Financial Planner

2015 Retirement Changes

1. Decreased Creditor Protection for Inherited IRAs.

Currently, if you have money in a 401(k), a pension plan, or an IRA, and you were going to declare bankruptcy, up to $1.25 million would be protected from creditors.

Recently, the U.S. Supreme Court ruled that inherited IRAs are no longer considered retirement funds and therefore, lack the creditor protections afforded under federal law (less than $1.25 million). 2. Introduction of Qualified Longevity Annuities to 401(k)s.

A person can now hold a qualified longevity annuity contract (QLAC) inside of an IRA or 401(k) worth up to the lesser of 25% of their account balance or $125K.

New rules from the Treasury Department state that QLACS are now excluded from the retirement account balance when calculating required minimum distributions when a person reaches the age of 70.5. 3. Reduction in the number of IRA to IRA rollovers.

An individual can withdraw funds from an IRA and roll the funds over to another IRA or the same IRA within 60 days to avoid being taxed.

Now, after a tax court decision, only one 60 day rollover is allowed during a 12 month period no matter how many IRAs a person has. 4. Increased access to annuities in target date funds.

The Treasury Department and the IRS now allow 401(k)s to offer target date funds that include deferred income annuities as the default investment option.

This change gives people another way to generate guaranteed retirement income.

5. Creation of the myIRA (My Retirement Account).

This new Roth IRA will give people that have no access to an employer sponsored retirement plan the chance to save for retirement. The money comes right out of an individual’s paycheck and it gets invested in a guaranteed variable rate government security.

If your age 50 or less, you can have $5,500 taken out of your paycheck per year. If 50+, you can take out $6,500 per year out of your paycheck.

Careless IRA Planning Exposes Risks

If you have or plan on opening a traditional IRA in 2015, listen up. The next ten minutes or so could save you some money, and who doesn’t want more money to begin a new year?

Pre-retirees in their 50s and 60s that have traditional IRAs in their retirement plans may need to pay attention more closely to those accounts. According to a report, a third of savers in their 50s and a quarter between 60 and 64 invest their IRAs completely in stocks, and that might carry unnecessary risk. Another surprising finding is that more than half of pre-retirees with IRAs spent less than an hour planning their IRAs when they invested in them; spending even a little more effort on looking for lower fees and expenses can add value exponentially over time.

Rules and Regulations: Some investors are somewhat intimidated by the complexity of theFinancial Planner rules that govern IRAs. There are so many factors to consider that influence limits and eligibility such as income, age and other investments, not to mention whether or not we’re talking about a Roth or traditional IRA. It’s easy to see how frustrating navigating these may be, but fortunately professional financial advice is just a phone call away. There are actually some great tax breaks that can be taken advantage of by investing in many retirement accounts and playing them against each other.

Diversification and Asset Allocations: Accounts with 100% stock allocations are going to take a hit on days when the Dow drops 2% and the NASDAQ falls 3%, and that’s nothing compared to a market correction. With the high volatility this years’ equity market fluctuated by, diversifications may be something worth looking into. Another thought to consider is that pre-retirees generally have other savings accounts like 401(k)s that they also contribute to. Those accounts might be allocated as 100% bonds, so regardless of how tilted that investor’s IRA is towards stock, his overall asset allocation will be much closer to the average saver’s 50-50 stock-bond split.

When Being Conservative Is Risky: One of the most problematic financial situations for retirees happens when savings growth is outpaced by inflation. This is a common reason why retirement plans fail. With CDs and bonds paying such low returns, it actually costs you purchasing power to avoid any risk at all here. When rates are low, stocks are the better investment to make because their returns are much more competitive. Over the long-term, no other asset has outperformed equities, despite their risk.

Long-Term Perspective: If you are committed to investing heavily in the stock market with one or several of your savings accounts, it’s essential to have the mentality to stick it out through the rough patches. This is a buy-and-hold strategy that will work against you if you realize too late that you have a high risk tolerance and pull out your money with your stocks are priced low. Consider the outcomes first.


If you live in the Seattle, Washington area and would like to know more about the right retirement solutions for you, contact a local retirement solutions service in Seattle, WA.

U.S. stocks rise; Dow closes above 18,000 for the first time

U.S. stocks rose to record levels last week in quiet trading during a holiday-shortened week. Major market indexes repeatedly closed at all-time highs throughout the week, and the Dow Jones Industrial Average ended above 18,000 for the first time on Tuesday.

Both the Dow Industrials and the S&P 500 Index ended at record levels on Friday, marking their second straight week of gains. The small-cap Russell 2000 also ended at an all-time record high. Trading volumes were thin due to Christmas. The U.S. stock market was closed starting at 1 p.m. Wednesday and on Thursday for the holiday.

Fincancial Advisor

Revised GDP shows U.S. resiliency amid slowing global growth A surprisingly strong upward revision in third-quarter U.S. gross domestic product (GDP) was last week’s biggest economic news.

The U.S. economy grew at an annualized 5% pace from July to September, the Commerce Department reported, much higher than its earlier 3.9% estimate and marking the economy’s fastest growth since the summer of 2003.

Bigger-than-expected increases in household purchases and business investment accounted for the revision, which follows a 4.6% advance in the second quarter. The latest GDP data underscored the resilience of the U.S. at a time of slowing growth in Europe and other major economies. Additionally, falling prices at the pump since the end of the third quarter bodes well for consumer spending in the coming months.

Economists believe that this year’s plunge in oil prices will have positive and negative effects on economic growth next year but, on balance, will add slightly to 2015 GDP growth. Up next: home sales, manufacturing gauges, fourth-quarter earnings In the absence of other major economic and corporate news, investors continued to draw comfort from the Federal Reserve’s December 17th announcement that it would be “patient” before raising short-term interest rates, even as the U.S. economy shows signs of strength.

Economic readings in the final week of December include monthly home sales and various manufacturing reports. Investors are also gearing up for the fourth-quarter corporate earnings season, which kicks off in early January.

Well, here we are again on the doorstep of a new year. That means lots of different things for different people from resolutions, including losing weight, learning a new language, BUT, for the government it usually means only one thing…time to make changes.

The changes the government makes are usually to the tax code or something else we aren’t aware of until it’s too late. Lucky for you, today one of the things we’re going to tell you about are the 5 Biggest Retirement Planning Changes for 2015. You’re not going to want to miss this because these 5 things are either going to help you make more money or keep more of it. At the end of the day that’s why we do what we do as financial advisors, isn’t it?

We are here to make sure our clients find ways to make more money off their investments and design smart tax strategies to keep more of it, because it’s not about what you make, it’s about what you keep. Make sure to grab a pen and paper for this important information but if you don’t catch all of it, just write down our number, give us a call and we’d be happy to send this information to you. So let’s kick off the New Year right with the information you need to have a more successful 2015.


If you live in the greater Pensacola, Florida area, then contact a Financial Advisor in Mesa, AZ for more information.