Mattson Financial Services - July 2019

F I N A N C I A L S E R V I C E S , L L C


July 2019


What Do These Mean?

Converting accounts to IRAs comes with a big advantage: You can choose which IRA account you want to withdraw from. Strategic withdrawing allows you to minimize your tax burden.

As longtime clients know, we hold a charity event every year, which gives us a chance to really recognize local charities and give back.

It’s also an opportunity to have a little fun! Our ACEs (annual charity events) are typically a Vegas-inspired night of entertainment where you can leave the money at home! We supply everyone with 500 chips right at the door. All you have to do is play the games and lose chips! We usually involve four different charities at each ACE. As you play, your chips can go toward any of the charities. The charity that has the most chips at the end of the night gets a check for $1,500. I held our first event back in 1989 inmy own home. It was just a backyard barbecue. Since then, we’ve held ACEs at the Grand Rapids Art Museum, rented out the John Ball Zoo, and spent an evening on paddle wheel boats, not tomention all the other great venues we’ve rented around Michigan. This year, as we turn ACE into Vegas Night, you can expect plenty of entertainment and hors d’oeuvres. This is our way to share our appreciation of you, our clients, as well as giving back to the community. We hope you’ll reserve time to participate in our July 13 event! One more thing: We’re already planning an event for next year! The newest James Bond movie comes out next spring, so we will be renting out a theater for our clients! Now, what about RMDs? These are three letters we talk about a lot, and they’re very important. Short for required minimum distributions, RMDs are what the government requires you take out of qualified, pre-tax retirement accounts. You must start taking RMDs at age 70 1/2. Up until you turn 70 1/2, the government lets you grow this money without worrying about the tax. Then the money must come out. As a general rule, you start taking funds out at a rate of 4%. If you have different types of accounts, such as a 403(b), 401(k), or a 457 plan, as well as an IRA, you have to take RMDs out of each of these accounts. Now, if you were to convert your 403(b) or 457 accounts to IRAs, for example, you would not have to withdraw from each IRA.

What happens if you miss taking out an RMD? The IRS will hit you with a 50% penalty. Some people don’t like taking RMDs

because they have other sources of income, and taking RMDs can change their tax status. But, again, you can be strategic about it.

While we at Mattson Financial Services assist clients with their retirement accounts, it is the investor’s responsibility to make the withdrawal correctly and on time. As a courtesy, we closely follow our clients’ financial situations and will do what we can to help.

If you have a spouse taking our RMDs, and that spouse passes away, you may or may not have to continue the RMD process. If the account is left in the deceased spouse’s name, the RMDs must continue or face a penalty.

If you convert the account to an IRA in your name and are not yet 70 1/2, you do not have to continue taking the RMDs until you are of age.

The State Supreme Court made a ruling regarding IRAs that are received as part of an inheritance. Those assets can be attacked by predators and creditors. If you want to make sure those assets are protected, call us and we’ll connect you with Randall Borkus, who can tell you exactly how to keep that money out of the hands of predators and creditors! –Gary Mattson

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