Our financial lives are like jigsaws with a thousand pieces that only fit together with thoughtful, precise coordination. Each part of the wealth management procedural process presents potential challenges like paperwork submissions, complex legal requirements, and complications when corresponding with other financial institutions. Merriman helps solve these challenges with the help of a professional team of advisors, researchers, and operations staff, with the client services department acting as the glue that holds it all together.
In a nut shell, client services act as a liaison between the client, the custodian, and the wealth advisor. Client services implements and executes everything that you have discussed with your advisor. They talk the talk—client services walks the walk!
In the face of all these hurdles, our goal in client services is to lift the weight off your shoulders by completing tasks in minutes that could take you hours spent on hold and getting bounced around thanks to our experience and relationships with other financial institutions. We are also the first point of contact when you visit or call our office. And pride ourselves on providing warm, professional, and quality service every time you walk through the doors or one of your calls lights up our phone. We possess a broad knowledge and can assist with answering your questions or linking you with an expert. For all those times when you need a quick money transfer or confirmation of a recent trade, client services can help sort out those questions in one fell swoop.
Our client service all-stars go above and beyond for every client. Just imagine you’re heading into retirement after a fulfilling career with half a dozen happy employers, but now you have to figure out how to roll over all those 401(k)s! Instead of wading through that mire of paperwork on your own, we can prep the forms, gather your signatures, print the postage, and get those 401(k)s rolling so that you can hit the golf course.
Since none of us are springing out of telephone booths in red capes, how does client services pull it off? We manage all these super human feats by building relationships with our advisors and clients. We collaborated with our advisors daily to tackle the latest objectives for managing our clients’ assets. These strong bonds translate to our clients and their families. We value long-term relationships and prioritize our clients to take care in addressing every task. Whether celebrating a new (grand)child or coping with the passing of a loved one, we are here to support you throughout all phases of life.
And to get a picture with the voices and names, this us. Our individual bios can be found here.
With fall fast approaching, it’s time to take care of a few things before year end that can also set you up for the start of next year.
Retirement contributions and withdrawals – Just as it’s important to make the necessary contributions to your retirement plan based on your financial plan, you must also take your required minimum distribution (RMD) by December 31 to avoid any penalties if above age 70 ½ or own an inherited IRA. The Merriman Client Services team is hard at work making sure these are all completed for clients. Contributions: The deadline for 2018 Roth IRA and Traditional IRA contributions is April 15, 2020.
Divorce can be incredibly overwhelming from many aspects and impacts our emotional, physical and financial well-being. There’s a lot of work that needs to be done when going through a divorce and many decisions that must be made. It can be challenging to know where to start, and there are numerous ways to get divorced these days. Some involve an amicable approach, using a mediator or an entire team to collaborate, while others are highly contentious, with lawyers acting as the go-betweens and sometimes involving courts. The process is often a time-consuming, emotional roller coaster. We’re here to try and help you simplify this process and let you know you’re not alone.
If you’ve ever heard the saying, “It takes a village,” it’s very true when it comes to divorce. Have a team in place to help you navigate a divorce is essential, regardless of the type of divorce you may find yourself in. Since divorce is a legal process it requires professional advice. You want a lawyer that you feel comfortable and confident in that will help advocate for your best interests. While your lawyer knows and understands the law, there are financial consequences of divorce that can be quite complex, depending on your situation. A Certified Financial Planner (CFP®) or Certified Public Accountant (CPA) can help you understand the short and long-term financial impacts of any proposed divorce settlements. They help provide information surrounding various financial issues from health care coverage, dividing pension plans, tax consequences, the family home, any businesses and much more. They can help your legal team make financial sense of any proposals and act as expert witnesses in trials and arbitrations. Having a financial professional in place can help provide you with peace of mind when it comes to your financial future. Lastly, divorce is emotionally taxing and can be scary. There are divorce coaches that provide advice outside the legal arena as well as counselling services throughout and after the divorce. They are there to be your champions throughout the entire process, and show you there is life and love during and after divorce. While hiring three different people might sound expensive, it’s generally considered more cost effective in the long run. By hiring an entire team, each professional can focus their time with you on their area of expertise, making their work more cost effective.
Putting a team in place won’t happen overnight as you’ll want to take some time hiring the right people. In the meantime, there are documents you’ll want to start compiling as your legal and financial team will need a lot of information to help you determine the best path forward. We’ve created a checklist you can download here of the documents you’ll need to gather (regardless of where you are in the process). It’s a lengthy list and the items required can seem overwhelming. Start with the easy stuff, and once you have a CFP® or CPA, they’ll often meet with you, to help ensure you get everything necessary. Having a team and tools to help you get started and organized are what you’ll need, to help get through such a significant life event.
Executives and other highly compensated employees might notice a different option in their benefits plan, beyond the usual 401(k). Some employers also offer Section 409A nonqualified deferred compensation plans to high earners, which have their own mix of rules, regulations and potential drawbacks to navigate. However, when you’re earning income in the hundreds of thousands, it’s important to consider every option for saving on taxes and setting aside a larger nest egg for retirement. Contributing to the usual bevy of IRAs and 401(k) might not be enough to see you through your golden years, and tools like deferred compensation plans could also help you bridge the gap of early retirement.
Deferred compensation plans look a bit different than the 401(k) you already know. Like a 401(k), you can defer compensation into the plan and defer taxes on any earnings until you make withdrawals in the future. You can also establish beneficiaries for your deferred compensation. However, unlike 401(k) plans, the IRS doesn’t limit how much income you can defer each year, so you’ll have to check if your employer limits contributions to start building your deferred compensation strategy. Elections to defer compensation into your nonqualified plan are irrevocable until you update your choices the following year, and you have to make your deferral election before you earn the income. If you’re in the top tax bracket (37.0% in 2019), this can allow you to defer income now and receive it at a later date (such as when you retire) in a lump sum or a series of payments, when you expect to be in a lower tax bracket.
Unlimited contribution amounts and optional payout structures may sound too good to be true, but nonqualified deferred compensation plans also have significant caveats to consider. The big risk is that unlike 401(k), 403(b) and 457(b) accounts where your plan’s assets are qualified, segregated from company assets and all employee contributions are 100% yours—a Section 409A deferred compensation plan lacks those protections. 409A deferred compensation plans are nonqualified, and your assets are tied to the company’s general assets. If the company fails, your assets could be subject to forfeiture since other creditors may have priority. The IRS permits unlimited contributions to the plan in exchange for this risk, and the potential loss of deferred compensation can motivate company officers to maintain the health of the company.
Let’s review potential distribution options from nonqualified deferred compensation plans. A Section 409A deferred compensation plan can provide payment no earlier than the following events:
A fixed date or schedule specified by the company’s plan or the employee’s irrevocable election (usually 5 to 10 years later, or in retirement)
A change of company control, such as a buyout or merger
An unforeseen emergency, such as severe financial hardship or illness
Once your income is deferred, your employer can either invest the funds or keep track of the compensation in a bookkeeping account. Investment options often include securities, insurance arrangements or annuities, so it’s important to evaluate the potential returns and tax benefits of your deferred compensation plan versus other savings options. Plan funds can also be set aside in a Rabbi Trust; however, those funds still remain part of the employer’s general assets.
Nonqualified deferred compensation plans have a variety of structures, rules and withdrawal options depending on how your employer builds the plan. Consider the following pros and cons of deferred compensation plans when reviewing your employer’s options.
You can defer a significant amount of income to better help you replace your income in retirement. The IRS does not limit contributions.
You have the ability to postpone income in years when you’re in high tax brackets until later when you expect to be in a lower tax bracket.
If your employer offers investment options, you may be able to invest the money for greater earnings.
There are no nondiscrimination rules for participants, so the plan can benefit owners, executives and highly compensated employees specifically. Other retirement plans may limit contributions or participation due to discrimination rules.
Your deferred compensation plus any investment earnings are subject to forfeiture based upon the general financial health of the company.
The election to defer compensation and how/when it will be paid out is irrevocable and must be made prior to the year compensation is earned.
Depending on the terms of your plan, you may end up forfeiting all or part of your deferred compensation if you leave the company early. That’s why these plans are also used as “golden handcuffs” to keep important employees at the company.
The plan may or may not have investment options available. If investment options are available, they may not be very good (limited options and/or high expenses).
If you leave your company or retire early, funds in a Section 409A deferred compensation plan aren’t portable. They can’t be transferred or rolled over into an IRA or new employer plan.
Unlike many other employer retirement plans, you can’t take a loan against a Section 409A deferred compensation plan.
The questions below are helpful for assessing whether a deferred compensation plan makes sense for you.
Is your company financially secure? Will it remain financially secure?
Will your tax rate be lower in the future when this deferred compensation is paid?
Can you afford to defer the income this year?
Does the plan have investment options? Are the fees and selection of funds reasonable?
Does the plan allow a flexible distribution schedule?
Section 409A deferred compensation plans have inherent drawbacks and prominent risks, but they could help you save toward your retirement planning goals. We recommend working with a Merriman advisor to review your specific plan terms and financial situation when preparing for the future. We can help you decide whether a nonqualified deferred compensation plan makes sense for your situation, weigh issues like future taxes and create a long-term plan. We want you to feel ready for everything life has to offer.
Everyone thinks about saving for retirement, and not many people want to work forever. However, have you thought about the best way to save for the future? If you are setting aside the yearly max in your 401(k) and channeling extra savings to your brokerage, you might be missing out on powerful tax-advantaged saving opportunities. In this article, we will show you how we help clients maximize savings, minimize taxes and secure their future using the Mega Backdoor Roth IRA.
Most people know they can contribute to their employer’s retirement plan from their paychecks through pre-tax and Roth contributions up to $19,000 a year ($25,000 if age 50 or older; IRS, 2018). What people miss is whether their retirement plan allows for additional after-tax contributions beyond this limit. Enter the supercharged savings!
It turns out that some company plans permit you to contribute up to the IRS maximum for total contributions to a retirement plan, which is $56,000 in 2019 ($62,000 with catch-up contributions; IRS, 2018). The IRS maximum counts contributions from all sources, including pre-tax employee deferrals, employer matching contributions, and even after-tax contributions for the Mega Backdoor Roth. That means you might be able to contribute an additional $20,000 or more after-tax each year after maxing your elective deferral and receiving your match. You can then convert the extra after-tax savings to Roth dollars tax-free. This more than doubles what most individuals can contribute to their retirement plan, and you won’t have to pay taxes on your Roth account distributions in retirement. This benefit is even greater when both spouses have this option available through their employers, so be sure to check both plans.
Retirement plans like those at Boeing, Facebook, and Microsoft permit easy conversions of after-tax to Roth dollars within the retirement plan. Other companies offer a variation where you can make in-service distributions and move after-tax dollars into a Roth IRA. Make sure to check with your benefits team to find out if your company’s retirement plan supports after-tax contributions and Roth conversions, the steps involved and the maximum amount you can contribute to the after-tax portion of your retirement plan. It’s important not to run afoul of plan rules or IRS requirements, so also be sure to consult experts like your accountant or financial advisor if you have any questions.
Why contribute extra after-tax? Now that we have covered the high-level view, let’s hammer down the why. The benefit of contributing to your employer’s after-tax retirement plan is that those contributions can subsequently be converted to Roth tax-free. This is sometimes called a ‘Mega Backdoor Roth,’whereby you can contribute and convert thousands of dollars per year depending on your retirement plan. Once converted, these Roth assets can grow tax-free and be distributed in retirement tax-free. After several years of Mega Backdoor Roth contributions, you can amass a meaningful amount of wealth in a tax-free retirement account
How do I contribute? 1. Log in to your employer’s retirement plan through their provider website, such as Fidelity.
2. Find the area where you change your paycheck and bonus contributions (i.e., deferrals).
3. Find “after-tax” on the list showing how much you elected to contribute pre-tax, Roth, or after-tax to your 401(k).
4. Enter a percentage to have withheld after-tax from your upcoming paychecks and bonuses that works for your budget.
5. Select an automated conversion schedule, such as quarterly (Microsoft’s retirement plan even offers daily conversions!). If your plan doesn’t offer automated periodic conversions, contact your retirement plan provider regularly throughout the year to convert the assets.
6. Remember to select an appropriate investment allocation for your retirement account that aligns with your overall investment plan.
Is any part of the conversion taxed? For retirement plans that don’t convert after-tax contributions to Roth daily, there may be growth in the account prior to conversion. This growth is subject to taxation at ordinary income tax rates. For example, if you converted $22,000 ($20,000 contributions + $2,000 investment growth over the period), you’ll owe income tax on the $2,000.
We suggest speaking with a Merriman advisor to determine if your retirement plan allows additional after-tax contributions, how to fit it within your budget and its impact on your retirement savings goals.
Holidays and long weekends are a popular time for email scammers to strike. Recipients of scam messages are more likely to believe urgent pleas for money or assistance from an acquaintance on vacation who says they are unreachable by phone. Meanwhile, victims are less likely to check their email on their day off to discover strange replies that might tip them off that their account has been hacked and used to send scams to their contacts.
That might help explain why this morning after Independence Day weekend, I have already heard from several people who received an email from a known contact who claims to be travelling and in urgent need of a birthday gift for a relative (warning bells!)
In this scam, the contact asks the recipient as a favor to purchase a several hundred dollars in gift cards and email them to the relative with the promise of repayment as soon as they return from their trip. Of course, many people can identify this as a scam and know that they should not purchase the gift cards (which are commonly requested by scammers in lieu of wire transfers), but a more serious concern is that the sender’s email account has very likely been compromised and used to send this scam to dozens of their personal and business contacts without their knowledge.
Is there anything you can do?
If you ever receive one of these messages from a friend or colleague, you may wish to notify them via telephone (not by email – you’ll see why in a bit) that their email password may have been stolen and their email account compromised. They should immediately change their password, and if they have reused the same password on other online systems, they should change it there as well, preferably using a unique password on every system.
Why not just reply to the email?
In many cases the attackers perpetuating these scams will also create email filter rules to automatically delete or redirect inbound emails to an external mailbox that they control. This prevents the real account owner from being alerted to the compromise and allows the attacker to monitor the email remotely for signs that they’ve been discovered. So after changing the email password, users should also check their email filtering rules for any suspicious rules that were created without their knowledge. Filter rules are a feature that most users don’t access frequently, so these links may help finding the setting for several common email providers:
Everyone can follow a few basic precautions that will help avoid a compromised online account:
1. Use a password manager to generate and securely store random, unique passwords for each and every site so that one stolen password does not jeopardize multiple accounts.
2. Enable two-step verification (also known as two-factor authentication) on all accounts that offer it, but especially for email and banking accounts. This makes it much more difficult for an attacker to log in with a stolen password. Instructions depend on your provider, but most email and banking services offer this option now:
Microsoft (outlook.com, live.com, hotmail.com, msn.com, etc.)
3. Never type a password into a website that was accessed via an email link. Attackers steal passwords by forging email from a well-known website with a link to a fake login form. The login page may look exactly like the real site, but the password is sent to the attacker instead. The forgery might even log into the legitimate site afterword to avoid raising suspicion.