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E-News ~ 3rd Qtr 2004 |
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From the office of Tim Olson, CEBS, CMFC The Olson Group is pleased to announce that Ryan Hinz has joined our team. Ryan graduated from the University of Lincoln with BS degrees in business and finance, and since has been very involved in the voluntary benefits marketplace. Ryan’s responsibilities will include re-enrollment meetings, helping you with new hires, ongoing service with billing, claims, and any other issues you may have. Over the next few months we will introduce you to Ryan and/or he will be contacting you to help service the voluntary benefit programs already in place. We are excited about our newest Olson Group representative! Age 70½ and Minimum Required Distributions (MRDs) Basic Facts If you have a Traditional or SIMPLE IRA, the IRS requires that you start receiving distributions by April 1 of the year following the year in which you reach age 70½. If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required. The amount that must be distributed each year is referred to as the minimum required distribution (MRD). April 1 of the year following the year in which you reach age 70½ is referred to as the required beginning date. You must receive at least a minimum amount for each year starting with the year you reach age 70½. If you do not receive that minimum amount in your 70½ year, then you must receive distributions for your 70½ year by April of the next year. The MRD for any year after the year you turn 70½ must be made by December 31 of that later year. Example: You reach age 70½ on August 11, 2004. For 2004, you must receive the minimum required distribution from your IRA by April 1, 2005. You must receive the MRD for 2005 by December 31, 2005. You will want to compare the benefit of leaving the money in your account for as long as possible with the tax consequences of taking two distributions in one year. All subsequent MRDs must be taken by December 31 of each year. How To Determine Your Annual MRD To calculate your distribution amount each year, divide your prior year-end IRA balance by the applicable factor corresponding to your age in the table. If your 70th birthday falls during the first six months of the year (January through June), your first distribution will be calculated using the age 70 factor shown in the table. If your 70th birthday occurs during the second half of the year (July through December), your first distribution will be calculated using the age 71 factor. Example: You reach age 70 on January 24 and had a prior year-end balance of $274,000 in your Traditional or SIMPLE IRA(s). Divide $274,000 by the applicable life-expectancy factor of 27.4 years to determine that your annual MRD is $10,000. (Your MRD needs to be recalculated each year.)
IRS Uniform Lifetime Table Exceptions To Using The IRS Uniform Lifetime Table If your spouse is your sole beneficiary on January 1 of a distribution year, and he or she is more than 10 years your junior, you may use the actual joint-life-expectancy factor in the IRS Joint Life and Last Survivor Expectancy Table. The factors are based on your actual ages and will result in a smaller MRD amount. You can find this IRS Joint Life and Last Survivor Expectancy Table at www.irs.gov or call the IRS at 1-800-829-3676. For purposes of figuring your MRD, your marital status is determined as of January 1 of each year. If you are married on January 1, but get divorced or your spouse dies during the year, your spouse as of January 1 remains your sole beneficiary for that year. For determining your distribution period, a change in beneficiary is effective in the year following the year of death or divorce. Owning Several Different Traditional IRAs You do not need to take MRDs from each IRA. You must calculate the MRD amount for each Traditional IRA , add those amounts together and take the total MRD from any one or more of your IRAs. The same rule applied to your SIMPLE IRAs, separately. Income Tax Withholding Federal income tax withholding applies at the rate of 10% unless you elect some other rate or you elect not to have withholding apply. Certain states also require withholding. Reinvesting MRDs You can reinvest your MRD, but you will owe any income tax due on the distributions when you take them. You cannot roll the MRDs into another IRA or retirement plan. But you can keep your money working in mutual funds by investing it in a non-retirement account for yourself, for another person or for your favorite charity. Exception You can delay taking MRDs from your current plan until retirement if you continue to be employed by the plan sponsor beyond age 70½ and do not own more than 5 percent of the company. Are You Notifying Your Employees Correctly On COBRA? If coverage for a dependent ends due to divorce, legal separation or any other change in dependent status, the EMPLOYEE should notify the employer within 60 days of the qualifying event. Plan administrators, upon receiving notice of a qualifying event, must provide an election notice to qualified beneficiaries of their right to elect COBRA coverage. Because qualified beneficiaries have independent election rights, plan administrators should either include a separate election notice for each qualified beneficiary in a single mailing that is addressed to both the employee and spouse, or, if a single notice is sent, it should clearly identify all qualified beneficiaries covered by the notice and explain each person’s separate and independent right to elect COBRA coverage. A plan administrator must always send separate election notices to qualified beneficiaries who do not reside at the same address if the different addresses are known to the plan administrator. A notice sent to the spouse is treated as a notification to all qualified dependent children residing with the spouse at the time the spouse’s notification is sent by the plan administrator. Notices must be provided in person or by first class mail within 14 days after the plan administrator receives notice that a qualifying event has occurred.
Securities offered through
Sunset Financial Services, Inc. 3520 Broadway Kansas City, MO 64111 (816) 753-7000 (OSJ) Member NASD/SIPC Sunset Financial is not affiliated with The Olson Group. Our Quality Partner Watko Benefit Group 10851 Mastin Street Suite 960 Overland Park, KS 66210 PHONE: (913) 323-3234 FAX: (913) 323-3250 EMAIL: gwatkins@watkobenefit.com |
Changing Retirement Plan Allocations Life is always changing, and those changes can affect your asset allocation - the combination of stock, bond and cash investments you choose for your retirement plan account. Varying performances among your stock, bond and cash investments can throw your allocations out of alignment, making it necessary to "rebalance" your account.
Schedule a time once a year to review your investment profile and make any necessary adjustments to your allocations. To update your investment profile and learn more about changing your allocations, go to www.eretirement.aul.com and read Allocation Builder: A Four-Step Guide to Investing Your Money. This guide is a resource for keeping your investment mix on track to your retirement destination. If you need to adjust your asset allocation, go to www.eretirement.aul.com or call AUL TeleServe at 1-800-249-6269. When you using TeleServe, select Option 2, enter your Social Security number, and your pin number. If you do not have a pin number, enter "0". You will then be transferred to a Customer Service representative. Do not be concerned if you need to enter your Social Security number more than once, you will get to a Customer Service representative. During peak hours of the day there may be a five to ten minute wait to get to a representative. You may also apply this same review method for all your other individual investments and retirement accounts. If you have any questions on the selection of investment options, please contact Tim, Mike or Rita at our toll free number (866) 289-1046. 5500 Filing If your plan has a January 1 effective date and your 5500 filing has not been completed, be sure you have an extension filed by July 31, 2004. Please contact our office if you have any questions or concerns. The Income Irony by Jean Chatzky's Money Tip One great irony is that despite rising incomes, many Americans complain of having to work harder and harder just to maintain a decent standard of living. But economists say that really isn’t the case. Because inflation has been kept at bay, the portion of your income you need in order to achieve a nice lifestyle is far smaller than it used to be. The problem is our expectations. We want big-screen TVs, palm pilots, sport utility vehicles, and cell phones. For many people, eating out isn’t for special occasions anymore; it’s an every-other-day occurrence. In fact, one financial planner told Money magazine that it’s the people with the biggest salaries who have the least sense of how quickly they’re burning through their income. They work so many hours that they wind up eating out all the time and paying for all types of services, from housecleaning to landscaping to day care. Keeping your spending in check: According to the Bureau of Labor Statistics, average American households spend about 33 percent of their income on housing, 19 percent on transportation, 13.5 percent on food (with more than 40 percent being spent in restaurants), and 5 percent on health care. Other significant expenditures include taxes, entertainment, and clothes. How can you keep your spending in check?
UnumProvident's New Employer Site Unum has created online solutions that help you with day-to-day plan administration and ongoing benefits management. This secure Internet Service gives you access to tools to:
The secure Employer Internet Service is available 24 hours a day, seven days a week. To register for the online service, contact Amanda Peters at 1-800-255-6148, Ext. 22371. If you need assistance with any of your benefit questions or problems, please call our toll free number (866) 289-1046. If a carrier does not respond to your inquiries, please call us. We are here to make things easier for you.
"Above all, we must realize that no arsenal, or no weapon in the arsenals of the world, is so formidable as the will and moral courage of free men and women. It is a weapon our adversaries in today’s world do not have."
Ronald W. Reagan
Each New Day
"Finish each day and be done with it. You have done what you could; some blunders and absurdities have crept in; forget them as soon as you can. Tomorrow is a new day; you shall begin it serenely and with too high a spirit to be encumbered with your old nonsense." Ralph Waldo Emerson
The Purpose of Life
"I find that if I remind myself (frequently) that the purpose of life isn’t to get it all done but to enjoy each step along the way and live a life filled with love, it’s far easier for me to control my obsession with completing my list of things to do." Richard Carlson, PH.D.
"I am still determined to be cheerful and happy, in whatever situation I may be; for I have also learned from experience that the greater part of our happiness or misery depends upon our dispositions, and not upon our circumstances."
Martha Washington (1732-1802)
Confucius Says:
"Needing insurance is like needing a parachute. If it isn’t there the first time, chances are you won’t be needing it again." |
The Olson Group
20214 Veterans Drive, Suite 200PO Box 543
Elkhorn, NE 68022
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PHONE: (402) 289-1046 |
TOLL FREE: 1-866-289-1046 |
FAX: (402) 289-1012 |
EMAIL: tolson@theolsongroup.net |
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