Monthly Archives: October 2015

After-tax 401(k) Contributions Allowed to Rollover to Roth IRA

For years, employees who earned too much income to contribute to a Roth IRA in the standard way, but still made after-tax contributions to a traditional 401(k) plan, missed an opportunity to have tax-free qualified withdrawals once they retired.

Now with a new ruling from the IRS, employees may have the option to rollover after-tax contributions from a traditional 401(k) to a Roth IRA without additional fees, once they retire or separate from the company.

The way we see it, this is good news not only for high-income earners but also for:

  •      Workers whose companies do not offer a Roth 401(k) plan (The Roth 401(k) already allows rollover to Roth IRA.).
  •      Workers who made after-tax contributions to traditional 401(k) accounts before Roth 401(k) or Roth IRA plans were available.
  •      Employees who have reached the maximum contributions for 401(k) or Roth 401(k) and want to save more for retirement.
  •      People who are behind in saving for retirement, and therefore want to save more than is allowed by traditional or Roth 401(k) limits.

Additionally, this ruling may make it possible to rollover after-tax contributions from a traditional 401(k) plan to a Roth IRA with possibly no out-of-pocket costs.

If you wanted to build up a Roth IRA for the sole purpose of passing it on to your heirs, then this provision could be helpful in allowing you to do just that. Not only can your Roth IRA funds have the potential to grow tax-free, but you also may not have to take the required minimum distributions.

Whether or not you want to save more money for your own retirement or for your family, the ability to rollover after-tax contributions to a Roth IRA is a new option that could be a good fit for your financial plan. Be sure to speak with a qualified financial advisor before making any changes to contribution amounts or retirement plans.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change

Charity Afternoon: Feed My Starving Children Event

Initiating a tradition of giving, the Guidant Wealth Advisors team spent an October afternoon packing nutritious meals for Feed My Starving Children.

Charity Afternoon - Guidant Philanthropy Event

Guidant Wealth Advisors staff at the recent Charity Afternoon event.

Working with financials day in and day out, we recognize the value of a dollar – especially when it comes to charity and non-profit organizations. It is these groups that truly know how to stretch their donations to get the most help to those in need. And that inspired us to create a tradition here at Guidant Wealth Advisors that we call “Charity Afternoon.”

We wanted to set aside time on a regular basis – be it annually or more frequently – to donate our time to causes we feel truly impact the local and global communities.

In October, that charity was Feed My Starving Children, a non-profit Christian organization that delivers nutritious meals to hungry children.

During this charity event, the Guidant Wealth Advisors team spent the afternoon not only packing meals but also learning about where these meals would be delivered. Working together to package, seal and box individual portions of vitamins, vegetables, soy and rice, our team felt a combined sense of goodwill and camaraderie.

In discovering how many children are malnourished across the world, the greatest joy we received from this charity event is an understanding of how the meals we packed would impact the health of so many children.

During the Feed My Starving Children event, Guidant Wealth Advisors helped to pack 57 boxes, which:

  •      Provided 12,312 meals
  •      Fed 34 kids for a year
  •      Cost $2,708.64 from donated funds

Our goal is to continue the tradition of Charity Afternoon in the upcoming months and years. We hope this post inspires you to give back or take action for a cause that speaks to you.


Medicare Part D: Should you change prescription drug coverage?

Prescription Drugs – Medicare Part D Coverage

Plan on reviewing your prescription drug coverage annually.

As you may be aware, the annual period to change your Medicare Part D (prescription drug) coverage begins October 15 and runs through December 7.

During this enrollment period, you have the opportunity to change from one prescription drug plan to another, to switch from a Part D plan to a Part C (Medicare Advantage) plan, from Part C to Part D, as well as a few other options.

The big question is: Do you need to change your prescription drug coverage every year?

You Don’t Have to Change, but You May Want to Review

While it certainly isn’t necessary for you to change your Medicare prescription drug plan every year, what you may want to do on an annual basis is review your current plan. This can ensure you are not paying more than you need to, and that you monitor your cash flow for other expenses – an especially important strategy for those approaching retirement or who are already there.

Medicare Part D plans are run by private companies, which have the right to change their costs and the list of drugs they cover every year. That means, even if your current drug prescriptions are covered, they may not be covered in the coming year. If this is the case, you may want to consider looking at other local plans that cover your prescriptions, have fewer restrictions, and offer lower costs on prescriptions.

Doing an annual review of Medicare Part D coverage is important for those on fixed incomes, especially. If you find your current plan will charge you more out-of-pocket in the coming year for prescriptions you still need to take, then you want the opportunity to find a plan that can save you money. (Note: Medicare Part D companies are required to send you a notice by September 30th explaining the changes to coverage and costs for the coming year.)

How to Find Out about Coverage

Calling your plan is the first step to learning about which drugs are going to be covered in the coming year. The notice you receive by September 30th will have a list of drugs, but it may not necessarily be complete. By calling, you can find out if your prescriptions will cost more, if you need a special request from your physician to continue coverage, or if you need to start looking at other plans.

To review other Medicare Part D plans in your area, you can visit the Medicare Plan Finder.

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