important that you do not directly receive it. If you receive the money directly, you will have to pay a 20 percent withholding tax on the amount you receive and then file for a refund in the next year, providing proof that you have transferred the funds to an IRA. Instead, instruct the retirement plan to transfer your money directly to an IRA you have established or to another qualified retirement plan. This is easy to do using simple forms supplied by the new plan. If you want help with the forms, representatives of the plan are generally available to assist you.
1st Capital can also give the help you need to handle this part of your financial lifestyle! Getting this right is critical to your future retirement and your current tax responsibilities.
Do you know how you can save for retirement even if you don’t belong to an employer sponsored retirement plan?
Anyone receiving compensation or married to someone receiving compensation can contribute to an IRA. In addition, if you are self-employed, you can start a Simplified Employee Pension Plan (SEP) or a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE). As with other retirement savings plans, there may be tax consequences, and possibly penalties, if you withdraw your savings early.
Are you tracking your Social Security earnings?
More women than ever now work, pay Social Security taxes, and earn credit toward a monthly income at retirement. These earnings can mean some income for you and your family in the form of monthly benefits if you become disabled and can no longer work. If you die, your survivors may be eligible for benefits. In addition, you may be eligible for Social Security benefits through your husband’s work and can receive benefits when he retires or if he becomes disabled or dies. Special rules apply if you and your husband have been employed and both have paid into Social Security. Special rules also apply if you are divorced or if you have a government retirement plan.
To calculate your benefit estimate, visit the Social Security Administration’s website. – www.ssa.gov.
Are you entitled to a portion of your spouse’s retirement benefit if you and your husband divorce?
As part of a divorce or legal separation, you may be able to obtain rights to a portion of your spouse’s retirement benefit (or he may be able to obtain a portion of yours). In most private-sector plans, this is done using a qualified domestic relations order (QDRO) issued by the court. You or your attorney should consult your spouse’s plan administrator to determine what requirements the QDRO must meet.
1st Capital can also help you assess what options you have and how to properly navigate them.
Are you aware of the rules that govern your retirement plan and the retirement plan of your spouse if either of you die?
The rules are different for defined contribution and defined benefit plans. If you or your spouse belong to a defined benefit plan (a traditional pension plan), the surviving spouse may be entitled to receive a survivor benefit when the enrolled employee dies. This survivor benefit is automatic unless both spouses agree, in writing, to forfeit the benefit. You will need to check the SPD or consult with the plan administrator regarding survivor annuities or other death benefits. If you are a beneficiary under your spouse’s defined benefit pension plan, you may want to request a copy of the SPD and other plan documents that describe your spouse’s vested benefits.
It’s Up to You
Once you’ve answered these questions, you’re on the road to learning more about your financial freedom and the retirement financial lifestyle you deserve. As a resource for women (and men), 1st Capital can help you with our Lifestyle Wealth Management Worksheet. You can access it at www.1stcig.com or email me directly for a Wealth Assessment Survey that can be a “game-changer” for your wealth and financial planning success.
I hope you can utilize this information throughout the year
Contact: 312-952-8040/Cell * 312-836-3800/Direct Line * [email protected] * www.1stcig.com.