Important factors to consider about your retirement plan distribution

Why an IRA rollover?

The self-directed advantage

Consider this example

Important factors to consider about your retirement plan distribution

Are you changing jobs? Changing careers? Taking early retirement? If you are receiving a distribution from a company retirement plan, there are important factors to consider.

Income Taxes –
Penalty taxes
Asset accumulation for retirement

Your decision on what to do with your money can be reduced to four basic alternatives:

• You can take the money today and pay the income tax, along with a penalty tax if you are under 59 1/2.
• You can roll over to a traditional IRA and continue to defer tax until later.
• You can roll over to a traditional IRA and then convert to a Roth IRA. This would require you to pay tax on the distribution amount in the year of conversion, but you would never again pay tax on that money if you left it in the Roth IRA for at least five years and until you reached age 59 1/2.
• If the plan allows, you may roll over to your new employer’s plan.

Why an IRA Rollover?

Remember, this is your retirement savings . . . it is critical that you keep your assets growing and working for you if you are planning to have a financially secure retirement.

Rolling over your distribution allows you to:

• Direct your own assets,
• Maintain the tax-deferred status of your retirement savings,
• Preserve the ongoing tax-deferred earnings and capital appreciation,
• Avoid the 10% penalty tax and 20% withholding,
• Have the opportunity to convert to a Roth IRA and avoid future taxes and
• Elect distribution as part of a series of substantially equal payments under Section 72(t).

The Self-Directed Advantage

Flexibility

The Raymond James Self-Directed IRA allows many different investment options, including common and preferred stocks, corporate bonds, government securities, open- and closed-end mutual funds, variable annuities, CDs, and REITs.

Recordkeeping

Raymond James, as custodian, receives the contributions, provides detailed records of transactions, prepares statements reflecting all assets, makes distributions based on your instructions and handles the tax reporting. You receive a consolidated statement reflecting all account activity during the year.

Simplicity

If you maintain IRAs at more than one institution, it may be time-consuming and difficult to gather information and maintain records. Combining your assets in one IRA has distinct advantages. Transferring IRAs held elsewhere to a Raymond James Self-Directed IRA can be done quickly and easily.

Cost effectiveness

At Raymond James you can maintain your IRA for one reasonable annual fee. In fact, IRAs with a value of $250,000 or more pay no annual fee.

Consider This Example

Clint, age 60, is retiring from Oral D, Inc., a distributor of orthodontic products. During his 18 years of service, he accumulated more than $300,000 in the Oral D profit sharing plan. Clint wants to use $25,000 for a downpayment on a vacation condo and save the rest for retirement. What should he do?

The best alternative for Clint is probably to take a lump sum distribution from the Oral D profit sharing plan and roll over the proceeds to an IRA. Clint can then take a distribution from the IRA; by doing so he avoids the 20% mandatory withholding that would have been assessed had he withdrawn directly from the profit sharing plan.

After rolling the proceeds to his own IRA, Clint has the option to direct his own investments and withdraw funds at his discretion. He continues to avoid the 20% withholding, which would have been mandatory for any distributions had he left the money with the profit sharing plan.