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    April 2, 2013
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AskKen's Answers
1 2 3 4 5 ... 32 next>>
 

Transfer from a UK SIPP

I have a UK Self Invested Pension Plan - it is currently invested in mostly equities - UK and foreign. Is there a way to roll this over into a Qualifying Recognised Overseas Pension Scheme (QROPS) within Fidelity. Does a 401(k) qualify as a QROP and if so what do I need to do in order to roll over the funds.
Thank you for contacting us regarding your UK Self Invested Personal Pension. Based on current U.S. tax law and applicable IRS rules, a retirement or pension plan from a foreign country cannot be rolled into an IRA or qualified retirement plan.

The Chief Counsel of the IRS offered a memorandum on this topic in 2008 concluding that a distribution from a UK pension scheme is not a qualified rollover distribution under Internal Revenue Code Section 402(c)(4). As a result, Fidelity has since disallowed rollovers to a U.S. IRA or qualified retirement plan like a 401(k) of which Fidelity is custodian.

Thank you again for your question. I hope that this information can serve to help you narrow down what might be a more acceptable option for your foreign retirement savings.

Ken
5 days ago
by
AskKen
 

Social Security for older spouse with lower income

My wife will reach 62 this year and is a year older than me. I will not retire until I am 66. May my wife draw on herself at 62 and then draw on me under a spousal benefit once I turn 66 and file for benefits. Is this a good strategy?
Thank you for your question on Social Security benefits. For many people, income from Social Security is a significant part of their retirement plan, and the timing of taking these benefits is an important decision.

Yes, your wife can start her own benefit at age 62. Since you have not yet filed, she will not be obligated to take the spousal benefit when she starts collecting her own benefits. Once you start your benefit, she can add spousal excess benefits to her own benefit.

Keep in mind, however, that if she begins collecting Social Security at 62, her benefit amount will be permanently reduced. Even if she waits till she is 66 or older to start the spousal portion, her total monthly benefit will be lower due to starting her portion early. Delaying benefits will increase your benefit amount by about 8% each year up to the age of 70, but the question of whether this is a good strategy for you depends on your overall financial situation and goals. Fidelity can help you determine that with an evaluation of your total financial picture. Call us at 800-343-3548 and speak with one of our retirement representatives.

I hope this is helpful.

Ken
5 days ago
by
AskKen
 

What is a SEPP

How do I start a SEPP?
I'm a General Contractor and am looking to set up my retirement.
Thanks for inquiring about opening a SEP IRA. A SEP IRA is a great way for self-employed individuals to take advantage of tax-deferred savings for retirement.

You will need to complete IRS Form 5305-SEP in order to establish your SEP IRA. This form should be kept in your permanent records as proof of establishing the plan. All of the necessary forms and answers to any additional questions can be found on Fidelity.com at https://www.fidelity.com/retirement...

If you have further questions, you can speak with one of our retirement specialists at 800-544-5373, Option 3. We also suggest that you consult with your tax advisor.

Ken
5 days ago
by
AskKen
 

Can I borrow money from my SEP Account to buy a house

I would like to borrow a portion of my SEP Account to use as my down payment on a house. Can I do this
Thanks for inquiring about taking a loan from your SEP IRA.

Although you can borrow money from some retirement plans, such as 401(k)s, IRS regulations do not permit loans to be taken from a SEP IRA or any IRA. Distributions are allowed, although the withdrawal may be taxed and penalties may apply if you are under 59½ years of age. But before you consider a withdrawal, keep in mind that dipping into your retirement savings could mean that you won’t have the money you need in retirement.

Your best option might be to try to find the necessary funding elsewhere. A Fidelity representative can review your accounts with you and determine what options are available to you. If you would like to speak with one of our retirement specialists, call 800-544-5373, Option 3.

Thanks so much for this opportunity to help you!

Ken
5 days ago
by
AskKen
 

Can I consolidate my Rollover IRA and SEP into 1 account

I have a Rollover IRA with Fidelity - I recently open a SEP account as well. I would like to consolidate them into 1 account, the SEP - Haw can I do it? Can i do it online?

Thanks
Thanks for inquiring about how to consolidate your Rollover IRA with your SEP IRA.

This can be done very easily online at Fidelity.com. Simply log in, go to your SEP IRA, and select the option to transfer money into the SEP IRA from another Fidelity account. From there, choose your Rollover IRA as the account to transfer the money from. There are no tax consequences or penalties associated with this transfer since they are both IRA accounts.

If you have further questions, you can speak with one of our retirement specialists at 800-544-5373, Option 3.

Ken
5 days ago
by
AskKen
 

I have to save more money ?.

I am 56 I have $ 350000 saved in 401-- IRA.
Saved money in Stocks/Mutual funds and cash $325000. can I get retired at age 62.
Hi, and thanks for your question. If I’m understanding correctly, you’ve saved a total of $675,000 between 401(k)s, IRAs, and nonretirement investment accounts, and you plan to retire in about six years at age 62. Although you’ve provided me with a good amount of information, there are a few other important data points we would need in order to provide a more accurate assessment of your situation.

First, we’d need to know how much money you expect to spend in retirement. Naturally, it is hard to know for sure until you actually retire or do a detailed budget. For preliminary planning there is a rule of thumb you can apply, which is to assume you will need 85% of your current income in retirement. So, hypothetically speaking, if you earn $75,000 per year, you would want to assume an annual retirement income need of $63,750 ($75,000 x .85). This is important to know to determine how much money you will need to withdraw from savings to supplement Social Security payments and other sources of guaranteed lifetime income (such as pensions or annuities).

Next, we would need to know how much more you plan to save in these accounts between now and retirement, and what your target asset allocation (the mix between stocks, bonds, and cash) will be from this point going forward. This information will help make some assumptions regarding the future value of your current savings.

As you probably know, you may be eligible to begin taking Social Security at age 62. What many individuals and couples don’t know, however, is the longer they defer taking Social Security, the larger your payments will be. Suppose you’re 62 and eligible for $1,200 per month. If you wait until your full retirement age (FRA) of 66 to start claiming benefits, that amount will rise 33% to approximately $1,600 per month. This is a very important decision that will factor into your overall retirement plan.

My suggestion is that you take some time to run the numbers in one of our retirement planning tools. Then, you may want to set up time with one of our planning consultants who can review your plan and make suggestions that may help you to meet your retirement goals. For instance, you may find that your asset allocation is too conservative or too aggressive. We can help you re-adjust your investment mix so that your overall investment strategy is appropriate for your time horizon, risk tolerance, and investment experience. Here is a link to a planning tool designed specifically for individuals who are more than five years from retirement: https://www.fidelity.com/calculator...

I wish I could have given you a simple yes or no answer. But since this is such an important decision, it is critical to take a closer look at your situation and numbers. That said, I hope you find my answer helpful as you begin to prepare for retirement.

Ken

Important Additional Information:
Guidance provided by Fidelity through Retirement Quick Check is educational in nature, is not individualized, and is not intended to serve as the primary basis for your investment or tax-planning decisions.
1 week, 2 days ago
by
AskKen
 

When to draw Social Security

I am turning 66 in July and my wife is 63. We have adequate savings to draw on without relying on Social Security. Should we start drawing now or wait. I heard that I could suspend my drawing and draw 1/2 of my wife's benefit now and then draw my full at 70. Don't know if that's correct but any ideas appreciated/
Thanks for your question about when to begin drawing on Social Security benefits. Generally, it’s wise to delay benefits as long as possible, since your benefit amount between ages 66–70 will increase by about 8% a year. But you’ll want to consider other factors such as the Full Retirement Age (FRA) benefit amounts for both you and your wife, and how long each of you expect to live. These will also impact your decision of when to file and ultimately the cumulative amount you can receive from Social Security.

Coordinating spousal benefits is one of the most complicated areas of Social Security planning. In the scenario you provided, if your wife were to file and you’ve reached FRA of 66, then you’d be able to elect to only receive the spousal benefit, allowing your own benefit amount to earn delayed retirement credits till age 70. You’d be eligible for 50% of the spousal benefit if you’ve reached FRA.

This strategy is one that you can use but may not provide the highest amount of cumulative lifetime income. We’d recommend working with one of our consultants who can review your situation in more detail and help you consider other potential strategies.

I’ve also provided a link to a Fidelity Viewpoints® article that covers this strategy and others in more detail: https://www.fidelity.com/viewpoints...

I hope this is helpful.

Ken
2 weeks ago
by
AskKen
 

If I apply for spousal benefits after FRA, can I switch to my own benefits at age 70?

Yes, you can. This strategy is often referred to as “claim now, claim more later.” Once you have reached full retirement age (FRA) and your spouse has filed for their own benefit, you can file a restricted application for a spousal benefit, which is typically 50% of your spouse’s benefit amount.
Your own benefit can continue to earn delayed retirement credits until you begin collecting, as late as age 70. This strategy will allow you to receive a benefit from Social Security now while earning the delayed retirement credits.

Coordinating spousal benefits can be one of the most complex areas of Social Security planning. You’ve mentioned one of the opportunities to maximize a married couple’s benefits, but keep in mind that the rules are complicated and must be followed carefully.

You can find some additional information on maximizing benefits for couples in this Fidelity Viewpoints article: https://www.fidelity.com/viewpoints.... The article covers several strategies you may want to review.

I hope this is helpful.

Ken
3 weeks, 5 days ago
by
AskKen
 

Non-deductible IRA

I am 29 years old and currently contribute $18,000 to a traditional 401k. Can I also contribute $5,500 to a non-deductible IRA? Can I then rollover that non-deductible IRA into a Roth IRA?
First, let me commend you for contributing the maximum amount allowed to your 401(k) for someone your age. (Those over age 50 can contribute an additional $6,000 in catch-up contributions.) Regarding your question, yes, you can also contribute to an IRA in addition to your workplace plan. If you are above the income limits to make contributions directly to a Roth IRA then you can, as you suggest, make a nondeductible or after-tax contribution to a Traditional IRA and then move it to a Roth IRA through a process known as a Roth IRA conversion. The income limits for contributing to a Roth IRA can be found on this page in the IRS website: http://www.irs.gov/Retirement-Plans...

You may want to talk to a tax advisor about your own personal situation and the implications of a Roth IRA conversion. But generally speaking, if you don’t have existing Traditional IRA assets and you do the conversion before the contributions have earned interest, you can convert to the Roth IRA with no tax consequences.

Ken
3 weeks, 6 days ago
by
AskKen
 

If I don't get the tax deduction due to income limits, why get an IRA?

Hi Karen. Thanks for your question.

A far more important reason to contribute to an IRA, even if you can’t take advantage of a tax deduction, is the opportunity for potential tax-deferred growth over time. Even without the benefit of a tax deduction, it is still worth making a contribution to a Traditional IRA just for the long-term growth potential.

Another approach for those who are above the income limits for tax deduction is to consider contributing to a Roth IRA and getting potential tax-free growth and withdrawals. The income limits for tax-deductible Roth IRA contributions are higher than those for deductible Traditional IRA contributions.

If you are above the limits for Roth contributions you can also consider making a nondeductible Traditional IRA contribution and then converting it to a Roth IRA through what’s known as a Roth IRA conversion.

To learn more about these options you can go to this page: https://www.fidelity.com/retirement....

Ken
3 weeks, 6 days ago
by
AskKen