Wealth Managment

If you are retiring, changing jobs, laid off or your company recently merged, CALL me and I can assist you with the decision you have with your 401(k), 403(b), Pension, Profit Sharing, ESOP and other company sponsored retirement plans and the tax ramifications of each option.
Generally Employer Sponsored Retirement plans have four (4) options.

    Option 1
  • Leave the money where it is if your former employer allows. They may not be required to allow you to be able to leave your money with them.
  • Option 2
  • Roll the retirement to your new employer if applicable and the new employer accepts the funds from your old employer. The new employer is generally not required to accept the funds from your former employer. One thing to note is that the matching that the new employer may do is not done on old money transferred from a former employer. Example: If you transfer $100,000 from your old employer to your new employer, you will have $100,000 with your new employer. The new employer generally does not match old money transferred into the plan. The matching funds will be for new money you deposit while working at the new company.
  • Option 3
  • Take the money to yourself. Withdraw the money and have a check sent to you. Your former employer is required to withhold 20% and send it to the Internal Revenue Service (IRS) and you will receive the remaining 80%; however, the total amount is taxable. The amount you receive and the amount sent to the IRS is taxable.

 

Option 3 Example
Example: You have $100,000. Your employer will send $20,000 to the IRS and $80,000 will be sent to you. The taxable amount will be $100,000 (the $80,000 you received plus the $20,000 sent to the IRS). I usually get calls monthly from people saying I was taxed twice on the money. I already paid tax on the money when I did my withdrawal. Now when I do my Federal Taxes, I have to pay taxes again. Now to clarify this so it is understood, you are not paying the actual tax on your distribution with the 20% sent to the IRS. This is merely an estimated tax payment not the actual tax. The distribution is not taxed separately, it is added to your income. Your actual tax is calculated when you do your federal income tax return. Actual tax can be higher or lower depending on your age, your tax bracket and other items on your tax return. Usually financial advisors tell you to seek the advice of a tax professional. I am a Certified Public Accountant (CPA), a Tax Professional.

Example: Let’s say you withdrew $100,000: $20,000 is sent to the IRS. You receive $80,000. You, like most of us, spend the $80,000 thinking the tax is already paid. Now tax time is here. You go to complete your tax return. With the additional income from the distribution, you may be pushed into a higher tax bracket. To make the math easier, let's assume a 30% tax bracket.

  • Tax: 30% of the $100,000 (not the $80,000 you received) $30,000
  • Under 59 1/2 Penalty $10,000
  • Total Tax Bill $40,000
  • That is $20,000 more than you paid in. You now owe the IRS 20K plus applicable penalties and interest.
Before you do this, CALL FOR YOUR FREE in person 30 minute no cost no obligation consultation regarding your employer sponsored retirement plan.

Option 4
  • Roll your employer plans to an IRA (Individual Retirement Arrangement). There are no taxes and no penalties when you rollover your money to an IRA. I can handle this transaction for you. For your free 30 minute in person no cost no obligation consultation regarding your 401(k), 403(b), Pension, Profit Sharing, ESOP or other employer sponsored retirement plan, please call. My number is 713-862-4332. The phone is answered 24 hours a day, 7 days a week. You can call now.

Everyone’s situation is different. Please get specific advice for your particular situation.

  • Teachers, educators, health professionals and anyone else who has Teacher Retirement System (TRS) for their retirement, please call us. We are familiar with TRS and will be more than happy to assist you as you make your decisions regarding your retirement. This is a non revocable decision. In other words, you can’t change your mind later and say I want the lump sum. DON’T GO IT ALONE. I will sit down with you for free and discuss and explain your options and the tax ramifications of each option. The wrong decision can cost you dearly at tax time.
  • Energy Industry employees, please call us and allow us to assist you with your Employer Sponsored Retirement Plans. We are familiar with "Net Unrealized Appreciation"
  • WRONG DECISIONS CAN COST YOU DEARLY AT TAX TIME.

  • IN SERVICE DISTRIBUTION (ISD) - We are very familiar with In Service Distributions. An In Service Distribution is when you currently work for an organization and you are allowed to withdraw or rollover a part or all of your Employer Sponsored Retirement Plan. You can also continue to contribute to your Employer Sponsored Retirement Plan.