These are often the easiest plans to start investing in for retirement; they are accumulation vehicles that help you build wealth. These plans are typically set up by your employer and contributions are automatically taken pre-tax from your paycheck. Each plan has a contribution limit, but overall, these are fantastic to help you to start saving for retirement.

The thing that surprises some retirees later on is something you should address in your retirement plan, well in advance. Because the money held inside these accounts is tax qualified, meaning neither the principal nor interest has ever been taxed, unexpectedly high taxes could be due later, reducing your nest egg significantly. And whether you need the money or not, you must start taking money out of these plans every year starting at age 72. These are called RMDs, or Required Minimum Distributions.

Specific rules concerning withdrawals are very important in qualified plans. Distributing assets without understanding applicable tax laws can have a negative impact on your Medicare premiums, Social Security taxation and can unintentionally land you in a higher tax bracket. Consult a retirement tax professional and know the rules before you withdraw money or file for Social Security!

With 401(k) plans and similar accounts, investment options, fees and plan rules are chosen by your employer. Taking control and using a tax-free rollover into your own IRA (or smaller taxable rollovers into Roth IRAs) can be a very smart move as you get closer to retirement. That way you will have control over your choice of investment options and fees. In retirement, distributing and protecting wealth becomes a priority and your investment vehicle choices should reflect that change.

When you separate from your employer, or you reach a certain age, most employer retirement plans (401(k), 403(b), etc.) will allow you to rollover your account to your own IRA. A traditional IRA is a tax-deferred account subject to early withdrawal penalties under age 59.5 and annual RMDs starting at age 73 (Secure Act).

So why consider a rollover? First, your IRA account will be in an investment vehicle of your choosing to reflect your changing needs. Second, lower fees, and a variety of investment choices like commodities or even real estate are major reasons to take control of your retirement funds. One of the most important features of owning an IRA is the ability to convert some or all of your funds into a Roth IRA. Please consult a retirement tax professional when considering whether or not a Roth IRA is right for your situation as they cannot be undone later.

Depending on your financial situation and how close you are to needing income, a Roth IRA or Roth conversion can untether you from the US Government by eliminating future taxes on both principal and interest. Plus, NO RMDs! There are some different rules associated with Roth IRAs.

Again, everyone’s situation is different so please consult a retirement tax professional when contemplating converting your traditional IRA to a Roth IRA. You have to pay the taxes up front, so creating a plan is vital to the success of the conversion. If you believe that tax rates may increase even 1% in the future, then considering a Roth conversion (or a series of them) could be a very good financial move.

Exposure to investments can help your retirement account grow and distribute more income over the long-term. Based on your risk tolerance, income needs and tax situation, an investment model can be created and implemented to meet your goals. Utilizing a fully-managed advisory account takes the guesswork out of asset allocation and the time to manage all of your investments for a fixed percentage. At MWM, we charge no commissions on trades—we are a fee-based firm. These accounts bear risk and a thorough analysis and risk assessment is mandatory for ALL our advisory accounts.

Some investors prefer to monitor and trade their own retirement accounts. In this case, a brokerage account would be the preferable investment vehicle, and Murphy Wealth Management can help you navigate the tricky tax situations or provide overall investment advice for a fixed fee. Whichever option you prefer, consulting with professional money managers and tax professionals regarding your retirement can eliminate the uncertainties that inevitably surface throughout retirement. Our tax experts understand how to take advantage of the new laws to ensure more money is going into your pocket, than into Uncle Sam’s.

Your retirement is already tax deferred, so why consider another tax deferred vehicle? Distribution. Annuities offer a wide range of distribution options that if properly structured, will provide a stream of income you can’t outlive. This is the top goal of most retirees, so an annuity can offer unmatched benefits. This is a commission-based product, so if you are presented with an annuity as a retirement solution, make certain you are asking the right questions and understand the fees, penalties, and possible restrictions. If you need near-term access to the bulk of principal…these may not the best choice for your specific situation. If you own an annuity and are not sure how it works, please contact our office for a review and explanation of the benefits and features.

New permanent life insurance policies offer the chance for retirees to create tax-free retirement income and optional long-term care coverage if they need it (and a death benefit if they don’t.) Life insurance may be worth exploring at any age if you are in good health. Learn more about Life Insurance.