Are you ready to roll?

Transcription

1 Are you ready to roll? Is an IRA Rollover right for you? Variable Annuities: Are Not a Deposit of Any Bank Are Not FDIC Insured Are Not Insured by Any Federal Government Agency Are Not Guaranteed by Any Bank or Savings Association May Go Down in Value AXA Equitable Life Insurance Company (NY, NY)

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3 Let s get rolling toward your future. Who would have guessed that one day, you d retire? Today may not be that day, but it s definitely coming so the sooner you get your retirement strategy rolling and figure out how you ll turn your hard-earned assets into income, the better off you ll be. You can choose which direction you d like to go Most of us have held more than one job in our lives. Maybe quite a few jobs. And, if you contributed to a retirement plan, leaving your job (whether to go to a new job or to retire) means you have four options for that money: Take it as cash Leave it in your old employer s plan Transfer it to your new employer s plan (if you re changing jobs) Roll it into an Individual Retirement Account (IRA) or another retirement plan. Let s explore what each of these roads could mean to you 1

4 DISTRIBUTION OPTION 1 TAKING THE CASH Watch out for bumps along the way. While taking a lump sum distribution will give you immediate access to your retirement money, you probably won t get all of it. Taking a lump sum will trigger income taxes on the money you take (including a mandatory 20% withholding for federal income taxes) plus a possible 10% Federal income tax penalty if you re not yet age 59½. If you redeposit that money in an IRA or a new plan within 60 days and you only rollover once in a 12-month period, you won t have to pay the penalties, and you ll pay taxes when you withdraw the money later instead. Hypothetical Example This example assumes a participant under 59½ in a 35% federal income tax bracket. $100,000 RETIREMENT ACCOUNT -$20,000 mandatory 20% withholding -$15,000 additional federal income taxes due -$10,000 10% penalty for early withdrawal (if you re not yet age 59½) $55,000 what you re left with after taxes and penalties Note: The mandatory 20% withholding will be treated as a taxable distribution unless it is redeposited. 2

5 DISTRIBUTION OPTION 2 LEAVING THE SAVINGS IN YOUR OLD EMPLOYER S PLAN Will this be a dead end for you? Leaving your money where is it may seem like the easiest thing to do. You re familiar with the investment and there s no paperwork. But, keep in mind that you ll also have to stay within the guidelines of that plan. You re restricted to the investments within that plan. You may lose some control and access to those assets. You may not be able to make additional contributions. Plus, it s just one more account to keep track of. 3

6 DISTRIBUTION OPTION 3 TRANSFERRING THE MONEY TO YOUR NEW PLAN Before you merge onto this road, make sure it s right for you. If you re starting a new job that has a retirement plan that accepts rollovers, you can transfer your money from your old plan to your new one. This can help you keep track of your investments more easily. Make sure you check out the plan s restrictions and investment options carefully, though, because not all plans are alike and you ll want to make sure you re happy with the choices you have. Not all plans accept rollovers. Plus, what happens if you re starting your own business or retiring? Then, you may need another option for the money in your old employer s plan. 4

7 DISTRIBUTION OPTION 4 ROLLING THE MONEY INTO AN IRA Keep rolling along this road... it s wide open! An IRA rollover lets you transfer money from your old employer s retirement plan into an IRA in your name without paying income taxes or penalties. Here are a few other benefits of a rollover IRA: It s not associated with your employment, so you can take it with you wherever you work. You may have access to more investment and income options. By consolidating retirement accounts into one IRA, you may have an easier time keeping track of what you have and what you need. Plus, with just one account, you ll need to do only one Required Minimum Distribution (RMD) calculation and you ll get only one 1099-R form. How s it done? Make sure you have the right kind of plan Here are the types of accounts you can roll into an IRA: Qualified retirement plans, such as a pension, profit sharing plan, 401(k), or stock bonus plan Traditional IRA 401(a) plan 403(a) plan Governmental 457(b) plan Choose your IRA investments You will need to reinvest the money you roll over. Sometimes, you can roll each investment into the same one that you had before; or, you and your financial professional may need to choose new ones to fit your needs. 5

8 Stop and think before you choose a route. Your current retirement plan and overall financial situation are unique to you, so be sure to consider all of your options before deciding whether to consolidate your retirement plan accounts. The following are some important questions you should ask yourself: How comfortable am I leaving my account under my former employer s plan? How do the investment options in my former employer s plan compare with my current plan do these options meet my investment needs? What fees apply to my account in my former employer s plan versus my current plan? What services do I have access to in my account with my former employer s plan versus my current plan? What, if any, restrictions apply to my account in my former employer s plan versus my current plan? Knowing the importance of saving for retirement, are there any unusual circumstances where I might need access to my account for an important immediate need? 6

9 Choose the road that s best for you. Using an IRA If you prefer, you can roll your old retirement plan assets into a new retirement plan, such as an Individual Retirement Account (IRA). Traditional IRA: Rollover money goes in pre-tax and any earnings are tax-deferred. Withdrawals are subject to ordinary income tax treatment. You have to start withdrawing a Required Minimum Distribution at age 70½. Roth IRA: You ll owe income tax on the amount you put into a Roth IRA immediately, but you can pay that from another source if you want. Money goes in after taxes and there are generally no income taxes on earnings. When you withdraw your savings and any earnings, you won t pay any income tax (as long as there s been money in the Roth IRA for 5 years, and you ve experienced a qualifying event*). You also don t have to take withdrawals from a Roth account if you don t want to. When does a Roth IRA make sense? You may want to consult with your financial professional before making a decision. In general, here are couple of things to consider: If you think you ll be in a higher tax bracket when you retire, you may want to pay taxes on the money now, which is what you ll do with a Roth IRA. Your Roth IRA withdrawals are only tax-free if money has been in the account for 5 years or more. * A qualifying event means you are: 59½, deceased, disabled, or purchased your first qualifying home of $10,000 or more. 7

10 Make sure your money is working for you. Why fund your IRA with an annuity? You can fund an IRA with any number of investments. Each type of investment has its pros and cons, so you may want to talk to your financial professional about what s best for you. Annuity Benefits If you re thinking about an annuity, here are a few things to think about: Considerations 8 Options for lifetime income Annuities are one of the only products available that guarantee income for as long as you live, no matter how long that is. Protection for your loved ones Annuities also generally provide a death benefit for your beneficiaries. Stretch your money It s possible to stretch an annuity, so that, if you don t need the money, you can create an income stream for the next generation while minimizing taxes. Annuities are long-term investment products, meant for retirement planning purposes. Annuties are contractual agreements in which payment(s) are made to an insurance company, which agrees to pay out an income or lump sum amount at a later date. There aren t any additional tax benefits for using an annuity to fund an IRA, since an IRA already has tax-deferred status. So, you will also want to consider the relative features, benefits, and costs of an annuity with any other investment that you may have in connection with your retirement plan or arrangement. Withdrawals from an annuity contract are taxable as ordinary income and, if made prior to age 59½, may be subject to an additional 10% federal tax. Withdrawals may also be subject to contractual withdrawal charges. There are fees and charges associated with annuity contracts, which include, but are not limited to, operations charges, sales and withdrawal charges, administrative fees, and additional charges for optional benefits. Annuities contain certain restrictions and limitations. For costs and complete details, contact a financial professional. Guarantees are based on the claims-paying ability of the issuing company.

11 Fuel up for the trip. If you are considering an annuity to fund your IRA, you may want to check out one of AXA Equitable s annuities. Each provides a different kind of protection: 1 This Income Protection with the Retirement Cornerstone variable annuity and a guaranteed benefit rider. An innovative variable annuity that allows for accumulation of retirement income. When you re ready, you can seamlessly transition from accumulation to a stream of income payments that can last as long as you live. The guaranteed benefit rider would be available for an additional fee. 2 A Protection up to -30% with Structured Capital Strategies * annuity. variable and index-linked annuity contract offers upside potential up to a cap with some downside protection, allowing you to track domestic, international, and commodities market indices for a specific period of time, with some built-in protection from market downturns. 3 Tax-Inefficiency Protection with Investment Edge variable annuity. variable annuity that allows you to defer current taxes when you re trying to accumulate wealth and, provides tax-efficient distributions adding powerful tax advantages to your retirement portfolio. Amounts invested in a variable annuity s portfolios are subject to fluctuation in value and market risk, including loss of principal. *Please note that with the Structured Capital Strategies Structured Investment Option you are only protected from some downside risk; if the negative return is in excess of the protection level, there is a risk of substantial loss of principal. 9

12 Ready to get rolling toward retirement? You re saving for retirement and looking forward to a time when you can use that money to do whatever you want a new hobby or endeavor, trips to see your favorite bands play, or just relaxing with friends and family. Regardless of your future goals, it may be time to start thinking about how you ll turn your retirement assets into income you cannot outlive. For more information on IRA rollovers, AXA Equitable s portfolio of protection, or other options for your retirement savings, please contact your financial professional today. An IRA rollover, funded by an annuity, may put you on the right road. Important Information Visit us at Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a variable annuity. For a prospectus containing this and other information, please contact a financial professional. Read it carefully before you invest or send money. This document was prepared to support the promotion and marketing of AXA Equitable variable annuities. AXA Equitable, its affiliates, distributors, and their respective representatives do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting or legal statements made herein. The annuity contracts described in this brochure are issued by AXA Equitable Life Insurance Company (AXA Equitable), New York, NY Variable annuities are distributed by an affiliate, AXA Advisors, LLC (member FINRA, SIPC). Policy form numbers Retirement Cornerstone 15a: ICC12BASE3, ICC12BASE4 and any state variations. Structured Capital Strategies 16: 2016SCSBASE-I-B-[A/B], 2016SCSBASE-I-C-[A/B], 2016SCSBASE-IADV-[A/B] and any state variations. Investment Edge 15: ICC12IEBASE1, ICC13BASE2 and any state variations thereof. Retirement Cornerstone Series B contracts have a declining seven-year withdrawal charge schedule (7%, 7%, 6%, 6%, 5%, 3%, 1%). Structured Capital Strategies Series B contracts have a declining five-year withdrawal charge schedule (5%, 5%, 5%, 4%, 3%). Investment Edge Series B contracts have a declining five-year withdrawal charge schedule (6%, 6%, 5%, 4%, 3%). AXA is the brand name of AXA Equitable Financial Services, LLC and its family of companies, including AXA Equitable Life Insurance Company (NY, NY), and AXA Advisors, LLC. AXA S.A. is a French holding company for a group of international insurance and financial services companies, including AXA Equitable Financial Services, LLC. This brand name change does not change the legal name of any of the AXA Equitable Financial Services, LLC companies. The obligations of AXA Equitable Life Insurance Company backed solely by their claims-paying ability. Please visit our website at AXA Equitable Life Insurance Company. All rights reserved Avenue of the Americas, New York, NY 10104, (212) GE (8/16) (Exp. 8/18) Cat. #156619