IRA and Pension Regulation Change for Financial Advisers

The U.S. Department of Labor is moving to finalize its tough new regulation for financial professionals in April (see SMFN's previous report). The proposed regulation would extend a fiduciary standard (presently applicable to corporate retirement plans) to individual retirement accounts. Under the fiduciary standard, financial advisers would face increased disclosure obligations, extensive and complex compliance obligations, and heightened liability exposure.

The regulation would have a significant effect on the movement of funds from a company retirement fund to an IRA, a move known as a rollover. Advisers have an incentive to recommend rollovers, as they typically get paid fees on these transactions. Under the new regulations, an adviser would clearly have to document why a rollover would be in a client's best interests. Once funds were moved to an IRA, an adviser would have to avoid taking a commission for recommending one investment over another.

The new regulatory scheme is touted by the Department of Labor as a benefit to the American public that will save investors $17 billion each year. That projection may not be accurate. But what seems certain is that the new regulations will slow down the flow of rollovers. There is some suggestion that the new regulations will have an adverse effect on the process of saving money for retirement.


The Five Myths of Reverse Mortgages

Reverse mortgages have entered the public’s consciousness in the last decade, largely because of television advertising by some companies that handle these financial arrangements. However, most people don’t really know very much about reverse mortgages, and there are a number of myths and misunderstandings among people who might benefit from a reverse mortgage. In this report, Kris Wiltfong of Capstone Planning, LLC explains how these mortgages work and who can benefit from them.

Reverse mortgages are available to people aged 62 and older who have an equity interest in a home. A reverse mortgage is a way to convert some of that equity into monthly payments. Wiltfong points out that one big benefit of a reverse mortgage is that the funds received are not subject to tax. The concern about taxation of the money received is a common misconception.

Another common misconception is that, when you get a reverse mortgage, you no longer own your home. Of course, there will be a lien on the home to secure the payments, but the ownership of home doesn’t change. Naturally, if you are receiving the funds, you need to keep up your homeowner’s insurance and pay the property taxes, as always.

Contrary to what some people think, there are not large out-of-pocket expenses associated with reverse mortgages. The costs are comparable to those for any other mortgage. Another misconception is that reverse mortgages are only for people who are in serious financial straits. Wiltfong explains that anyone who wants to add some money to their retirement might want to consider a reverse mortgage.

If this sounds good, you can contact Capstone Planning at 386-202-4498 or go the Capstone Planning website.

Kris Wiltfong is a Risk Specialist at Capstone Planning, LLC of Palm Coast, Florida. The company, founded in 1997, focuses on retirement planning. One of the company’s primary focuses is risk management. Retirement News Today is a featured network of Sequence Media Group.

Retirement Accounts IRAs to Fall Under Fiduciary Standards to Protect Investors

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The U.S. Department of Labor is proposing a new regulation for financial professionals who advise people on retirement investments. The proposal, which has met with a cold reception from brokers, would impose a fiduciary standard on those who advise people saving for retirement. Brokers are saying that the cost of compliance could force them to drop middle-class clients.

The standard currently in effect for brokers providing advice to investors is simply that the advice be “suitable.” The Labor Department’s proposed regulation would require that investment advice be in the “best interests of clients.” The regulation could drive up the cost of giving advice to those with small retirement accounts and could have a negative effect on small brokerages. The regulation would apply to IRA accounts as well.

The proposed regulation is already having effects on investment companies. The Wall Street Journal reports that the costs of compliance were one of the factors that caused American International Group, Inc. to sell its brokerage unit in January. Labor Secretary Thomas Perez has called concerns of investment brokers overblown. Some critics, including financial radio host Dave Ramsey, have said that the new regulation would have a very bad effect on financial advice to middle class investors.


Social Security Expert Brian Doherty Lists Four Things to Consider Before Making Your Social Security Claim

All of us who are nearing retirement are thinking about Social Security and how to get the most out of it. Social security expert Brian Doherty explains that there are four things everyone should consider before making a claim for benefits.

First, people need to be aware of longevity. Most of us will live longer than we think. Doherty says that 50% of Americans underestimate their life expectancy by about five years. With that in mind, people should look for ways to maximize the amount of their benefits throughout their retirement years.

Second, people need to remember that Social Security has a cost of living adjustment (COLA) built in. Doherty says that this is an incredible benefit that most people don’t take full advantage of. By delaying the start of your Social Security benefits as long as possible, you’ll take maximum advantage of the cost of living adjustments when they occur.

Third, married couples need to be aware of the survivor benefits available through Social Security. One spouse may be heavily dependent on Social Security benefits after the other spouse dies. Statistics tell us that wives outlive their husbands. When both members of a couple are receiving monthly SS checks, one check will go away when a spouse dies. The surviving spouse can continue to receive whichever check is larger. So, again, there’s a benefit in maximizing the amount of the larger check by delaying the start of benefits.

Fourth, maximizing monthly Social Security benefit checks means that savings and other income sources will not be depleted before you die. Getting the most from your Social Security means you can live better, longer, and not run out of money.

Brian Doherty is the author of a new book “Getting Paid To Wait,” which reveals his groundbreaking strategy on how to maximize Social Security benefits. He is a nationally-recognized expert on Social Security claiming strategies and a top-rated speaker and media commentator on this topic. He began his career as a financial advisor with Dean Witter. He is President of Filtech, a consulting company specializing in Social Security claiming strategies. The Legal Broadcast Network is a featured network of the Sequence Media Group.