There’s no such thing as a one-size-fits-all retirement strategy, which can make it quite difficult to understand which path to follow. It’s critical to create a strategy that works specifically for your unique situation, but with so many options that each come with different criteria and potential tax consequences, the average person can easily miss out on financial advantages without proper guidance.

If you’re looking for a financial advisor, Winter & Associates is here to help. We are an independent financial services firm bringing guidance to generations of individuals, families, and businesses in the Upper Midwest. Our experienced financial professionals will work closely with you to develop a retirement strategy that best meets your needs, whether you are self-employed or on a company retirement plan; have a history of taking too little risk or too much; or have been saving for your whole life or just the past 10 years.

We take a completely customized approach to each client’s retirement strategy, carefully considering what you care about and how you envision your ideal future. Our financial advisors help you keep your assets, your goals, and your values in sync—milestone after milestone, year after year. Contact us today to book an appointment!


RETIREMENT FUNDING VEHICLES*

IRAs

There are several types of Individual Retirement Accounts (IRAs), and each has its own advantages and regulations. Your financial advisor can help analyze which IRA (or IRAs) makes the most sense for your situation.

There are two main types of IRAs: Traditional and Roth. Here’s a general overview:

Traditional IRAs

  • May offer significant tax deductions.
  • Come with a contribution limit that may vary from one year to the next.
  • Investments grow tax-deferred, which means you’re not taxed on the dollars in this account until you make a withdrawal.
  • Everyone with taxable compensation qualifies, but not all contributions are deductible.
  • Required Minimum Distributions (RMDs) must be made starting at age 73 as of 2023 (if you turned 73 prior to 2023, please consult your financial professional for additional guidance). 
  • Taxable withdrawals made prior to age 59½, may incur a 10% penalty unless you meet certain exceptions (such as death or qualifying disability). For more information visit irs.gov.
  • Subcategories include:
    • SEP IRAs - If you’re a business owner or independent contractor, you may be eligible for a Simplified Employee Pension (SEP IRA). This type of IRA follows the same investment, distribution, and rollover rules as traditional IRAs, but is designed for self-employed individuals or small-business owners with few or no employees. Contributions are tax-deductible, contribution limits apply, and investments grow tax-deferred until distributed.
    • SIMPLE IRAs - A Savings Incentive Match Plan for Employees (SIMPLE IRA) is ideal for small employers (no more than 100 employees) who would like to avoid the start-up and operating costs of a conventional retirement plan. SIMPLE IRAs are similar to Traditional IRAs but have higher contribution limits. Additionally, distributions within two years of plan participation will incur a 25% tax penalty.

Roth IRAs

  • Contributions are not tax-deductible.
  • Funds inside the account grow tax-free.
  • Offer the ability to withdraw your contributions (not growth) at any time, penalty-free. Because of this, many people use their Roth IRAs as emergency funds.
  • Qualified distributions are tax-free.
  • No Required Minimum Distributions at any age.
  • Ability to contribute is determined by your tax filing status and Modified Adjusted Gross Income.

Inherited IRAs (either Traditional or Roth)

When someone passes, they may leave behind an IRA or employer-sponsored retirement plan to a spouse, relative, or unrelated party or entity (estate or trust). If eligible, the account can then become an Inherited IRA or "Beneficiary IRA” after assets are transferred into a new account in the beneficiary’s name. There are specific rules that must be followed in order for the transfer to be made, which a financial advisor can help you navigate.

Would you like to talk about the advantages and disadvantages of each type of IRA and determine the best strategy for you? Contact us today to get started!

401(k) Plans

Unlike an IRA, which is an individual retirement account, a 401(k) is a type of employer-sponsored retirement plan, and therefore administered under different rules. Here are the basics about 401(k) plans:

  • Named for the section of the tax code that governs them.
  • Allow employees to defer and invest a portion of each paycheck before taxes are taken out. Employees control how their money is invested.
  • Many employers match their employees’ contributions up to a certain percentage.
  • The IRS mandates contribution limits.
  • Restrictions on when you can withdraw money, including penalties for withdrawing funds before you reach retirement age.
  • Taxes aren’t paid until money is withdrawn from the account.

In a perfect world, you’d have the means to max out both an IRA and a 401(k) plan, but that’s not the reality for many people. Your retirement advisor would be happy to further explain the key differences and help you determine whether to put your money in an employer-sponsored retirement account like a 401(k) or a self-directed option like a Traditional IRA or Roth IRA. Click here to book an appointment online.


EMPLOYMENT CHANGES

Many people change jobs throughout their career and are faced with decisions regarding their employer-sponsored plans. We can help you review all your options, which include rollovers, keeping the money where it is, moving the funds to a new employer-sponsored plan, or cashing it out. It is important to discuss the benefits and considerations of each option so you can make an informed decision.

The process of transferring funds from a retirement account into a Traditional IRA or Roth IRA is known as a Rollover. The purpose is to maintain the tax status of assets. Many people opt for rollovers when they change jobs and want to move their 401(k) plan or 403(b) into an IRA, but that is not always the case. Sometimes, rollovers happen when the account holder is looking for different benefits or investment options.

It’s likely you’ll have to deal with this decision at least once in your lifetime and learning how to handle the process can be complex. When it’s done correctly, it allows you to efficiently move those assets. But when you don’t know what you’re doing, taking money out of a retirement plan can lead to some tax pitfalls. Our financial advisors have decades of experience and can help you understand all of your options and determine which one is best suited for your situation. Contact us today to set up an appointment.

 

ANNUITIES

Your retirement years should be spent simply enjoying life, not constantly worrying about whether your money will last. However, with people living much longer than previous generations, combined with the rising cost of healthcare and overall inflation, it’s an issue we must confront. If you’re concerned about outliving your income, one financial product to consider is an annuity: a type of insurance contract that can help provide retirement income for as long as you live.

Annuities can act like life insurance’s counterpoint. Whereas life insurance offers financial protection in the event of “dying too young,” annuities offer financial protection against “living too long.” If set up correctly, an annuity can provide income for the rest of your life, whether you live to be 80 or 120. However, there are many types of annuities to choose from (which can use either qualified or non-qualified dollars), each with its own pros and cons, so it’s important to be an educated buyer.

If you’d like to discuss whether annuities make sense as part of your personal retirement strategy, contact Winter & Associates! Our experienced financial advisors will provide insight on each type of annuity, help you “shop the market,” and offer advice based on decades of financial problem-solving and client relations expertise. With us on your side, you can feel confident about your retirement decisions. Call us today: 651-414-5000.


TAXABLE/NON-QUALIFIED ACCOUNTS

Non-qualified accounts are not eligible for tax-deferral benefits under the Employee Retirement Income Security Act (ERISA) guidelines; however, a taxable account can provide increased flexibility and investment opportunities in addition to other retirement accounts.

Since income tax has already been paid on the funds in a non-qualified account, when a withdrawal is made, the account holder must only pay tax on realized gains, such as interest or appreciation. Your financial advisor can help further explain the advantages of non-qualified accounts and help you determine whether it makes sense for you to have both types of accounts. Contact us today!


WE OFFER PRACTICAL RETIREMENT EDUCATION

Whether or not you choose Winter & Associates to assist with your retirement goals, we want to help you make informed decisions about your future. Our President, Nicole Winter Tietel, periodically offers interactive seminars that deliver comprehensive, objective knowledge for individuals nearing retirement. To find out if we have a course coming up or if you’re ready to book an appointment with a financial advisor, please give us a call at 651-414-5000 or connect with us online.

*This overview is not comprehensive and does not list all features, limitations, or qualifications. Information is as of 3/2024. To learn more about each retirement vehicle, visit irs.gov or reach out to us to discuss your specific circumstances.