RATIONAL INVESTING
IN AN
IRRATIONAL WORLD

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THE STRONGEST PRINCIPAL
OF GROWTH
LIES WITHIN HUMAN CHOICE

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RETIREMENT PLAN CONCERNS?
CALL A PAISLEY ADVISOR
AND SLEEP EASY TONIGHT

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Active Strategic Management

  • Wealth Management / Financial Planning

    Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services. Contact a Paisley Financial Associate to learn more about how we can provide for you. 

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  • 401 K Plans

    A 401k retirement plan is a special account funded through pre-tax payroll deductions. Funds in the account can be invested in stocks, bonds, mutual funds or other assets, and are not taxed on any capital gains, dividends, or interest until withdrawn.

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  • IRA Rollovers

    An IRA is an Individual Retirement Account, and provides either a tax-deferred or tax-free way of saving for retirement. There are many varieties of IRA's please read more on the link below to see which is right for you.


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  • Educational Plans

    A 529 plan is a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary. Many different plans exist. Learn more to see which is right for you.


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  • Alternative Investments

    Alternative investments are instruments such as physical gold or other commodity based ETF's such as oil or lumber which can be used as a hedge or inflation hedge against an overall portfolio.

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  • Independent Research

    Paisley Financial provides timely and accurate research on markets, companies and industries. Our team offers more than three decades of experience as well as time held relationships with industry experts that will bring the highest quality of knowledge to our customers.

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Individual 401k Plans

A 401(k) retirement savings plan allows an employee to save for retirement and have the savings invested while deferring current income taxes on the saved money and earnings until withdrawal.

Most 401(k) contributions are on a pre-tax basis. With either pre-tax or after-tax contributions, earnings from investments in a 401(k) account such as interest, dividends, or capital gains, are tax deferred. The resulting compounding interest of the delayed taxation is a major benefit of the 401(k) plan when held over long periods of time.

Tax Information:

For pre-tax contributions, the employee does not pay federal income tax on the amount of current income that he or she defers to a 401(k) account. For example, an employee who earns $50,000 in a particular year and defers $3,000 into a 401(k) account that year only recognizes $47,000 in income on that year's tax return. Currently this would represent a near term $750 savings in taxes for a single worker, assuming the employee remained in the 25% marginal tax bracket and there were no other adjustments. The employee ultimately pays taxes on the money as he or she withdraws the funds is generally during retirement. Gains (including tax favored capital gains) are transformed into "ordinary income" at the time the money is withdrawn. 

Withdrawals: 

Withdrawal before the age of 59½ is subject to an excise tax equal to ten percent of the amount distributed, including withdrawals to pay expenses due to a hardship, except to the extent the distribution does not exceed the amount allowable as a deduction. Either way distributions are subject to normal taxation as ordinary income. 

There are a few exceptions to the 10% penalty which include: the employee's death, the employee's total and permanent disability, separation from service in or after the year the employee reached age 55, substantially equal periodic payments under section 72(t), a qualified domestic relations order, and for deductible medical expenses (exceeding the 7.5% floor).

Protection:

A lot of people are unaware of the fact that if they leave their job they can roll their 401K funds into an IRA. An IRA offers many advantages over a 401(k) Plan, the main advantage being choices of investments. Most 401(k) plans offer a very limited amount of investment choices which may be as many as 10 to as little as 3. Most IRA plans offer thousands of mutual funds, individual stocks, bonds and even options which can act as downside protection for your investments. In today’s markets, there are certainly advantages with a plan that offers you protection against downward movements and volatility.

Fees:

Most 401(k) plans have a myriad of fees attached to them that IRA’s do not. There can be, Mutual Fund Fees, Sub TA Fees, Sales Fees, Third Party Administrator Fees & Manager Fees and these can all add up over time. The S&P 500 was basically unchanged in price in the last decade, so the question is can you afford to pay these fees when you are not getting the performance? Of course every plan is different so you should always consult your Plan Sponsor to fully understand the fees you are paying.

If you have changed jobs or are recently unemployed now is a great time to review and roll over your 401(k) plan to an IRA with a Paisley Financial Advisor. There is no cost to you for discussing your plan. We can take a look at your current plan and discuss the many options you have available. We can break out the fees for you on the funds themselves as well as all the other fees that can greatly impact your future retirement savings.

When the markets move directionally higher, the fees are easily absorbed into the overall performance but when markets sit sideways or worse, downward, those extra fees can rack up thousands of dollars per individual participant. 

An Example of how you may have been impacted is as follows:

From January 1st 2000 thru December 31st 2009 the S&P 500 Index was basically unchanged. That means your money which typically grew at 6.68% annualized over time and adjusted for inflation, ended up going nowhere. Yes sitting in a savings account would have outperformed the S&P. But that’s not the bad news; the bad news is your 401(k) plan was charging you fees to go nowhere so not only did you not make any money for your time but there is a good chance that you even lost money if you were in any sort of index fund.

The IRA rollover opens you up to all sorts of possibilities. You have the freedom to choose the fees you want to pay & you have thousands upon thousands of securities to choose from. Not to mention over ten thousand mutual funds to fit your needs, instead of the 5 or 10 choices. Of course, having thousands of choices can be more of a detriment if you don’t understand what you are getting into so be sure to contact a Paisley Advisor who will be glad to discuss the many options available to you and how they can help secure your future.


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