PLANADVISER - November/December 2019 - 13

Rolling
Into IRAs
A new DC plan may be
the better choice when
a person changes jobs
AS TO whether a participant leaving a
job will do better to move his defined
contribution (DC) plan assets into his
new employer's retirement plan or an
individual retirement account (IRA), the
experts see more value in the former.
Still, there are pluses to converting
a 401(k) account to an IRA. Should
participants choose that option, they
can invest in any type of instrument,
notes Steve Bogner, managing director
and partner at Treasury Partners.
Another benefit to an IRA is that,
should the account holder die, his
beneficiaries will have the option
to take the distributions over their
lifetime, says Larry Steinberg, chief
investment officer (CIO) at Financial
Architects Inc. Beneficiaries of money
from a 401(k) must take the money
within five years, he says.
Besides these two benefits,
IRAs
have some drawbacks, which sponsors
might want participants to understand.
First are the retail vs. institutional fees
that participants will pay, notes Ric
Edelman, co-founder and chairman of
financial education and client experience
at Edelman Financial Services.
IRAs also lack the protections of
qualified plans, which are overseen
by the Employee Retirement Income
Security Act (ERISA) and require the
sponsor to act in its participants' best
interests, Steinberg says.
Moreover, an IRA-holder may contribute
only $6,000 a year; in 2020,
401(k) participants may contribute
$19,500, says Brett Tharp, CFP [Certified
Financial Planner], at eMoney Advisor.
Another drawback to IRAs is that
creditors can lay claim to the money.
They would have a hard time doing so
in an ERISA 401(k) plan, Steinberg says.
-Lee Barney
62
63
64
65 to FRA†
Source: Center for Retirement Research at Boston College
What's in a Financial Plan?
72% of investors say a
professional's financial plan
should include advice on
funding higher education
85% of investors say a
professional's financial
plan should cover
insurance planning
and analysis
Source: Spectrem Group, " Defining Financial Planning "
45% of investors say they
do receive that service
11% of investors say they
do receive advice or
guidance on that topic
FRA
FRA to 69
70+
†Full retirement age.
TALKING POINTS
2020 Contribution and Benefit Limits
$19,000
2019
$19,500
2020
Limit for 401(k), 403(b)
and most 457 plans, also
the federal government's
Thrift Savings Plan
Source: Internal Revenue Service
$6,000
2019
$6,500
2020
Catch-up contribution
limit for employees
ages 50 and up
$13,000
2019
$13,500
2020
Limit for SIMPLE*
retirement accounts
*Savings Incentive Match PLan for Employees.
Distribution of Social Security
Claiming Ages, by Gender
n Men n Women
39%
35%
23%
13%12%
7% 8% 7% 8%
16%
11%
9%
5%
7%
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