Retirement Planning Experts
UNDERSTANDING IRAS AND QUALIFIED RETIREMENT PLANS
Individual Retirement Accounts - IRAs*
Traditional IRA, a tax-advantaged account, allows earnings and deductible contributions to grow tax-deferred. Contributions may be deducted from your gross income on your Federal Income Tax Return.
SEP IRA, a Simplified Employee Pension Plan, is a retirement plan specifically designed for self-employed people and small-business owners. Larger contributions are permitted to a SEP than a traditional IRA, and all earnings in the IRA accumulate tax-deferred until withdrawn.
Roth IRAs might be a better alternative for some individuals as they may provide more flexible access to your savings. Unlike a Traditional IRA, contributions to a Roth IRA are not deductible from our gross income on your federal income tax return. However, since you have already paid taxes on the money you've contributed to the account, contribution dollars can be withdrawn without tax consequences.
(*10% penalty on distributions before age 59 1/2.)
401k Rollovers
HFIS Advisors help with 401k Rollovers by walking you through how to take your money with you when you leave an employer after separation of service. After all, it’s your money - why not take it with you! By Rolling it over into your own IRA, you maintain the tax-deferred statues of the monies, have access to a broader range of investment solutions and can benefit from the knowledge and hands-on expertise from company founder, Thomas Hartfield.
Rtirement Planning
An advisor can create a personalized financial plan for you, taking into consideration any retirement plan accounts you have (401k, IRA or pension), as well as other sources of retirement income such as Social Security benefits. They can help you identify potential costs you'll face in later life, such as medical costs as we age, long-term care expenses, and help you plan for them.
Qualified Plans:
Established by an employer (Plan Sponsor) to provide retirement benefits for employees and their beneficiaries, Qualified Plans allow the employer a tax deduction for contributing to the plan, and employees do not pay taxes on plan assets until these assets are distributed. Furthermore, earnings on qualified plans are tax-deferred. These plans must operate in accordance with requirements as provided by the IRS, the Department of Labor and ERISA (Employee Retirement Income Security Security Act of 1974).
Defined Benefit Plan: In this type of plan an employee's retirement benefits are predetermined by his or her compensation, years of service and age. Contributions are made annually.
Defined Contribution Plan: Depending on the plan type, contributions are invested on the employee's behalf, and the benefits paid to employees are based on contributions and any earnings or losses. Contributions may or may not be made each year.
- 401(k) Plans, established by the employer, allow eligible employees to make salary deferral (salary reduction) contributions on a post and/or pre-tax basis. Employers may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit sharing feature to the plan. Earnings accrue on a tax-deferred basis.
- Profit Sharing Plans allow employers to make discretionary contributions which and may vary from year to year. A Profits-Sharing Plan must set out a definite formula allocating both the contributions and distributions for each participant and the plan may have a vesting schedule.
- Money Purchase Plans require fixed annual contributions from the employer to the employee's individual account. The contribution is defined by the formula stated in the plan and must be made each year. Employee after-tax contributions may be made, but must pass an anti-discrimination test.
- ESOP, an Employee Stock Ownership Plan (ESOP), is a form of defined contribution plan in which the investments are held primarily in employer stock.
What are Retirement Plan Sponsors Looking for in a Financial/Investment Advisor?
As an Investment Advisor, Thomas is in the unique position to provide plan sponsors and participants with advice and guidance on issues relating to their finances—which most American adults and retirement plan sponsors alike could benefit from.
What’s one of the best ways to help?
Know what plan sponsors are looking for in a Financial Advisor, and know how to demonstrate the skills and expertise clients want and need.
At HFIS Advisors, we have over 25 years experience working with business owners setting up plans, educating employees, working hand-in-hand with human resources, payroll department, the executive team and ensure required filings are completed.
How can HFIS Advisors showcase our value as a financial advisor?
When one investment provider surveyed their plan sponsors, they found that almost nine in 10 plan sponsors agree that involving a financial advisor in running their workplace retirement plan has helped the company as a whole achieve better plan outcomes—including higher employee participation rates and more plan participants being on track for retirement. Perhaps even more telling is that plan sponsors report their financial advisor provides confidence in investment management and compliance, offers valuable support in regulatory matters, provides guidance on critical plan design options—and a full 95 percent agree that their advisor is worth the cost.
Understand the needs of the plan sponsor and participants
To determine the features that should be offered in our client’s new retirement plan, we first need to understand the needs and goals of both the plan sponsor and plan participants.
As an example, if we know the plan sponsor (employer) wants to maximize their tax advantages via the plan, we let them know which tax credits they may be eligible for and work with them to create additional tax savings for their business—by adding an employer match to their plan, for instance.
For participants, we make sure to provide plenty of opportunities for financial education, communicate effectively with them, and help them determine which investments best fit their risk tolerance and overall retirement goals.
Take administrative responsibilities and burdens off clients' hands
Plan sponsors are straight forward and clear that they want their financial advisor to help them feel confident in investment management and compliance, so it’s important to minimize their administrative burden.
Because HFIS Advisors is a “Fiduciary”, consider a retirement plan design that includes a 3(38) investment manager to offer two layers of fiduciary protection. That’s something we offer.
We can also help our clients set up payroll integration with their new retirement plan to help streamline their benefit and payroll processes. Payroll integration offers a variety of benefits—saving clients time and money by eliminating the need to manually enter data twice, reducing errors by automating the transmission of data between the payroll provider and retirement plan provider, minimizing administrative tasks, and ensuring participant contributions are invested in a timely manner.
We build relationships with our clients
We want clients to trust us and the advice we give, it’s important to invest in building a relationship with our clients over time. We get to know what matters to them—and present our clients with information and education that may help them reach their goals and overcome their challenges.