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Your Retirement

Retirement Planning

Southport Capital’s Approach
To Retirement Planning

At Southport Capital, we aim to know your goals and objectives as we map out the plan towards your dream retirement. The map we create helps guide us to the development of your personal retirement investing recommendation. Once the strategy is developed, we implement and maintain on an ongoing basis to help reach your goals.

 

Personalized Services Provided By Our Team:

      • An advisor meets with you to create a personalized plan based on your retirement needs, goals, and your lifestyle.
      • We develop a personalized portfolio analysis based on your retirement income goals.
      • We will regularly review your financial situation, goals, and income needs to ensure our plan is meeting your needs. We will adjust your plan as your needs and goals change.
      • Our advisors analyze and monitor financial markets and news to keep you informed, as well as help guide their decisions.

At Southport Capital, we aim to provide advice and education to help our clients create a plan that will help you meet your long-term financial goals in your retirement.

Have questions about retirement planning? Contact one of our advisors in a location near you.

401(k) & IRA Tips

Individual retirement accounts (IRAs) have a lot in common with employer-sponsored retirement plan accounts like 401(k)s, but differ in many important ways. Let’s take a look.

 

IRA vs 401(k): How are they different?

The subtle, but important, differences between IRAs and 401(k) accounts arise when answering the questions below.

  • Where do contributions come from and how are they handled from a tax standpoint?
  • How are early distributions treated?
  • When are federal taxes withheld automatically?
  • When do Required Minimum Distributions (RMDs) begin?

IRA vs 401(k): How are they alike?

The subtle, but important, differences between IRAs and 401(k) accounts arise when answering the questions below.

  • The main similarities include tax-deferred growth possibilities, as both traditional IRAs and 401(k)s generally offer tax-deferred earnings from interest income, dividends, and capital gains. They also offer the potential to reduce your income tax burden, although in different ways.
  • Both may also offer the possibility of taking hardship distributions for items like unreimbursed medical expenses, medical insurance, disability, qualified college expenses, or first-time home purchases. Generally, hardship distributions are limited to the amount of your contributions or deferrals. Some distributions are taxed and typically also incur a 10% early-withdrawal penalty if taken prior to the age of 59½.

Traditional IRA vs. 401k

The primary difference between an IRA and a 401k is that a 401k plan must be established by an employer. Each employee and the business owner decides whether to put a portion of their pay into the plan. The contributions for all employees and owners are held in a single plan trust, but each individual’s account balance is tracked separately. For 401k plans that have employees, the employer has the option of making contributions to the employees’ account.

An IRA, on the other hand, is an individual account, not tied to an employer. Individuals set up their IRAs with an IRA provider. They can choose to contribute a portion of their earned income periodically to the IRA. They can also fund the IRA with dollars rolled over from a former employer’s retirement plan, such as a 401k plan.

IRAs and 401k plans provide some of the same savings and tax benefits, but each has its own rules, and there are different rules for different types of IRAs and 401k plans.

IRA vs 401(k): Early distributions.

    IRA:

    Distributions from traditional IRAs are subject to specific requirements. Generally, a distribution taken before the age of 59½ is subject to a 10% early distribution penalty. The penalty no longer applies once you reach 59½. However, all distributions are taxed as ordinary income. In the case of a Roth IRA, distributions made before age 59½ are not taxed or penalized provided the amount withdrawn is smaller than what you contributed.

    401(k):

    Distribution options from a 401(k) plan vary based on your age and employment status. Unlike an IRA, you can’t take a distribution from a 401(k) whenever you feel like it. To take out money, you need to have what’s called a “distributable event,” such as leaving your employer or retiring.

    When you leave an employer or retire, you have to decide what to do with the money in your 401(k). Generally speaking, you can 1). roll the money over into an IRA or another employer-sponsored retirement plan, 2). take a “lump-sum” distribution (that is, “cash out” your account), or 3). do nothing, and leave the money in your former employer’s plan. If you cash out your plan, that money will be taxed as regular income in the year you take the distribution. Like the traditional IRA, pre-tax 401(k) contributions taken before age 59½ may be subject to a 10% early withdrawal penalty.

    If you haven’t had a distributable event, but still want to access money in your 401(k) account, you may be able to borrow the needed funds.  Many, but not all, 401(k) plans offer loan provisions. If you qualify for a hardship distribution, this may also be an option under your plan.

    Ready To Make The First Step In Planning Your Retirement?

    Making the steps to planning your retirement can be overwhelming. Let us help you create a plan that takes advantage of all the benefits retirement accounts can offer. Southport Capital’s retirement planning professionals and team are committed to helping investors define their financial goals for a secure retirement and creating a customized plan to achieve them.

     Contact us for a review on your current retirement planning strategy, and let us help you cultivate a long term plan that works for all your retirement needs.

    Resources:

    1 Retirement Topics — IRA Contribution Limits. IRS.gov. Retrieved on April 12, 2018 from https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

    Retirement Topics — 401(k) and Profit-Sharing Plan Contribution Limits. IRS.gov. Retrieved on April 12, 2018 from https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

    3 Retirement Topics – Traditional IRA vs. 401k https://www.myubiquity.com/401k/ira-vs-401k/

    Terms of Service

    These documents are for general information and educational purposes only, and must not be considered an investment or financial planning advice. Such advice must be tailored to your individual situation and objectives. Investors should consult all available information, including fund prospectuses, and investment legal and accounting professionals, before making any fund purchase or executing any investment or financial planning strategy. They must exercise their own independent judgment when making any investment decision.

    All investments involve risk. There can be no guarantee that the strategies, tactics, and methods discussed here will be successful. Shares may be more or less valuable than purchase price at any time in the future. Any performance-related numbers referenced are not verified and are being used for informational purposes only.

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