When you retire or change employers, consider distributing the employer stock you own inside your 401(k) plan to a regular brokerage account rather than rolling it over into an IRA account. A tax provision allows employees to take possession of company stock and roll the remainder of the 401(k) assets to an IRA. Although you pay tax up front based on the amount the plan paid for the shares as an IRA distribution, the increase in value is not taxed until you sell the shares. Once you hold the stock for one year outside the retirement account it qualifies for the lower Federal long- term capital gains rate, instead of ordinary income tax rates of up to 39.6% paid on IRA distributions. Consider contacting your financial advisor to assist you in making your decision.

Tax free investments appear not to be right for you: Although "tax-free" has a nice ring to it, tax exempt securities are most useful for people in the 35% or higher tax bracket. However, if you are in a lower tax bracket, the benefit may not exceed the cost of the lower return on investment. As investments mature, consider investing in taxable higher-interest investments. Consider contacting your financial advisor for further information.

You have investments held personally and/or through an IRA account(s). Periodically, you should get a comprehensive analysis of your existing portfolio to include risk assessment and asset allocation appropriateness. This should help you reduce risk through proper diversification. Contact your financial advisor for assistance.

"Variable Universal Life" insurance can be used as an investment vehicle when the primary goal is NOT insurance. This insurance allows you to place large amounts of cash into self-directed investment accounts deferring taxation of both growth and earnings for many years. These policies are great for individuals with excess cash to invest for the long-term. Consider contacting your financial advisor for additional information regarding Variable Universal Life Insurance.

Annuities are insurance products that offer a chance to save tax-deferred for retirement. If you are thinking of buying an annuity, consider the following:

1. Should you have a fixed rate or variable annuity?
2. What are the tax implications of owning an annuity?
3. Does it make sense to have IRA's or other retirement plans funded with tax-deferred annuities?
4. Are the fees, sales charges and/or surrender charges reasonable?

The main advantages of annuities are as follows:

1. You can shift the risk of outliving your assets to the insurance company.
2. They offer a death benefit guarantee whereby your heirs will receive at least as much as you invested if you die prematurely.

If you need assistance in purchasing or evaluating an annuity, consider contacting your financial advisor.

If you are in a retirement plan and your income exceeds the amount allowed for making regular or Roth IRA contributions, consider contributing to an annuity. An annuity will allow you to put back after tax dollars to grow on a tax deferred basis. If you are thinking of buying an annuity, consider the following:

1. Should you have a fixed rate or variable annuity?
2. What are the tax implications of owning an annuity?
3. Does it make sense to have IRA's or other retirement plans funded with tax-deferred annuities?
4. Are the fees, sales charges and/or surrender charges reasonable?

The main advantages of annuities are as follows:

1. You can shift the risk of outliving your assets to the insurance company.
2. They offer a death benefit guarantee whereby your heirs will receive at least as much as you invested if you die prematurely.

401(k) plans vary, but most plans allow you to borrow the lesser of 50% of your vested balance or $50,000 and pay it back within 15 years, if borrowed for a mortgage, or 5 years, if used for other purposes. You pay interest, usually prime plus a percentage point or two. We don't recommend 401(k) loans because:

1. If you leave your job, the loan becomes due immediately and may be subject to a 10% penalty if you are under age 59 1/2.
2. You're taking out money whose sheltered growth and earnings should be compounding tax free.
3. Interest you pay is not tax deductible if used for personal purposes. A better option is a "home equity loan".

If you retire or change jobs this year, you should consider a rollover of your 401(k) account to an IRA account so that you have more control over your investments. This is the perfect time to reevaluate your goals and structure your new investment portfolio to meet those goals. However, there may be advantages to leaving the money in your former employer's plan. For example, you can avoid a 10% penalty on pre 59 1/2 withdrawals. The penalty doesn't apply to payouts from company plans after you terminate employment if you are age 55 or older in the year you leave. This exemption applies to all future distributions you take from the plan. However, if you rollover the plan balance to an IRA and withdraw from it before 59 1/2, the 10% penalty applies.

If you are a high income taxpayer, you may be able to get retirement funds into a ROTH IRA, where they will grow tax free, by making non-deductible contributions to a Traditional IRA account and then converting them to a ROTH IRA account. Before converting to a Roth IRA you should consult your tax and/or financial advisor regarding the pros and cons of converting, especially if you have any other traditional IRAs, SEP IRAs, or SIMPLE IRAs.

If you are in a retirement plan with a 401(k) or similar feature, at a minimum, you should contribute up to the maximum amount your employer will match. If you can contribute more, do so even if your employer stops matching. You still get the benefit of the tax deferral on contributions and earnings. Increasing your contributions by just 1% can greatly affect your retirement savings. Consider contributing to a Nondeductible Traditional IRA

You can transfer from an eligible retirement plan (traditional IRA, SIMPLE, SEP, qualified plan, including 401(k), 403(b) or 457 governmental plans) to a Roth IRA and enjoy tax free withdrawals after retirement. Any income on conversion will be taxable in the year of conversion. Usually the best candidates for converting are those in a low income tax bracket who expect to be in a higher bracket when they retire. Before converting to a Roth IRA you should consult your tax and/or financial advisor regarding the pros and cons of converting.

The maximum contributions for IRA accounts change annually.  Please see the list provided on our website under Resources titled “Annual Updated Tax Numbers” for this and other limits, thresholds, and rates that change annually.