Fiduciary Tips from RWM Financial Group

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In the world of financial advice, discovering reliable guidance can seem as challenging as finding a needle in a haystack. Amidst a myriad of conflicting opinions and concealed motivations, individuals often feel overwhelmed and uncertain. However, there’s a beacon of integrity in this chaos: fiduciary responsibility.

At RWM Financial Group, we hold ourselves to the highest standard of fiduciary duty, prioritizing the interests of our clients above all else. We believe that financial success is built on a foundation of trust, transparency, and expert guidance. As part of our commitment to empowering individuals with the knowledge they need to make informed decisions, we’re excited to share some valuable fiduciary tips to help you navigate the complexities of personal finance.

Tip 1: Choose Your Advisor Wisely

When it comes to selecting a financial advisor, not all are created equal. It’s crucial to choose an advisor who is held to a fiduciary standard, meaning they are legally obligated to always act in your best interests. This ensures that their advice is unbiased and free from conflicts of interest. Before entrusting someone with your financial future, be sure to ask if they are a fiduciary and inquire about their qualifications, experience, and approach to financial planning.

Tip 2: Understand Fees and Compensation Structures

Transparent fee structures are a hallmark of fiduciary advisors. Before engaging the services of a financial advisor, make sure you clearly understand how they are compensated. Fiduciaries typically charge fees based on a percentage of assets under management or a flat fee for financial planning services. Beware of advisors who earn commissions or receive kickbacks for selling specific products, as these incentives may influence their recommendations.

Tip 3: Establish Clear Goals and Objectives

Successful financial planning begins with a clear understanding of your goals and objectives. Whether you’re saving for retirement, planning for your children’s education, or building wealth for the future, articulating your priorities is essential. A fiduciary advisor can help you define your goals, develop a customized financial plan, and provide ongoing guidance to keep you on track.

Tip 4: Diversify Your Investments

Diversification is a cornerstone of sound investment strategy. By spreading your investments across a variety of asset classes, sectors, and geographic regions, you can help mitigate risk and improve your chances of achieving long-term returns. A fiduciary advisor can help you construct a diversified portfolio tailored to your risk tolerance, time horizon, and financial goals.

Tip 5: Stay Informed and Engaged

Financial planning is not a one-and-done activity but an ongoing process requiring regular review and adjustment. Stay informed about changes in the market, tax laws, and economic trends that may impact your financial situation. Schedule regular check-ins with your fiduciary advisor to review your progress, reassess your goals, and make any necessary course corrections.

Conclusion

Navigating the complexities of personal finance can be daunting, but with the guidance of a valued fiduciary advisor, it’s entirely achievable. At RWM Financial Group, we’re dedicated to helping our clients achieve their financial goals with integrity, transparency, and expertise. By following these fiduciary tips and partnering with a fiduciary advisor, you can take control of your financial future and unlock new opportunities for success. Contact us today to learn more about how we can help you on your journey to economic well-being.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Writing Your Company’s Retirement Plan Goals

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Guess what? Your company’s retirement plan is like a superhero cape for your organization’s goals. But hold up, before you dive into the superhero action, let’s figure out what you really want to achieve.

So, you know how employers sometimes feel a bit lost when setting up those retirement plan goals? Well, no worries! We’re here to change that and lead your team on a path towards a retirement that screams confidence.

Ready for some questions?

What’s the grand goal of your company’s retirement plan?

Your company’s retirement plan isn’t just a financial tool; it’s the cornerstone of your employees’ future. Are you aiming for financial security, early retirement options, or perhaps a plan that fosters a strong company culture? Clarifying these goals ensures your plan aligns with your company’s vision and the well-being of your team.

How are you handling those fiduciary responsibilities?

Fiduciary responsibilities aren’t just a checkbox; they’re a commitment to your employees’ trust. Beyond legal obligations, it’s about ensuring your investment decisions, communication strategies, and plan management prioritize the best interests of your workforce. Regular assessments guarantee you’re not just meeting requirements but exceeding them.

Are your plan fees playing fair?

Uncover the true cost of your retirement plan. Beyond the surface, scrutinize fees, and explore whether there are more cost-effective options. This not only saves money for both the company and employees but also enhances the overall value of your retirement offering.

And hey, what about the latest legislation – how’s that affecting your retirement game?

The retirement landscape is ever-evolving, influenced by legislative changes. Stay ahead by understanding how new laws impact your plan. This knowledge not only ensures compliance but opens opportunities to optimize your strategy and keep your plan in sync with the latest regulations.

Any room for improvements in the plan design?

Don’t settle for the status quo. Explore innovative plan designs that could potentially enhance outcomes for your employees. From investment options to contribution structures, a proactive approach to design ensures your plan evolves with the needs of your workforce, fostering financial wellness.

Conclusion: Don’t let your company’s retirement plan wander.

Now armed with a more profound understanding of your goals, fiduciary responsibilities, fees, legislative impacts, and potential design enhancements, it’s time to take charge. Set a clear direction, map out a strategy, and ensure your company’s retirement plan isn’t just a benefit but a dynamic force propelling your team toward a secure and confident future.

And guess what? We’ve got your back every step of the way. Reach out to us today, and let’s give your retirement plan a well-deserved checkup. Your company’s retirement plan isn’t just a plan-it’s a journey, and RWM Financial Group is here to make it a remarkable one. Contact RWM Financial Group

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Navigating the 401(k) Adventure: A Friendly Guide to Fiduciary Best Practices with RWM Financial Group

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Hey there, savvy decision-makers at RWM Financial Group! Let’s chat about the nitty-gritty of your 401(k) game plan and why keeping an eye on those investments is a big deal. We get it, steering through the fiduciary responsibility maze can be a bit overwhelming, but fear not – we’re here to guide you with a friendly chat and a sprinkle of expertise.

So, you’ve got this investment committee, right? They’ve got their hands full selecting and keeping tabs on the investment options for the retirement plan. No pressure, but it’s a crucial task. But guess what? You’re not alone! There’s a buffet of resources out there to help you make those informed decisions without breaking a sweat.

Why bother, you ask? Well, staying proactive and clued up on these matters can be your secret weapon against potential legal headaches. Nobody wants to be tangled up in lawsuits about excessive fees or ERISA violations. Trust us, it’s not a fun ride.

Your Fiduciary Responsibilities

Let’s dive into the fiduciary responsibilities for a moment. As a fiduciary, you, the plan sponsor/employer, have a duty to act solely in the best interest of the participants. The Department of Labor says, “Hey, be prudent, diversify those investments, and keep the risk of big losses in check.”

Now, we know it’s a complex dance, and that’s why you might want some dance partners. Cue the 3(21) and 3(38) advisors. The 3(21) buddy is like your co-pilot – offering counsel and guidance without taking the wheel. On the flip side, the 3(38) advisor takes full control of the investment decisions, letting you sit back and relax.

Investment Policy Statement

Let’s not forget the Investment Policy Statement (IPS) – think of it as your GPS for the plan’s investments. It’s your roadmap, ensuring the plan’s goals align with its investment approach. Plus, it’s the committee’s handy tool for evaluating the retirement plan’s performance.

Evaluate, Benchmark, and Assess

Now, when it comes to evaluating, benchmarking, and assessing – it’s like giving your plan a health check. Are those goals outlined in the IPS being met? Is the fee structure reasonable? Time to compare your plan to the cool kids in the market to see how it measures up.

Oh, and setting up a 401(k) plan? We get it, the U.S. tax system can feel like a rollercoaster. But fear not! With the right help, even the smallest business can confidently rock a 401(k) plan. Automation is the name of the game, and a financial professional specializing in these plans can be your sidekick.

What is Fiduciary Liability Insurance?

Let’s talk about fiduciary liability insurance – your plan’s superhero cape. It’s not required, but it’s a smart move. This insurance provides legal protection if someone claims a fiduciary duty breach or mismanagement of the retirement plan. No capes against fraud, though – that’s where the ERISA fidelity bond steps in.

Fiduciary Oversight, Financial Integrity

So, my friends at RWM Financial Group, overseeing a retirement plan is a big deal, but with the right squad of fiduciary experts, including those 3(21) or 3(38) advisors, you’ll be cruising smoothly. A well-managed plan and investment strategy? That’s your ticket to an optimized plan and happy employees reaching their retirement goals.

Contact RWM Need a hand in the 401(k) adventure? Drop us a line! We’re here to answer all your burning questions and help you navigate those fiduciary responsibilities like seasoned pros. Cheers to financial well-being!

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Why Sponsor a 401(k) Plan for Small Business?

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5 Good Reasons To Set Up A 401(k) Plan Even if Your Company is Small

The 401(k) plan is a favorite retirement savings vehicle for Americans. It is estimated that 52% of working Americans work for a company that offers a 401(k) or similar plan. But, while more than 67% of very large companies offer  a plan, just 26% of America’s small business owners offer a 401(k) plan and 74% do not offer any form of retirement benefits. Owners of small businesses may incorrectly assume that 401(k) plans just won’t work for them.  Here’s the reality.1

#1: 401(k) plans make it easier to compete for and keep talent.

Seventy-seven percent of employers believe that offering a 401(k) or similar plan is important for attracting and retaining employees. However, some may be underestimating their importance — fully 81% of workers agree that retirement benefits offered by a prospective employer will be a major factor in their final decision-making when job hunting.

#2: A 401(k) can help owners save for their own retirement

Business owners sometimes hope to fund their own retirement through business profits or the future sale of their business. They may sacrifice personal retirement savings in favor of plowing money back into the business. When the company provides a 401(k) plan for employees, owners may be more likely to contribute on their own behalf, too. The savings in the plan can help the business owner’s ability to retire, even if the company itself does not survive.2

#3: 401(k) plans save the company on taxes. 

A key provision of SECURE Act 2.0, passed in December 2022, allows employers with 1-50 employees to claim a credit of up to 100% of start-up costs for the first three years after adopting a new plan.3 This credit is capped at $5,000 per employer annually (total of $15,000  for the three years). A 50% credit from the SECURE Act of 2019 remains for those businesses with 51-100 employees. There is also an additional tax credit for five years of up to $1,000 per employee equal to the applicable % of eligible employer contributions. This tax credit does not apply to defined benefit plans and there is an exception for employees with wages in excess of $100,000. You may also enjoy a reduction in payroll taxes if employees are taking advantage of the plan — which is a great reason to educate them about its benefits.

#4: Plans are easy to set up and operate…with the right help

401(k) plans are available by virtue of an extremely complex U.S. tax system. It makes sense to feel a little intimidated, especially when you have a business to run. Today, there is a lot of help available to make it possible for even the smallest business to confidently establish and operate a 401(k) plan. The administration can be fully automated, and you can select a financial professional who specializes in these plans to help make sure it benefits employees and the company, within the bounds of all applicable laws.

#5: 401(k) plans help employees retire on time.

Their workplace 401(k) plan may provide an opportunity for employees to connect with a financial professional; for many, this is their only such contact. Along with the plan, contact with a financial professional may help employees gain confidence in their ability to retire. And that is important for at least two reasons. 1) Employees who know they will have enough money to retire are more likely to leave the workforce on time. Thus, they make room for the next generation of employees rather than remaining on the job solely for the paycheck. And 2) employees who are worried about finances are often less productive, less healthy, and more expensive for your other benefits.4

  1. Source: Plansponsor.com ↩︎
  2. https://transamericacenter.org/docs/default-source/retirement-survey-of-employers/tcrs2019_srr_employer_survey_retirment_security_challenge.pdf ↩︎
  3. https://www.irs.gov/retirement-plans-plan-participant-employee/retirement-savings-contributions-savers-credit ↩︎
  4. Source: 401kSpecialist Magazine, 2022. ↩︎

Contact RWM If you haven’t yet established a 401(k) plan, take some time to learn more about the ways it may help you grow your business and work towards your future – and those of your employees. RWM Financial Group would be happy to share more insights.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

RP-0393-0323  Tracking #1-05365579 (Exp. 03/25)

2024 Compliance Calendar

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Stay ahead of deadlines with help from our annual Compliance Calendar. If you have any questions about deadlines or the information requested, please get in touch with us to review today!

Download the 2024 Compliance Calendar

RWM Financial Group is committed to providing solutions and support for yours and your employees’ retirement. Here’s a handy checklist to keep your retirement plan running smoothly:

  • Review plan documents: Ensure all information is up to date and compliant with current regulations. Don’t let any outdated policies slip through the cracks!

  • Communicate with participants: Engage your employees by sharing important updates, educational resources, and reminders about upcoming deadlines. Let’s keep them informed and motivated!

  • Evaluate investment options: Take a close look at your plan’s investment lineup. Are there any adjustments needed to align with participants’ goals? Let’s ensure a diverse and appealing selection.

  • Assess plan fees: Scrutinize the fees associated with your plan. Can any be renegotiated or reduced? It’s time to optimize your plan’s cost-effectiveness!

  • Conduct plan audits: Regular audits are crucial to maintaining compliance and identifying any potential issues. Stay ahead of the game and ensure your plan is in tip-top shape.

  • Enhance financial education: Empower your employees with financial literacy tools and resources. Help them make informed decisions for a secure retirement future.

RWM Financial Group takes pride in our roles as your Plan Advisors; we are dedicated to you, your plan, and your employees. We are here to support you every step of the way.

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

Retirement Plan Options for Agricultural Businesses

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Agricultural business owners have distinct financial characteristics compared to the general population, such as higher personal savings and less dependence on social security during retirement. They also have income from both farming and non-farming sources. Therefore, it’s crucial for them to have a well-defined and comprehensive retirement plan.

 In this article, we will explore different retirement plan options available to agricultural business owners. These include IRAs, SIMPLE plans, SEP plans, and 401(k) plans. We will also discuss the importance of estimating net worth, income, and expenses, and how to use that information to create a retirement plan that aligns with your goals. 

Planning for Retirement with an AG Business

Retirement planning for agricultural businesses can be a complex process due to the unique nature of the industry. Compared to typical business owners, farm and ranch households often have:

  • More personal savings
  • Diverse financial portfolios
  • Income from both farm and off-farm sources

Commercial farm operators are also less likely to have employer-sponsored pension plans and often have to rely on farm assets for retirement income.

It is important for farmers and ranchers to begin planning for retirement well in advance, ideally five to fifteen years before they plan to retire. This provides ample time to make necessary adjustments to their financial portfolio and informed decisions about their future.

Let’s take a look at some options.

Retirement Plan Options for Farmers

As farmers and ranchers approach retirement, it’s important to have a plan in place to ensure financial security. There are several options available for retirement planning, including:

IRAs

There are regular (traditional) IRAs and Roth IRAs. Regular IRA contributions can get you a current-year tax deduction of up to $6,000 for 2022, or $7,000 if you’re over 50 years old. However, you will pay income tax on the distributions when you withdraw them in retirement. Roth IRA contributions, on the other hand, get you no tax deduction for the current year, but you will pay no income tax when you receive distributions after 59.5 years old.

SIMPLE PLAN

Simplified Employee Pension plans allow for tax-deductible contributions for the employer, with contribution limits of up to 25% of the employee’s compensation. This plan is a good option for agricultural businesses with a small number of employees.

401(K) PLAN

This plan allows for tax-deferred contributions from employees, with contribution limits of up to $20,500 for 2022 and up to $27,000 if you’re over 50 years old. Employers can also match contributions, but this plan can be more costly and complex to administer.

Farmers and ranchers can also consider investing in farm assets such as land, equipment, and livestock as a means of retirement income. However, it is important to consult with a financial advisor or CPA to determine the best plan for your situation.

Do Farmers Ever Really Retire? 

It ultimately depends on the individual. Some farmers choose to continue working, while others decide to retire for health reasons or to pursue other interests. Some farmers may sell their farm to a younger generation and continue to work on the farm in an advisory role. 

Others may lease their land to another farmer and continue to work on the farm in some capacity. It’s important for farmers to have a plan for retirement and to consider their options for income during retirement, whether that means continuing to work on the farm or finding alternative sources of income.

With all of these options available, many business owners in the agricultural sector may not know where to start. Let’s discuss how to begin developing a retirement plan. 

How Farmers Can Develop a Retirement Plan

Here are four steps for agribusiness owners can use to develop a financial or retirement plan:

Identify Your Goals:

Establishing your financial objectives in advance is the key to ensuring your investment strategy aligns with your goals. While your long-term goals may not change significantly over time (such as retirement planning and passing on your business to the next generation), your investment mix will evolve as you age. As you approach retirement, you may prefer less risky investments. Because markets fluctuate, it’s essential to reassess your goals and investments regularly to ensure that your financial strategy remains on track.

Calculate What You Can Invest

When creating your investment plan, subtract your monthly expenses from your monthly income to calculate your disposable income. This will determine the amount of money you have left over after covering necessary expenses and what you can afford to invest each month.

If you find that your expenses are greater than your income, consider ways to reduce or delay expenses or find ways to increase your income. If your income exceeds your expenses, it’s time to decide how to use the surplus income to achieve your financial goals.

Planning Retirement with a Professional 

Preparing for retirement can be a complex and overwhelming process. It is important to have a thorough understanding of how to make the most of your distributions and avoid potential pitfalls to ensure a comfortable and secure retirement. It can be beneficial to seek guidance from a team of financial experts to develop a personalized plan that aligns with your specific needs and goals.

Contact RWM today to learn more about retirement plan distributions and how we can help you get ready for retirement. 

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. 

Everything You Need to Know About Retirement Plan Distributions 

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Retirement brings you the opportunity to spend time on what matters most in life and finally relax as your career comes to an end. If you’ve taken the right steps throughout your career, then you may be in a position to receive Retirement Plan Distributions. These distributions can be crucial to living comfortably after you’ve stopped working. 

Retirement Plan Distributions allow you to receive payments or withdraw money from retirement plans such as 401(k)s and IRAs. They provide you with a consistent income or a lump sum of cash so you don’t need to worry about working as you get older. It’s vital that you understand Retirement Plan Distributions so you don’t incur penalties, maintain a healthy income when you’re no longer working, and save on taxes.

This article will look at how you can get the most out of your retirement plan and set yourself up for long-term financial freedom. 

Eligibility for Distributions 

The best way to avoid penalties when it comes to your distributions is to understand eligibility. 

In the United States, the retirement age is considered 59.5. If you withdraw any money from your retirement plan before retirement age you will incur a 10% penalty on the cash you withdrew. Unless you absolutely need the money, you should really think twice about any early withdrawals. You’ll be far better off in the long run if you stick to the practice of not touching your retirement plan before retirement age.

There are exceptions however to that 10% penalty. Some examples include:

  • First Time Homebuyers can withdraw up to 10,000 dollars
  • The death of the retirement plan participant 
  • Total and permanent disability 
  • Qualified medical expenses 

Most of the reasons for the penalty being waived are that something has gone really wrong in your life. It’s important to talk to a qualified financial planner if you’re ever in a position where you need to take money out of your plans so they can help with waiving the fee. 

Required Minimum Distributions

A Required Minimum Distribution (RMD) is the minimum amount of funds that you must withdraw from your traditional retirement plan once you reach the age of 72 (increased from 70 with the Secure Act). The government created legislation for RMDs to make sure people don’t use their retirement accounts as a way to avoid paying taxes indefinitely.

The IRS performs a mathematical calculation to inform you how much you need to take out. There will be no penalty if you take out the minimum or more, but it’s possible you’ll have to pay income tax. Some plans allow you to defer the RMD if you’re still employed at 72. 

Lump Sums or Installments?

Once you reach the age where you can start receiving distributions, you’ll have the choice of receiving cash in either a lump sum or installments. This is where a lot of people start to feel overwhelmed as there’s a lot of information about what’s the best step to take toward long-term financial freedom. 

From our own experience in retirement plans, we typically see clients choose  installments as their preferred choice for taking distributions. The two main reasons for this are:

  • Taxes: Getting paid in installments helps you spread out your taxes over time and avoid the higher tax rate that may come with a lump sum distribution.
  • Financial Stability: It’s difficult to make a sitting lump of cash last. Having installments allows you to have a predictable and stable source of income, providing you with peace of mind in retirement. 

There are some pros to choosing a lump sum, such as putting that money into other investments with the help of a qualified financial planner, but this decision should be carefully thought over by a professional as it can lead to greater financial risk. 

Rollovers

It’s possible, even likely, that you’ll change companies over your career. And you may be worried about what happens to all the money in the plan at your current place of work if you’re considering a job change. The good news is that you can take all of that money with you if the new plan accepts money from your previous plan with a rollover. 

A rollover is the process of transferring retirement assets from one plan to another while avoiding any possible penalties and maintaining your tax-deferred growth. 

But what if you want to rollover your retirement plan to an IRA?

Well, you can do that too. A direct rollover to an IRA means that income taxes are still not due. Your future earnings are still tax-deferred and you can now control your money as far as investments are concerned. A direct rollover is an optimal way of transferring assets from account to account. 

Planning Retirement with a Professional 

Planning for your retirement can be stressful. You want to do everything in your power to make it a period of life that’s as stress-free as possible. Having the knowledge of how to make the most out of your distributions and how to avoid potential pitfalls goes a long way toward making a pleasant retirement possible. 

The next step is talking with a team of professionals to find the best plan of action for your financial situation. You can contact RWM today to learn more about retirement plan distributions and how we can help you get ready for retirement. 

Guide to Retirement Savings

When it comes to saving for retirement, there are a lot of things to consider. How much money do you need to save? What kind of account should you use? And how can you make sure your savings last throughout retirement?

Here’s a quick guide to help you get started on the right track.

How Much Should You Save For Retirement?

The answer to this question depends on a number of factors, including your age, income, and lifestyle. A good rule of thumb is to save at least 10-15% of your income for retirement. Also aim to save enough to replace 70-80% of your pre-retirement income.

If you’re starting to save late in life, you may need to save more than 15% to make up for lost time. And if you want to retire early or maintain a comfortable lifestyle in retirement, you may need to save even more.

What Kind Of Account Should You Use?

There are a few different types of retirement accounts available, including traditional IRA’s, Roth IRA’s, and 401(k)s. Each type of account has its own rules and benefits, so it’s important to choose the right one for your needs.

A traditional IRA is a good option if you’re looking for tax-deferred growth on your savings. With a Roth IRA, you’ll pay taxes on your contributions now, but all future withdrawals are tax-free. And a 401(k) is a good choice if your employer offers matching contributions.

How Can You Make Sure Your Savings Last Throughout Retirement?

There are a few different ways to ensure your savings last throughout retirement. One option is to invest in annuities, which provide guaranteed income for life. Another option is to create a withdrawal plan that includes regular withdrawals, as well as a buffer for unexpected expenses.

There are a few other key things you can do to help ensure you don’t run out of money in retirement, including :

  • Saving enough money
  • Diversifying your investments
  • Planning for potential health care costs

A Final Word

No matter how you choose to save for retirement, the most important thing is to start now. The sooner you start saving, the more time your money has to grow. And the more time your money has to grow, the more comfortable you’ll be in retirement.For more advice on saving for retirement, be sure to check out our other articles. And if you have any questions, our team is here to help. Contact us today!

What are Retirement Plan Rollover Options?

When it comes to retirement planning, there are a lot of moving parts. One important decision is what to do with your retirement savings when you leave your job. You may be able to roll over your 401(k) or other employer-sponsored retirement plan into an IRA. Or you may choose to cash out your account. Both options have pros and cons.

Rolling over your account may be the best choice if you want to keep your money invested and continue to grow your nest egg. Cashing out may make sense if you need the money to cover immediate expenses. But cashing out comes with taxes and penalties that can eat into your savings.

Before making a decision, it’s important to understand all of your options. This blog will explore the different rollover options available to you and help you decide which one is right for your situation.

What is a Retirement Plan Rollover?

A retirement plan rollover is when you move money from one retirement account to another. This can be done for a variety of reasons, such as wanting to invest in a different type of account or consolidating multiple accounts.

When you retire, you have the option to rollover your retirement plan into another plan or take the money as a lump sum. Rolling over into another plan is usually the best option because it allows you to continue growing your savings tax-deferred. The most common retirement plans that are rolled over are 401(k)s and 403(b)s. 

What Are the Benefits of Doing a Retirement Plan Rollover?

There can be several benefits to doing a retirement plan rollover. These can include: 

  • Reducing fees
  • Diversifying your investments
  • Consolidating multiple accounts

Retirement Plan Rollover Options

There are a few different options when it comes to rolling over your retirement plan. You can roll over into another employer’s plan, you can roll over into an Individual Retirement Account (IRA), or you can cash out the plan entirely.

  • Rolling over into another employer’s plan is usually only possible if the new employer offers a retirement plan that accepts rollovers. This option can be beneficial because it allows you to keep your money in a tax-deferred account.
  • Rolling over into an IRA is a good option if you want more control over how your money is invested. With an IRA, you can choose from a wider range of investment options than with most employer-sponsored retirement plans.
  • Cashing out your retirement plan entirely should be a last resort. This is because you will have to pay taxes on the money that you withdraw, and you may also be subject to an early withdrawal penalty if you are younger than 59½.

What Are the Different Types of Retirement Plan Rollovers?

There are a few different types of retirement plan rollovers. The most common are: 

Direct Rollovers

With a direct rollover, the money is transferred directly from one account to another. The advantage of a direct rollover is that there is no tax liability on the money being rolled over.

Indirect Rollovers

An indirect rollover is slightly more complicated.With this type of rollover, the money is first withdrawn from the original account and then deposited into the new account. 

The advantage of an indirect rollover is that it allows you to take a 60-day loan with the money before it is deposited into the new account. However, there is a downside to an indirect rollover: if you do not deposit the money into the new account within 60 days, you will be subject to taxes and penalties on the money.

Roth Conversions 

This option involves converting a traditional IRA into a Roth IRA. One of the benefits of a Roth conversion is that it allows you to take advantage of tax-free growth on your investments. With a Roth IRA, you do not have to pay taxes on any money that  you withdraw from the account. This is different from a traditional IRA, where you have to pay taxes on money that you withdraw from the account. 

Another benefit of a Roth conversion is that it allows you to diversify your retirement savings. By converting a traditional IRA into a Roth IRA, you can have both types of accounts and enjoy the benefits of both.

What Are the Requirements for Doing a Retirement Plan Rollover?

Requirements for doing a retirement plan rollover vary depending on the type of rollover you’re doing. For example, indirect rollovers have a 60-day window in which the money must be deposited into the new account, or else it will be considered taxable income. Direct rollovers generally don’t have any such restrictions.

How Do I Do a Retirement Plan Rollover?

The process for doing a retirement plan rollover will vary depending on the type of rollover you’re doing. For example, with a direct rollover, you would simply contact the new account provider and request a transfer from the old account. With an indirect rollover, you would first need to withdraw the money from the old account and then deposit it into the new account within the 60-day window. Roth conversions may require some additional paperwork.

What Are the Tax Implications and Fees of a Rollover? 

Taxes

The tax implications of a retirement plan rollover will depend on the type of rollover you’re doing. In most cases, the money being rolled over will not be subject to any taxes. However, if you do an indirect rollover and don’t deposit the money into the new account within the 60-day window, it will be considered taxable income.

Fees

There may be some fees associated with doing a retirement plan rollover, depending on the type of rollover you’re doing and the account providers involved. For example, you may be charged a transfer fee by the old account provider or a deposit fee by the new account provider.

Things to Keep in Mind

Before doing a retirement plan rollover, it’s important to consider your goals and objectives. You should also compare the fees and expenses of the different accounts involved. And finally, make sure you understand the tax implications of the rollover. 

For help deciding on your rollover plan, reach out to us today. 

Why Should You Save for Retirement Early?

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Are you one of those people who think that they have plenty of time to start saving for retirement? If so, you’re making a huge mistake. The sooner you start saving for retirement, the more money you will have when it comes time to retire. 

In this blog post, we will discuss the importance of saving for retirement early and how compounding interest can help you reach your goals!

The Importance of Retirement Plans

When it comes to personal finance and money management, there’s a lot of misinformation out there. A study from the Financial Industry Regulatory Authority found that only 24% of Americans could pass a basic financial literacy test. This is why financial wellness programs and resources at work like retirement plans, are essential. They provide employees with the education and support they need to make sound decisions about their money.

If you’re not saving for retirement, start today. Even if you can only contribute a small amount, it’s important to get started. The earlier you start saving, the more time your money has to grow through compounding interest. 

Employees who opt out of retirement savings or put it off often don’t have the information necessary to make better decisions based on the power of compounding interest.

What is Compounding Interest?

Compounding interest is when you earn interest on your initial investment, plus any interest that has accumulated in previous periods. Reinvesting your earnings generates new earnings from the original investment – and that’s called compounding.

But it’s not just about starting early. Consistency is key when it comes to saving for retirement. The more you can save on a regular basis, the better off you’ll be down the road.

If you’re not sure how much you should be saving for retirement, a good rule of thumb is to save at least 15% of your income. But if you can save more, that’s even better.

For example, let’s say you start saving $200 per month at age 25. If you continue saving that same amount and earn a conservative return of six percent, you’ll have almost $900,000 saved by the time you retire at age 67.

What Happens if You Wait to Start Saving?

If you wait until age 35 to start saving, you’ll need to save almost $500 per month to have the same amount of money when you retire, as someone who started saving 10 years earlier than you.

The effect of compounding really adds up over time, especially if you start early. In the example above, the difference in savings between starting at 25 versus 35 is almost $600,000.

The power of compounding interest is real. And, the sooner you start saving for retirement, the more time your money has to grow. If you haven’t started saving yet, don’t wait any longer. 

What Types of Retirement Savings Programs Are There?

There are two main types of retirement savings programs – employer-sponsored plans and individual retirement accounts (IRAs). Employer-sponsored plans, such as 401(k)s, 403(b)s, and 457s, are tax-advantaged savings plans offered by many employers. These plans typically offer a matching contribution from your employer, making them a great way to save for retirement.

IRAs are another type of retirement savings account that you can open on your own. There are two main types of IRAs – traditional and Roth. With a traditional IRA, you make contributions with pre-tax dollars and pay taxes on the money when you withdraw it in retirement. With a Roth IRA, you make contributions with after-tax dollars and the money grows tax-free.

There are other types of retirement savings programs, such as annuities and pension plans. But employer-sponsored plans and IRAs are the most common.

If your employer offers a retirement savings plan, be sure to take advantage of it. If you don’t have access to an employer-sponsored plan, open an IRA and start saving on your own. It’s never too late to start saving for retirement.

How Much Would I Have to Save if I Started at 30?

A recent study found that an alarming amount of millennials and Gen-Zers have nothing saved for retirement. That’s scary considering that most people retiring today are living 20-30 years in retirement.

There are a number of reasons why millennials and Gen-Zers are so unprepared for retirement. One reason is that many of them are saddled with student loan debt. According to the study, millennials and Gen-Zers said their student loan debt was the biggest reason they weren’t saving for retirement.

Other reasons include low wages, high living costs, and a lack of financial literacy. Many young people simply don’t know how to save for retirement or don’t think they can afford to.

If you’re in your 20s or 30s and have nothing saved for retirement, don’t despair. It’s never too late to start saving. Even if you can only afford to save a little bit each month, it’s better than nothing. And the sooner you start, the more time your money has to grow.

If you started saving for retirement at age 30, assuming a six percent rate of return, you would need to save $383 per month to have the same amount of money saved as someone who started saving at 25.  

If you’re not sure where to start, try our retirement calculator. This tool can help you figure out how much you need to save and which type of retirement savings account is right for you.

Embed that calculator! 

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Final Thoughts

Saving for retirement may seem like a daunting task, but it doesn’t have to be. The earlier you start, the more time your money has to grow. And with the power of compounding interest on your side, you’ll be on your way to a bright financial future. The earlier you start saving, the more time you have to reach your retirement savings goals.

Saving early can also help you reduce your taxes in retirement. If you contribute to a traditional IRA or employer-sponsored retirement plan, you can deduct your contributions from your taxable income. 

Lastly, saving for retirement early can help you avoid running out of money in retirement. If you start saving early, you’ll have a larger nest egg that can last throughout your retirement years.

What are you waiting for? Start saving for retirement today. Talk to someone on our RWM team about the retirement savings options available to you and make saving for retirement a priority.