401(k)

Lucky Enough to Have an Employer Match?

Published on: March 12, 2018 | By McCulloch & Miller, PLLC

You’d think no one would want to turn down free money. Yet that’s exactly what many working Americans do!

One out of five Americans—20%—don’t take advantage of a terrific benefit: employee sponsored retirement savings accounts that include an employer match of some and sometimes all the employee’s contributions. Most workers do contribute more than enough to enjoy the benefits of their employer’s match, but what’s up with those 20%?

USA Today recently ran an article, “1 in 5 Americans are making a terrible 401(k) mistake” that says this may be one of the worst retirement mistakes you can make. While it may not look like a lot of money to ignore right now, you’d be surprised at the difference it can make when you retire.

How Can a Roth IRA Reduce the Tax Burden Facing Your Heirs?

Published on: October 30, 2017 | By McCulloch & Miller, PLLC

There’s more than retirement savings power in a Roth IRA. Used properly, it can help cut your beneficiary’s tax liability, regardless of if and when tax reform becomes reality.

If you’re interested in reducing the taxes your heirs will have to pay, you’re probably concerned about the discussion about tax reform going on in Washington these days. Unfortunately, there’s no way to be certain what, if any, changes will actually occur. In the meantime, your estate planning attorney can help you structure your estate, so that less of it ends up being consumed by taxes. That includes moving funds into non-taxable accounts, including Roth IRAs.

Motley Fool’s recent article, “A Clever Way to Cut Your Heirs' Income Taxes,” says the money you put into a Roth retirement savings account has already been taxed. It was taxed on the contributions you made or as a rollover from a tax-deferred retirement savings account. As a result, everything in that account is now non-taxable for income-tax purposes. As the Roth has been open for at least five years prior to your death, the money in that account won’t be subject to federal income taxes.

Estate Planning 101: Check Your Beneficiary Designations

Published on: August 7, 2017 | By McCulloch & Miller, PLLC

Unless you really want to give your ex the proceeds of your life insurance or 401(k), it is best to take the time to do this one task.

If you haven’t looked at the paperwork for your life insurance policies, bank accounts, retirement accounts, investment accounts and any other asset that names a beneficiary, right now would be a good time to take a look—especially if you haven’t done so in years. The number of horror stories of assets going to untended people would surprise you. It’s such an easy fix that is all too often forgotten.

MarketWatch’s recent article, “Make this estate planning move right now: Check your beneficiary designations,” explains how the Fifth Circuit Court of Appeals reversed the trial court by finding that a pension plan administrator didn’t abuse her discretion in determining that a deceased plan participant’s stepsons weren’t considered his “children” under the terms of the plan. As a result, the deceased participant’s siblings, not his stepsons, were entitled to inherit the plan benefits in Herring v. Campbell (5th Circuit 2012).

How are 401(k)s and IRAs Different?

Published on: August 4, 2017 | By McCulloch & Miller, PLLC

New regulations from the Department of Labor may come into play for Americans deciding which type of account is best for their retirement savings.

There are significant differences between 401(k)s and IRAs, and as reported in a recent post on wjbf.com, “Advantages and disadvantages to a 401k and an IRA,” a number of new regulations from the Department of Labor makes this a good time to review the pros and cons of these popular retirement savings plans.

401(k): A 401(k) can potentially be less expensive than other investment vehicles, due to the number of participants. Many also have a loan provision for access to your principal, if you need it in an emergency. If you retire early, qualified plans may have an age 55 withdrawal privilege that gets you around the 10% withdrawal excise tax provision. However, if you’re still working, you may be able to push back your required minimum distribution (RMD), if you’re over age 70 and still participating in the plan. You’ll also have creditor protection in the typical qualified plans. Those are some of the general positives.

Why “Regular Folks” Need an Estate Plan

Published on: May 26, 2017 | By McCulloch & Miller, PLLC

An estate plan does a lot more than distribute your assets among family members and organizations that share your values. It also protects you and your loved ones. That’s why everyone needs an estate plan, especially if you have minor children.

It’s amazing that some people still think they don’t need an estate plan. According to an article in Trust Advisor, “Why An Estate Plan Is Beneficial,” a small estate needs the protection that an estate plan can offer against unnecessary expenses and ensures that personal, financial and charitable goals will be fulfilled. There are four key reasons why everyone needs an estate plan:

Stipulating Care for Yourself. This includes a healthcare proxy, power of attorney and living will that states how you want to be cared for, if you become incapacitated.

Retiring in 2017? Take These Steps Before You Make It Official

Published on: May 22, 2017 | By McCulloch & Miller, PLLC

Before you tell HR what your final day of work will be, there are more than a few details that you need to cover to prepare for taxes, make the most of any potential benefits and start retirement on the right foot.

If there’s a retirement season, it’s spring or early summer, when it feels like it did when the school year ended! But before you start planning your retirement party, Kiplinger advises you to take these steps first, as explained in article, “4 Actions to Take If You’re Retiring in 2017.”

Make sure to get the match. Your employer may “match” and/or offer “profit-sharing” contributions to your 401(k) or other retirement plan. You typically must be actively employed on the date of payment in order to receive these funds, so be sure that you understand the terms before setting your final work date.

RMDs for Retirement Accounts: What You Need to Know

Published on: December 16, 2016 | By McCulloch & Miller, PLLC

New Year’s Eve is the deadline for taking RMDs if you are older than 70 ½. Haven’t started yet? Get on this right away to get it done in time. Otherwise, be prepared to pay a penalty.

You still have a little time to beat the last minute rush on taking your Required Minimum Distributions (RMDs) from traditional IRAs and 401(k)s, according to Kiplinger’s “FAQs About Required Minimum Distributions for Retirement Accounts.” However, you had better hurry if you are older than 70 ½. You only have until December 31^st and any delays could be expensive. Remember that you aren’t the only one making this transaction at this time of year, and you’re hardly alone in waiting until the last minute.

Here is some additional information to help you meet your deadline for IRA withdrawals and some special rules for 401(k)s.

Senior Weddings Call for a Different Kind of Planning

Published on: December 14, 2016 | By McCulloch & Miller, PLLC

If you’re walking down the aisle again, there are a number of smart steps to take before you say “I do” another time.

Just as your life was probably simpler the first time you married, your subsequent marriage, especially if it occurs late in life, can become problematic, if good planning doesn’t happen in advance. If you don’t know your legal rights or your responsibilities, reports New Hampshire Magazine in “Navigating Late-Life Remarriage,” you, your children and your new spouse may be in for some unpleasant surprises.

While death and the likelihood that one spouse will outlive the other is inevitable, another important fact is that the divorce rate among those who remarry later in life years is 60%. This is much higher than the rate of any other segment of the population. Some experts think that number may go even higher.

A Checklist for Post-Funeral Tasks

Published on: December 12, 2016 | By McCulloch & Miller, PLLC

There are a number of tasks that need to be done after a loved one passes. A Houston estate planning attorney can help make these tasks easier.

Most people don’t know that there is a time limit on certain tasks that need occur after someone passes away. According to WXYZ Detroit’s article, “Tips you need to know to take a loved one's estate through probate,” you’ll need to contact the Probate Court within 42 days of the death to find out whether you’ll need to have either a formal or informal administration of the estate. That’s just for starters. Here are other things that need to be done after the funeral:

Don’t rush to have an obituary notice published. There are scam artists who use the obituaries as an information source for going after estate assets, planning burglaries and engaging in identity theft.

Don’t Bury Your Tax Returns, Use Them for Informed Financial Decisions

Published on: October 26, 2016 | By McCulloch & Miller, PLLC

Most Houstonians like to stash away our tax forms as soon as we file our taxes, but that’s a mistake.

When it comes to making financial decisions, you want to arm yourself with as much information as possible. One often overlooked source is your Form 1040, advises CNBC in “Use your tax return for more than paying taxes.” Sharing this document with your Houston estate planning attorney will allow them to get a clearer picture of your situation as well.

Lines 1-5 (Filing status). If you need to check a different box for your filing status, you should review your estate plan. If you get married or divorced, you'll need to update your will and the beneficiaries for life insurance and retirement plans.