Frequently Asked Questions

The Wiser Financial Group has provided our most frequently asked questions on annuities, insurance, and IRAs. Please consult our list below and if you have a question not answered, please contact us by completing the online contact form or call (269) 372-1430 or (800) 292-1472.

Annuities Questions

Which type of annuity is right for me?
Each individual's retirement needs are as unique as the individual themselves. That is why it is important to speak with a qualified financial advisor who can assess your unique situation: your plans for the future, your current financial status, etc. After evaluating your needs, you and your financial advisor can discuss the various investment options available.

Would there be any penalties if I should decide to take a withdrawal?

Depending on the product, a partial withdrawal of up to 10% of the annuity value can be withdrawn once per contract year without penalty. Anything above 10% would be subject to a withdrawal charge. The length of time the contract has been in force will determine the percentage of the charge. Note that the IRS charges a 10% penalty on any distributions taken prior to age 59 1/2. This is separate from the withdrawal charges that may be imposed by the issuer of the annuity.

What does "by contract year" mean?
A contract year is the 12 months from the date the contract was issued to the next anniversary of the date the contract was issued. For example, if your contract was issued August 10, 2003, and you took a partial withdrawal in January of 2004, then the next free withdrawal would not be available until after August 10, 2004.

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Insurance Questions

Which type of insurance is right for me?
Each individual's insurance needs are as unique as the individual themselves. That is why it is important to speak with a qualified financial advisor who can assess your unique situation: your plans for the future, your current financial status, etc. After evaluating your needs, you and your financial advisor can discuss the various insurance options available.

How much life insurance coverage to I need?
There are several factors that can influence how much life insurance coverage you need. You can help answer this question using one of our online calculator tools. In general, life insurance coverage worth 10 times your annual income is considered a conservative amount. Of course this will vary with your particular needs.

How often should I review my life insurance coverage?
Your life insurance coverage should reflect the important changes in your life such as marriage, birth of a child, a move or a new job. Aside from these momentous events, a good rule of thumb is to review your coverage annually with your financial advisor.

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IRA Questions

I want to roll my retirement assets over. How do I do that?
If you received distribution forms from your employer, complete them using the accompanying instructions. If you need forms, contact your benefits department to obtain them. Talk to your financial advisor about the best option for your situation. If you want to roll your money into your new plan, make sure that your new employer will accept transferred assets and that you are eligible to roll your money over.

If I choose a direct rollover to an IRA or a new plan, will I receive any kind of confirmation?
You should receive a 1099-R form from your old plan's provider indicating that you initiated the direct rollover transaction. Because the direct rollover pays the money from your old plan directly into your IRA or new employer's eligible plan, the form will show that no federal income tax was withheld on the amounts you rolled over because you're continuing the tax-deferred benefit. You may also receive paperwork from your old employer or your new plan's trustee if you rolled your money into the plan. The IRA trustee or custodian will issue a Form 5498 showing receipt of the rollover.

What happens if I already took the cash from my account? Can I still roll over the entire account?
Yes, but you must do so within 60 days of receiving your distribution. You must replace the 20% withholding tax your employer took out - with your own money. (You get the 20% back from the IRS when you file your taxes.) This is known as an indirect rollover. If you can't make up the 20%, you'll have to pay additional income taxes on the distribution and you might get hit with a 10% penalty on the amount if you're younger than 55 when you left the company, unless another exception applies. To avoid these problems, make sure the funds go straight from your old plan's trustee to your new plan's trustee or to an IRA, and not through you. This is called a direct, or trustee-to-trustee, transfer.

Where can I transfer my retirement plan account?
You can roll your retirement plan assets into an IRA or move it into a new employer's plan.

Can I move my assets from one type of plan to another, for example, from a 403(b) to a 401(k)?
You can generally move the pretax portion of your vested account balance from one type of plan to another as long as your new plan accepts transferred retirement assets. Your after-tax contributions are only transferable between similar plans (for example, from a 403(b) plan to 403(b) plan), and you must move your money directly between plans. Check with your new plan to make sure it accepts rollovers from other plan types and/or rollovers of after-tax contributions.

If I decide to open an IRA, do I have to rollover my entire account balance?
Depending on the terms of your plan, you may be able to rollover all or any portion of your vested account balance. Just remember, if you take all or part of your balance in cash and later decide to roll it over, you have to do so within 60 days. You'll also have to make up the amount that was withheld for income taxes if you want to roll your distribution over.

If I make contributions to my rollover IRA, can I still roll the IRA into an employer plan?
New legislation allows you to transfer your rollover IRA balance into your new plan, as long as the new plan accepts rollovers from IRAs. Before rolling your money into a new plan, you should compare the plan's investment options and withdrawal rules with those of your IRA. You may give up some flexibility or face stricter requirements if you make the move.

Can I roll my account balance to more than one IRA?
Yes, you can have as many accounts as you like.

Is there any portion of a distribution that's tax-free?
Yes, if the distribution includes after-tax contributions, these contributions can be distributed tax-free. Your tax-free distributions can be rolled into an IRA or possibly into your employer's plan.

Can I cash-out of my retirement plan?
You can take the cash, but financial professionals almost always advise against it. You'll lose a large portion of your money to taxes. When you add up the federal and possible state and local taxes, you may end up with less than you thought you had. If you're under 59 1/2 when you cash out of your plan, you'll also have to pay penalties. There are a few times when this penalty does not apply. Other exceptions may apply. Please consult a tax advisor for additional exceptions for which you may qualify. You can avoid the penalty if:

  • You're at least 55 years old when you stop working for your employer.
  • You take your distribution in substantially equal payments. You must take them for at least five years or until you turn 59 1/2 - whichever is longer. (Ask your financial advisor for more information about this option.)
  • You become disabled or have certain medical expenses.

What if I own company stock in my plan when I leave my job?
You can sell your shares before you leave the plan and roll the proceeds into an IRA or your new employer's plan. (Please note: Your employer may require you to sell your shares when you leave the plan.) Or, if your old plan allows, you can roll your shares from the plan directly into a rollover IRA established through a broker. Check with your former employer about the rules governing the buying and selling of company stock.

What happens to my retirement money when I reach age 70 1/2?
The IRS says you must begin withdrawing money from your Traditional IRA or employer plan account(s) by April 1 following the year you turned 70 1/2. If you don't withdraw the minimum amount each year required by the government, the IRS will penalize you with a hefty 50% tax on any amount that should have been withdrawn but wasn't. If you're still employed at 70 1/2, you may delay taking money from your plan account(s) until you actually retire unless you own 5% or more of the company. This exception does not apply to Traditional IRAs.

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