Redrick Terry:
4 Your Money time, we’re joined by David Nelson, CEO of NelsonCorp Wealth Management. David, welcome back.

David Nelson:
Thanks Redrick, appreciate it.

Redrick Terry:
Absolutely.

Redrick Terry:
We’re now squarely in the middle of the year. Those taxes are behind us. People are starting to think about vacation. As a financial advisor, what’s something that you think people should be thinking about at this moment?

David Nelson:
We’re always boring, the important stuff is boring.

David Nelson:
This list here, I think is a good place to start as far as to address the issue. Talking 401(K) specifically here. Looking at the numbers, $5.2 trillion as far as invested, 20% of all assets are in it, 55 million people are participating, 89% of employers are putting money in.

David Nelson:
It’s really important that individuals understand this is a bedrock for most individuals on their retirement as far as going forward, so they’ve got to pay attention to that as far as the benefits that exist there. Again, exploit those opportunities that exist there.

Redrick Terry:
Certainly. Obviously, those accounts are extremely important. What things specifically can people do to make sure that they’re doing it the right way?

David Nelson:
This list is so crucial, I brought notes today for the first time. I want to make sure I address all the issues.

Redrick Terry:
This is the first time, it is.

David Nelson:
It’s the first time.

David Nelson:
Anyway, we want to maximize the match. So many people are getting matches, and they’re not taking advantage of it at work. Most employers, you put in 6% as far as out of your paycheck, I’ll put in three. So you’ve got to take advantage of that. That’s a 50% return as far as on your money.

David Nelson:
Next is you got to pay attention to what you’re investing in. So many people, we ask them, “Well, what’s your money invested in?” They have no idea. There’s good investments in 401(K) plans, and there could be some duds. So you got to be aware of that, and you got to be aware of costs.

David Nelson:
The other thing is you’ve got to coordinate this as far as with the outside investments that you may have. Coordinating the investments that are in the plan as well as outside the plan. You’ve got to look and see if they have a Roth option. We talk about the Roth IRA, the 401(K) all the time, it’s a great tool, folks, that you should be using.

David Nelson:
We want to make sure that we look and see if I’m over the age of 50 that I maximize the benefits, or that the benefits that are offered to me by putting in the maximum amount into my plan, there’s a catch up provision. Lastly, we got to check the beneficiary designations. Again, this is often overlooked for many individuals. You want to make sure to check as far as those.

Redrick Terry:
Absolutely.

Redrick Terry:
What about some other things that people may not be thinking about as much, should probably be thinking about more?

David Nelson:
These are two cutesy’s, and I mean they’re really good. Unfortunately, we don’t have a lot of time here.

David Nelson:
The first one is consider taking your IRA and putting it into your 401(K) at work to allow you to be able to do Roth conversions as far as with other money. It’s a little complicated, you need to work with somebody that knows what they’re doing, but it can be a great strategy as far as helping you in retirement.

David Nelson:
The last one, and this applies to a factory that isn’t too far from here, this is a big item where people have bought stock as far as company stock, they’ve made a lot of money in it and if they retire and they roll that over an IRA, they lose a huge tax benefit. There is a provision that allows those individuals to be able to extract that stock and get tax preferred treatment as far as with that money. So that’s a biggie, again for individuals that have company stock in their plan.

Redrick Terry:
David, all kinds of great information and we appreciate it, as always.

David Nelson:
Love it, glad to be here.

Redrick Terry:
Absolutely.

Redrick Terry:
If you missed any part of our discussion, we’ll make it available for you on our website. That’s OurQuadCities.com.

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