WEBVTT 1 00:00:01.240 --> 00:00:04.759 Talking this week with our retirement planning professionals from Class Financial, 2 00:00:04.799 --> 00:00:07.679 Malia Quavis and Kyle Kite. If you've got a question 3 00:00:07.719 --> 00:00:09.720 for Millie and Kyle, love to have you join us 4 00:00:09.839 --> 00:00:11.759 this morn and tell number to get on the air 5 00:00:12.000 --> 00:00:14.720 six oh eight three two one thirteen ten. That's six 6 00:00:14.880 --> 00:00:17.199 oh eight three two one thirteen ten. We're going to 7 00:00:17.239 --> 00:00:19.039 be talking with Millie and Kyle will be talking. 8 00:00:18.839 --> 00:00:20.519 About rollovers this week. 9 00:00:20.519 --> 00:00:23.079 But if you have anything retirement related to any type 10 00:00:23.079 --> 00:00:26.359 of question, Malia and Kyle are here to answer your question. 11 00:00:26.399 --> 00:00:28.120 Telphonn ombver here at station to get on the air 12 00:00:28.280 --> 00:00:31.079 six oh eight three two one thirteen ten. That's six 13 00:00:31.160 --> 00:00:33.679 oh eight three two one thirteen ten. You can learn 14 00:00:33.679 --> 00:00:37.719 more about Class Financial on their website classfinancial dot com. 15 00:00:37.759 --> 00:00:42.039 That's Class k LaaS Financial dot com and their telephone 16 00:00:42.079 --> 00:00:45.359 number six oh eight four four two five six three seven. 17 00:00:45.479 --> 00:00:47.359 Don't forget no charge for that initial get to know 18 00:00:47.399 --> 00:00:50.320 you appointment Tech Loss Financial. It will be complementary to 19 00:00:50.359 --> 00:00:53.000 you again their number six oh eight four four two 20 00:00:53.039 --> 00:00:56.799 five six three seven joining us this morning. As mentioned 21 00:00:56.799 --> 00:00:59.640 Malia Quavis and Kyle Kite. Malia, how the heck have 22 00:00:59.759 --> 00:01:01.799 you ben my friend, very. 23 00:01:01.600 --> 00:01:02.640 Good, Happy spring. 24 00:01:02.759 --> 00:01:05.480 It's here, it is, it is. It looks like some 25 00:01:05.519 --> 00:01:06.640 great days ahead. 26 00:01:06.719 --> 00:01:08.680 Kyle. How have you been doing. It's been a while 27 00:01:08.719 --> 00:01:11.400 too talking with you. 28 00:01:11.439 --> 00:01:12.000 Doing good. 29 00:01:12.400 --> 00:01:14.079 It's good to talk with both of you. 30 00:01:14.159 --> 00:01:18.239 And as mentioned, we're going to be talking about retirement accounts, rollovers, 31 00:01:18.480 --> 00:01:21.519 maybe switching jobs or of course as you near retirement 32 00:01:21.599 --> 00:01:23.680 you really start to pay closer attention to these type 33 00:01:23.719 --> 00:01:26.040 of things. We'll talk about some of the stuff that 34 00:01:26.280 --> 00:01:28.519 you need to have in mind and need to be doing, 35 00:01:28.519 --> 00:01:30.920 some actions you need to be taking with our retirement 36 00:01:30.959 --> 00:01:33.840 planning professionals this morning, and just a moment, a couple 37 00:01:33.920 --> 00:01:36.280 of things mentioned the website COSS Financial dot com. Don't 38 00:01:36.280 --> 00:01:38.879 freak can listen back to this and previous shows podcasts 39 00:01:38.920 --> 00:01:42.200 all online at that website class financial dot com. That's 40 00:01:42.239 --> 00:01:45.439 coss k l aas financial dot com. You can also 41 00:01:45.480 --> 00:01:48.680 sign up for the weekly Market Pulse newsletter right online again. 42 00:01:48.719 --> 00:01:51.280 They're telephone number six so eight four four two five 43 00:01:51.400 --> 00:01:53.400 six three seven. Later on the show, we're going to 44 00:01:53.439 --> 00:01:55.439 be doing the Class Quiz question the week, another chance 45 00:01:55.439 --> 00:01:57.359 for you to win a fantastic prize. This week, our 46 00:01:57.400 --> 00:02:00.200 friends at Costs Financial have provided a twenty five five 47 00:02:00.239 --> 00:02:02.480 dollar gift card to ihop tell you a little bit 48 00:02:02.519 --> 00:02:04.359 later on in the program how you can win that 49 00:02:04.519 --> 00:02:07.519 little tipto. Oftentimes, just about every week, the question and 50 00:02:07.560 --> 00:02:09.759 answer come up during the program, and before we get 51 00:02:09.800 --> 00:02:12.639 rolling on this week's conversation, let's actually look back at 52 00:02:12.759 --> 00:02:15.520 last week's show, Malia and get the Claws quiz question 53 00:02:15.639 --> 00:02:16.960 and answer there as well. 54 00:02:17.639 --> 00:02:20.280 Yeah, so, one of our favorite topics around here is 55 00:02:20.360 --> 00:02:25.599 discussing Medicare. So last week's question was, according to Medicare 56 00:02:25.680 --> 00:02:29.400 dot gov, Medicare is a federal health insurance program in 57 00:02:29.439 --> 00:02:32.680 the United States for people. What age you're older? So 58 00:02:32.800 --> 00:02:36.439 his multiple choice was at age sixty two, sixty five, 59 00:02:36.639 --> 00:02:40.800 or sixty seven, and Pat called in with a correct answer. 60 00:02:40.879 --> 00:02:45.319 Congratulations to her. Medicare is available to you at the 61 00:02:45.360 --> 00:02:51.199 age of sixty five, So Sean, you cannot sign up yet. Okay, 62 00:02:51.240 --> 00:02:54.240 take note of that, But congratulations to Pat, and thanks 63 00:02:54.319 --> 00:02:57.960 everyone for listening and calling in for answering that question. 64 00:02:58.120 --> 00:03:00.400 It was a fantastic show as well. Good folks. 65 00:03:00.400 --> 00:03:01.919 If you want to listen back, you can always head 66 00:03:01.960 --> 00:03:05.039 on over to class financial dot com. That's class financial 67 00:03:05.080 --> 00:03:07.120 dot com. Somedays I feel sixty five or older. 68 00:03:07.120 --> 00:03:08.879 Moly, I don't know, we all do, we all do. 69 00:03:09.800 --> 00:03:11.960 I don't know if that counts for much, So of 70 00:03:12.000 --> 00:03:13.599 course we might be. 71 00:03:14.319 --> 00:03:17.759 You know, as we talk about approaching retirement and switching jobs, 72 00:03:17.759 --> 00:03:19.280 I know a lot of folks reach out to you 73 00:03:19.759 --> 00:03:22.560 if they've got maybe an old retirement account to roll over, 74 00:03:23.039 --> 00:03:25.319 and Kyle, I got to ask, what should they know 75 00:03:25.439 --> 00:03:27.840 before making making any kind of moves. 76 00:03:28.479 --> 00:03:32.520 Yeah, it's a great question, Sean. So these jobs, it's 77 00:03:32.639 --> 00:03:34.879 very common that they leave behind an older timement plan, 78 00:03:34.960 --> 00:03:36.439 an old four and K or a four H three 79 00:03:36.479 --> 00:03:39.240 B something like that. So some of the stats around 80 00:03:39.280 --> 00:03:42.360 this are According to the Bureau of Labor Statistics, individuals 81 00:03:42.360 --> 00:03:45.840 between ages eighteen and fifty two may change jobs up 82 00:03:45.919 --> 00:03:49.360 to twelve times, and many of those jobs likely included 83 00:03:49.439 --> 00:03:51.960 an employer sponsored retirement planning like a four oh one K, 84 00:03:52.080 --> 00:03:54.080 four H three B simply er A or a set 85 00:03:54.080 --> 00:03:56.800 by RA. So it's very common that, you know, when 86 00:03:56.800 --> 00:03:59.439 you're switching jobs, sometimes these things you kind of forget 87 00:03:59.439 --> 00:04:01.400 about once while, and people will come and see us 88 00:04:01.400 --> 00:04:03.159 ten or fifteen years later and like, oh, yeah, I 89 00:04:03.159 --> 00:04:05.520 had all these old things out there that I forgot about. 90 00:04:05.639 --> 00:04:08.719 So if you have an old retirement account, it's important 91 00:04:08.719 --> 00:04:12.599 to understand your options before you may so many people 92 00:04:12.680 --> 00:04:14.879 choose to roll their funds into the new employer's plan, 93 00:04:14.960 --> 00:04:18.279 which allows for easier account management and avoids immediate taxes 94 00:04:18.360 --> 00:04:21.279 or penalties. But there's some other options that you have 95 00:04:21.399 --> 00:04:24.079 out there as well. So the first one, and the 96 00:04:24.079 --> 00:04:26.600 one that we probably recommend the least, would be to 97 00:04:26.839 --> 00:04:29.519 just cash out the four one K. So while it 98 00:04:29.560 --> 00:04:33.040 may seem tempty, to be careful here because there's some 99 00:04:33.040 --> 00:04:37.240 significant financial consequences, the big one being that the entire 100 00:04:37.319 --> 00:04:40.800 balance of what you cash out becomes taxabile income in 101 00:04:40.839 --> 00:04:44.040 the year that you withdraw it, and if you're under 102 00:04:44.079 --> 00:04:46.279 the age of fifty nine and a half, you'll likely 103 00:04:46.319 --> 00:04:49.399 face a ten percent early withdrawal penalty on top of 104 00:04:49.480 --> 00:04:53.120 federal and state tag and for many many people, you know, 105 00:04:53.160 --> 00:04:54.639 if you're under that age of fifty nine and a 106 00:04:54.680 --> 00:04:56.519 half and you cash this money out, you're going to 107 00:04:56.600 --> 00:04:59.000 lose you know, somewhere in that twenty to thirty percent 108 00:04:59.079 --> 00:05:02.079 range between the the penalty and the taxes on it. 109 00:05:02.199 --> 00:05:04.759 So one you know some options where this might work 110 00:05:04.800 --> 00:05:06.519 is if you only have a small balance, this might 111 00:05:06.560 --> 00:05:08.120 not be a big deal, So think of you know, 112 00:05:08.160 --> 00:05:10.480 one thousand, two thousand and three thousand dollars. It's not 113 00:05:10.600 --> 00:05:12.959 as big with the penalty and stuff like that. But 114 00:05:13.040 --> 00:05:15.800 if you've accumulated a lot of money inside that plan, 115 00:05:16.639 --> 00:05:19.360 adding that lump sum to your yearly income could push 116 00:05:19.399 --> 00:05:21.839 you into that higher tax bracket as well. So that's 117 00:05:21.879 --> 00:05:23.399 part of the reason why we say, you know, it's 118 00:05:23.439 --> 00:05:25.720 one of our least recommended options. 119 00:05:25.720 --> 00:05:28.519 I would say so talking this morning with Malia Kuavis 120 00:05:28.519 --> 00:05:31.279 and Kyle Kite, they are our retirement planning professionals from 121 00:05:31.319 --> 00:05:34.079 cost Financial. You can learn more online their website costs 122 00:05:34.160 --> 00:05:37.000 financial dot com. That's cost k l a a s 123 00:05:37.079 --> 00:05:39.720 financial dot com. Fantastic resource to learn more about the 124 00:05:39.720 --> 00:05:42.560 team at Costs Financial. You can learn about their separate divisions, 125 00:05:42.639 --> 00:05:44.639 how they can help you or if you're an employer 126 00:05:44.680 --> 00:05:46.959 as well. They've got a lot of information up on 127 00:05:47.000 --> 00:05:50.079 the website costs Financial dot com. There tell for number six, 128 00:05:50.120 --> 00:05:53.199 SOH eight four four two five, six three seven, don't 129 00:05:53.240 --> 00:05:55.000 forget no charge for that initial gets to know your 130 00:05:55.000 --> 00:05:57.680 appointment at Costs Financial. It will be complimentary to you. 131 00:05:57.920 --> 00:06:00.279 Again they're number six, SOH eight four four two five 132 00:06:00.360 --> 00:06:02.319 six three seven, and it joined us this morning with 133 00:06:02.360 --> 00:06:03.879 a question. Now I gotta do is pick up phone, 134 00:06:03.879 --> 00:06:06.319 give us call six eight three two one thirteen ten. 135 00:06:06.560 --> 00:06:09.680 That's six oh eight three two one thirteen ten. So, Kyle, 136 00:06:09.720 --> 00:06:11.959 as you talk about some of the penalties and some 137 00:06:12.000 --> 00:06:15.920 of the consequences of doing a four oh one K withdrawal, 138 00:06:15.959 --> 00:06:18.040 are there ways to kind of put the genie back 139 00:06:18.040 --> 00:06:18.480 in the bottle? 140 00:06:18.480 --> 00:06:20.920 Are there ways to reverse a four oh one K withdrawal? 141 00:06:21.800 --> 00:06:23.439 Yeah, so there is, Sean, but you got to be again, 142 00:06:23.560 --> 00:06:25.319 very very careful, and you got to do it quickly. 143 00:06:25.399 --> 00:06:27.240 So if you act fast, you might be able to 144 00:06:27.319 --> 00:06:30.800 undo one of these withdrawals. So this is called a 145 00:06:31.040 --> 00:06:34.800 which means redepositing the funds into a qualified retirement account 146 00:06:34.800 --> 00:06:38.000 within those sixty days. But you got to remember that generally, 147 00:06:38.000 --> 00:06:39.959 when you do a four oh one K cash out, 148 00:06:39.959 --> 00:06:43.120 they automatically withhold that twenty percent in taxes, so you're 149 00:06:43.120 --> 00:06:44.720 going to have to not only put the money back 150 00:06:44.759 --> 00:06:46.639 that they cashed out to you, but also make up 151 00:06:46.639 --> 00:06:49.920 those difference in taxes as well. And you can got 152 00:06:49.920 --> 00:06:51.160 to keep in mind that you can only do one 153 00:06:51.240 --> 00:06:54.959 rollover per year between those iras. So again these are 154 00:06:55.000 --> 00:06:56.319 a lot of the things that we have to be 155 00:06:56.439 --> 00:06:58.600 very very careful of, and again why we don't recommend 156 00:06:58.639 --> 00:07:02.000 this very often for people. So the next option would 157 00:07:02.000 --> 00:07:04.319 be to keep your four one K with your former employer. 158 00:07:04.480 --> 00:07:06.199 So again this is where people kind of just forget 159 00:07:06.199 --> 00:07:07.720 about it and leave it sit there or they don't 160 00:07:07.720 --> 00:07:11.839 take any action. Many come the funds in the plane 161 00:07:11.959 --> 00:07:15.240 and the money can continue to grow tax deferred. But 162 00:07:15.480 --> 00:07:17.319 it's getting more and more common that if your balance 163 00:07:17.360 --> 00:07:20.800 is under five thousand, your former employer may eventually ask 164 00:07:20.839 --> 00:07:22.519 you to move it. So they'll either push it into 165 00:07:22.560 --> 00:07:24.839 an IRA for you, or they'll keep you know, sending 166 00:07:24.879 --> 00:07:27.360 you emails or letters in the mail that they want 167 00:07:27.399 --> 00:07:30.279 you to move it. And while this option keeps it simple, 168 00:07:30.319 --> 00:07:32.560 there's a few drawbacks to this. So the first one 169 00:07:32.600 --> 00:07:34.720 is that you can't contribute to the account anymore, so 170 00:07:34.759 --> 00:07:37.240 you can't contribute to prior for to one k's, it'd 171 00:07:37.240 --> 00:07:39.800 only be current four to one k's or current iras 172 00:07:39.839 --> 00:07:42.240 that kind of stuff. And you'll need to monitor your 173 00:07:42.240 --> 00:07:44.639 investments to ensure that they align with your risk tolerance. 174 00:07:44.759 --> 00:07:46.519 So again, these things can change as you get a 175 00:07:46.519 --> 00:07:48.639 little bit older. Maybe you've left it there for twenty 176 00:07:48.680 --> 00:07:50.240 years and you're a different stage of life, and we 177 00:07:50.279 --> 00:07:52.279 need to tweak those investments that would be one hundred 178 00:07:52.279 --> 00:07:55.319 percent on you. And then most plans offer a limited 179 00:07:55.360 --> 00:07:59.240 selection of investment options, so your choices may be restricted. 180 00:08:01.079 --> 00:08:04.279 Aft because not too long ago, I received one of 181 00:08:04.279 --> 00:08:06.959 these letters from an employer that I worked at right 182 00:08:06.959 --> 00:08:10.879 out of high school. There's less than a thousand dollars, 183 00:08:10.879 --> 00:08:13.680 and I felt terrible because I'm like, boy, these poor 184 00:08:13.720 --> 00:08:16.279 people have been managing this all about it that I 185 00:08:16.319 --> 00:08:19.680 didn't even know existed. But yeah, it does. I guess 186 00:08:19.680 --> 00:08:23.800 that's probably quite common. What about we talk about some 187 00:08:23.879 --> 00:08:25.959 of the options. What about rolling over your four to 188 00:08:26.000 --> 00:08:27.800 one K into a new employer's plan. 189 00:08:28.560 --> 00:08:30.360 Yeah, as we mentioned earlier, this is probably one of 190 00:08:30.399 --> 00:08:33.559 the more common options for people. Most four one K 191 00:08:33.679 --> 00:08:35.919 plans will allow you to roll over old four to 192 00:08:35.919 --> 00:08:37.720 one ks into this new one. So this is a 193 00:08:37.720 --> 00:08:40.320 popular choice because it just consolidates things. And you've heard 194 00:08:40.320 --> 00:08:42.039 Au say it on the show many many times. We're 195 00:08:42.039 --> 00:08:46.279 big fans of consolidation, simplification, and diversification, right, So by 196 00:08:46.279 --> 00:08:48.960 consolidating this, it makes it easier to manage your retirement 197 00:08:49.000 --> 00:08:51.600 savings and better yet there you don't have to worry 198 00:08:51.639 --> 00:08:54.639 about paying taxes or anything like that. It's all tax free. 199 00:08:55.120 --> 00:08:57.000 It's not a taxable event, so you're good to go 200 00:08:57.080 --> 00:09:00.000 in that respect. And there's a couple of additional benefit 201 00:09:00.000 --> 00:09:01.320 fits when it comes to a four to one K. 202 00:09:01.720 --> 00:09:04.559 Number one is you've got the Aris of protections offering 203 00:09:04.600 --> 00:09:09.039 potential creditor protection. So remember this is where if you're 204 00:09:09.159 --> 00:09:11.600 if you are filing bankruptcy things like that, you have 205 00:09:11.639 --> 00:09:14.679 creditor protection for retirement accounts, but falls into those Arista 206 00:09:14.720 --> 00:09:17.240 guidelines of four to one ks, and your new four 207 00:09:17.240 --> 00:09:19.039 to one K maybe you move to a bigger company 208 00:09:19.039 --> 00:09:21.399 so they have better investment options or lower fees. This 209 00:09:21.480 --> 00:09:24.720 could be an efficient way to grow your savings. And finally, 210 00:09:24.799 --> 00:09:26.960 you want to be mindful of your pretext and WROTH 211 00:09:27.039 --> 00:09:29.519 balances because they do need to be rolled over properly 212 00:09:29.559 --> 00:09:32.159 into corresponding accounts. So going from a four to one K, 213 00:09:32.360 --> 00:09:34.159 a traditional four one K to a WROTH four O 214 00:09:34.200 --> 00:09:36.039 on and K that could be a taxable event. So 215 00:09:36.039 --> 00:09:37.600 you just got to be very very careful when you're 216 00:09:37.600 --> 00:09:38.600 looking at these things. 217 00:09:38.639 --> 00:09:41.399 Really important stuff to know their As we talked this 218 00:09:41.440 --> 00:09:44.639 morning with our retirement planning professionals from Class Financial, Kyle 219 00:09:44.720 --> 00:09:47.240 Kite and Malia Quavis. You can learn more about Costs 220 00:09:47.279 --> 00:09:50.519 Financial on their website coss Financial dot com. That's coss 221 00:09:50.639 --> 00:09:54.120 k l aas Financial dot com. They're telephone number six 222 00:09:54.159 --> 00:09:57.080 so eight four four two five six three seven. No 223 00:09:57.279 --> 00:09:59.120 charge for that initial get to know you appointment tech 224 00:09:59.120 --> 00:10:01.639 Costs Financial h we will be complimentary to you again. 225 00:10:01.639 --> 00:10:04.039 They're telephone number six so eight four four two five 226 00:10:04.159 --> 00:10:06.840 six three seven. You're saying, well, rolling it over a 227 00:10:06.840 --> 00:10:09.039 four oh one K into a new four oh one K. 228 00:10:09.080 --> 00:10:09.480 Is one thing. 229 00:10:09.480 --> 00:10:11.720 What about an IRA? We'll get the details on that. 230 00:10:11.960 --> 00:10:14.080 We'll do it next as Money in Motion with cost 231 00:10:14.120 --> 00:10:19.480 Financial continues right here on thirteen ten. WIBA join this 232 00:10:19.519 --> 00:10:22.320 week by Malia Quavis and Kyle Kite. They are our 233 00:10:22.399 --> 00:10:27.039 retirement binding professionals from COSS Financial. The website cossfinancial dot com. 234 00:10:27.080 --> 00:10:31.519 It's coss k l Aasfinancial dot com. Great resource to 235 00:10:31.600 --> 00:10:33.720 learn more about COSS Financial, how they can help you 236 00:10:33.759 --> 00:10:35.960 if you're an employer. Also, I'll learn how they can 237 00:10:36.000 --> 00:10:36.360 help you. 238 00:10:36.519 --> 00:10:36.840 Also. 239 00:10:36.879 --> 00:10:40.240 There's different divisions of COSS Financial. It's all really really 240 00:10:40.320 --> 00:10:42.840 nice on the website Colssfinancial dot com. While you're there, 241 00:10:42.919 --> 00:10:44.960 If you haven't signed up yet for the weekly Market 242 00:10:45.000 --> 00:10:47.360 Pulse newsletter, I strongly urge you to do that. I 243 00:10:47.399 --> 00:10:50.600 signed up probably ten years ago. It's a great it's 244 00:10:50.639 --> 00:10:52.399 not spam or anything like that. It's like once a 245 00:10:52.399 --> 00:10:54.480 week you'll get an email and it gives you a 246 00:10:54.519 --> 00:10:56.639 little snapshot of what's been going on in the markets, 247 00:10:56.679 --> 00:10:58.159 things you need to know about. Linked to the most 248 00:10:58.200 --> 00:11:00.879 recent podcast as well, and that's free to you at 249 00:11:00.960 --> 00:11:03.759 Classfinancial dot com. Speaking of things that are free to you, 250 00:11:04.000 --> 00:11:06.480 that first appointment no charge, It is complementary. All I 251 00:11:06.480 --> 00:11:08.559 gotta do is make that appointment by calling Class Financial 252 00:11:08.559 --> 00:11:10.919 office right here in Madison six oh eight four four 253 00:11:10.960 --> 00:11:13.679 two five six three seven. Again that telephon number six 254 00:11:13.759 --> 00:11:16.600 O eight four four two five six three seven talking 255 00:11:16.720 --> 00:11:19.279 rollovers this week with Malia and Kyle, and we left 256 00:11:19.279 --> 00:11:22.360 off talking about rolling over your old four oh one 257 00:11:22.440 --> 00:11:25.200 K into your new four to oh one K and Malia, 258 00:11:25.600 --> 00:11:28.919 I have to imagine that a common option for folks 259 00:11:28.960 --> 00:11:31.159 is maybe rolling over that old four oh one K 260 00:11:31.360 --> 00:11:32.480 into an Ira. 261 00:11:33.720 --> 00:11:37.519 Yeah. So, as as always when we're speaking about things 262 00:11:37.559 --> 00:11:41.159 you can do or shouldn't do, as you you know, 263 00:11:41.240 --> 00:11:44.519 look at your retirement accounts, we would just advise slow down, 264 00:11:44.799 --> 00:11:47.919 just slow down, And this option comes up, you know, 265 00:11:47.960 --> 00:11:51.759 probably the most frequent out there, one of the most 266 00:11:51.759 --> 00:11:53.960 frequent choices aside from people say I'm just going to 267 00:11:54.000 --> 00:11:56.440 cash out the whole thing, which Kyle clearly told us 268 00:11:56.519 --> 00:12:00.480 not to do that. So so when we say down, 269 00:12:00.559 --> 00:12:02.840 we want we want to make sure that you understand 270 00:12:02.879 --> 00:12:06.279 what you're doing and your choices. And so if you 271 00:12:06.399 --> 00:12:08.360 decide to roll over your four oh one K, you 272 00:12:08.360 --> 00:12:11.360 will open up an IRA. You can do that by yourself, 273 00:12:11.399 --> 00:12:13.039 you can do it at your local bank, you can 274 00:12:13.039 --> 00:12:16.159 do it with your financial advisor. And really the objective 275 00:12:16.200 --> 00:12:19.399 here is to take your traditional four oh one K 276 00:12:19.519 --> 00:12:21.519 or four O three B and you would move that 277 00:12:21.919 --> 00:12:27.360 potentially into a traditional IRA. Or similarly, if you had 278 00:12:27.399 --> 00:12:29.840 a wroth four oh one K balance, you would want 279 00:12:29.879 --> 00:12:33.600 to make sure that is transferred into a wroth IRA 280 00:12:33.759 --> 00:12:37.279 at any of these different institutions. So what you need 281 00:12:37.320 --> 00:12:39.320 to keep in mind if you do decide to go 282 00:12:39.360 --> 00:12:42.480 with choice number five here rolling that those retirement funds 283 00:12:42.519 --> 00:12:45.120 into an IRA, you have to understand this is not 284 00:12:45.159 --> 00:12:48.799 a taxable event, certainly not the WROTH. Everyone understands that 285 00:12:48.799 --> 00:12:51.120 that money went in after you paid taxes on it, 286 00:12:51.159 --> 00:12:55.039 and we'll continue it will continue to grow tax tax 287 00:12:55.480 --> 00:13:00.679 tax free. However, the pre tax accounts, the those will 288 00:13:00.679 --> 00:13:04.519 not create taxes until you take them out somedays, so 289 00:13:04.639 --> 00:13:08.480 keep that in mind. Not a taxable event. However, as 290 00:13:08.480 --> 00:13:12.240 we mentioned before, if you withdraw those funds the pretax 291 00:13:12.879 --> 00:13:15.919 from the IRA before the age of fifty nine and 292 00:13:15.960 --> 00:13:21.279 a half, you'll likely face a ten percent early withdrawal penalty. 293 00:13:21.000 --> 00:13:24.600 So why would you even put it into an IRA. Well, 294 00:13:25.360 --> 00:13:28.519 an IRA is going to give you more flexibility for distribution, 295 00:13:28.799 --> 00:13:31.279 so that is a common reason people will decide to 296 00:13:31.320 --> 00:13:33.840 go this way. So unlike four oh one K plans, 297 00:13:34.519 --> 00:13:38.159 they generally have stricter withdrawal rules. And you know, people 298 00:13:38.200 --> 00:13:41.000 don't like to have handcuffs on their own money, you know, 299 00:13:41.120 --> 00:13:44.200 so they like the opportunity to say and depending on 300 00:13:44.240 --> 00:13:47.240 where they're at in life, maybe they're getting very close 301 00:13:47.279 --> 00:13:50.600 to retirement, they want to be able to control the 302 00:13:50.639 --> 00:13:55.679 way in which their IRA assets are invested, and if 303 00:13:55.679 --> 00:13:57.799 they want to take money out of them, they want 304 00:13:57.840 --> 00:14:00.200 to be able to do it at their discretion. So 305 00:14:00.279 --> 00:14:04.639 some key considerations for why people do choose to do 306 00:14:04.639 --> 00:14:08.080 a roll over. Besides, the flexibility would be investment selection. 307 00:14:08.759 --> 00:14:11.080 So you know you're in an IRA, you're able to 308 00:14:11.120 --> 00:14:14.320 choose an investment strategy that maybe aligns better with your 309 00:14:14.360 --> 00:14:18.159 time horizon and also your risk tolerance. For example, you 310 00:14:18.240 --> 00:14:21.519 might want to invest in a CD within an IRA 311 00:14:22.240 --> 00:14:25.360 because that might offer you lower risk, but we have 312 00:14:25.399 --> 00:14:28.039 to keep in mind that might offer minimal growth as well, 313 00:14:28.600 --> 00:14:32.240 whereas a diversified portfolio of stocks and bonds could provide 314 00:14:32.320 --> 00:14:35.519 better long term potential. So we're not here to say 315 00:14:35.559 --> 00:14:38.039 that there aren't four oh one K four three B 316 00:14:38.200 --> 00:14:41.159 plans out there that don't have, you know, a host 317 00:14:41.240 --> 00:14:47.320 of selections, but they typically have less selections out there 318 00:14:47.399 --> 00:14:51.000 choices for you to make, so that again going from 319 00:14:51.080 --> 00:14:56.759 ten to one hundred choices or beyond might be important 320 00:14:56.759 --> 00:15:00.320 for you. Fees is another reason to con that are 321 00:15:01.200 --> 00:15:04.679 making the choice or not. You have to understand there's 322 00:15:04.720 --> 00:15:07.639 investment fees associated with both your old four oh one 323 00:15:07.679 --> 00:15:10.840 K and also the new IRA, and so leaving it 324 00:15:10.879 --> 00:15:13.240 behind might be the right choice because their fees are 325 00:15:13.279 --> 00:15:17.919 considerably less potentially, but again your choices might be limited 326 00:15:17.960 --> 00:15:22.399 as well. Timing in RMD rules is the next area. 327 00:15:22.480 --> 00:15:25.480 If you retire between the ages of fifty five and 328 00:15:25.519 --> 00:15:28.080 fifty nine and a half. And again this goes back 329 00:15:28.120 --> 00:15:31.840 to my beginning point, slow down, slow down. If you're 330 00:15:31.840 --> 00:15:36.360 retiring between those ages, our suggestion might be leave your 331 00:15:36.399 --> 00:15:39.320 money in that four oh one K because that may 332 00:15:39.360 --> 00:15:43.679 allow you to withdraw funds penalty free, whereas rolling it 333 00:15:43.720 --> 00:15:46.879 into an IRA could delay that option until age fifty 334 00:15:46.960 --> 00:15:49.480 nine and a half. So what I'm talking about here 335 00:15:50.559 --> 00:15:53.120 is for persons who are approaching the age of fifty 336 00:15:53.159 --> 00:15:57.120 five still working for the company. It's called separation of 337 00:15:57.240 --> 00:16:01.399 service at age fifty five, and they are potentially looking 338 00:16:01.440 --> 00:16:06.799 to completely retire, and they need to develop an income stream. 339 00:16:07.279 --> 00:16:09.960 If we're able to take money from that four to 340 00:16:09.960 --> 00:16:13.759 oh one k again before we've ever moved it over 341 00:16:13.840 --> 00:16:17.159 to an IRA. If we can start taking it from 342 00:16:17.320 --> 00:16:20.879 the four to oh one K, you will still have 343 00:16:20.879 --> 00:16:24.000 to pay taxes on that, but coming out of that 344 00:16:24.240 --> 00:16:27.799 vehicle will prevent this age fifty nine and a half 345 00:16:28.759 --> 00:16:32.759 termination fee, so to speak, this penalty. So we've done 346 00:16:32.759 --> 00:16:35.279 that with many many clients. It's an important thing to 347 00:16:35.399 --> 00:16:37.879 know before you just, you know, blatantly, Oh, I'm just 348 00:16:37.960 --> 00:16:40.320 rolling all over to an IRA, and I'll deal with 349 00:16:40.360 --> 00:16:43.159 it later. This could actually create some good income for 350 00:16:43.200 --> 00:16:46.120 you and not cause you to have that penalty, So 351 00:16:46.600 --> 00:16:50.600 make sure you know you're timing. Another area certainly is 352 00:16:50.679 --> 00:16:54.519 required minimum distribution. So we've got clients, I'll be honest, 353 00:16:54.639 --> 00:16:57.879 they work into their eighties. Not that you want to shine, 354 00:16:57.879 --> 00:16:58.639 but the rest. 355 00:16:58.480 --> 00:17:00.799 Of many people I'll like to work. 356 00:17:01.720 --> 00:17:04.400 But if you plan to work past age seventy two, 357 00:17:06.440 --> 00:17:09.599 and you're keeping funds in a current employer's four oh 358 00:17:09.640 --> 00:17:12.680 one K, that will allow you to continue to defer 359 00:17:12.839 --> 00:17:17.839 rmds until you stop working. So again, these people I'm 360 00:17:17.880 --> 00:17:21.200 speaking of are continuing to feed their four oh one 361 00:17:21.279 --> 00:17:24.359 ks and they are not forced to take rmds out. 362 00:17:24.720 --> 00:17:28.720 And RMDH today, of course is seventy three, so it's 363 00:17:28.759 --> 00:17:31.640 amazing you can continue to contribute and you're not forced 364 00:17:31.720 --> 00:17:36.359 to take out the required minimum distributions. And finally, wroth conversions, 365 00:17:36.400 --> 00:17:39.319 So if you roll traditional four to one K assets 366 00:17:39.359 --> 00:17:43.440 into a wroth ira, as Kyle mentioned earlier, taxes are 367 00:17:43.519 --> 00:17:46.240 due at the time of conversion, so you just want 368 00:17:46.240 --> 00:17:49.400 to be careful, don't rush through it. Get some good 369 00:17:49.480 --> 00:17:52.599 advice as to your situation and what you should do 370 00:17:52.920 --> 00:17:56.000 when you do leave an employer and those retirement assets. 371 00:17:56.119 --> 00:17:57.200 Great advice this morning. 372 00:17:57.240 --> 00:17:59.359 As we talked this morning with our retirement planning professionals 373 00:17:59.400 --> 00:18:02.359 from Class Financial, Melia Quavis and Kyle Kites, don't forget. 374 00:18:02.359 --> 00:18:05.240 You can learn more about Class Financial their website coss 375 00:18:05.319 --> 00:18:08.640 Financial dot com. Great website, coss Financial dot com. That's 376 00:18:08.720 --> 00:18:11.880 k l aas Financial dot com. They're telphone number six 377 00:18:11.960 --> 00:18:15.279 oh eight four four two five six three seven. No 378 00:18:15.400 --> 00:18:17.599 charts that initial gets to no deployment at costs Financial. 379 00:18:17.640 --> 00:18:19.759 It'll be complementary to you again that number six oh 380 00:18:19.759 --> 00:18:23.079 eight four four two five six three seven. So Kyle, 381 00:18:23.160 --> 00:18:25.720 what if I have maybe employer stock in my four 382 00:18:25.799 --> 00:18:28.000 oh one k? Anything I need to consider? There any 383 00:18:28.039 --> 00:18:29.559 special considerations in that area. 384 00:18:30.119 --> 00:18:32.680 Yeah, it's a great question, Sean. And this is this 385 00:18:32.759 --> 00:18:35.680 is a very can be a complex strategy until you 386 00:18:35.680 --> 00:18:38.160 get your arms around it. But there's something called a 387 00:18:38.359 --> 00:18:42.119 net unrealized appreciation. So this is a tax advantage way 388 00:18:42.160 --> 00:18:45.119 to transfer stock from your four oh one k into 389 00:18:45.200 --> 00:18:48.839 a taxable account while benefiting from the longer or lower 390 00:18:48.839 --> 00:18:52.799 long term capital gains. Tax rates get into this makes 391 00:18:53.000 --> 00:18:54.920 I just want to let everybody know we're not tax accountants. 392 00:18:54.920 --> 00:18:58.400 So always consult your CPA before making this decision, because, 393 00:18:58.400 --> 00:19:00.559 as I said, this strategy can be a great thing 394 00:19:00.599 --> 00:19:02.480 for some people, but you have to understand what you're 395 00:19:02.519 --> 00:19:05.759 getting into. So here's how it works. So typically, when 396 00:19:05.799 --> 00:19:07.240 you pull money out of a four to one K, 397 00:19:07.359 --> 00:19:09.920 as we've been talking about, your withdrawals are going to 398 00:19:09.920 --> 00:19:13.720 be taxed as or so again, whatever tax bracket you're 399 00:19:13.759 --> 00:19:16.039 in when you pull as those funds out, that's the 400 00:19:16.079 --> 00:19:19.920 tax rate you're going to pay. However, under the NUA strategy, 401 00:19:20.559 --> 00:19:24.279