Tag Archives: success

When You Change Jobs…You Have Important Decisions To Make!

September 2016
changing-jobs

What to do with your money in an employer-sponsored retirement plan, such as a 401(k) plan. Since these funds were originally intended to help provide financial security during retirement, you need to carefully evaluate which of the following options will best ensure that these assets remain available to contribute to a financially-secure retirement.

Take the Funds: You can withdraw the funds in a lump sum and do what you please with them. This is, however, rarely a good idea unless you need the funds for an emergency. Consider:

  • A mandatory 20% federal income tax withholding will be subtracted from the lump sum you receive.

  • You may have to pay additional federal (and possibly state) income tax on the lump sum distribution, depending on your tax bracket (and the distribution may put you in a higher bracket).

  • Unless one of the exceptions is met, you may also have to pay a 10% premature distribution tax in addition to regular income tax.

  • The funds will no longer benefit from the tax-deferred growth of a qualified retirement plan.

Leave the Funds: You can leave the funds in your previous employer’s retirement plan, where they will continue to grow on a tax-deferred basis. If you’re satisfied with the investment performance/options available, this may be a good alternative. Leaving the funds temporarily while you explore the various options open to you may also be a good alternative. (Note: If your vested balance in the retirement plan is $5,000 or less, you may be required to take a lump-sum distribution.)

Roll the Funds Over: You can take the funds from the plan and roll them over, either to your new employer’s retirement plan (assuming the plan accepts rollovers) or to a traditional IRA, where you have more control over investment decisions. This approach offers the advantages of preserving the funds for use in retirement, while enabling them to continue to grow on a tax-deferred basis.

Why Taking a Lump-Sum Distribution May Be a Bad Idea:

While a lump-sum distribution can be tempting, it can also cost you thousands of dollars in taxes, penalties and lost growth opportunities…money that will not be available for future use in retirement.

Let’s say that you have $100,000 in a retirement plan with a former employer, you’re under age 59-1/2 and you’re in the 28% federal income tax bracket.

Taxes and penalties if you…

Roll the $100,000 into an IRA

Take a lump-sum distribution

20% mandatory withholding at the time of distribution

$0

$20,000

8% additional income tax due at filing

$0

$8,000

10% premature distribution penalty tax

$0

$10,000

Ending Balance:

$100,000

$62,000

Cost to Take the Funds Today:

$38,000

Value of $38,000 in:

5 Years

10 Years

15 Years

20 Years

5% Return

$48,499

$61,898

$78,999

$100,825

8% Return

$55,834

$82,039

$120,542

$177,116

10% Return

$61,199

$98,562

$158,735

$255,645

NOTE: The above is a hypothetical example for illustration purposes only and assumes that one of the exceptions to the premature distribution penalty tax is not available. In addition to the federal taxes illustrated above, state tax may also be payable. This example is not indicative of any particular investment or performance and does not reflect the fees and expenses associated with any particular investment, which would reduce the performance shown above if they were included.

Please contact my office if you would like any additional information on rolling funds over from a previous employer’s retirement plan.

MESSAGES
from the Masters…

IT IS A CHALLENGE TO SUCCEED by Jim Rohn

It is a challenge to succeed. If it were not, I’m sure more people would be successful, but for every person who is enjoying the fruit from the tree of success, many more are examining the roots. They are trying to figure it all out. They are mystified and perplexed by what seems to be some strange, complex and elusive secret that must be found if ever success is to be enjoyed. While most people spend most of their lives struggling to earn a living, a much smaller number seem to have everything going their way. Instead of just earning a living, the smaller group is busily engaged in designing and enjoying a fortune. Everything just seems to work out for them. While the much larger group sits in awe at how life can be so unfair, complicated and unjust.

“I am a nice person,” the man says to himself. “How come this other guy is happy and prosperous, and I’m always struggling?” He asks himself, “I am a good husband, a good father and a good worker. How come nothing seems to work out for me? Life just isn’t fair. I’m even smarter and willing to work harder than some of these other people who just seem to have everything going their way,” he says as he slumps into the sofa to watch another evening of television. But you see you’ve got to be more than a good person and a good worker. You’ve got to become a good planner, and a good dreamer. You’ve got to see the future finished in advance.

You’ve got to put in the long hours and put up with the setbacks and the disappointments. You’ve got to learn to enjoy the process of disciplines and of putting yourself through the paces of doing the uncomfortable until it becomes comfortable. You’ve got to be prepared and willing to attack the challenges if you want the success because challenges are part of success. Now that may sound like a full menu of activities, but let me assure you that the process of going from average to fortune isn’t really all that difficult. Thinking about it is the difficult part. Anticipating all the effort and the changes and the disciplines is far worse in the mind than in reality. I can promise you that the challenges you’ll meet on the road to success are far less difficult to deal with than the struggles and the disappointments that come from being average. Confronting and overcoming challenges is an exhilarating experience. It does something to feed the soul and the mind. It makes you more than you were before. It strengthens the mental muscles and enables you to become better prepared for the next challenge.

I’ve often said that to have more, we must first become more, and to become more, we must begin the process of working harder on ourselves than we do on anything else. But in addition to gathering new knowledge, new skills and new experiences, it is also important to discover new emotions. It is how we feel about what we know that makes the biggest difference in how our lives turn out. How we feel about the chances we have and the choices we have determines the intensity of our effort. Whether we try or don’t try. Join or don’t join. Believe or don’t believe.

I’d like for you to discover some strong feelings about your life and about what you want to do with that life. You probably have much of the knowledge and a lot of the experience and perhaps most of the skills that it takes to become successful. What you may be lacking in are the strong feelings about what you want and what you want to do. You may be one of those who have become so involved in the process of earning a living that you’ve forgotten about the choices and the chances you have for designing your own life.

Let these strong feelings help you take a second look at your life and where you’re headed. After all, you’ve only got one life, at least on this planet. So why not make it an adventure in achievement? Why not discover what all you can do and what all you can have? Why not discover how many others you can help and in the process how that can help you?

Why not now take the Challenge to Succeed!

QUOTES
from the Masters…

On Stewardship

“The man says, ‘If I had a fortune, I’d take good care of it. But I only have a paycheck and I don’t know where it all goes.’ Wouldn’t you love to have him running your company?”

-– Jim Rohn

“I am only one; but still I am one. I cannot do everything, but still I can do something. I will not refuse to do the something I can do.”

— Helen Keller

“Don’t be afraid to give your best to what seemingly are small jobs. Every time you conquer one it makes you that much stronger. If you do the little jobs well, the big ones tend to take care of themselves.”

— Dale Carnegie

On Overcoming Failure

“Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not a dead end. Failure is something we can avoid only by saying nothing, doing nothing, and being nothing.”

— Denis Waitley

“I am not judged by the number of times I fail, but by the number of times I succeed; and the number of times I succeed is in direct proportion to the number of times I can fail and keep on trying.”

— Tom Hopkins

“No man ever became great or good except through many and great mistakes.”

— William E. Gladstone

Fixing The Value of Your Business…From the Desk of Gurdayal Singh

Business Briefs

May 25, 2016

business shingle

FIXING THE VALUE OF YOUR BUSINESS FOR ESTATE TAX PURPOSES

What Conditions Must Be Met to Fix the Value of Your Business for Estate Tax Purposes?

If certain conditions are met, a binding buy-sell agreement may fix the value of a business interest for estate tax purposes. The purchase price, whether a fixed amount or one determined by a formula, can be accepted as the estate tax valuation if these conditions are met:

1. The buy-sell agreement must create an enforceable obligation on the part of the estate of the deceased owner to sell and the buyer to purchase the business interest.

2. The buy-sell agreement must prohibit the owner from disposing of his or her business interest during lifetime without first offering it to the other parties to the agreement at a price not higher than the price (fixed or formula) specified in the agreement.

3. The buy-sell agreement must be the result of an “arm’s length” transaction, meaning that the price must be fair and adequate at the time of the agreement or any subsequent reevaluation.

Without a binding buy-sell agreement, there can be a great deal of additional detail and uncertainty as to the valuation of a business interest at the owner’s death, adding to the time and expense required to settle the estate, as well as making it difficult to predict and plan for any estate taxes that may become payable.

MESSAGES

from the Masters…

SUCCESS IS EASY, BUT SO IS NEGLECT by Jim Rohn

People often ask me how I became successful in that six-year period of time while many of the people I knew did not. The answer is simple: The things I found to be easy to do, they found to be easy not to do. I found it easy to set the goals that could change my life. They found it easy not to. I found it easy to read the books that could affect my thinking and my ideas. They found that easy not to. I found it easy to attend the classes and the seminars, and to get around other successful people. They said it probably really wouldn’t matter. If I had to sum it up, I would say what I found to be easy to do, they found to be easy not to do. Six years later, I’m a millionaire and they are all still blaming the economy, the government, and company policies, yet they neglected to do the basic, easy things.

In fact, the primary reason most people are not doing as well as they could and should, can be summed up in a single word: neglect.

It is not the lack of money – banks are full of money. It is not the lack of opportunity – America, and much of the Free World, continues to offer the most unprecedented and abundant opportunities in the last six thousand years of recorded history. It is not the lack of books – libraries are full of books – and they are free! It is not the schools – the classrooms are full of good teachers. We have plenty of ministers, leaders, counselors and advisors.

Everything we would ever need to become rich and powerful and sophisticated is within our reach. The major reason that so few take advantage of all that we have is, simply, neglect.

Neglect is like an infection. Left unchecked it will spread throughout our entire system of disciplines and eventually lead to a complete breakdown of a potentially joy-filled and prosperous human life.

Not doing the things we know we should do causes us to feel guilty and guilt leads to an erosion of self-confidence. As our self-confidence diminishes, so does the level of our activity. And as our activity diminishes, our results inevitably decline. And as our results suffer, our attitude begins to weaken. And as our attitude begins the slow shift from positive to negative, our self-confidence diminishes even more…and on and on it goes.

So my suggestion is that when given the choice of “easy to” and “easy not to,” you do not neglect to do the simple, basic, “easy,” but potentially life-changing activities and disciplines.

To Your Success,
Jim Rohn

QUOTES
from the Masters…

 

On Leadership

“A good objective of leadership is to help those who are doing poorly to do well and to help those who are doing well to do even better.”

— Jim Rohn

“Leaders think and talk about the solutions. Followers think and talk about the problems.”

— Brian Tracy

“Leadership is the ability to decide what has to be done and then get people to want to do it.”

— Patricia Fripp

On Expectation

 

“Today I live in the quiet, joyous expectation of good.”

— Ernest Holmen

“The real winners in life are the people who look at every situation with an expectation that they can make it work or make it better.”

— Barbara Pletcher

“You always act in a manner consistent with your expectations, and your expectations influence the attitudes and behaviors of the people around you.”

— Brian Tracy