary federal income taxes (5%) -$2,500 *For distributions prior to age 59½. This is for illustrative purposes only. Tax withholding assumes a 25% federal tax rate and 6% state and local taxes. Penalties and taxes, other than mandatory withholding, are paid later; they are not taken out of your distribution. Your situation will vary.

12 CONSIDER THE COSTS Distribution amount Less 20% mandatory federal withholding -$10,000 Less 10% early withdrawal penalty* -$5,000 Less additional ordinary federal income taxes (5%) -$2,500 Spendable amount $29,500 Less state and local income taxes (6%) -$3,000 *For distributions prior to age 59½. This is for illustrative purposes only. Tax withholding assumes a 25% federal tax rate and 6% state and local taxes. Penalties and taxes, other than mandatory withholding, are paid later; they are not taken out of your distribution. Your situation will vary.

13 LEAVE IN CURRENT PLAN Key considerations Potential for tax-deferred growth continues Retain plan s services and investment options Reserve ability to rollover to a new plan [Ability to continue to repay plan loans] [Preserve tax benefits applicable to employer stock] Access to money is subject to plan provisions May provide access to investments that may not be available outside your plan Investments limited to those in plan There are other important factors to consider when deciding between an employer-sponsored plan and IRA examples include fees and expenses, available services, and protection from creditors. Please consider consulting with a tax advisor. Assumes any minimum balance requirements are met.

14 MOVING TO A NEW EMPLOYER S PLAN Key considerations Potential for tax-deferred growth continues Plan may allow loans Investments limited to those in new plan Access to money is potentially limited by plan provisions Not all employers accept 401(k) rollovers There are other important factors to consider when deciding between an employer-sponsored plan and IRA examples include fees and expenses, available services, and protection from creditors. Please consider consulting with a tax advisor.

15 ROLLOVER IRA Key considerations Potential for tax-deferred growth continues Expanded investment options May be able to retain your current investments Reserve ability to move to a new employer s plan Withdrawal options and requirements for minimum distributions may be different [Possible negative tax consequences when rolling over employer stock please consult a tax advisor] Additional contributions allowed No loans available There are other important factors to consider when deciding between an employer-sponsored plan and IRA examples include fees and expenses, available services, and protection from creditors. Please consider consulting with a tax advisor.

16 POTENTIAL TAX-DEFERRED BENEFITS THE CHARTS BELOW SHOW THE POTENTIAL IMPACT OF TAKING A DISTRIBUTION VERSUS LEAVING IT IN A TAX-DEFERRED ACCOUNT. Assuming a hypothetical 7% return, compounded monthly, savings after 20 years from a $50,000 distribution. Continue to invest tax-deferred $201,937 Take cash* Invest in taxable account Investment earnings taxed at 18.75% each year $95,262 $50,000 $30,625 *Distribution from 401(k) has a 28.75% combined state and federal tax rate and a 10% penalty. This chart is for illustrative purposes only and should not be considered representative of the returns of any of the investment options in your plan. Money in the taxdeferred account is taxed when it is withdrawn. Gains in the taxable account are subject to a capital gains tax rate of 15%; lower maximum tax rates on capital gains and dividends will make the investment return for the taxable account more favorable, thereby reducing the difference in the dollar amounts between the two accounts. Changes in tax rates and the tax treatment of investment earnings may affect comparative results. You should consider your personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision because these factors may further affect the results of the comparison. Distributions from a retirement plan may be subject to a 10% early withdrawal penalty and income taxes, which are not reflected in these results. However, if you leave your employer after you turn age 55, you may not be subject to the 10% early withdrawal penalty. There are other limited situations when the 10% early withdrawal penalty may be waived, including, but not limited to, permanent disability.

17 IRA ROLLOVERS DIRECT VS. INDIRECT DIRECT ROLLOVER Check made payable to the new IRA custodian/plan trustee Two-step process Complete your plan distribution form and select the direct rollover option Complete IRA rollover application for the receiving financial institution If rolling over to another employer plan, contact the new employer for information on forms etc. INDIRECT ROLLOVER Check made payable to you Mandatory 20% federal tax withholding 60 days to roll over all or a portion to IRA Must personally deposit 20% out of pocket if depositing entire balance Any portion not rolled over, including amounts withheld, is considered a distribution A direct rollover can be processed at any time

18 WHAT DO I DO NOW? If you would like to make a change Contact [advisor name here] If you aren t ready to make any changes If you re still unsure

19 WHAT DO I DO NOW? If you would like to make a change Contact [advisor name here] to initiate a distribution If you aren t ready to make any changes No action required Money can remain in the plan If you re still unsure Assumes minimum account balance requirements are met.

20 WHAT DO I DO NOW? If you would like to make a change Contact [advisor name here] to initiate a distribution If you aren t ready to make any changes No action required Money can remain in the plan If you re still unsure Contact [advisor name here] Assumes minimum account balance requirements are met.

21 IT S YOUR FUTURE.

22 SAVE ENOUGH FOR RETIREMENT.

23 WE RE HERE TO HELP.

24 C1CK8136P 2016-AX phone number /website