Managing Held-Away Retirement Plans and Annuity Accounts: Part III

Part III: Additional Notes on Financial Harmony

In Part I of our three-part series on managing held-away accounts, we described the important role retirement plans play in your life, as they are often among the biggest building blocks in your household wealth. In Part II, we described an investment strategy for managing them effectively within your family’s overall game plan. Today, we’ll wrap our series with some of the additional advantages to be had by taking a unified approach to managing held-away assets such as retirement and annuity accounts:

    • Tax-Saving Opportunities. With asset location strategies, we seek to locate your most heavily taxed investments within your tax-sheltered accounts, to help you minimize or even eliminate their tax inefficiencies. Since your tax-sheltered accounts are often found in held-aways such as 401(k) plans, we must incorporate these accounts into our overall planning to maximize effective asset location.
    • Making the Most of Your Retirement Benefits. It’s probably been a while (if ever) since you’ve taken a close, coordinated and informed look at your retirement plan benefits. Are you contributing as much as you can and should? Are you making the most of employer matches? If your company offers a Roth 401(k), have you considered how to make best use of it? Upfront and ongoing, we’ll scrutinize and advise on these and other important planning considerations.
    • Making the Most of Available Investment Choices. We wish this weren’t so, but many retirement plans offer poor investment choices that do not align well with our evidence-based investment strategy. We’ll assess the choices within your plan. Then we’ll help you identify and choose the best solutions, or at least make the most of those that are available to you.
    • Minding the costs. The costs of the investment choices for many 401(k) plans are often excessive. We choose the best of what your plan offers, ideally passively managed funds that focus on efficiently targeting specific asset classes. We then fill in the gaps using your other investment accounts, thereby minimizing the costs that otherwise detract from your end returns.
    • Smoothing the Way for your Loved Ones. As touched on in Part I, it also can be an enormous stress-reliever for your family if they have access to a unified, big-picture view of household assets during estate planning and execution. A widow, widower, child or other beneficiary is already experiencing enough stress without having to hunt down farflung assets, or worry that they may not even be aware of all available resources.
    • Managing Your Own Worst Enemy: You. In the absence of confident planning, investors often succumb to emotional trading within their 401(k) accounts, adding to their costs without improving on expected outcomes.

The Take-Away

Your investment strategy is like the blueprint for your financial home. It should include and plan for all of the “rooms” in your household, not just its primary living quarters. By including your held-away accounts within your overall financial planning, we help you optimize accounts that are often (a) among your greatest assets and (b) key determinants in whether you achieve the retirement lifestyle you envision for you and your family. This is one way that we at SageBroadview help you Appreciate the Wealth of Your Life.℠

Sheri Iannetta Cupo, CFP®, is a Principal of SageBroadview Financial Planning based in Morristown NJ, and Farmington CT, an independent, Fee-Only Registered Investment Advisory firm, specializing in providing busy professionals and their families with holistic financial life planning and investment management services. You can find more here: www.sagebroadview.com where this post originally appeared. You can also connect with Sheri on TwitterGoogle+ and LinkedIn.

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