retirement account consolidation Archives - ROI TV

Maximizing Your Workplace Retirement Accounts

Joe Anderson — Thu, 15 May 2025 11:20:15 +0000

Managing workplace retirement accounts can be one of the most important steps toward achieving financial security in retirement. Yet, many people make costly mistakes that could easily be avoided with a little guidance. With over $36 trillion held in retirement accounts as of 2023, it’s crucial to understand how to optimize these investments. Let’s explore the different types of retirement accounts, withdrawal strategies, tax implications, and the benefits of Roth conversions to secure your financial future.

Workplace Retirement Accounts and Common Mistakes
Understanding your workplace retirement account is the first step to avoiding costly errors. As of 2023, $36 trillion is invested in preferred retirement accounts, with 35% of those funds held in IRAs. The rest is spread across 401(k)s, government pension plans, and annuities. One major point of confusion for many retirees is taxation—every dollar withdrawn from these accounts is taxable, and early withdrawals before 59½ often result in a 10% penalty. Knowing the rules and planning your withdrawals accordingly can save you thousands of dollars over the course of your retirement.

Types of Retirement Accounts: Defined Contribution vs. Defined Benefit Plans
Workplace retirement accounts generally fall into two categories: defined contribution plans and defined benefit plans.

Defined Contribution Plans like 401(k)s, 457 plans, and IRAs allow employees to contribute a specific amount each year. These are now more common because they are less costly for employers.
Defined Benefit Plans, commonly known as pensions, promise a fixed income based on years of service and salary history. Although less common today, those with access to these plans must decide between taking a lump sum or monthly annuity payments based on their risk tolerance and financial goals.

Options for Employer-Sponsored Plans Post-Retirement
After retiring, you have three main options for your employer-sponsored retirement plan:

Leave it in the plan – This option is the simplest and often comes with lower fees and fiduciary protections.
Roll it into an IRA – This allows for more investment choices and easier management.
Withdraw it – Early withdrawals from a 401(k) are penalty-free at age 55 if you retire, but regular income taxes still apply.

Taxation and Required Minimum Distributions (RMDs)
Understanding the tax implications of your withdrawals is essential. Distributions from 401(k)s and IRAs are taxed as ordinary income, and withdrawing before age 59½ incurs a 10% penalty.

RMDs are mandatory for traditional IRAs and 401(k)s starting at age 73, ensuring the IRS collects its share of taxes.
Roth IRAs, however, are exempt from RMDs during the account holder’s lifetime, making them a powerful tool for tax-free growth.
Inherited Roth IRAs are required to be fully distributed within ten years, though they remain tax-free if held for five years.

Roth Conversions and Tax Strategies
Roth conversions allow you to transfer funds from a traditional retirement account to a Roth IRA, paying taxes now to avoid them later. This strategy is especially useful if you expect your tax rate to rise in the future. Converting your accounts before age 73 also reduces RMD amounts, which can minimize your tax burden.

However, it’s crucial to plan these conversions carefully to avoid bumping into higher tax brackets or increasing your Medicare premiums. Properly timed Roth conversions can offer substantial tax savings and more flexibility in retirement.

Beneficiary Designations and Estate Planning
One of the most overlooked aspects of retirement planning is beneficiary designations. Remember, the beneficiaries listed on your retirement accounts override any instructions in your will. Non-spouse beneficiaries are required to fully distribute inherited IRAs within ten years. For Roth IRAs, these distributions remain tax-free if the account has been held for at least five years.

To avoid unnecessary tax implications, always keep your beneficiary forms updated, especially after major life events like marriage, divorce, or the birth of a child.

Consolidating Multiple Retirement Accounts
If you’ve held multiple jobs throughout your career, you may have several 401(k) accounts scattered across different employers. Consolidating these accounts into a single IRA simplifies management, reduces fees, and makes it easier to maintain a cohesive investment strategy.

Consolidation also helps with RMD calculations, making it easier to plan your withdrawals without the hassle of managing multiple accounts. As Kurt from La Jolla learned, consolidating accounts can make retirement much more straightforward and stress-free.

Retirement Readiness and Resources
Preparing for retirement is more than just saving money—it’s about understanding your options and making strategic decisions that optimize your wealth. Joe and Big Al recommend downloading the Retirement Readiness Guide to explore detailed strategies for accessing savings accounts, understanding account types, and planning for the future.

With the right knowledge, managing your workplace retirement accounts can be a straightforward process that secures your financial future. By understanding your options, avoiding common mistakes, and implementing smart strategies, you can turn your retirement savings into a powerful tool for financial independence.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post Maximizing Your Workplace Retirement Accounts appeared first on ROI TV.

Retirement Planning Strategies for 2025

Joe Anderson — Tue, 08 Apr 2025 11:24:45 +0000

If you’ve been feeling unsure about your retirement plan—or haven’t made one at all—you’re not alone. On this episode of Your Money, Your Wealth, I sat down with Joe Anderson, CFP®, and Big Al Clopine, CPA, to unpack what retirement planning really looks like in 2025. From financial makeovers to smart tax strategies, we broke down practical ways to help you retire on your terms.

Why a Retirement Makeover Matters Now More Than Ever
Inflation, market swings, and increased longevity mean our money needs to stretch further than ever. Just consider this: in 2016, average monthly expenses were around $3,500. By 2021, that number had jumped to $4,500. That’s an extra $12,000 per year! No wonder nearly half of retirees today say they’re spending more than they expected.

That’s why having a clear, documented financial plan is essential. Yet, only 17% of Americans have one in writing. A solid plan keeps you on track and gives you the power to course-correct when life throws surprises your way.

Benchmarks by the Decade
Not sure if you’re on track? Use these savings benchmarks as a rough guide:

By your 40s: aim for 3x your annual income
By your 50s: 6x
By your 60s: 10x

So if you’re earning $100,000 a year, you’d want around $300,000 saved by your 40s and $1 million by retirement. These aren’t hard rules, but they’re great starting points—especially when you factor in Social Security or a pension.

Stress-Test Your Retirement Plan
A financial plan isn’t “set it and forget it.” It needs to work under different assumptions—like higher inflation or lower market returns. We looked at John and Sally, both 57, with $1 million in 401(k)s and $50,000 in cash. Spending $140,000 a year, they ran out of money by age 82. Working longer, spending less, or downsizing their home could change that dramatically.

Avoid the Hidden Costs of Early IRA Withdrawals
Thinking about tapping into your IRA early? Be cautious. Taking $100,000 out before age 59½ could cost you $38,000 in taxes and penalties—especially if you live in a high-tax state like California. That’s money that could’ve grown for decades had it stayed invested.

Streamline and Simplify with Account Consolidation
Multiple 401(k)s and IRAs can make managing your retirement messy. Consolidating accounts not only reduces paperwork and fees but simplifies your required minimum distributions (RMDs) later on. Instead of juggling separate RMDs for each 401(k), you’ll only need to calculate one for all your IRAs.

Don’t Leave Free Money on the Table
If your employer offers a 401(k) match, make sure you’re contributing enough to get the full benefit. Even small increases matter. One example showed how bumping contributions from 2% to 6% boosted savings from $119,000 to $356,000 over time. Ideally, you should aim to save 15–20% of your income, but starting small and building up works too.

Why Roth IRAs Should Be Part of Your Tax Strategy
Most people stash retirement savings in tax-deferred accounts like 401(k)s—but come retirement, those withdrawals are taxed as ordinary income. That’s where Roth IRAs can shine. Contributions are taxed upfront, but qualified withdrawals are completely tax-free. They’re especially great for stocks or high-growth investments.

And here’s the kicker: tax brackets are scheduled to go up in 2026. That makes now a smart time to explore Roth conversions and lock in lower tax rates while you can.