What to Do with Your ESOP: Options Available for Employees

August 5, 2016 by Sam Curmaci

What to do with your Publix ESOP

If you’ve worked for a long time, you already know about how great the benefits are in this grocery company. Around since 1930, it has become the largest employee-owned grocery chain in America. You’re perhaps one employee who’s worked with them for years and realized how unusually generous their benefits continue being.

One of those is their employee stock ownership plan (ESOP) that’s one of the best available in the country. It’s an investment feature many who’ve worked there prefer because it gives them continual income into their retirement years without having to rely on less dependable financial sources.

If you’ve decided to take this investment benefit, maybe you’re still wondering what to do with your ESOP as you head toward retirement. Your options can vary, though it requires some smart strategy depending on what your age is.

Some prefer to retire early, and others wait until they’re older. In either case, here’s some tips to look at since many myths have developed about your ESOP. It’s time to see what works best for your own financial situation.

Can You Leave Your ESOP Forever?

We’ve seen some misconceptions develop about how long you can keep your ESOP there. You’ve perhaps heard some tell you it’s possible to leave your ESOP there for life.

This isn’t true, though you can keep it in there for a while if you’ve decided to retire before the age of 62. By March of the year after you turn 62, you are required to take full distribution of your ESOP. Packets are sent out in February.

The company sends you the distribution paperwork when the time comes, though this doesn’t end the story on what’s possible with yourESOP. If you’re slightly younger, you have other options available to give you some supplemental income before being required to cash out.

Using the “Diversification Election”

For those just turning 55, you’re at a perfect age to enjoy some additional ESOP benefits from your employer. If you’ve worked at least a decade at the company, you can start to take distributions while still working there. They call this “Diversification Election”, and it increases your income substantially while still being employed.

The downside to this is you get a 10% penalty, plus taxation on your distributions as income. One way to prevent penalties is to roll your ESOP into an IRA within 60 days.

Yet another method is available to avoid tax penalties, but it again depends on what your age is at the time.

Using the Substantially Equal Periodic Payment Arrangement

Otherwise known as SEPP, the Substantially Equal Periodic Arrangement is a system helping you take distributions without a 10% penalty. Still, it’s only applicable to those under 59 1/2 years of age. It’s also known as a 72(t) arrangement in IRS parlance, and it’s worth looking into to help yourself bring more income into your household without subtractions.

How Much of Your ESOP Can You Take Out After Retirement?

You can’t expect to dip into your ESOP after retirement and leave the rest in place. You are required to take the whole thing out if you need some or all of it for a particular financial emergency.

At the time of this distribution, you can take it all as cash or as a stock certificate. Once you take this action, however, you can’t reverse it. Taxes may apply as well, depending on how you use your distribution.

What makes your employer extra good with their ESOP‘s is they don’t force you to sell your stock back to them. They let you benefit, including passing it on to your heirs if you want.

Contact us at S.A.C. Investments to learn more about what you can do with an ESOP and ways you can roll it over to other sources of retirement income.

Join our Grocery Employee Pre-Retirees Group on FB.

The group answers all of your retirement questions. Feel free to join and or share with co-workers. https://www.facebook.com/groups/GroceryEmployeePreRetirees/

What Should You Do With Your Office Depot Retirement?

June 2, 2016 by Sam Curmaci

What to do with your Office Depot Retirement — After years of growing a 401(k) while working for Office Depot, you need to start thinking about what you will do with those funds once you retire.

After years of growing a 401(k) while working for Office Depot and now nearing retirement, what exactly are your options? Office Depot offers a 401(k) retirement plan from Fidelity Investments, but do you have to keep your 401(k) earnings there? Basically, the question is: what should you do with your Office Depot retirement?

Retirement With a 401(k)

The minimum age of retirement recognized by a 401(k) plan is 59 ½ years old, which may or may not be your age. Either way, starting to receive funds from a 401(k) has to wait until this age. There are many restrictions around withdrawing from this retirement savings account, which are designed to penalize early withdraws.

When reaching that retirement age, a set amount will be distributed each month from your 401(k), determined by life expectancy and other factors around each individual circumstance. This amount distributed will be taxable as income tax, according to the tax bracket itwas made in. So, although a 401(k) is tax deferred at first, later on the recipient does have to pay some taxes on it.

Options When Retiring

Reaching the age of retiring is a joyous occasion, which shouldn’t be hampered by bad surprises when it comes to restrictions and limitations around your retirement savings. Likely, you’ve been monitoring the amounts and even contributing extra into your 401(k), and now you want to ensure you benefit from the years of investing and hard work.

Using your money to make money is a great idea, and can be sort of a part-time job during retirement. If used correctly, investments could grow and taxes could be minimized. For the retiree who wants more flexibility and options in dealing with his retirement savings, a directroll-over of their 401(k) into another retirement plan may be the right option.

Here are some retirement investment opportunities to consider:

- ETF’s
- Mutual Funds
- Bonds
- Annuities

Rolling over a 401(k) directly into another qualified retirement plan, can be done without penalty or tax liability. The purpose of this is to give you more flexibility and options concerning withdraw and investment opportunities.

Benefits of Using a Smaller Retirement Specialist Firm

Working with a smaller retirement specialist financial advisor, can give you the personal attention needed to maximize your retirement account benefits. Larger firms are less capable of working individually with each client, the way a smaller firm like S.A.C. Investments can. The best part is: you’ll get even better expertise and advice, because you’ll have access to their top advisors.

There are many tips and tricks to the investment world, which an experienced financial advisor can help you navigate. Taking chances with the hard-earned money you’ve accumulated for decades, should be avoided. Working with a smaller firm, means you’ll get the attention and advice needed to avoid heavy penalties, risky investment practices, and heavy tax liability.

S.A.C. Investments

We’re retirement specialists, which means we understand how to properly manage 401(k) roll overs into qualified retirement plans, which give more investment options and flexibility. Every client’s needs and circumstances are different, and we take the time needed to gain a clear understanding of these unique variables.

Asset allocation and risk vs. reward are both part of our investment strategies, which result in secure investing while gaining the highest rewards. Our goal is to choose your investments based on your needs and objectives, rather than some cookie-cutter formula. And it is our ultimate goal to provide a level of service that inspires confidence and trust, while bringing absolute clarity to each client’s goals and investment objectives.

After decades of working for Office Depot and investing into your 401(k), gaining a clear understanding of future investment options is a wise choice. By talking to S.A.C. Investments with a free consultation, your savings could be more accessible and earn more every year. Please contact us today to learn more, and we’ll be glad to help.

Smart Management of Your AutoNation 401(K) Equals A Carefree Retirement

May 5, 2016 by Sam Curmaci

What to do with your Autonation Retirement

As an employee of AutoNation, you have saved for retirement through the company defined contribution 401 (K) plan. AutoNation, a great company to work for, has helped you save for retirement by matching contributions and offering a variety of investment option for your money. Under a defined-contribution plan, the payout at retirement is not fixed, as it was under the Defined Benefit plans of old. The amount that you receive depends on the contributions you and AutoNation made and the returns earned from the investment.

As much as you have loved working for AutoNation, it is now your choice to retire. You are looking forward to a carefree lifestyle with no worries. The ability to enjoy your retirement will depend on what you do with your AutoNation 401 (K) funds. As much as you trusted and benefitted from the AutoNation investment funds, it is wise to roll over your 401 (K) funds into an IRA. The reasons to make this move are numerous. Read on to see why rolling over your AutoNation 401 (K) is right for you.

Reduced Fees

Most 401 (K) plans provide access to a broad array of mutual funds and sometimes individual securities through a brokerage window, for an addition charge. Administering the funds assets is costly. Employers often pay the fees as part of a benefits package or they might charge reasonable fees as permitted by ERISA. Other plans offer free administrative services. However, they charge for the investment product offered. Additionally, plans charge for pooled investment accounts and mutual funds offered in 401 (K) accounts. This usually equals a percentage of the total assets invested based on the type of investment, aka revenue sharing.

Employees must navigate through the portfolio and make choices for their retirement goals while being concerned with the differential costs of options in the menu. Many authorities have called for greater regulation of excessive fees charged by retirement plans. As quoted in the March 2015 edition of the Yale Law Journal, “The issue is that these plans invest in actively managed mutual funds that siphon off tens of billions of dollars in fees every year, yet they deliver returns that trail the overall market. While persistent over-performance is rare and difficult to predict, fees are relatively transparent and tend to persist.”

More Control

In addition to controlling the fees that you pay, you can minimize the restrictions of what you can invest in by rolling over your retirement account. Most 401 (K) plans have investment restrictions including restricting the employer contribution portion to the funds of their choice. The funds of their choosing can also include investing in the company stock. We all know that keeping your eggs in one basket is a recipe for breakfast not for prudent investing. Even if all the options in the company fund menu involved no fees, a limited choice of mutual funds would prevent you from selecting resources that reflect your risk tolerance and investment goals. Once you roll over your 401 (K), you will have complete control over investing your money.

Simplified Portfolio

If your AutoNation 401 (K) is not your only retirement fund, then it makes sense to consolidate your accounts. Whether the accounts are from several or one other employer tracking them is a nuisance. The benefit of combining accounts is that you will get a complete picture of your investments. It is more convenient to deal with one institution that offers excellent service, low fees, and investment choice. Consolidating 401 (K)s help to establish a strategy based on your current needs, goals and on today’s market. Additionally, regardless of the size of the old fund choices, most likely it is dwarfed by choices available when you roll over to an IRA. Rather than being stuck in the past views of your employer, you can chart your investment course. Do not neglect the wealth you have worked so hard to build with unsuitable investments based on past trends. Instead, reach out to your professional investment advisor to find the investment approach that will be as successful as you have been in all your professional endeavors.

“S.A.C. Investments is an independent investment management firm built on the belief that all investors should have access to unbiased, professional advice provided through a client-first relationship. We are committed to doing our job diligently so you can have the freedom to focus on your ambitions for a good life, now and in the future.” To find out more contact us today.

Department of Labor’s Recent Fiduciary Rule and Its Impact on You

April 21, 2016 by Sam Curmaci

On April 6th, a new fiduciary rule was announced by the Department of Labor (DOL). This new standard in the retirement and investment world is also referred to as the “conflict of interest rule.” This rule has been in the works since its’ initial proposal a year ago and is set to take effect in part a year from now, with full implementation due in January 2018. This is an overview of this highly anticipated fiduciary rule and a discussion of its’ speculative impact.

Fiduciary Rule

According to online publication Inside Counsel, in an article written by Chris Thorsen on April 18th, 2016, called: “What Does the Department of Labor’s New Fiduciary Rule Mean?”

“The DOL’s final fiduciary rule and related exemptions are intended to protect investors by requiring all who provide retirement investment advice to retirement plans and IRAs to abide by a ‘Fiduciary’ standard – putting their clients’ best interest before their own profit.”

Advocacy groups are pleased with the new standard, according to an article called “DC Industry Generally Gives Fiduciary Rule a Thumbs-Up”, written by Hazel Bradford on April 18th, 2016 in an online publication called Pensions and Investments. The article states:

“Advocacy groups are mostly in favor of the new standard…”

The rule is intended to make retirement and investment advisors accountable with the law, concerning any conflict of interests, which may influence the advice they give investors. Basically, the rule makes advisors legally liable if they’re not providing advice which is in their clients best interest.

On April 5th, Secretary of Labor Thomas E. Perez explained that the rule is a:

“…fundamental principle of consumer protection…”

Yet, on the other hand, James A Klein, president of the American Benefits Council, said:

“…employers appreciate some changes made in the final rule but worry about the ‘potential chilling effect’ if employers cannot provide routine guidance through human resources staff and outside service providers.”

The Pensions and Investments article goes on to state:

“Firms providing investment advice to plans must acknowledge in writing they are acting as fiduciaries. Advisors can continue to receive common forms of compensation, as long as they put their clients’ best interest first and disclose conflicts.”

Speculative Impact

Financial advisors and institutions cannot set their own compensation structures, without a prohibited transaction exemption. This is supposed to put the investors best interest before the advisors’ profit, by not permitting payments that create a conflict of interest. The exemption is referred to as the Best Interest Contract Exemption (BICE). This exemption must be used by an advisor or firm, to receive any compensation considered prohibited by the rule.

The Inside Counsel article explains:

“In response to industry concerns, the final rule also described communications that would not be considered fiduciary investment advice and, therefor, fall outside of this regulatory regime. Examples of communications not covered by the rule include: general communications and commentary regarding investment products, such as financial newsletters; marketing materials; investment education; retirement education; and providing a menu of available investment alternatives from which a plan fiduciary could choose.”

The impact of this new rule from the DOL, which will be slowly implemented and enforced over the next couple years, is still vague and unknown by the industry.

According to the Inside Counsel article:

“…the final rule is both lengthy and complicated. All industry sectors and consumer groups are in the process of studying the details and analyzing the implications of the rule and its exemptions.”

Summary

While advocacy groups and government officials are confident this rule will be a positive change that financial firms and institutions can implement successfully, industry leaders are skeptical and unsure of its’ final impact on day-to-day business. The coming months and years will tell how this new fiduciary rule will impact both investors and financial advisors.

S.A.C. Investments is interested in these current changes being implemented by the DOL, and can help you understand how this fiduciary rule will affect your investment strategy.

We’re an independent investment management firm that already believes investors should have access to unbiased, professional advice provided through a client-first relationship. This means we already put our clients’ investments before any conflict of interest from profit. If interested in learning more, please contact us today.

Walmart Layoff: Amazon Rapidly Grows as Indestructible Retail Giant Sinks

February 11, 2016 by Sam Curmaci

2016 is the year of 10,000 Walmart employee layoffs due to the company closing 154 stores in the U.S.

Walmart’s ongoing business strategy, based on Ray Kroc’s model of creating a simple concept that is easily duplicated, is rapidly backsliding. Walmart has utilized this duplication strategy and added an additional scheme by bringing its stores into low-income neighborhoods. Opening retail stores that supply necessities, particularly consumables, in neighborhoods where people have very limited resources forces community dependency on Walmart. Lower-income neighborhoods, where citizens have transportation limitations, combined with lower retail costs has produced quantified profits for Walmart.

Walmart CEO Doug McMillon stated that they are closing 154 stores in the US. and laying off 10,000 employees to ‘.. keep the company strong and positioned for the future. It’s important to remember that we’ll open well more than 300 stores around the world next year. So we are committed to growing, but we are being disciplined about it.’

How can Walmart close 154 stores, while ‘growing’ 154 stores plus 146 stores equalling 300 ‘around the world?’ Does this mean that Walmart is opening stores, in the U.S., with a different marketing plan and a fresh crop of employees? Or does ‘around the world’ indicate a downsizing in the U.S. and expanding in other countries where labor is cheaper? Once these promised 300 stores open, the specific store locations, employees hired, and operations should answer these questions and likely raise others.

2016 begins with the announcement that Walmart is downsizing in the U.S., as 2015 statistics reveal rapid market growth for Amazon. Walmart is downsizing to ‘stay strong for the future,’ while Amazon is growing stronger and developing a more popular marketing concept. The concept of the one-stop-shop “super store” that has just about everything, at a reasonable price, is clearly being trumped by the concept of ordering literally anything from anywhere on the globe online. If Amazon fulfills its objective, online orders will soon be delivered by drone. CSNBC Ari Levy states in “It’s no secret that Amazon has changed the retailing game by selling just about everything imaginable, often at the lowest price, and shipping products with such speed and efficiency that many consumers have simply stopped going to stores.” This statement demonstrates that there is an obvious shift in shopping preference toward Amazon. (“Commerce in Chaos: Can Anyone Take on Amazon,” Ari Levy.) As baby boomers age, the demand for more products and greater convenience grows. The baby boomer generation is demanding more independence. Ordering online, especially undergarment products, is growing with the influx of aging baby boomers.

Investing Channel, Zero Hedge’s article “Is WalMart In Terminal Decline? This Chart Is One More Reason To Think So” illustrates how Amazon’s rapid growth has been surpassing and is now eclipsing Walmart. The graph shows how Amazon’s annual growth was less than 5%, 2003-2006, while Walmart far surpassed this growth by approximately 17%. A drastic shift occurs in 2010 when Wal Mart’s growth shrinks to nearly nothing, while Amazon grows by about 11%. By 2011,Walmartrebounds, only slightly, while Amazon leaps ahead. 2011-2015 Walmart‘s growth remains low and fluctuates, while Amazon continues to rise. By 2014, Walmart‘s growth is less than 10%, while Amazon shoots to 22%. The most drastic change and contrast between Walmart and Amazon occurs in 2015, with Walmart growing by less than 10%, as Amazon leaps up to a growth of 42%. Not only does Amazon beat itself by climbing from 22% to 42%, but also grows four times the percentage ofWalmart‘s growth in 2015! This rapid and drastic shift clearly challenges Walmart‘s future security and marketing model.

The pending closure of these 154 Walmart stores is an incident, among many, of how Walmart has impacted American economy and dictated our way of life. According to PressTV, “A study in 2013 by Congress found employees at a single Wisconsin Walmart receive about $1 million per year in public assistance.” This Wisconsin community and many other U.S. communities, years ago, had a Walmart store imposed upon them, forcing out local small businesses. We, as a nation, have been paying for the public assistance benefits that working Walmart employees require due to low pay creating an unmet financial need. Now our US economy and citizens will pay for WalMart‘s impact as 10,000 citizens face unemployment. Meanwhile, the 154 stores are closing in middle to low-income neighborhoods. The same stores that the WalmartCorporation forced these communities to solely depend on, are now abandoning these same communities.

For more information, please contact us.

SAC Investments

Financial Services Ft. Lauderdale Florida

Call Today! (954)763-2816

Sam Curmaci, President of Investments