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• Developing your retirement income strategy is part of the Envision® process.
• We can help you analyze possible expenses and sources of income.
• Checking on your strategy annually can help you maintain course.

It starts with a plan

Creating a plan can help you stay focused, plan for challenges ahead, and make choices that work for you. 

Our Envision planning process is the foundation we use to develop your retirement income plan. It can help you make choices and tackle the following topics:

• When and how can I retire with confidence?
• How can I help make my money last as long as I’m retired?
• Where will my income come from?
• How do I prepare for and respond to events throughout retirement?
• When and how should I address my legacy goals? 

7 common retirement planning moves

Will the money in your investment accounts last through retirement? Here are some steps that go beyond the basics of using tax-advantaged funds and making regular contributions.
 

1. Review your portfolio - Conduct regular investment checkups on your own and with us.
2. Maintain emergency savings - Wells Fargo Advisors recommends keeping an emergency fund with enough money to cover living expenses for three to six months. Keep emergency funds in a liquid account you can easily access if needed.
3. Set an appropriate asset allocation - Investments are fluid. Some are more volatile, but all can be affected by market fluctuations. Adjust your assets to align with your current goals and tolerance for risk.
4. Itemize your income plan - Understand where your retirement funds will come from. List out all sources, such as Social Security and pensions. For each item, list how it might generate income for your portfolio.
5. Clean up your accounts - Consider consolidating accounts. You’ll not only have less paperwork, you can help keep an eye on your asset allocation and overall investment strategy.  We can talk about your choices and what might make the most sense for you. Before taking any action, speak with your current retirement plan administrator and tax professional.
6. Sell assets strategically - Selling assets can have tax implications. Proceeds could nudge you into a higher tax bracket. Balance the concern of minimizing taxes when you’re selling assets with your portfolio’s allocation strategy. Talk with us about the choices you have in this situation.
7. Talk with family - Partners and spouses should be on the same page regarding your financial portfolio. Cover some key financial details: 

• Current total assets
• How much you have saved right now
• How much is in each account
• Where the funds are located
• Your budget

Common risks to address

While we develop your retirement plan, you’ll want to look at risks such as inflation, market events, health needs, withdrawal strategy, and how long you’re likely to live. Understanding the impact these challenges may have on your savings and planning for them can help you stay the course. 

Have an ongoing process

Planning for retirement is not a “one and done” kind of activity. A good plan should be checked regularly and adjusted, as necessary. Keep an eye on your portfolio, talk about your expectations, and prepare for the unexpected.
 
Schedule an annual checkup with us to review your plans, your current circumstances, and your portfolio. We’ll work together to discuss your choices and what works for you.

Next steps 

• Think about what you hope your retirement will be.
• Write down all your possible sources of income and expenses in retirement.
• Take a look at your portfolio and call us if you have any questions about changing your asset allocation.
• Call us to start on your personalized retirement income plan.

 

Wells Fargo Advisors does not provide tax or legal advice. 

Investing involves risk including the possible loss of principal. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Diversification does not guarantee profit or protect against loss in declining markets. Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations. Dividends are not guaranteed and are subject to change or elimination.

• You can benefit from tax-advantaged investing in an IRA.
• Consider contributing to an IRA even if you participate in a qualified employer sponsored-retirement plan (QRP).
• Find out which type of IRA – Traditional or Roth – is right for you.

IRAs can help you meet your retirement goals

Even if you already participate in a qualified employer sponsored-retirement plan (QRP) such as a 401(k), 403(b) or governmental 457(b), an IRA can help supplement these savings. Similar to a 401(k), IRAs offer the potential for growth in a tax-advantaged account. Over time, that can make a significant difference in your retirement savings.

Types of IRAs

Both Traditional and Roth IRAs offer tax advantages, a wide variety of investment options, the flexibility to choose whether or not to invest annually, and the same contribution limits. 

• Traditional IRA - Offers tax-deferred growth potential. You pay no taxes on any investment earnings until you withdraw or “distribute” the money from your account, presumably in retirement.¹ Additionally, depending on whether you’re covered by a retirement plan with your employer and your income, your contribution may be tax deductible.¹ 
• Roth IRA – Offers tax-free growth potential. Earnings are distributed tax-free in retirement, if a five-year waiting period has been met and you are at least age 59½, or as a result of your death, disability, or using the first time homebuyer exception. Since contributions to a Roth IRA are made with after-tax dollars, there is no tax deduction regardless of income. 
• Who can contribute to an IRA - You and your spouse, if filing jointly, can contribute to a Traditional IRA if you have earned income. You can make a non-deductible contribution to a Traditional IRA even if your income exceeds Modified Adjusted Gross Income (MAGI) deduction limits. You and your spouse, if filing jointly, can contribute to a Roth IRA at any age as long as you have earned income and are at or under MAGI phase-out limits. 
• Small business SIMPLE & SEP IRAs - SEP IRAs and SIMPLE IRAs are often offered by small businesses as a retirement plan for their employees. These plans can be ideal for small businesses with a few employees. A SEP IRA is a Traditional IRA that holds employer contributions under the SEP plan.²

IRA contribution limits and deadlines

IRS rules state how and by what date you can make your IRA contributions. IRA contributions must generally be made by April 15 for the prior tax year. If you are 50 or older, within a particular tax year, you can contribute an additional $1,000 catch-up amount each year. 

Call us to discuss the exact date for this year and the amount you can contribute, or check out IRS Publication 590 found here:

• IRS Publication 590-A 
• SEP Plan FAQs

Retirement plan distribution options 

When you change jobs or retire, you generally have four options for your retirement plan assets:

1. Roll assets to an IRA
2. Leave assets in your former employer’s plan, if the plan allows
3. Move assets to your new/existing employer’s plan, if the plan allows
4. Cash out through what’s called a “lump sum distribution,” pay taxes and perhaps a 10% IRS tax penalty

There are advantages and disadvantages to each option. The best one for you depends on your individual circumstances.³  Since your retirement plan savings may represent a substantial source of income in retirement it’s important to think about all of the following:  

• The difference in fees and expenses between the QRP and IRA
• When penalty-free distributions are available
• Your need for help making investment decisions and other services offered
• Any special considerations regarding your employer stock
• Timing of required minimum distributions (RMDs)
• Protection of assets from creditors and bankruptcy

We can sit down and look at your choices together so you can decide which one makes the most sense for you. Before you make any decision or take any action, speak with your current retirement plan administrator and tax professional. 

Next steps

• Make an appointment with us to go over your IRA choices.
• Fund your IRA.
• Find out if you can deduct your Traditional IRA contribution. 

¹Traditional IRA distributions are generally taxed as ordinary income. Qualified Roth IRA distributions are federally tax-free provided a Roth account has been open for more than five years and the owner has reached age 59-1/2 or meets other requirements. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Both may be subject to a 10% IRS tax penalty if distributions are taken prior to age 59-1/2.

²Withdrawals are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59-1/2. For SIMPLE IRAs, the federal penalty increases to 25% if a distribution is taken prior to two years from the first deposit made into a participant’s account if under age 59-1/2.

³Please keep in mind that rolling over assets to an IRA is just one of multiple options for your retirement plan. Each of the following options is different and may have distinct advantages and disadvantages.

1. Roll assets to an IRA
2. Leave assets in your former employer’s plan, if plan allows
3. Move assets to your new/existing employer’s plan, if plan allows
4. Cash out or take a lump sum distribution 

When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees and expenses, services offered, investment options, when penalty free withdrawals are available, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.

• Everyone could use an estate plan – not just the wealthy.
• 5 documents are essential for many estate plans.
• An estate planning attorney and your accountant will work with your Financial Advisor.

Estate planning: a matter of control 

You might associate estate planning with famous people you see in the news. In fact, estate planning could be appropriate for everyone. 

Consider your assets: bank accounts, investment accounts, 401(k) or 403(b) plan accounts, house, cars, jewelry, and heirlooms. This is your estate and your estate plan can define what you would like to happen to these assets when you die. 

An estate plan can also take care of you as you get older or if you become ill or incapacitated. Being wealthy has little to do with it. 

If you don’t make your own plan, your family may be left scrambling at an already difficult time. Bottom line: If you don’t decide, someone will decide for you.  

Five essential documents 

These five documents are often essential to an estate plan: 

• Will - Instructions for distributing your assets when you die. You will name a personal representative (executor) to pay final expenses and taxes and distribute remaining assets. Name a guardian to raise your minor children if both parents die. 
• Durable power of attorney – You give a trusted individual management power over your assets if you can’t manage them yourself. This document is effective only while you’re alive. 
• Health care power of attorney - You choose someone to make medical decisions on your behalf if something were to happen and you can’t make them yourself. 
• Living will – Shares your intentions about life-sustaining medical measures if you are terminally ill. No one is given authority to speak for you. 
• Revocable living trust - You can provide for continued management of your financial matters while you are alive, after your death, and even for generations after. 

Why beneficiary designations are important

Beneficiary designations can be an easy way to transfer an account or insurance policy when you die. But if you didn’t complete beneficiary designations, or haven’t updated them, they can cause issues with your estate plan. 

Designations on forms are often filled out without much thought – but they’re important and deserve your attention. Beneficiary designations on forms like your insurance policy and 401(k) take priority over other estate planning documents, like your will or trust. 

Let’s say you specify in your will you want everything to go to your spouse after your death. But you never changed the beneficiary designation on your life insurance policy and it names your ex-spouse. Your ex may end up getting the proceeds. 

Turn to a team of professionals 

Making the decisions involved with estate planning may seem overwhelming. It doesn’t have to be. You can start by organizing your important documents. 

Turn to a team of trusted professionals, including your financial advisor, an estate planning attorney, and your accountant. They know the questions to ask and can help you avoid potential pitfalls. 

If you currently don’t have relationships with an attorney and an accountant, we can make some recommendations. We can also discuss our role in the planning process and how you can get started. 

Next steps 

• Make an appointment with us to talk about your estate planning goals.
• Start gathering your financial documents.
• Check the beneficiary designations on your financial and investment accounts.

Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors. 

Wells Fargo Advisors and its affiliate do not provide tax or legal advice. Please consult with your tax and/or legal advisors before taking any action that may have tax and/or legal consequences.  Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.

• If you were sick, injured or died, would your family have the resources to achieve their goals?
• Help cover unpredictable financial risks through insurance.
• Life, disability, and long-term care insurance help cover risks that could disrupt your investment plan.

Insurance helps protect assets 

You can’t avoid all risks in life. Insurance can play a key role in helping preserve your assets and achieve your financial goals. 

It’s all about keeping an eye on both assets and liabilities. Insurance allows you to transfer a risk from your balance sheet to an insurer’s.  Find out why we recommend insurance as part of your investment plan.

A different kind of risk 

When it comes to your financial goals, there are more risks to consider than just market volatility.  Insurance can help protect against life-changing events. It can help ensure the financial goals you have made can continue on.  

We offer life, disability and long-term care insurance to help protect what matters most to you.  Each type of coverage can help protect the key areas of your financial life: family, business, retirement, and legacy.  

• Life Insurance - Life insurance helps protect the financial security of your family. Each type of life insurance is designed for a specific purpose. There is no “one size fits all”.  We offer a wide selection of life insurance products, all from highly rated insurance companies, to help meet your specific protection needs.

• Long-Term Care Insurance - This type of insurance can help pay for the costs of long-term care should you need it. It is important to know that Medicare does not pay the largest part of long-term care services or personal care—such as help with bathing, or for supervision often called custodial care. 

• Disability Insurance - Disability insurance is designed to replace a portion of your income if you're unable to work because of a sickness or injury. Even if you could weather a temporary gap in earnings, an extended disability can be financially devastating and put your other goals, such as retirement and college planning, at risk.

How much should I have? 

When it comes to the amount of coverage needed to help protect your financial goals, the “right” answer is unique to you. Factors such as your age, who depends on you, and your income and assets, should be carefully reviewed.  


It’s important to understand the amount may change over time and when major life events occur, making a regular review is critical. 

Next Steps

• Research the costs associated with skilled nursing care, adult day care, and other services.
• Understand your annual expenses to help ensure you have the proper disability and life insurance coverage.
• Evaluate how your needs may change over time.
• Call us to see how insurance can play a role in your retirement planning.

Insurance products are offered through non-bank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.

Guarantees are based on the claims-paying ability of the issuing insurance company.

• Saving for your child’s or grandchild’s education doesn’t have to derail your retirement savings plan.
• 529 plans and trust funds are designed to help save for a child’s education.
• Financial aid may be another option

Retirement vs. education

As a parent or grandparent, you’re probably considering how to balance paying for college while planning for your retirement. Many families use some combination of savings, investments, borrowing, and financial aid (if available). 

There are options for financing college, but Wells Fargo Advisors believes  saving for retirement should be the higher priority for many investors. 

If your employer offers a 401(k) plan, consider putting your savings there first, especially if there is a company match. After that, contribute to your child’s education account. 

Save as early as possible

As you can imagine, the sooner you start saving for your child’s or grandchild’s education, the more money you may have later. 

One popular way to save is the 529 college savings plan. These are tax-advantaged accounts administered by states and institutions. Parents, grandparents, relatives, and friends can contribute.  

Other college savings accounts include custodial accounts in the child’s name and Coverdell Education Savings Accounts. 

Please consider the investment objectives, risk, charges and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your Financial Advisor. Read it carefully before you invest. 

Qualified Coverdell Education Savings Account distributions are not subject to state and local taxation in most states.

Establish an educational trust fund 

Setting up an educational trust fund designed for your child’s education is also an option. When a grandparent or benefactor establishes an education trust, the terms of the trust can be specified. This can include who controls the money, how it will be used, and for whom the trust benefits. 

It’s a good idea for grandparents to involve parents when it comes to helping with college savings. How they choose to save could impact any potential financial aid the child may receive. 

Consider financial aid 

A variety of factors play into financial aid eligibility. Don’t assume your child or grandchild won’t qualify for financial aid.  

Start thinking about applying for aid during high school. Visit the U.S. Department of Education’s Financial Aid Office for information about eligibility requirements, application deadlines, and types of federal financial loans and aid. 

For nonfederal financial aid, visit the College Board’s College Scholarship Service (CSS)/Financial Aid PROFILE® application for information on qualifying. 

Factor in income and existing investments 

Other investment sources may help pay for college, and keep you from tapping your retirement savings. Those may include stocks, bonds, and mutual funds.

It’s a balancing act 

As you plan for the future, keep in mind the three C’s of college funding: consistency, communication, and compromise. 

Planning for retirement, managing your investment portfolio, and funding a college education is a balancing act. The trick is to plan ahead. 

We can help you come up with a plan that considers all aspects.

Next steps 

• Ask us how you can save for both retirement and education.
• Start saving for college when your child or grandchild is young.
• Even if you don’t think you’ll qualify, apply for financial aid.

Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors. Wells Fargo Advisors and its affiliates do not provide legal or tax advice.

• Generally you have four distribution choices for your qualified employer–sponsored retirement plan (QRP) assets
• Each has unique factors to keep in mind
• Know all of your options before making a decision

Decide which option is right for you 

If you’re changing jobs or retiring, you’ll need to decide what to do with assets in your 401(k) or other qualified employer-sponsored retirement plan (QRP). These savings can represent a significant portion of your retirement income, so it’s important you carefully evaluate all of the options.   

Generally, you have four options:

• Roll the assets to an Individual Retirement Account (IRA)
• Leave the funds in your former employer’s retirement plan (if allowed)
• Move savings to your new employer’s plan (if allowed)
• Withdraw or “distribute” the money

Roll the assets to an IRA

Rolling your retirement savings to an IRA provides the following features:

• Assets continue their tax-advantaged status and growth potential
• You can continue to make annual contributions, if eligible
• An IRA often gives you more investment options than are typically available in an employer’s plan
• You also may have access to investment advice 

Before rolling your assets to an IRA consider the following: 

• IRA fees and expenses are generally higher than those in your employer’s retirement plan
• Loans from an IRA are prohibited
• In addition to ordinary income taxes, distributions prior to age 59 1/2 may be subject to a 10% IRS tax penalty
• IRAs are subject to state creditor laws
• If you own appreciated employer securities, favorable tax treatment of the net unrealized appreciation (NUA) is lost if rolled into an IRA

Leave the funds with your former employer 

You may be able to leave your retirement plan savings in your former employer’s plan, assuming the plan allows and you are satisfied with the investment options.  You will continue to be subject to the plan’s rules regarding investment choices, distribution options, and loan availability.  

Keeping assets in the plan features: 

• Investments keep their tax-advantaged growth potential
• You retain the ability to leave your savings in their current investments
• You may avoid the 10% IRS early distribution penalty on withdrawals from the plan if you leave the company in the year you turn 55 or older (age 50 or older for certain public safety employees)
• Generally, have bankruptcy and creditor protection
• Favorable tax treatment may be available for appreciated employer securities owned in the plan

Move savings to your new employer’s plan 

If you’re joining a new company, moving your retirement savings to your new employer’s plan may make sense. This may be appropriate if:

• You want to keep your retirement savings in one account
• You’re satisfied with the investment choices offered by your new employer’s plan

This alternative shares many of the same advantages and considerations of leaving your money with your former employer. In addition, there may be a waiting period for enrolling in your new employer’s plan. Investment options are chosen by the QRP sponsor and you must choose from those options.

Withdraw or “distribute” the money 

Carefully consider all of the financial consequences before cashing out. The impact will vary depending on your age and tax situation.  Distributions prior to age 59 1/2 may be subject to both ordinary income taxes and a 10% IRS tax penalty. If you must access the money, consider withdrawing only what you need until you can find other sources of cash. 

Features 

• You have immediate access to your retirement savings and can use however you wish.
• Although distributions from the plan are subject to ordinary income taxes, penalty-free distributions can be taken if you turn:
• Age 55 or older in the year you leave your company.
• Age 50 or older in the year you stop working as a public safety employee (certain local, state or federal) — such as a police officer, firefighter, emergency medical technician, or air traffic controller — and are taking distributions from a governmental defined benefit pension or governmental defined contribution plan. Check with the plan administrator to see if you are eligible.
• If you own employer securities, a distribution may qualify for the favorable tax treatment of NUA.

Keep in mind

• Your former employer is required to withhold 20% of your distribution for federal taxes.
• Distribution may be subject to federal, state and local taxes unless rolled over to an IRA or another employer plan within 60 days.
• Your investments lose their tax-advantaged growth potential.
• Your retirement may be delayed, or the amount you’ll have to live on later may be reduced.
• Depending on your financial situation, you may be able to access a portion of your funds while keeping the remainder saved in a retirement account. This can help lower your tax liability while continuing to help you save for your retirement. Ask your plan administrator if partial distributions are allowed.
• If you leave your company before the year you turn 55 (or age 50 for public service employees), you may owe a 10% IRS tax penalty on the distribution.

What to consider if you own company stock

Net unrealized appreciation (NUA) is defined as the difference between the value at distribution of the employer security in your plan and the stock’s cost basis. The cost basis is the original purchase price paid within the plan. Assuming the security has increased in value, the difference is NUA.  NUA of employer securities received as part of an eligible lump-sum distribution from an employer retirement plan qualifies for special tax treatment. In most cases, NUA will be available only for lump-sum distributions — partial distributions do not qualify.

We can help educate you so you can decide which option makes the most sense for your specific situation.

Next steps

• Learn about your choices before taking a distribution
• Pay special attention to taxes, penalties and fees associated with each action
• Contact us or your  tax professional if you have questions about how to proceed

When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees and expenses, services offered, investment options, when penalty free distributions are available, treatment of employer stock, when required minimum distributions begin, protection of assets from creditors, and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets. Withdrawals are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59 1/2.

Wells Fargo Advisors does not provide tax or legal advice. Please consult with your tax and legal advisors to determine how this information may impact your own situation.