Sizzlin’ Summer Series: PART 3

Sizzlin’ Summer Series: PART 3

What does Summer remind you of? Maybe it’s the feeling of jumping into a cool pool after a day in the summer heat; or maybe it’s the sound of the ice cream truck as you are bolting out the door with whatever change you could get your hands on. From lazy days in air conditioning to random road trips and more; summer is full of memories, and more importantly, choices.

In Part 3 and the final installation of ‘SIZZLIN SUMMER SERIES’, we will go into the top 3 financial choices you should research before making a decision:

  1. 401(K) and 401(k) Roth:

Up until recent, most companies would only offer a traditional 401(k) to employees; however, a Roth 401(k) has become a regular option as well. The difference comes down to one simple, yet complex word: taxes. In short, a traditional 401(k) is taxed when you pull the money out when you retire. Opposite of traditional; a Roth 401(k) is taxed now, so you don’t have to pay Uncle Sam when you retire. So which one is best? It all depends on your tax bracket and current tax rate. For instance, tax rates are the lowest they have ever been in the last 100 years, so it would make sense to rollover to a Roth 401(k).

Key Point: A 401(k) is a vital part to any retirement portfolio. When looking at the 2 types, consider your current tax bracket, how your income will change in the coming years, and tax rate predictions.

  1. Variable Annuity and Fixed Index Annuity:

In short, an annuity is a fixed sum of money paid to someone, typically for the rest of their life on a annual basis. While guaranteed income is a great addition to any retirement plan, its crucial to know the two types of annuities and how they differ. A Fixed Index Annuity (FIA) typically provides a set amount of money annually in exchange for a lump purchase payment. An FIA is the safest annuity type as it is offers no market downturn and a guaranteed rate of interest. On the contrary, a Variable Annuity provides irregular payments based on investment funds designed by the insurance company. In addition, directly correlates with the market, so any downside in the market will reflect in a loss in return.

Key Point: An FIA is the most commonly used Annuity type and offers guaranteed upside potential with no downside risk. A Variable Annuity has the opportunity to earn much more return in less time than an FIA, but usually carries an aggressive risk.

  1. Risk and Reward

Learning to ride a bike and creating an investment strategy have one key trait in common, balance. Where as a bike requires hand eye coordination and practice, a proper investment portfolio requires constant attention and updates. This is because life is always changing, from career change, to starting a family, to new bills and more, finances need to say in tune with your current needs, wants, and goals. While someone who is younger with a time horizon of 5+ years may choose a riskier portfolio, another, older couple may choose a safer portfolio with little to no downside risk.

Key Point: A successful investment strategy does not require a balance beam or seesaw to work properly. What it does require is consistent checks and adjustments to make sure your portfolio is in the best spot for your current goals and financial situation.

A financial plan has a lot of moving parts and just like a car, requires upkeep and maintenance to keep things rolling smoothly. Regardless of where you are on your financial journey, chat with a financial professional today to see how you can achieve your retirement goals.


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Disclosure: This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives.


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Sizzlin’ Summer Series: PART 2

Sizzlin’ Summer Series: PART 2

The official start of Summer – June 21st – is right around the corner. As we cruise into part two or our Sizzlin’ Summer Series, we will make a splash with the best cities to retire in 2019.

Get your Hawaiian shirts on, coolers filled, and beach towels ready, because here come the Top 4 Places To retire!

  1. Independence, Kentucky

Ranked the 31st safest city in the U.S., Independence, Kentucky offers everything you can expect from a larger city, with a quaint feeling of an upscale suburban atmosphere. Beyond its centralized location between two large metropolitan areas, Independence offers a mild climate with extremes of 20’s and 80’s and a vast landscape of trees and greenery. Top it off with Kentucky’s retirement-friendly tax structure that does not tax Social Security benefits and has little to no tax impact on other retirement income sources, you can see why this was one of the top places to retire in 2019.

  1. Little Elm, Texas,

The first thing to note about Little Elm, Texas is there is nothing little about this city bustling with activities and sites to see.  This 22nd safest city in the nation – according to, a retirement news source – surrounds 29,000 acres of the well-known Lewisville Lake and offers a lush landscape. For those who enjoy weather that never goes below freezing and sees the highest temperatures in the 90’s, Little Elm is a fantastic retirement option. Throw in no tax on social security, retirement income or state income tax, and things are looking even better. Did we mention the nationally ranked UT Southwestern Medical Center is minutes away in Dallas?

  1. Iowa City, Iowa

Coming in at the #1 on Milken Institutes list of best cities for successful aging, Iowa City, Iowa has a lot of offer exploring retirement options. Out of the total population of 158,370, roughly 11% make of the 65 and older demographic. This along with a low unemployment rate and strong small business growth make Iowa City a top choice when retiring in the U.S. Milken Institute also ranks Iowa City #1 in healthcare for small cities. Whether you want to be within walking distance to downtown or enjoy small town living, Iowa City is a great place to discover.

  1. Bethel Park, Pennsylvania

Coming in last but certainly not least, Bethel Park, Pennsylvania is positioned on the Blue and Red Lines of the Pittsburgh Port Authority; allowing easy access to South Park and Pittsburgh without the need to drive. In addition to having UPMC Hospital- ranked #11 in geriatric care in the U.S. – within easy access to the transit system, Bethel Park also offers retirees no Social Security Benefits tax and a few options for property tax rebates. And for those who like being minutes away from outdoor activities, Bethel Park contains a 2,013 acre section of South Park, bustling with community events, Golf, ice-rink, hiking trails, historic buildings and more.

Whether you are nearing retirement or still in the planning stages, there is a plethora of places in the United States that offer great opportunities when considering retirement. Next time we will take a dip into the final installment of our Summer Series! Tune in Next Month to see how we’re keeping your summer sizzlin’ and cool!


Content derived from

Disclosure: This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives.

The post Sizzlin’ Summer Series: PART 2 appeared first on Adult Financial Education Services.

Provided by: Adult Financial Education


Six Potential 401(k) Rollover Pitfalls

You’re about to receive a distribution from your 401(k) plan, and you’re considering a rollover to a traditional IRA. While these transactions are normally straightforward and trouble-free, there are some pitfalls you’ll want to avoid.

1. Consider the pros and cons of a rollover

The first mistake some people make is failing to consider the pros and cons of a rollover to an IRA in the first place. You can usually leave your money in the 401(k) plan if your balance is over $5,000 (at least until the plan’s normal retirement age, typically 65). And if you’re changing jobs, you may also be able to roll your distribution over to your new employer’s 401(k) plan.

  • Though IRAs typically offer significantly more investment opportunities and withdrawal flexibility, your 401(k) plan may offer investments that can’t be replicated in an IRA (or can’t be replicated at an equivalent cost).
  • An IRA may give you more flexibility with distributions. Your distribution options in a 401(k) plan depend on the terms of that particular plan, and your options may be limited. However, with an IRA, the timing and amount of distributions are generally at your discretion (until you reach age 70½ and must start taking required minimum distributions in the case of a traditional IRA).
  • 401(k) plans offer virtually unlimited protection from your creditors under federal law (assuming the plan is covered by ERISA; solo 401(k)s are not), whereas federal law protects your IRAs from creditors only if you declare bankruptcy. Any IRA creditor protection outside of bankruptcy depends on your particular state’s law.
  • Required minimum distributions from traditional IRAs must begin by April 1 following the year you reach age 70½. However, if you work past that age and are still participating in your employer’s 401(k) plan, you can delay your first distribution from that plan until April 1 following the year of your retirement (if you own no more than 5% of the company).
  • 401(k) plans may allow employee loans (IRAs can not allow loans).
  • Most 401(k) plans don’t provide an annuity payout option, while some IRAs do.

2. Not every distribution can be rolled over to an IRA

For example, required minimum distributions can’t be rolled over. Neither can hardship withdrawals or certain periodic payments. Do so and you may have an excess contribution to deal with.

3. Use direct rollovers and avoid 60-day rollovers

While it may be tempting to give yourself a free 60-day loan, it’s generally a mistake to use 60-day rollovers rather than direct (trustee to trustee) rollovers. If the plan sends the money to you, it’s required to withhold 20% of the taxable amount. If you later want to roll the entire amount of the original distribution over to an IRA, you’ll need to use other sources to make up the 20% the plan withheld. In addition, there’s no need to taunt the rollover gods by risking inadvertent violation of the 60-day limit.

4. Remember the 10% penalty tax

Taxable distributions you receive from a 401(k) plan before age 59½ are normally subject to a 10% early distribution penalty, but a special rule lets you avoid the tax if you receive your distribution as a result of leaving your job during or after the year you turn age 55. But this special rule doesn’t carry over to IRAs. If you roll your distribution over to an IRA, you’ll need to wait until age 59½ before you can withdraw those dollars from the IRA without the 10% penalty (unless another exception applies). So if you think you may need to use the funds before age 59½, a rollover to an IRA could be a costly mistake.

5. Learn about net unrealized appreciation (NUA)

If your 401(k) plan distribution includes employer stock that’s appreciated over the years, rolling that stock over into an IRA could be a serious mistake. Normally, distributions from 401(k) plans are subject to ordinary income taxes. But a special rule applies when you receive a distribution of employer stock from your plan: You pay ordinary income tax only on the cost of the stock at the time it was purchased for you by the plan. Any appreciation in the stock generally receives more favorable long-term capital gains treatment, regardless of how long you’ve owned the stock. (Any additional appreciation after the stock is distributed to you is either long-term or short-term capital gains, depending on your holding period.) These special NUA rules don’t apply if you roll the stock over to an IRA.

6. And if you’re rolling over Roth 401(k) dollars to a Roth IRA …

If your Roth 401(k) distribution isn’t qualified (tax-free) because you haven’t yet satisfied the five-year holding period, be aware that when you roll those dollars into your Roth IRA, they’ll now be subject to the Roth IRA’s five-year holding period, no matter how long those dollars were in the 401(k) plan. So, for example, if you establish your first Roth IRA to accept your rollover, you’ll have to wait five more years until your distribution from the Roth IRA will be qualified and tax-free.

Caution: When evaluating whether to initiate a rollover from an employer plan to an IRA always be sure to (1) ask about possible surrender charges that may be imposed by your employer plan, or new surrender charges that your IRA may impose, (2) compare investment fees and expenses charged by your IRA (and investment funds) with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of your employer plan.