401K Coronavirus Crisis: What to do with your 401k if you lost your job during the Coronavirus?

hello everybody thank you once again for tuning into strategic wealth lives might live my name is matt deqin and of course i will be your host again here today I think this is probably to be one of the most important webinar events that we're going to do possibly this entire year we're gonna be talking to individuals we're talking about individuals that may have lost their jobs here recently in the economic downturn as well as individuals that are maybe concerned about losing their jobs so looks like we have quite a few individuals so kind of going through the login process so like we've done in the past I'm going to share with you a quick little video clip of some of our news parents's that we've done with some of our relationships over the last several weeks and then after the short video I'll be back with you and we will get the presentation started so enjoy the video clip and I will see you in just a moment viewers out there were set to retire in the next 18 months or so and have seen accounts drop by as much as 30% that that's huge what do you say to this group and what they should do yeah the main thing is is to try and take advantage of the opportunity that we have right now because the market is rallied a little bit to put a safety net underneath your portfolio so if things get volatile again moving forward you don't have to watch your assets go back down in value again like they have basically over the last 20 to 30 days so individuals really need to take advantage of the opportunity we have right now to lock in their assets because things could get worse as we start to see the unemployment numbers continue to go higher corporate earnings are gonna be released next month and all indications are it's not going to be good this stimulus bill it was given credit for raising the market quite a bit last week I don't I don't know if that's the whole reason but a lot of people gave it the credit is that gonna last was it enough and you know that all-important question you know is the worst over with the market can we say that yeah I think a lot of people was optimistic because this is a great headline it is it is great that we're getting a two trillion dollar stimulus but if we think about the GDP for this country this country is over twenty four trillion dollars a year so this is really only one month of that if we shut down all businesses which is basically what's happened you're the guy that knows the most so rapidfire my friend number one is there anything I can do right now or I ought to be doing with my retirement or my investments number one the big thing right off the bat is have a plan we're in crazy unchartered times economically and it's really easy to react to what happens in the market on a day-to-day basis so the first thing would be have a concrete plan that you can stick with because if you don't have a plan it's like you're flying through retirement without air-traffic control and if you're flying without air-traffic control you may not get to your final destination [Music] you okay thank you everybody for watching those those news clips we have a few more that have joined in just so once again many here's me thinking we're gonna be talking today about what individuals should do with their 401 k plans or 403 B plans if either yourself or maybe a family member a friend a loved one may unfortunately have lost their job recently as well as we're going to be giving some tips to individuals that maybe haven't lost their jobs and you can do with your 401 K if you're still employed in the course talk about some of the changes that we're seeing happen in the economy and just in this new environment or new world that we're operating at those that don't know B or the company's strategic wealth designer so I'll give you kind of a brief overview we have been helping individuals with their retirement plans for as a company for almost 20 years now I've got 23 years worth of experience in the industry as again as a company all of our advisors back in our different offices collectively we have over 100 years and helping individuals with their retirement goals and dreams and I'll talk about it a little bit later here in the presentation but we primarily typically work with those that are retired already or soon to be retired many plan on retiring within about the next 10 years we do work with a lot of our clients children and grandchildren of course in times like we're going through right now we want to help as many people as we can but that's traditionally who we typically focus as the planning on and those that we can typically help most I started the firm because I really wanted to be able to operate both myself and the other advisors I wanted to be able to operate in an environment where we didn't have things like quotas that we had to adhere to and we were really free to work with the best investments and options that were going to be a perfect fit for our clients so we are an independent firm not tied to any one large company where we're forced to only offer their products and accounts we can work with any company or investment that's appropriate for our clients and then of course I think probably the biggest difference with us is the fact that we are fiduciaries meaning that everything that we do recommend to individuals when we can help them has to be in the clients best interest and we'll talk a little bit more about that in detail here in a few moments but I think that's probably one of the big reasons why we've had so many individuals coming to us in the past and of course right now for help and advice as far as what to to do next so let me pull up the presentation then I'm gonna be sharing with you here today again focus kind of on a couple of different areas of course what to do with your 401 K or maybe you have a 403 B or some of our viewers right now may have a thrift savings plan as well if they're a federal employee but there are some tips as far as what you should do if you've lost your job if you think that you may lose your job in the immediate future or if you have no concerns whatsoever about losing your job that's great we'll have some tips for you in regards to what to do in that scenario as well let's start out here a little bit talking about I'm gonna take my my picture on or off the screen here a little bit so you can see everything let's talk a little bit why we thought it was a good idea to create this particular webinar and share this information today as we know already we've seen so far tens of millions of Americans have lost their job as a result of the issues that we're dealing with as a country due to coronavirus and it's projected that millions more may also lose their job in the weeks and months to come some have projected as many as 47 million may be laid off I hope it doesn't get that high but that's what's being projected right now that would mean that the unemployment rate could be as high as 30% something we haven't seen and in close to a hundred years and again hopefully it doesn't get that bad but this is just kind of the the landscape that we're dealing with right now and part of what's causing that or some other side effects of that or of course the stock market has been in and around a bear market due to government mandated shutdowns that are continuing for right now and again hopefully they they expire and we can all get to work and go back to normal life here in the not-too-distant future but the scary thing that I see it that I see with everything that's going on right now is the longer that were kind of in the shutdown mode the longer it's going to take to get back to quote-unquote normal times so hopefully we can get this over and done with sooner rather than later but I think the longer that drags on the more painful it's gonna be yeah in a Wall Street Journal here recently they cited a survey that was done by the US Chamber of Commerce in coordination with MetLife and they found that of those surveyed already one-fourth of the small businesses that they had talked to had already closed and then another 40% were saying that they were going to have to close within the next two weeks so all of this is leading us to believe that unemployment will of course continue to rise and there's going to be more and more people kind of looking for what to do with their 401k plans if they have indeed lost their job or they're concerned that they may lose their job so there's a couple of things that we would recommend for those specifically that still have their job and then we'll talk here in just a moment some tips for things that you should do if you if you have a course already lost your position but if you are currently employed there's still a few things that you should consider doing take a look at your current position within your organization you know some companies are not as affected as others with everything that we're dealing with right now it depends on what industry you're in of course but try and review your current position in the strength the stability of the company that you work for currently and there's no guarantees in life but try and project a little bit how likely you think it may be that you would actually lose your your position or your job or your company may make closed or go into some sort of a temporary shutdown you also want to analyze and assess how quickly you think that you could maybe pick up another position if that were to happen a certain position of course are in demand we see that in the news all the time right now that certain companies are needing to hire individuals and you may have a certain skill set that's very marketable so you can kind of assess if it would be something you'd have to deal with for a few weeks or unfortunately as many as a few months it's a good opportunity to consider should you stay in the industry that you've been operating in or maybe jump into a brand new industry I think that everybody is looking forward to when we can come out of our homes again and maybe everything kind of goes back to normal but I think that there's gonna be lasting impact from what we've seen here with this particular crisis and certain industries are gonna be altered and they'll really never be the same again that's gonna be that will create some opportunities to maybe do something different and it also may be a signal that it's time to do something different so so maybe analyze that a little bit of course you can start to do some due diligence and find out what type of benefits would be offered if if there was some sort of a shutdown or a layoff at your employer are they going to cover your health insurance as an example while you're off are they gonna you know make your your pension plans available for rollover or available a certain income from them early you can kind of start to get your ducks in a row now and see you know what options you would have available if unfortunately you were to join some of the millions that have already lost their position and then of course it's also a time where some individuals can take a look and see should they just go ahead and go into retirement do I even need to go and look for another job we saw that some during the financial crisis where some individuals were laid off or companies were closing and rather than try and you know update the resume and find another position some individuals said hey you know I know the market is pulled back a little bit but we did a good job of saving and investing over time we're just going to go ahead and see if we can retire now now of course in order to do that and make that determination you typically need to have a retirement income analysis done and that's something that of course said strategic wealth designers can help you determine I wouldn't just you know make the decision without doing some analysis but that's something that we could potentially help you with if you were needing to talk with someone now for those of you that have already been laid off or lost your position take a look at some of the new benefits that are that are being offered the recent stimulus plan that was passed through Congress added an additional $600 per week on top of your traditional unemployment benefits so that's gonna help out some individuals kind of bridge the gap on their income and then uh so some states are beginning to do some unique things recently New York State wants to add an additional six hundred dollars on top of the additional six hundred dollars that the federal government is paying right now per week so those in New York State could maybe earn an additional three or four thousand dollars per month over and above what they could normally earn through unemployment benefits and you're gonna see other states kind of follow suit and take the same path so right now we have viewers from all over the country you do want to look at your specific state and see how they've changed the unemployment benefits and how they may be different today than what they have been traditionally in the past in something that's common right now with most states is that you used to have to wait two weeks before you start filing for unemployment smell States of either waive that completely or said instead of waiting two weeks you just have to wait one week and then I think pretty much all states at least from what I've seen in the news they've waived the work search requirement meaning usually in order to get unemployment benefits you had to prove that you were submitting your resume and going on interviews and things of that nature in order to collect those benefits moving forward but most states if not all of them have eliminated that requirement good things kind of hard and the current conditions to try and look for a new job in most scenarios and then you know some that were originally unable to draw unemployment certain industries or certain types of jobs usually couldn't draw unemployment benefits against some of those restrictions have been waived so an example would be I know a lot of us haven't been able to get our haircuts done and gone you know to the hair salons and barbershops and places like that usually those individuals are just 1099 independent contractors and that both unemployment but that has changed so in most states you are an ally able to apply for those types of things so another thing that you want to double check and see and these are great things to just have in your mind or maybe written down if unfortunately there's some sort of a surprise I know most employers are trying to do a lot of communication with their staff and let them know exactly what's happening or what's projected to happen but you know so hopefully if someone were to lose their job maybe forward it's not a complete surprise but sometimes when you get that information if it catches you a little bit off guard there's certain questions you you wish and you had hope to ask that you sometimes in the moment you don't think to ask so maybe just kind of have a little mental note of some of these things you want to know what type of severance is being offered if anything and how that's gonna work if it's gonna be paid out over time or as a lump sum if you do accept a severance does that mean that you'll still be eligible to file for unemployment or is it an either/or either go on unemployment or accept the the severance you wanna make sure that you understand that before really signing anything and moving forward with with your departure and then again if you have a pension plan you want to double-check and see what the company's plans are gonna be for that as well are they going to change in the provisions make it a little more accessible and a little more liquid because of what's happened so a lot of these things that we're talking about if you have been laid off or again if you're thinking that that may be coming down the road if you would like to you can schedule time to talk with one of our advisors you know we can put everything that we've talked about so far and again here in a moment I'm going to start talking specifically about 401ks and 403 B's what they do with those but we can plug all of this information into a retirement income analysis and see if you you know wanted to go ahead and make the decision to retire today how long will the money last hopefully it will last as long as you need it to but we basically run the analysis out until both you and if you're married your spouse or significant other is age 100 and then from there you can make smart decisions on whether you can go ahead and retire or if you can't retire right now we may be able to project that you know we need to find another position or a new job for maybe a couple more years or three more years something of that nature at least then you'll be able to know exactly what it is that you're dealing with and you'll know you know kind of what your options need to be moving forward so some sound financial advice for the current situation and this is really something again that we encourage everybody whether you've already lost your position or concerned that you or a loved one a friend or a family member may lose their position how long can you really afford to be unemployed once you've gathered all the information on the unemployment benefits or the severance package you know kind of take a look and assess at how long you can kind of bridge the gap and how long can you can you make that money last and if it's a short period of time not as long as you think it may need to be then take a look at what expenses you can potentially cut right now this of course is something the companies across the country are dealing with so can I take a look at your household as a as a mini company and start taking a look at some of the luxuries maybe that right now you just can't utilize whatsoever because you're not allowed to leave your home or where those businesses have been closed maybe there's no reason to continue to pay for those types of things so try and find whatever expenses you can cut one of the big things that I've been encouraging a lot of individuals to do is if you're out of work or are concerned you may and find yourself out of work you know start working on trying to develop some sort of a new skill a new talent there's all kinds of things you can do online in the new digital world that we're all dealing with where you can maybe get certain certifications education and learn something new that would make you more hireable to the next employer you'll hear at our company traditionally we've done dozens and dozens of face to face live events with as many as a few hundred people at a time and of course all of those types of events have been completely eliminated so we of course had to pivot and start working on zoom meetings and conference calls and doing webinars and things of that nature so we've had quite a few team members on our on our staff some already had a good amount of experience operating in this type of digital world but others not so much so they've been going through and getting educated and practicing and learning how to utilize these tools it looks like we'll probably need to utilize them for the foreseeable future so and then again last kind of bullet point that we have here on this screen is make sure that you have that income analysis done before you make the decision to retire occasionally we've individuals that kind of come in and say okay went ahead and pulled the plug I'm gonna retire now I need to do an analysis and see how long my money will last and that's kind of a it's kind of backwards from from what we recommend we don't want to do it that way go ahead the analysis done now that's something that we're uncomplimentary I should've mentioned that earlier so we don't charge anything to run these retirement income analysis because they don't cost us much money to put together again with our years of experience we can put them together it's not real costly for us to do that it takes a little bit of time but we'll be able to tell you exactly what your options are and you really want get that analysis done prior to making the decision to go ahead and retire okay so let's transition and talk specifically about what you want to do with your 401 K or again maybe four over D or TSP if you are now in a position where you're not going to be contributing to that 401 K for a variety of reasons again maybe you've been laid off I know that some companies are now eliminating or reducing the company match maybe some individuals just don't want to put any money into their 401 K because they want to start building up a safety net in fears that they may lose their job and be out of work for a while we've seen some individuals doing that so anytime that you stop contributing to a 401k plan when I say that that can be synonymous with 403 B you or TSP when you stop contributing to those types of plans they end up becoming was referred to as a dormant account and this is something that a lot of individuals kind of fail to really comprehend and get their arms around and understand so I'm going to explain to you and just about the difference between dormant accounts and active accounts but before I get into that of course you're on the screen we've got the rule of 100 which is something that we talk about often if you've followed us here strategic web designers for any period of time you know that we talk this a lot and the reason why we talk about it is specifically for times like going through right now so for those of you that are not familiar with the role I'll give you a brief overview but basically what it says is whatever your age is currently that's the percentage of your portfolio that you should have faith and protected from risk meaning in most cases you can't lose any money on it at all and then the difference between your age and the number 100 that would be the maximum percentage of your portfolio that you could put at risk or you should put at risk only if you're comfortable with risk so it doesn't mean that you have to do this it's just if you consider yourself traditionally to be a moderate investor or maybe a conservative or to moderate investor you want to try and follow the rule of 100 especially when you are within 10 years of retirement that's where it becomes critical I kind of think everybody at every age could benefit from following the rule of 100 but it becomes very important when we kind of hit that home stretch and we're within 10 years of our planned retirement date so as you can see here on the screen we have a generic rule or a generic scenario of a 60 year old with about a million dollars in their portfolio that of course means that they should have roughly $600,000 safe and protected no more than four hundred thousand dollars at risk in the market and things like stocks bonds and mutual funds now every time we talk about this role everybody's always heard me say you do not have to hit these percentages exactly you know don't get stressed out about it if you're 62 years old you do not have to have a 38% 62% split you just want to be close I've really believed but in most scenarios five to ten percent points away from this roll is fine I normally wouldn't recommend going more than ten percentage points away from this roll and especially right now with everything that we're seeing happen in the economy and in the stock market and as I'm saying this I know there's going to be a lot of viewers right now that haven't been following this almost most of our clients here at the firm have but we have a lot of individuals that are not currently climbed so if you're not following this rule currently and maybe your portfolio has gone down a little bit in value you it is not too late to get into adherence with this rule there there are safety measures that we can put in place and there are actions that you can take with your portfolio where you don't have to lock in a loss and you don't have to worry about putting yourself into a position where you can't recover what's been lost so far but you know oh it's not too late you do have to make some changes if you've seen losses and you don't want to continue to see those but there are the good news is there are a lot of things that can be done it's not too late to make some adjustments going back to the rule 100 though you know a lot of times it makes sense to have certain types of accounts at risk and then other accounts where you want them in a completely safe manner so I'm getting a little bit technical here I'm going to try and keep this as simple as I possibly can if you are going to take risk either right now we're moving forward the most appropriate types of accounts to have risk are inside of what's referred to as actively funded accounts now an actively fund account is any account that you are adding money to on a monthly basis that's the key and that's what makes it active so you're actively contributing to the plan like maybe your employer's retirement plan or any other investment program if you're putting money in and investing it monthly then that account is considered active and that can be an okay time to have that money at risk the reason why is because I'm an actively funded account again an account that you're putting money into monthly you're able to take advantage of the volatility that we've seen recently here in the stock market so what I mean by that is when the market goes down like it has this year you don't get excited about it but you're actually taking advantage of that volatility because you're still putting money in so that means that you're investing more money at a lower price you may be buying more shares of whatever but you're investing in and what will happen there's that will help you recover more quickly when the market ultimately rallies and rebounds and starts to move forward so in an actively funded account it can be okay to have some risk and if you want to have risk in your portfolio the absolute best place to take the risk is in an account that you are actively contributing to and taking advantage of the volatility that we're going through where the mistake gets made a lot of times as a we'll have what's referred to as a dormant account like I just mentioned any account that you're no longer contributing money to on a monthly basis again that's the key it has to be monthly if you're not putting money into it at least monthly then that account is considered dormant because you're no longer adding money to it and that is where we typically want to reduce or eliminate some of the risk and the reason why is because when we go through volatile periods like we're going through right now when the market goes down and value you're not taking advantage of the volatility you just lose money and then depending on the account in particular 401 KS you know there's going to be fees and expenses associated with those plans that kind of drag the value of your account in that that overall portfolio down even further so you always have fees and expenses and they matter when the market is going up but no matter a lot or when the market is going down because they kind of compound the problem so in a dormant account what's happening is you're not taking advantage of the market when it goes higher and because you're no longer adding money at a lower price and then when the market goes down you just lose and because of the fees and expenses sometimes it's your pain that kind of compounds and you suffer and lose even more so this is such a misunderstood issue that in my most recent book on retirement planning we pretty much spent an entire chapter talking about the difference between active and dormant accounts because it's a mistake that a lot of investors make they don't really understand the difference between the two and candidly it's a mistake that a lot of financial advisors make in stock brokers make as well they just don't understand the difference between actively funding an account and not actively fighting an account and when it's appropriate to have risk and when it's not so if you have you or get a loved one a family member if you've lost your job here recently that account is no longer going to have additional funds put into it most likely so that account is now dormant and you really want to take advantage of these types of opportunities to roll those 401 KS and 403 B's over to IRAs there's a few reasons why we recommend that you know we've said often that if you're not as your previous employer we don't believe that your money should be either so you may be in a scenario where you you had a previous employers retirement playing anyway even before coronavirus and you just never rolled it over we really believe that if you're not at your previous employer or money shouldn't be there either some main advantages moving funds over to an IRA are gonna be that you get more control over the assets meaning you can pick and choose whatever you want to invest it so a 401k unfortunately you're limited to just whatever investments typically mutual funds that your employer has has given you to select from so you may have a list of ten or forty or or a hundred different mutual funds but that's that's pretty much it you cannot invest in individual stocks typically or individual bonds or ETFs or real estate or annuities or anything else all you have is just one asset category and that's and that's mutual funds so rolling it over to an IRA you can invest the money in anything that you want to so inside of the IRA you could use mutual funds or individual stock bonds ETFs commodities like gold and silver you can maybe do real estate annuities you know you can even get into collector items things of that nature so literally anything that you want to invest the money into you can once it's in an IRA also what ends up happening typically when you make that rollover you can typically not always but you can typically reduce the fees and expenses that you're paying some of the fees that participants inside of a 401k or 403b have to pay some of those fees are disclosed on the statement you may have noticed that change occurred I think maybe about five or six years ago where certain activists were trying to get more of these fees and expenses disclosed to participants and the industry really fought that tooth and nail and so they kind of end up having is this compromise in that some of the fees are disclosed typically the management fees on the mutual funds but not all of the fees are so I think it really did more harm than good because a lot of times people mistakenly believe well you know why should my statement shows me how much I'm paying fees they don't look so bad and the reason why they don't look so bad is because that's only part of the story sometimes it's kind of just the tip of the iceberg on what the total cost is because 401k plans typically have a lot of administrative fees and your third-party administrator fees and other filing fees and your statement fees and just there's all kinds of different fees associated with them and none of those types of expenses have to be disclosed to you just the management fees so it's good to know what you're paying on the management fees but that's not typically the entire story so a lot of times you can save yourself some money by getting it roll over to an IRA because in that environment you can typically know exactly what you're paying in fees and expenses especially if you work with a a fiduciary one of the biggest issues that I see and I always want to bring this up because a lot times people don't realize this is how it works but one of the biggest issues that we see is if you have money in a 401k plane and it's with a previous employer for whatever reason if that employer word about bankruptcy right now which of courses is more likely than what it was maybe six or seven months ago of course the money that you have in your 401k plan that that money is completely frozen while the bankruptcy is taking place okay so don't get me wrong I always have to be very clear if the company files bankruptcy unless you're invested only in that company's stock you don't typically have to worry about losing all the money that's in the plan but what ends up happening is you don't have any access to those funds and you can't make any changes with it while the bankruptcy Preedy proceedings are kind of playing themselves out so sometimes individuals will lose the non-vested portion of the company match depends on how your 401k plan documents were written up but usually you don't actually lose the money you just lose access to it meaning you cannot roll it over to an IRA while the bankruptcy proceedings are going on and sometimes that takes years to work themselves out you cannot change the investments inside of the 401k which is really crucial especially in a time period where things are as well as as they are right now you cannot take any withdrawals you can't take any loans or anything like that so I walk you through a real quick story of why I'm bringing this particular point up the scenario that played out during the last financial crisis we had a gentleman that was a new client to the firm and he came to see me I believe in kind of late 2007 and that's really when things kind of just began to get a little bit bad and and he unfortunately had had been laid off but he got some severance and and he wasn't that concerned about it because he had about eight hundred thousand dollars in his previous employers 401k he really believed that you know if he needed to get to that money he'd be able to he was over the age of sixty so he could access it without any penalties or anything like that well what end up happening to him very quickly is right after losing his position the company filed bankruptcy so by the time that his severance ran out when he went back to the 401 K and was really looking to take some withdrawals from it and roll the rest over the rest of it over to us to help him with it he couldn't couldn't take any withdrawals the money that was in the plan was completely frozen and then as we got into 2008 of course the market started to get pretty volatile he wanted to you know sell out the mutual funds that he had inside of the 401 K and just moved the money to cash and he couldn't he could not make those adjustments so after some time I don't remember how long it was but several months the bankruptcy finally was over the funds were no longer frozen and they were freed up he was able to take withdrawals and roll the money over but unfortunately had gone from about 800,000 dollars down to about $400,000 and there was nothing that he or us or anyone could do about it because I just have those plans were so in this type of environment there's gonna be a larger likelihood that companies could actually file for bankruptcy and again I want to be very clear doesn't mean necessarily you would lose the money but you lose access to it and you lose control over it and you have to kind of wait and hope that the bankruptcy doesn't take that long and you got to kind of have to wait and hope that you don't need the money and then eventually after the bankruptcy is over then you can make some changes so that's a huge issue while we talk about if you're not at your previous employer we don't think your money should be either if it's at your previous employer then you can't add to it like you could add to it make the active when you're rolling over to an IRA and then again getting the money's out of a 401k and into an IRA usually we can help you make sure that those assets moving forward are gonna complement the other investments that you have and we can manage it or whoever you go to can manage it and make sure that all everything is kind of working in coordination as opposed to having part of the money under professional care and part of the money in a previous employers retirement plan that maybe you're trying to manage yourself but you're just much better off going ahead and getting that money roll it over to an IRA anytime that you have that option to do that we usually recommend taking that option again so main thing we're talking about here are the 401 KS for all three B's and then thrift savings plans if you're a federal employee I've already touched on some of these things but this is maybe a couple of things that you can double check on if you're currently working for an employer right now and this doesn't matter whether you think that you may lose your position or not this is something that either yourself or get a loved one a friend family member or neighbor can possibly take advantage of one of the things that you can sometimes do if you're still employed at your company you have money inside of the 401 K maybe you're not completely happy with it or you'd like for diversification and make some changes sometimes you can do what's referred to as an in-service rollover or an in-service distribution and what that means is you still work for the company you still plan to work for the company and you are let me get my picture off this so you can see everything so you still plan to work for the company you're still going to possibly even contribute to the 401 k plan but you're able to move either all or part of the money over to an IRA usually this comes into play when you are over the age of 59 and a half but some places will allow you to do this once you turn age 55 and then again other companies will allow you to do this at any time the way that you can find out if you're eligible for this is you just want to talk maybe to anyone that's in your HR department or you can call the custodian on your maybe your 401k statement and ask if if you're eligible to do this so again if you could be call and ask them these questions you want to ask the the magic words are kind of can I do an in-service rollover an in-service withdrawal in in-service distribution if you use those types of phrases or terms they're gonna pretty much know exactly what it is that that you're asking and you want to consider maybe doing that the reason why is similar to what I was just talking about if the account is dormant you know you can usually take all or part of it and roll it to an IRA and then you're gonna have less fees typically more control and typically better investment options because then you can invest the money in anything that you want again those that have been following along with our webinar series we've talked in the past about these recently passed secure act that went into effect January 1st of 2020 so having your money inside of an IRA versus a 401k or 403b when you pass away is actually much better for your heirs and beneficiaries and I'll keep it very simple it's just that they have more options they have more options and better things that they can do because they've inherited an IRA versus a 401k again it would protect you from the issue hopefully it doesn't happen but it would protect you from the issue of what if your current employer were to file bankruptcy same problems occur there if you're still working for the company you know there every time a company files for bankruptcy doesn't necessarily everyone off so you could actually still be employed which would be good but again you can't make any changes to the 401k you can't roll it over you can't change the investments you can't take any withdrawals if you want to the money's completely frozen until everything is released from the courts hopefully when that happens it's just a few months but you know sometimes bankruptcy proceedings can take several years and then the last bullet point that of course we have here is you can do these in-service withdrawals in rollovers and no taxes are going to be due because it is a rollover so sometimes again at any age you can do this some companies well this to occur if you're over age 55 others it's age 59 and a half but it's something worth looking into and taking a look at especially with everything that's happening right now in the economy and the stock market some other times it these types of rollovers or options are available or let's say that again maybe your company has suspended its company match sometimes that changes the rules on rollovers and that money is eligible to be rolled to an IRA other times let's say if your company was recently or in the past it was merged with another firm or maybe they changed the 401k custodian some places sometimes will switch from you know nationwide to fidelity or fidelity to Charles Schwab but you know sometimes when those types of occur those those changes occur there through your employer then the money becomes eligible for rollover and any time that you have the ability to roll funds from a 401k over to an IRA more often than not that is something that we would definitely recommend that you take advantage of so again either yourself or if you have any friends or family members that would benefit from something like that just remind them to ask their HR department or call in to the 401k provider directly and ask if they can do an in-service rollover or withdrawal or again anybody that's not comfortable doing that and you would need help to make sure you ask the right questions that's also something that our advisors can maybe jump on a conference call with you and we can get the third party on the call and we can go through and just have us ask the specific questions because it's something that of course we deal with all the time so we know exactly what to ask and of course that would be part of any type of a portfolio review that anybody would like us to do for them again let's say that everything that we've talked about so far here today you know unfortunately you're not eligible for so if you haven't lost your job that's a great thing if you check on the in-service rollover if they don't allow for that you came again we can still take a look at the investments that you have as far as options within the 401k and we can kind of give you some education and some guidance there as well usually what we'd like to do in those scenarios is to run a retirement income analysis to kind of double-check and see kind of you know how good of shape you're in as far as your retirement plans once we have that information then we can tell you specifically just keep you know the investments you have in the 401k or your maybe some some changes to make some things to possibly do different again that's the type of advice that we give to individuals all the time couple of follow up notes here that I'm going to touch on and then I'll be wrapping up for the day at all times whether what we're going to do right now gets better hopefully in a shorter time period or if it lasts a long time you want to go back and and really have some strong safety nets built into the overall portfolio the overall retirement plan that you're working on so make sure that you're able to meet normal monthly expenses and you have a good chunk of money set aside for emergencies so again we usually recommend about six months where the living expenses is what we would recommend that someone have in a secured just regular maybe savings account or or checking account or money market or something like that typically you don't need more than six months some people like to have more and that's fine but usually almost any emergency that you can think of six months where the living expenses are going to be enough so just take whatever it costs to run your household per month multiply it by six and that's how much money you would would want to have set aside in some sort of an emergency fund that will allow you to be able to maintain and get through typically bad bear markets or emergency situations where you've temporary lost a job something of that nature you know the worst bear market that we've ever seen happened in the 1930s where the market fell right about 86 percent then it took a total of 16 years to recover from that so because those types of scenarios can happen we recommend having what we refer to as a cash flow bridge meaning that you need to have the right amount of assets and money invested in a safer position where you don't have to worry about it going down and value to bridge those types of gaps sixteen years is a long time but if you manage it properly you know ones retirement may last one year 30 or or four years so 16 years - to bridge a bad event is that something anybody should be really shocked or surprised if they have to deal with in the future and the way that you can deal with that is by having a secure cash flow bridge making sure you're adhering to rules like the role of 100 so you're able to get through the pache and still maintain your lifestyle and still maintain your standard of living and the way that you can do that is by using the rule of 100 and making sure that you have good guarantees built into the portfolio and when you have a good mixture of safety versus risk in the portfolio that then allows you if you want to to take even more risk on your risk based side shooting for and chasing some of those higher returns that we hope we will be seeing again in a not too distant future so bottom line here on this particular slide is it just comes down to having a really great well organized coordinated plan that will allow you to get through these difficult periods like we're seeing right now last thing that I wanted to mention again I kind of talked about there's sorted out the talk here today with a brief overview of it whether you decide that you want to come in and and talk with us via a conference call or resume meeting or something of that nature make sure whoever you're going to and working with is a fiduciary and in an environment like we're going through right now I would not want to work with any type of an advisor unless they were a fiduciary we're not the only ones there's other options that are out there but a lot of individuals in our industry are not held to a fiduciary standard they're held to what's referred to as a suitability standard meaning they just have to recommend things to you that are going to be suitable for your situation but if there was a better investment option something that was maybe gonna have lower fees or lower risk maybe in performance they don't necessarily have to tell you about that as long as what they recommend to you could be argued that it was suitable then they are good to go you don't want to work with advisors that are like that that's usually about probably in today's environment probably bout 70% of the advisors that are out there just have to recommend things to you that are suitable the other 30% are like us we have to recommend what is absolutely in the clients best interest so when we go through audits with regulators when they come in and take a look at what we're recommending to clients we have to be able to prove that whatever recommendation we made absolutely was what was best for that client just can't be good for the client can't just be better than what they had has to be of every option that's out there everything and that's available we had to make the absolute best recommendation that we could to them so make sure whoever you're talking to has that same fiduciary standard and not just a suitability saturd it's incredibly important especially in times like these so you can once again schedule a portfolio review with us today if you would like you can click on the rate on the link to the right like we said earlier we're fiduciaries we're independent and we are distribution specialists meaning once again we traditionally work with those that are retired or soon to be retired and we have the ability to work with individuals either through a conference call we've been having a lot of zoom meetings with individuals across the country and then in our different offices we have some individuals that are still wanting to do face-to-face meetings and we have that ability on a very limited basis of course we're considered in a central business and we have a very small staff that's working in the office taking all of the caution you know prescribe precautions to make sure everybody stays safe but some individuals would prefer a face-to-face meeting and that's fine but if you are comfortable with it we can set up a conference call or a zoom meeting to get any questions that you might have answered so you can schedule that review with us today and please you know pass this information on from this particular webinar individuals are going to be able to go back and review it again but if you again if you have friends or loved ones anybody that's maybe lost to position or is concerned that they may lose their position they can benefit from it but also anybody that has money invested currently in a 401k or 403b will be able to take advantage of some of the tips that we've talked about here today if you've missed any of the previous strategic wealth live webinars you can sign up for those and you can gain access to some of them that we've talked or any of them that we've covered in the past if you missed some of them there's been very good tips that we've given on those as well than I didn't go into again here today and then last but not least you know be sure to follow us on our Facebook page again you'll get updates on upcoming webinars with the topic is going to be now you're able to submit questions to us there we'll have anybody I sure go back and they answer those questions for you we're working on a lot of things as a firm we've got a fun educational cooking show that's going to be coming up we have our news appearances and clips for the day for different questions that reporters are asking us about the economy in the stock market so be sure to follow us on Facebook and you'll probably get a lot of answers to any questions that you might have and then again just you know keep in touch with us let us know if we can help you in any way and if you have money in Agoura 401k or even an inactive 401k get a second set of eyes to take a look at those and schedule a talk you know a lot of our initial meetings are just running about 15 20 minutes on the phone and everybody that we're having these meeting with they're walking away and having learned something and something that they can really benefit from so once again thank you for tuning in and I do very much look forward to seeing everybody at some point in the future okay thank you have a great day thanks for tuning you

Channel: Strategic Wealth Designers

Views: 91

Rating: 5 out of 5

Keywords: Strategic Wealth Designers, 401K Coronavirus, Coronavirus 401K, Financial Planning, Financial Plan

Id: qxbuKw2WMV4

Length: 49min 30sec (2970 seconds)

Published: Mon May 25 2020