2017 Year-End Retirement Action Plan

Transcription

1 2017 Year-End Retirement Action Plan Te end of te year is a good time to assess your overall financial picture, especially your retirement strategy. As te year comes to a close, use tis action plan to elp ensure tat you make te most of your retirement savings for FOR ALL TAXPAYERS LINDA WARD EXECUTIVE DIRECTOR, HEAD OF RETIREMENT & EDUCATION SOLUTIONS Linda leads efforts to prepare and serve clients trougout teir retirement journey. Having served in a variety of senior-level executive roles, Linda brings valuable insigt and deep knowledge of te retirement landscape. Se is recognized and publised as a tougt leader and spokesperson, and quoted in industry publications including Te Wall Street Journal. 1. REVIEW AND UPDATE YOUR PLAN Take te time to set up an appointment wit your Advisor for an annual review to elp evaluate weter you are on track to meet your retirement goals. Our Customized Financial Analysis tool is designed to ensure tat we not only ear your concerns and expectations about retirement, but we also encompass tem in your financial strategy. If you don t ave one, ask your J.P. Morgan Financial Advisor for a Customized Financial Analysis so you can evaluate your current financial situation and elp make sure you are on track to accomplis all your financial goals. Te Customized Financial Analysis is a tool tat provides an additional resource in te evaluation of te potential risks and returns of investment allocation coices. Te projections or oter information generated by te Customized Financial Analysis regarding te likeliood of various investment outcomes are ypotetical in nature, do not reflect actual investment results and are not guarantees of future results. 2. MAXIMIZE RETIREMENT CONTRIBUTIONS Wen it comes to saving for retirement, it s important to take advantage of all te opportunities tat migt be available to you. Consider te following: Employer Matcing Contributions: Don t lose out on te dollars your employer migt add to your 401(k). If your employer matces a portion of your contributions to your 401(k) plan, make sure you contribute at least enoug to capture 100% of your employer s matc. Oterwise you are forgoing additional funds tat can elp you wit your goals. INVESTMENT AND INSURANCE PRODUCTS ARE: NOT FDIC INSURED NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED 1

2 Consider establising an IRA. Make your contribution as early as you can to take advantage of te benefits of tax-deferred compounding. IRA Contributions: Once you maximize your contributions to your employer s 401(k) or oter retirement plan, consider establising an IRA. Make your contribution as early as you can to take advantage of te benefits of taxdeferred compounding. Catc-Up Contributions: Once you reac age 50, te Internal Revenue Service (IRS) allows you to contribute more to your 401(k) and IRA. Tese catc-up contributions can elp if you started saving later in life or are falling sort of your retirement goals. Prepare to Reset Your Contributions: Maximum 401(k) and IRA contribution limits are occasionally increased by te IRS to account for cost-of-living adjustments. Make sure you stay abreast of tese canges so you can adjust your contributions to maximize your tax-deferred savings. Consider Oter Tax-Deferred or Taxable Savings Options: Once you ave reaced te maximum contribution levels for your IRA, 401(k) or oter retirement plan, talk to your J.P. Morgan Financial Advisor about oter taxdeferred or taxable solutions tat migt be available. 3. CONSIDER A ROTH As you save for retirement, remember tat upon distribution, not all dollars will be considered equal. We often concentrate on te amount of dollars contributed to our retirement accounts and may lose sigt of te type of dollars contributed. To te everyday investor earning an income, pre-tax and after-tax saving options will typically be available for teir IRA and teir employer-sponsored retirement plan (e.g., 401k, 403b, etc.) contributions. More employers are offering te Rot saving option in te retirement plan tey make available for employees, giving workers te coice to diversify te tax treatment of teir retirement dollars. Year-end planning offers you te opportunity to review te tax buckets to wic you ave been allocating your retirement dollars and wat diversification opportunities may be available to you. 4. THINK ABOUT CONSOLIDATING Consolidation can be elpful wen you are reviewing your overall asset allocation and portfolio risk. If you ave multiple IRAs at various financial institutions, consolidating tem into one IRA may elp you organize your assets. Consolidation can also be elpful wen you are reviewing your overall asset allocation and portfolio risk. Generally, tere are two metods available to you wen you are tinking about consolidation a trustee-to-trustee transfer or a rollover. Te IRS allows you to make only one IRA-to-IRA rollover per 12-mont period. Tis limit applies no matter ow many IRAs you own or were you old tem. You can still complete an unlimited number of trustee-to-trustee transfers. Your Advisor and a tax professional sould assist you in determining weter consolidation makes sense given your specific circumstances and goals. If consolidation does make sense, tey can guide you as to te best way to accomplis tis. 2

3 TRANSFER VERSUS ROLLOVER Reviewing your asset allocation is an important step to ensure te allocation and risk level are aligned wit your financial goals. A trustee-to-trustee transfer is te more common metod of moving IRA assets from one IRA to anoter. Wit a transfer, you will complete transfer paperwork at te receiving firm and te assets are moved from firm to firm witout your taking receipt of te assets. You can complete an unlimited number of trustee-totrustee transfers eac year. An IRA-to-IRA rollover occurs wen you take receipt of your IRA assets for up to 60 days before tey must be redeposited into te same IRA or anoter IRA. If redeposited witin 60 days, te distribution of assets will not be taxable or subject to penalty, as long as you aven t completed anoter IRA-to-IRA rollover in te past 12 monts. You are required to roll over te same property tat was distributed. For example, if you removed sares, you would ave to roll over te same sares. If te sares were sold during te 60 days, te cas equivalent is not eligible to be rolled over. You can only complete one IRA-to-IRA rollover per 12-mont period. You can move assets from an employer-sponsored retirement plan to an IRA via a direct 1 or indirect rollover 2. You can complete an unlimited number of tese types of rollovers eac year. 5. REEVALUATE RETIREMENT ASSET ALLOCATION Reviewing your asset allocation strategy for your retirement investments including tose eld in your IRA and 401(k) is an important step to ensure te allocation and risk level are aligned wit your financial goals. Talk to your Advisor about reviewing your asset allocation to see if you need to rebalance your retirement portfolio. * 6. REVIEW YOUR BENEFICIARIES If you ve experienced a life event, take time now to complete tis important step to ensure tat your beneficiary designations are still consistent wit your wises. Are te beneficiaries named on your IRA, 401(k), life insurance policies and oter accounts up to date? If you ve experienced a life event (suc as marriage, divorce, te birt of a cild or grandcild or te deat of a spouse) take time now to complete tis important step to ensure tat your beneficiary designations are still consistent wit your wises. Be sure to speak wit your tax and legal advisors before making any beneficiary canges. Remember, te assets in tese accounts go to te person(s) or entity(ies) you ave designated as your beneficiary(ies) in your account forms (or to te default beneficiary(ies) specified in your account agreements, if you ave no living designated beneficiary(ies) at te time of your deat), regardless of ow you may dispose of your assets under your will. Your financial institution will need to onor te latest designation on file from you. * Tere may be a potential tax implication wit a rebalancing strategy for assets tat are not eld in a tax-deferred retirement account or investment. Please consult your tax advisor before implementing suc a strategy. 3

4 FOR TAXPAYERS AGE 70½ OR OLDER Once you turn 70½, tere are retirement planning steps and strategies tat you sould consider: 1. TAKE REQUIRED MINIMUM DISTRIBUTIONS If you ave a Traditional IRA and/or employer-sponsored retirement plan, * you must begin to take your Required Minimum Distributions (RMD) on an annual basis once you turn 70½. You can defer receipt of your first RMD until April 1 of te year following te year in wic you attain age 70½. If you do tis, you ave to take two distributions tat year one for te prior year and one for te current year. If you ave multiple IRAs, you can satisfy your RMD from any one or more of te IRAs. Because te penalties for not taking RMDs are steep (50% of te distribution not taken in a given year), you may want to talk wit your Advisor about automating your RMDs. If you don t need te RMD for day-to-day living expenses, consider saving and reinvesting te RMD eac year for future expenses or oter financial goals. Before requesting an additional RMD, please remember to speak wit your Advisor about any system-generated RMD you may already ave set up so tat you don't duplicate your RMD. Beat te Rus. For any distributions eiter required or desired to be taken by December 31, don t delay until te last minute and risk your distribution not being processed on time. 2. CONSIDER QUALIFIED CHARITABLE DISTRIBUTIONS Taxpayers older tan 70½ are permitted to take tax-free distributions from teir IRAs for caritable purposes. Taxpayers older tan 70½ are permitted to take tax-free distributions from teir IRAs for caritable purposes. Tis provision is commonly referred to as a Qualified Caritable Distribution (QCD) and it allows you to direct a specified amount of your RMD to public carities. Te distribution will not be included in your adjusted gross income, but it will count toward satisfying your RMD requirement. To qualify as a QCD for 2017, te funds will ave to be made payable to te carity(ies) and distributed by December 31 and may not exceed $100,000. Tese distributions will be reported on Form 1099-R as normal distributions. You sould work wit your tax advisor regarding ow to report any distribution paid to a carity on your tax return. 3. CONTRIBUTE TO A ROTH If you are still working, ave earned income, and want to continue to accumulate additional assets for your retirement, you may be able to contribute to a Rot IRA if your adjusted gross income is witin te IRS limits. Rot IRA contributions are not tax-deductible, but qualified distributions will be tax-free upon meeting te criteria. Unlike a traditional IRA, you do not ave to take RMDs from a Rot IRA. Talk to your Advisor if you are interested in establising and contributing to a Rot IRA. * If you are working and participating in te qualified retirement plan were you work, you do not ave to take any RMD from tat plan until te year after you retire (unless you are a 5% owner of te business or te plan oterwise requires). 4

5 FOR THOSE WHO INHERIT RETIREMENT ASSETS If you are te named beneficiary of anoter person s IRA, tere are important rules you need to know about: 1. RMDS If you are a non-spouse beneficiary of an inerited Traditional or Rot IRA, you will ave to take distributions (RMDs) from te IRA. In many cases, you may ave te option of taking annual distributions over your life expectancy, wic leaves funds in te IRA for as long as possible. To take advantage of tis option (were available), you must take your first distribution by December 31 of te year following te year in wic te original owner's deat occurred. If you are a spouse beneficiary, you ave an additional option available you can roll over te IRA over into your own name and treat it as your own. Tis may be a good option if you don t ave an immediate need for your spouse s IRA assets and you want tem to continue to grow on a tax-deferred basis. If you are under age 59½ and need access to your spouse s IRA assets, you may consider transferring te assets to an inerited IRA instead of an IRA in your own name to avoid te 10% premature distribution penalty tat is generally applied wen someone takes IRA distributions before age 59½. WHAT S NEXT It s always a good idea to ceck in wit your Advisor regularly concerning your retirement strategy. Weter you are planning to retire in te near future or not for many years, your Advisor can answer questions you may ave regarding saving and investing or receiving distributions. Te inerited IRA RMD rules are extremely complicated and depend on te facts of your particular situation. Weter you are a spouse or a non-spouse beneficiary of an inerited Traditional or Rot IRA, be sure to speak wit a tax advisor before taking action. 2. DISCLAIM AN IRA INHERITANCE If you are an IRA beneficiary and do not want to accept all or part of te IRA assets you may be entitled to, you can disclaim te assets and tey will pass to oter eligible beneficiaries. Te beneficiary disclaiming te assets cannot direct wo sould receive tose assets (i.e., you cannot direct te disposition of te assets you disclaim). A decision to make a qualified disclaimer must be made witin nine monts of te original IRA owner s deat and before you receive any of te assets. Tis is an irrevocable decision and you sould consult wit a tax advisor or attorney before disclaiming IRA assets. 1 Under a direct rollover, assets distributed from an employer-sponsored qualified retirement plan (e.g., 401(k), 403(b) or 457(b) account) are payable directly to te receiving IRA custodian/trustee, for te benefit of te participant. 2 Wit an indirect rollover, te assets are distributed to te participant/employee, wo as 60 days after te date of receipt to roll over te distributed funds to an IRA or eligible retirement plan. Rollovers of assets from an employer-sponsored qualified retirement plan are not subject to te same restrictions as IRA-to-IRA rollovers (i.e., IRA-to-IRA rollovers are limited to one every 12 monts). Investing involves market risk, including possible loss of principal, and tere is no guarantee tat investment objectives will be acieved. Asset allocation/diversification does not guarantee a profit or protect against a loss. JPMorgan Case & Co., its affiliates, and employees do not provide tax, legal or accounting advice. Tis material as been prepared for informational purposes only, and is not intended to provide, and sould not be relied on for tax, legal and accounting advice. You sould consult your own tax, legal and accounting advisors before engaging in any financial transaction. JPMorgan Case Bank, N.A. and its affiliates (collectively JPMCB ) offer investment products, wic may include bank managed accounts and custody, as part of its trust and fiduciary services. Oter investment products and services, suc as brokerage and advisory accounts, are offered troug J.P. Morgan Securities LLC (JPMS), a member of FINRA and SIPC. Annuities are made available troug Case Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Case Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under te common control of JPMorgan Case & Co. Products not available in all states JPMorgan Case & Co. 5