Rollovers Now Restricted


Be aware: An IRS clarification that took effect Jan. 1, 2015, now restricts IRA rollovers. Your clients can make only one rollover from any of their IRAs to another (or the same) IRA in a 12-month period, regardless of the type or number of IRAs they own.  This one-per-year limit applies across all IRAs in the aggregate including traditional, Roth, SIMPLE and SEP IRAs. 

Before Jan. 1, the one-per-year limit applied on an IRA-by-IRA basis. This change in the IRS’s interpretation of the one-per-year rule comes from the U.S. Tax Court’s decision in Bobrow v. Commissioner. 

If your clients make more than one rollover in a 12-month period, the improper rollovers may be subject to the following tax consequences:

  • Any previously untaxed amounts may be taxable
  • If you are under age 59 ½ when you took the distribution, you may be subject to an additional                 10% early withdrawal tax
  • All or a portion of the improper rollover may be treated as an excess contribution and be subject to an additional penalty tax of 6% per year for each year that the excess contribution remains in the IRA

Your clients can still continue to do as many of the following transactions in a 12 month-period as they want: 

  • Trustee-to-trustee transfers between IRAs
  • Rollovers from traditional IRAs to Roth IRAs (i.e., “conversions”)
  • Rollovers between qualified plans and IRAs

The Bottom Line: Make sure you understand the new IRS rules before you make any client recommendations this year. Your Ash Brokerage annuity team is here to help. 


Don’t forget this solution for businesses


We all know annuities are a great solution for retirement. But have you ever considered annuities as a retirement solution for businesses? If you’re working with business owners and executive-level clients, ask if their company has a defined benefit pension plan. 

Why? Traditional pension plans have become a thing of past as 401(k) and other contributory plans have overtaken the retirement landscape. As a result, many businesses have decided to do two things: 

  • Freeze and eventually terminate an existing defined benefit pension plan
  • Shift all or a portion of their plan benefit obligations to a third party 

Here’s how it works: Businesses with a defined benefit pension plan can remove plan liabilities from their books by transferring the risk to a group annuity issued by a top-rated insurance company. This transfer allows the company to eliminate premiums paid to the Pension Benefit Guaranty Corporation along with significant cost savings in the plan administration. These cost savings can be reinvested in their business. Most importantly, the transfer allows the company to make good on the benefit promises made to their employees.

Plan participants benefit from the transfer because it ensures payment of the plan benefits promised to them at retirement that may include guaranteed income, the ability to provide ongoing income for a joint annuitant, and options such as payment frequency or cost-of-living adjustments.

You don’t have to be an expert to help your business clients execute this unique solution – Ash Brokerage has a dedicated team who can do it for you. You should call us – (800) 589-3000 – to learn more or to start identifying opportunities today. 



retirement business

Annuities: A Top Pick


The nature of my job dictates that I spend a lot of time in my car. When I’m driving, I’m typically either talking on my phone or listening to sports radio on ESPN. Not too long ago, one of my favorite sports show hosts was talking about the NFL draft and how difficult it is for franchises to select the best possible college player for their top draft pick. In college football, there’s an abundance of talented athletes who look very promising; however, it’s almost impossible to know for sure if their talent will translate into success in the NFL.

The commenter said selecting a draft pick is exactly like selecting a financial advisor: Regardless of who your advisor is, you would’ve made money over the last two years …  You won’t know if you have a great advisor until you see what they do in a difficult environment.

Consider this: On Jan. 5, 2015, the S&P 500 closed at $2,020.58, and just two years ago on Jan. 4, 2013, the S&P 500 closed at $1,466.67 – the index is up 38 percent and near an all-time high. 

Despite all the market success, all of the studies we’re seeing point towards the fact that many near-retirees are ready to take some of their “winnings” off the table and “lock in” in their gains. A recent study stated that 86 percent of baby boomers surveyed wanted help protecting a portion of their retirement assets. This same study showed that more than 50 percent of those surveyed formed their opinions of annuities more than 10 years ago … so they may not realize an annuity could give them exactly what they are looking for.  

We need to spread the word: Indexed annuities are an attractive option today with more, and better, features than they’ve ever had before. As you’re sitting with your clients, reviewing their portfolios’ performance this past year, ask about their sentiments of the equity market moving forward, and broach the subject of locking in a portion of their gains.  

The Bottom Line: Show your clients that you can help them succeed in a difficult environment … show them you won’t disappoint them as their top draft pick. The annuity team at Ash Brokerage would be thrilled to be YOUR top pick to discuss your clients’ situations and help identify the best annuity solutions.



The Cost of Waiting


We’ve been in a declining interest rate environment for about the last 10 years, with historic low rates the last few years. These low rates are driven by the Federal Reserve in hopes of jumpstarting the economy by allowing consumers to borrow money cheaply. While lower rates may sound good, they also mean very low returns for products such as CDs and money market accounts.

Even in this low-interest-rate environment, it’s estimated that there’s still nearly $10 trillion on the sidelines in the form of CDs and money market accounts. Many of these investors are concerned that committing their money to an annuity at current rates won’t allow them to take advantage of higher rates in the future. What they may not be considering is that waiting could cause them to lose earnings that may require years to make up, even if they do get a higher rate of return in the future.

For example, if you put $100,000 into an annuity paying 2.25 percent for five years, you would be guaranteed $111,768. If you waited two years before buying that annuity and were earning 0.50 percent in a CD, you would have to earn 3.78 percent over three years in order to get to the same $111,768 you would have been guaranteed with the five-year annuity.  

Regardless of interest rates, annuities are really designed for investors’ long-term goals. Annuities offer tax deferral, principal protection, liquidity, lifetime income options and death benefits that are paid directly to the beneficiaries.  

The Bottom Line: With $10 trillion on the sidelines, now’s a great time to reach out to investors about the benefits of tax-deferred annuities.


History and a Math Lesson


Why do we study history? Because it’s all we have, and history tends to repeat itself. Well, what have we learned from the Japanese economic collapse of the early ’90s? Apparently, not much. 

Since their real estate bubble burst, Japan has been in a low-interest-rate environment for the last 20 years, yet we keep waiting for interest rates to go up. Right now, billions of dollars are sitting in low-yield fixed accounts earning less than 1 percent, waiting for a rate increase. 

We’ve now been waiting approximately five years for this “rising rate” phenomenon – when will we stop waiting and move on? 

So there’s your history lesson. Now, let me explain the math lesson. Do you know how significant it can be to find just one percent more yield on your clients’ conservative assets today versus five years ago?  

Five years ago, a five-year CD was yielding approximately 5 percent interest. If I could have found something to get that client 1 percent more yield, I would have increased their yield by 25 percent. As we stand today, a five-year national CD yield is averaging about 1percent.* If I could find something to get that client 1 percent more yield, I could increase their yield by 100 percent!  

You could certainly do that, simply by repositioning your clients’ assets in a fixed indexed annuity. With cap rates in the 3-4 percent range, it’s likely you will find your clients 1 percent more yield without risk to their principal. 

Don’t talk yourself out of presenting this option to your clients because YOU don’t believe they will be interested. Clients are seeking yields without risk to principal, and they are finally fed up with sub-1 percent yields.

So the next time your children ask you, “Why do we study history and math?” you now have your answer.


*As of Dec. 19, 2014