Are multiple retirement accounts costing you money?

According to the financial tech company, Capitalize, by the end of 2021 there will be an estimated 25 million “forgotten” 401(k) accounts in the U.S., with an average account balance of approximately $55,000 and representing nearly $1.35 trillion of assets in total. In aggregate, these forgotten 401(k) accounts could be costing retirement savers a whopping $116 billion annually from higher fees and lower investment returns.

Often 401(k)s are left behind by people who have changed jobs or terminated their employment. People today change jobs more often—on average, 12 times over their careers. That could mean dealing with 12 different 401(k)s and/or 403(b)s over time, putting a person in a potentially very costly situation.

Steps are being taken to protect savers’ assets. Auto portability is a fairly new 401(k) plan default feature that automatically transfers small-balance retirement savings when participants change jobs. Bipartisan legislation to create a national lost-and-found database to help plan participants keep track of their retirement accounts has been introduced once again, and could end up being part of a larger SECURE Act 2.0 retirement reform package that may come out late this year. Lawmakers are also looking at ways to solve the problem of 401(k) “leakage,” which is when participants cash out their account instead of rolling it over to a new retirement savings account.

If you want to consolidate and aren’t sure where your old 401(k) is, there are three places it may be: In the old account set up by your employer; in a new account set up by the 401(k) plan administrator; or in your state’s unclaimed property division.

Do you or your partner/spouse have multiple accounts from old jobs? Did you have a retirement savings provider change at work and now have a second account? Consider rolling over to a WEA Member Benefits IRA account. It could save you money because of our low annual administrative fees and annual fee caps. And our IRA is open to your spouse/domestic partner, parents, parents-in-law, and children and their spouses, even in some states outside of Wisconsin.

Contact us for more information at 1-800-279-4030, Extension 8577 or visit weabenefits.com/rollover.

Restrictions may apply. Certain state residency required.

Simplify your life with account consolidation

Here are three reasons you may want to consolidate your retirement accounts.

Economic advantage

Consolidation may save you money by eliminating or reducing fees. Fees eat into your bottom line, which is even more crucial once you retire. Member Benefits retirement programs offer low fees that are capped annually, which keep costs in check (mutual funds fees still apply). Ask for a complete list of fees that may apply to each of your accounts, including mortality and expense fees, surrender charges, and custodial fees. Member Benefits does not charge these fees. Visit our Fees Matter page for more information.

Comfort

As you approach retirement, you need to consider reducing your risk as you have more to lose and less time to make up for market losses before you need the money. If you have more than one account, you may have different portfolios with differing levels of risk, and you’ll need to keep track of all of them.

Feeling comfortable with the level of risk you take when investing is key. Revisit your asset mix periodically to make sure your tolerance for risk matches how you’re investing your money. Having one account makes managing your risk easier to do.

Simplicity

A common reason people consolidate is convenience. Some or all of these might appeal to you.

Less work, more clarity. Managing multiple accounts can be a lot of work. If you have five different accounts, you receive five different quarterly statements. Each one reports the quarter’s activities differently, so it’s no small feat to get a glimpse of your overall situation. Putting your assets in one place, such as with Member Benefits, gives you a clearer snapshot of where you are financially.

Consolidation also makes tracking contributions and withdrawals easier. Because there are limits to how much you can contribute to most retirement accounts—penalties will apply if you go over—multiple accounts require you to more closely monitor where and how much you contribute.

Headache-free RMDs. The Internal Revenue Service (IRS) requires you to start withdrawing required minimum distributions (RMDs) from certain types of accounts, such as a 403(b) and Traditional IRA, generally at age 72 (or 70½ if you turned 70½ before January 1, 2020). When calculating your RMD, you must consider all of your accounts. Although you have some control from where and how you want your RMD to be taken, you are also responsible for communicating your withdrawal plans to all of your account providers. Failing to make your intentions clear can go bad—if an account owner fails to withdraw an RMD, fails to withdraw the full amount, or fails to withdraw by the applicable deadline, the amount not withdrawn is taxed at 50% (IRS).

One point of contact. Questions about your statement or asset allocations can get answered with one phone call or by logging in to one account. And tasks such as updating an address or changing a beneficiary are made simple.

Remember, you can stick with us—we’re here for you up to and through retirement. Take care when moving money so you can avoid common and costly mistakes such as surrender charges and other deferred sales charges. We can help talk you through what to consider. Call us about consolidating your accounts at 1-800-279-4030.

Saving for the future is a family affair

Does your teen have a job? Do you have a family member who works on the side? How about family who live outside of Wisconsin and want to build up their retirement nest egg? Great news—you can help them out!

If your teen has earned income, it’s never too early to get them started on their retirement savings with a WEA Member Benefits IRA. A Roth IRA is a particularly attractive savings option for young people who can count on years of tax-free earnings.

If you, your spouse, or child work or own a small business, a Simplified Employee Pension (SEP) IRA might be an option for you or your family member. A SEP provides retirement benefits for small business owners and their employees with little to no administrative costs. There are contribution limits—call us discuss your options.

A Spousal IRA can provide retirement savings for a non-working spouse with no or very little income as long as the married couple files a joint income tax return and has eligible compensation to cover the contribution amount.

And if you have family who live in one of the states that offer our IRA program, and they meet eligibility guidelines, they may also enjoy the benefits of saving with a WEA Member Benefits IRA. Visit our IRA eligibility web page to see which states are eligible.

1-800-279-4030
weabenefits.com/ira

Restrictions may apply. Certain state residency required.

Get the facts about Member Benefits’ retirement and savings program

MYTH: You have to move your money out of WEA Member Benefits because (fill in the blank).

FACT:

Despite what you might hear, you DO NOT need to move your money from your 403(b) or IRA with Member Benefits if you:

MYTH: Consolidating your money will make it easier for your beneficiaries.

FACT:

Sure, consolidation makes managing your money easier, but unless you are consolidating into a low-cost program, your account balance could take a hit.

MYTH: You won’t have access to your 403(b) funds in retirement because it is in an “annuity” (tax-sheltered annuity).

FACT:

Our program has flexible withdrawal options without surrender periods (the amount of time an investor must wait before withdrawing funds from an annuity without penalty). Often individual annuities or insurance company annuities have surrender/maturity periods that are many years long (sometimes 5–12 years). Ours doesn’t.

MYTH: My beneficiaries are specified in my will, so I’m set.

FACT:

Your will is not enough. The beneficiary designated on any retirement account supersedes the instructions found in a will or a trust. So be sure yours are up to date on all of your retirement accounts, and review and update your accounts whenever you experience any major life events (marriage, divorce, birth of a child, death of a family member, etc.).

MYTH: There are fees to transfer money from other retirement accounts into Member Benefits program.

FACT:

Nope! The WEA TSA Trust does not charge fees to transfer money from other retirement accounts into our program. However, if your retirement account at your current carrier has a surrender fee, or if you move money from a mutual fund that has a redemption sales charge, you may be charged a fee from your current carrier. Contact your current provider to review possible charges.

MYTH: There are fees to get funds out of your Member Benefits account upon retirement.

FACT:

Nope again! Member Benefits does not charge transactional fees or surrender charges even if you move your money out. (Mutual fund redemption fees may apply in certain situations.)

MYTH: Member Benefits doesn’t offer nonretirement accounts.

FACT:

Yes, we do! We have been offering Personal Investment Accounts since 2018. It’s a way to invest your money outside of a retirement account without using a cash account such as savings, checking, or certificates of deposit. It can be registered in just your name or opened jointly with anyone.

MYTH: In order to open a WEA Member Benefits IRA, I have to live in Wisconsin.

FACT:

In case you missed it, Member Benefits recently opened our IRA program to folks who live outside of Wisconsin! If you meet eligibility guidelines and live in one of the states that offer our IRA program, you and your family may enjoy the benefits of saving with a WEA Member Benefits IRA.

Have some questions about your retirement account or need help getting started? Contact us at 1-800-279-4030 or retirement@weabenefits.com.

NEW! IRA program available outside of Wisconsin

For those who meet our eligibility criteria, we have great news! We’ve expanded our IRA eligibility guidelines to include those who live in certain states.

Our IRA is open to family members

Family may also participate in our IRA program if they live in one of the approved states, so you can all enjoy the benefits of saving with a WEA Member Benefits IRA.

Take advantage of this savings opportunity

For more information and to learn which states are eligible, contact us.

To be eligible for this program, you must meet the IRS eligibility requirements for contributing to an IRA. Restrictions may apply. Certain state residency required.

Women and retirement: 6 challenges to a secure future

A comfortable retirement is an expensive endeavor for everyone. Financial planners suggest one should shoot for an annual retirement income that’s roughly 85% of your preretirement income, depending on your continued fixed expenses. Translation? Everyone needs to save—a lot. But women should actually be saving more.

“Women are at a much higher risk of facing financial uncertainty in retirement and retiring with considerably less savings than men,” says Andrea Hartwig, Financial Planner at WEA Member Benefits. “Women face unique challenges. Generally, they spend fewer years in the workforce, earn less income, gravitate toward conservative investments, and have longer life spans than men.”

While not every woman will experience the same challenges, it is likely that most will face more than one, which compounds the problem. “Their road to retirement is more long and winding than that of their male counterparts,” explains Andrea, “making it even more critical for women to recognize key life events that can trigger a financial setback. Women need to be aware and prepare.”

Challenges facing women

1. LIVING LONGER

The life expectancy for men in the U.S. is 76 years. For women it’s 81.1 While five years may not seem like a lot over a lifetime, it does mean the average woman will need to save more to fund the extra years compared to the average man. From a financial perspective, this is significant—and the price tag on those years will likely be higher.

Longevity brings with it a greater potential for increased health care costs. “People often believe that once they hit 65 and qualify for Medicare, their health care costs are covered, but that simply isn’t the case,” says Andrea. “Medicare is a great benefit, but it’s far from free. There will still be out-of-pocket expenses that are not insignificant.”

It is estimated that the average couple retiring at age 65 will need $285,000 to cover health care and medical costs in retirement. Women will need more than men—$150,000 vs. $135,000.2 And that doesn’t include long-term care services, which, despite what many think, are not covered by health insurance or Medicare. This is an important consideration as:

Health care continues to be one of the largest expenses in retirement. The longer you live, the greater the cost will likely be.

2. EARNING LESS

While strides have been made regarding equal pay, women are not always paid as much as men in the same fields and positions. According to the U.S. Census Bureau, women earn about a third less than men during their working lives, resulting in smaller contributions to Social Security, pensions, and other retirement accounts. It is a major contributing factor as to why women are 80% more likely to wind up in poverty than men when they’re age 65 or older.4

Women are also more likely to work part-time because they often fulfill other roles in the family requiring their time (like caregiving). Part-time workers may not qualify for their employers retirement plan, and again, lower income means less going into Social Security on their behalf.

3. TAKING CARE OF OTHERS

The pay gap issue is amplified for women who drop out of the workforce temporarily to be stay-at-home moms or to care for sick or aging parents. With 75% of all unpaid caregivers being women, the impact is far reaching and has long-term financial implications.5

Here’s what that means for women financially.

However, Andrea notes, this shouldn’t discourage women from taking time out of their careers.

“The key is to plan for it. The earlier you start saving and the more you contribute, the more time you can comfortably take off from your career,” she says.

4. INVESTING TOO CONSERVATIVELY

By and large, women gravitate toward more conservative investments than men. Playing it safe is more comfortable and may be a good approach when near or in retirement, but such a strategy usually means lower earnings over the long run. “If you take this approach, you may need to invest more money to meet your goals. But if there’s a time to be more aggressive, it’s when you’re young. Because of the long timeline, you are in a better position to recover from market fluctuations,” says Andrea.

Having a better understanding of investing and the relationship between risk and reward will help you find an investment strategy that will help you reach your goals and still sleep at night. It’s a balance. And, don’t be afraid of getting some professional help. You can go to weabenefits.com/financialconsults to learn about financial consultation options and set up a phone or video conference with a financial planner.

The Investor Suitability Profile Questionnaire offered by Member Benefits can help you determine the level of risk you’re comfortable with. After providing some basic information about your situation and answering six questions, you will receive an indication of your investment style along with an appropriate investment allocation.

5. BEING SINGLE or SINGLE AGAIN

This challenge is really more about planning for your future than it is about marital status. Because nearly every woman will have sole responsibility for her finances at some stage in her life—whether single by choice, divorce, or widowhood—it’s important for women not only to have a plan but to also have ownership in the plan.

“Women should always be involved in conversations about finances, whether that’s at the financial advisor’s office or at the dining room table at home. This is not the place to hand off control. Taking responsibility for your own financial security will prepare you for whatever turns your life may take,” encourages Andrea.

6. MAKING BIG DECISIONS WITHOUT ALL THE FACTS

It goes without saying that any big decision should be made with care—and there may be no greater decisions to make right now than about your financial future.

“Here is where having knowledge about your long-term finances comes in handy,” says Andrea. Knowing how you (and your spouse if applicable) are saving and what kind of accounts you have—403(b,) IRA, 401(k), and/or your Wisconsin Retirement System—is significant, because each account type has different rules and restrictions, and each serves a strategic role in your retirement income stream.

Without that knowledge, people can make costly and irreversible mistakes. For instance, it’s all too common for people to dip into their retirement account early. In fact, 52% of all savers take early withdrawals—a move that can cost you dearly in three ways:

  1. Penalties for unqualified distributions typically run 10% but could be higher if the account has surrender fees.
  2. Taxes may apply to withdrawals and may push you into a higher tax bracket.
  3. Earnings on the money you withdraw will cease, and you will lose out on future growth from compound interest.

“While this may be tempting, especially in difficult times like the COVID-19 pandemic, it really should be a last resort option,” says Andrea. “Your retirement savings should be earmarked for retirement. Building an emergency fund where the money is easy to access is a better way to plan for surprise financial situations that pop up in daily life.”

It’s all connected

Generally, the closer you get to retirement, the more complex your finances become—and it’s also a time when you are financially vulnerable. You will have several big decisions to make, including when to stop working, when to take Social Security, how to pay for health care, and how to generate cash flow from your retirement assets. These decisions are interconnected and could make a difference in your living costs and lifestyle in retirement—and ultimately determine when you can retire.

Andrea advises, “You really want to have a handle on these well before retirement. If you have a solid plan and an understanding of what your plan entails, the decisions will be easy to make.”

The information in this article is provided only as a summary of complicated topics and does not constitute legal, tax, investment or other professional advice on any subject matter. Further, the information is not all-inclusive and should not be relied upon as such. All investments hold risk and there can be no guarantee that your investments will be profitable or that your goals will be achieved.
SOURCES
1 U.S. Census Bureau   |   2 HealthView Services (a provider of health-care cost projection software) and Fidelity Investment (2019)
3 Wisconsin Office of the Commissioner of Insurance (OCI) (2019)   |   4 2018 report from the National Institute on Retirement Security
5 American Association for Long-term Care   |   6 Center for American Progress
ARTWORK: Daisy Garrett

Take advantage of our financial planning services

Our financial advisors specialize in working with Wisconsin public school employees, understand the unique retirement benefits available to them, and are experts in coordinating those benefits. We take time to help you identify and prioritize your financial goals, determine whether you are on track to meet your goals, and provide you with the information and tools to help you get there.

Member Benefits’ financial planning services are designed to address the changing needs of Wisconsin public school employees at various points in their careers and lives. And there are no commissions, which means you receive an unbiased analysis of your situation.

weabenefits.com/financial-planning

1-800-279-4030, Extension 6730

Keep calm and invest on

Effective January 1, 2023, the Prudential Guaranteed Investment was renamed to the Guaranteed Stable Investment. The Prudential Retirement Insurance & Annuity Company (PRIAC) was purchased by Empower Annuity Insurance Company (EAIC). Any reference to PRIAC should be replaced with EAIC. Any reference to Prudential should be replaced by Empower.

As of March 2020 when this article is being written, we’re dealing with an unprecedented health crisis. Our personal lives are being affected in a myriad of unexpected ways. It is understandable that most of us probably feel anxious and unsure about the future.

The daily news has raised fear in investors, and the disruptions to our daily lives have changed the way we’re spending our money. But when it comes to saving for your future, it’s more important than ever to keep a clear head.

You may be tempted to stop funding your retirement account, move it to something very conservative, or cash part of it out. But before you make any rash decisions, take a breath and remember: One of the best things you can do right now for your retirement is to stay the course for the long term.

Noted investor Warren Buffet saw this over 30 years ago when he described two “super-contagious diseases” that will forever have occasional outbreaks: Fear and greed among investors. As he famously stated as a strategy against this “disease,” people should “…be fearful when others are greedy and be greedy only when others are fearful.”

Although too simplistic to be construed as Buffet’s recommended investment strategy, his point is well founded. It’s all too common for investors to bolt when things go poorly.

And at the moment, fear is ruling. That’s why it’s more important than ever to be as rational as you can about your investments during this trying time. Getting some perspective can help you get there.

History is our teacher

Failing to recognize the dangers of letting your emotions drive investing decisions can be disastrous when your life savings are at stake. To understand what effect moving assets out of equities during a volatile market such as the 2008 recession has on account returns, in 2017 Fidelity took a poll of their investors and found that those who continued to contribute to their 401(k) plans between June 2007 and June 2017 benefited from, on average, a tripling of their account balance. For the average baby boomer, the account balance in their 401(k) plans was $115,000 in June 2007, fell to $85,000 at the beginning of 2009, and rose to $315,000 by June of 2017 (Forbes).

Admittedly, it can be difficult to look at a significant drop in your investment portfolio. But if, for example, you stayed the course during the 2008 recession, you were rewarded with an over 11-year bull run. Consider that fact in light of today’s market.

Further, stock market corrections happen more than you probably realize. Over the past 70 years, the benchmark S&P 500 has undergone 37 corrections of at least 10%, not including rounding (Yardeni Research). Stock market corrections usually run their course quickly, and you may profit much more by keeping the long-term view in your sight. (Past performance does not guarantee future results.)

Careful about getting too conservative

It’s understandable if the market volatility makes you feel like you want to go with more conservative investments or even pull out of your mutual funds all together. But know that while that may shield you temporarily, those alternatives have a risk as well—the risk that the rate of inflation will outpace the rate of return on your investments. For example, putting all your savings into cash would leave you exposed to erosion in its value from inflation. Younger people would find it extremely difficult to accumulate meaningful savings. Retirees would shorten the number of years they could cover their retirement expenses, as they still need exposure to stocks and bonds to maximize their nest egg.

Money invested in a fixed-income product like the Prudential Guaranteed Account (PGI)* with Member Benefits may provide investment stability, but it also limits earnings. If you choose to invest entirely in the PGI, you lose the ability to earn as much as you may have been able to if you had invested more diversely in stocks.

Mike Driscoll, Managing Director of Sheridan Road and an Accredited Investment Fiduciary, has 40 years of experience and a lot of knowledge in the financial industry. Mike is also a longtime WEA Member Benefits advisor, and has personal work experience with the PGI. He explains, “The guaranteed fund from Prudential provides stability in periods of market disruptions. Because the fund does not invest in stocks, it allows investors to minimize the impact of volatility in the equity markets. However, the fund is not designed for short-term trading, but for long-term stability of a portion of an investor’s account balance.”

Keep these things in mind: If you’re a younger person, time is on your side in terms of the market and your future ability to generate income. If you’re older and closer to retirement, you may want to be more conservative with your investments—but don’t miss out on the potential earnings of stocks and bonds. Delaying Social Security is another option. It may be a good time to revisit your spending goals and budget so you know exactly where you stand today.

Creating a well diversified portfolio appropriate for your personal situation is important and may help you with market volatility. How to determine what is appropriate is based on factors like your age, your goals, your time horizon (when you need to use the money you invest), and your emotional tolerance for risk.

Don’t try to time the market

Emotions and deeply ingrained biases influence our decisions every day. They are also deeply rooted in personal experiences that influence our decision-making. But they can cause us to behave in irrational ways. Especially in times of uncertainty, investors tend to make investment choices based on emotion rather than careful consideration of their long-term plan. “It’s tempting to sell stocks or cash out your retirement savings when things look shaky, then buy again when the outlook is bright. But trying to time the market almost never pays off because no one really knows what will happen next, even in these challenging times,” says Brenda Echeverria, Financial Planning Supervisor at Member Benefits. “Moving out of your investments into cash or very conservative investments means you may lose any opportunity to recover your losses when the stock market rebounds.”

Mike explains that Nobel Prize-winning psychologist Daniel Kahneman demonstrated this emotional tendency with his loss aversion theory, which demonstrates that people feel the pain of losing money more than they enjoy gains. Our natural instinct is to flee the market when it starts to plummet, just as greed prompts us to jump back in when stocks are skyrocketing (Capital Markets Group, How to Handle Market Declines, March 2020). Adds Mike, “Emotional reactions are normal when events that impact us seem beyond our control. You wouldn’t be human if you didn’t fear loss. But keep in mind that both (instincts) can have negative impacts on your finances.”

Right now, many people are trying to time the market by moving their funds around. There are risks and limitations to this strategy. For one, most investments, including several offered by Member Benefits, have trade restrictions that place a limit on short-term trading. Those who make too many trades within 30 days of purchase could find themselves put on “roundtrip restriction,” which bars shareholders who employ this tactic from making trades for a certain number of days.

If you are in the PGI and participant level protections (PLP) become active, it could limit the outflows from the account. Although PLPs do not apply to benefit responsive withdrawals (such as retirement income), if triggered, they do restrict withdrawal activity. Remember, PLPs are there to protect the account and account holder. For more information on PLPs, please see our article, Protecting a legacy.

If you are considering cashing out your retirement funds temporarily and putting them in the bank, know this: Doing so may make you subject to taxes—and you may be limited in coming back to your retirement program. Also keep in mind that the PGI offers a higher interest rate than a bank.

You have a unique advantage

As a Wisconsin public school employee, you have an advantage that many do not—the Wisconsin Retirement System (WRS) pension plan. This gives you a foundation of retirement income you can’t outlive.

Keep this in mind when you’re reading articles. The general population these articles are referring to are in a different situation than you are. It’s like comparing apples to oranges.

If your WRS pension and Social Security are taking care of a substantial percentage of your living expenses, you may not need to be so conservative with your 403(b) and IRA accounts. But of course, everyone needs to make the best decisions based on their own situation, investment objectives, and risk tolerance.

If you want a more in-depth review of your savings strategy, contact us for a complimentary consultation. You may find yourself investing too conservatively, not conservatively enough, or you may just have questions and need some guidance. Visit our financial consultations page. Or if you have questions, feel free to call us at 1-800-279-4030. Our staff is still available to help you from 7:30 a.m. to 5 p.m. Monday through Friday.

*Interest is compounded daily to produce a yield net of Empower’s administrative fee of 0.60%. Empower Annuity Insurance Company (EAIC) is compensated in connection with this product by deducting an amount for investment expenses and risk from the investment experience of certain assets held in EAIC’s general account. For more information, go to weabenefits.com/empower.

Stay on course

Investors who have been willing to ride out the volatile returns of stocks over long periods of time generally have been rewarded with strong positive returns. A long-term investment strategy offers a balanced approach to both risk and reward. Best practices associated with long-term investment strategies often include the following:

Investing involves market risk, including the loss of principal.

Ready to rollover to a WEA Member Benefits IRA?

Managing your investment accounts is easier when you consolidate. Consider rolling over into our IRA program where you’ll pay ONE low administrative fee up to an annual fee cap.**

It’s even easier to save by making automatic contributions from your savings or checking if you’re still working.

Here’s a few reasons to rollover your IRA to us:

It’s open to family members. Your family, including your spouse or domestic partner, children and their spouses, parents, and parents-in-law, may also be eligible to participate in our IRA program.1

Low fees save money. Fees charged by some plans can take a big bite out of your earnings. The number one factor in determining your rate of return—after asset allocation—is cost. To make the most of your invested dollar you will want to minimize the fees you pay.

Our IRA has just one low annual administrative fee (0.45%) that is capped annually at $600 for WEAC members $750 for non-members. No other administrative fees apply; however, mutual funds include investment management and redemption fees.

Rollover with ease. We can help you complete your transfer or rollover in a few easy steps. It only takes about 5 minutes with the help of one of our technical assistants.

Our enrollment experts will help you:

For more information, give us a call at 1-800-279-4030, Extension 8568, or start the process online at weabenefits.com/rollover.

*Be sure to consider all your available options and the applicable fees and features of each option before moving your retirement assets.
**A minimum annual fee of $25 will apply to accounts that have no annual contributions. Mutual fund management and redemption fees may apply.
1To be eligible for this program, you must meet the IRS eligibility requirements for contributing to an IRA. Restrictions may apply. Certain state residency required.

Decisions, decisions on distributions

Your required minimum distribution (RMD) is the minimum amount you must withdraw from your account each year, but you can choose to withdraw more. You generally have to start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, and your retirement plan account at age 72 (age 70½ if reached prior to January 1, 2020) or the calendar year you retire from an employer through which you contributed. Roth IRAs do not require withdrawals until after the death of the owner.

If you’re not sure what to do with your RMD by December 31, we have a few ideas for you.

Donate

Did you know you can choose to give up to $100,000 to a qualified charity from your Individual Retirement Account (IRA) without counting it as taxable income when you are over 70 ½ years old? This type of gift is called a qualified charitable distribution (QCD). It’s not only a powerful incentive for charitable giving, it also has tax benefits. QCDs count as IRA distributions, so they can be used to satisfy all or some of your required minimum distribution (RMD) for the calendar year.

Member Benefits requires you to complete a specific form if you wish to take advantage of this IRA option. Consider giving a donation to WEA Member Benefits Foundation or one or more of your favorite charities.

Reinvest

If you don’t need the funds for necessities, consider opening a Personal Investment Account with Member Benefits. It’s a way to invest your money outside of a retirement account without using a cash account such as savings, checking, or certificates of deposit. You can choose from individual, joint, UTMA, or trust accounts.

Ask us about the tax benefits of this type of account. For more information, visit the Personal Investment Account page.

Give

The Uniform Transfers to Minors Act (UTMA) provides an avenue for a grandparent, parent, aunt, and/or uncle to make monetary gifts to a minor. Or consider making a contribution to a 529 college savings plan (in Wisconsin, visit Edvest).

Transfer

If you have a Roth 403(b), you can roll the money into a Roth IRA, which has no RMDs for the original owner. You can also convert your Traditional IRA, Roth IRA, or pre-tax 403(b), but you will owe tax on the conversion.

Give us a call at 1-800-279-4030 if you have questions. As with most IRS provisions, we encourage you to work closely with your tax advisor to determine what would work best for your specific situation.

Working at a new district this year? Don’t forget your 403(b)

That’s right. Your 403(b) is an employer-sponsored plan, so when you leave a district, any contributions to that account stop. To continue funding your retirement savings, you need to set up a new retirement account with your new district.

Member Benefits is an approved vendor in 98% of the school districts in Wisconsin, so chances are you can continue saving for retirement with our nationally recognized 403(b). Here’s what you need to do.

Call us

We’ll help you set up your new account in about 10 minutes.

Fill out an SRA

Fill out a Salary Reduction Agreement (SRA) and submit it to your new district’s benefits manager or payroll coordinator, authorizing them to withhold and forward money from your paycheck to your 403(b). We can provide you with the SRA or you can get it from your district’s business office.

Update your account

While you’re setting up your new account, take the opportunity to:

Moving to a new district requires you to open a new 403(b) account in order to contribute to your retirement savings. Your 403(b) account with a previous district is still yours and will remain in that district’s plan until you either move it or need it for retirement.

Decide what you want to do about your old account

Keep in mind you may have the option to transfer the money from your old plan to your new one. The process is pretty easy. Our staff can explain your options and help you decide whether or not it makes sense to transfer the money.

>>Call 1-800-279-4030

P.S. Consolidating your retirement accounts makes them easier to manage and may save you money. If you want to rollover a 401(k) or other retirement account(s) to a WEA Member Benefits IRA*, we can help with that, too!

 

*The Trustee Custodian for the WEA Member Benefits IRA accounts is Newport Trust Company. To be eligible for this program, you must meet the IRS eligibility requirements for contributing to an IRA. Restrictions may apply. Certain state residency required.