As financial advisors, one of our main priorities is seeing that our clients have a sound estate planning strategy in place that makes sense for their family. A critical component of an effective strategy can be having a power of attorney named, in case you become incapacitated or incompetent.
If you become mentally or physically compromised for a period of time, and do not have a power of attorney, no one will be able to manage your financial or legal affairs. We recently encountered a situation just like this with a client becoming ill and unable to make decisions for themselves. His significant other relied on him and a portion of his income to maintain their daily life. Luckily in this situation, the significant other was named as his legal power of attorney and was able to manage his affairs and pay the necessary bills on time. It could have been a very unfortunate and unpleasant experience for both of them if our client had never named a power of attorney.
Establishing a power of attorney helps ensure that your loved one can handle your financial affairs for any length of time needed. If you need to update or create a power of attorney, please reach out to your attorney. You may also be able to create one online using a website like LegalZoom. We would be happy to discuss this further with you and refer you to an estate attorney if you don’t have one.
One of the many pleasures of being a financial advisor is having the opportunity to assist our clients’ family members with their financial needs. We recently had a client mention to us that his son recently got a new job and wasn’t sure what to do with his old employer-sponsored retirement plan. Since our client’s son was out of state, we were able to connect virtually with him and thoroughly reviewed all of his options with him. We informed him that he essentially had 4 options to choose from.
1. Roll over your assets into an Individual Retirement Account (IRA)
2. Leave assets in your former QRP, if plan allows
3. Move assets to your new/existing Qualified Retirement Plan, if plan allows
4. Take a lump-sum distribution and pay the associated taxes.
Each of these options has advantages and disadvantages and the one that is best depends on your individual circumstances. You should consider features such as investment options, fees and expenses, and services offered. Our team can help educate you regarding your choices so you can decide which one makes the most sense for your specific situation. Before you make a decision, read the information provided in this piece to become more informed and speak with your current retirement plan administrator, and tax professional before taking any action.
Ultimately, he decided it was advantageous to him to rollover the money into an IRA that we established.
If you, a friend, or a family member have recently changed jobs and are considering what to do with an old 401k or 403b plan, please feel free to contact us. We would be happy to offer some guidance!