Revere Asset Management
President & CIO
Daniel Stewart is President & CIO of Revere Asset Management and has been providing financial services and portfolio management for over twenty years. Revere Asset is a Fee Based RIA which Always Acts as a Fiduciary in the Best Interest of its Clients. Prior to joining Revere Asset Management, Dan advised on investment portfolios exceeding $200M. He is also well versed in comprehensive planning including corporate, individual, and estate planning.
Dan joined the NorAm Capital team in 2010 to create and manage their Private Wealth Management firm. This eventually led Dan to buy the business and rename it Revere Asset Management. He graduated from The University of Texas at San Antonio with concentrations in Finance and Accounting. Dan has passed the CPA Examination on the first attempt and subsequently earned his CFA® Charter (Chartered Financial Analyst).
Dan, a native of San Antonio, Texas, is married with 3 children. Dan played NCAA tennis on a full scholarship at Vanderbilt University. He played professional tennis on the United States and European circuit and was then the Head Tennis Professional at both the Retama Polo & Tennis Club and Thousand Oaks Indoor/Outdoor Racquet Club, in San Antonio, Texas.
Chartered Financial Analyst (CFA®), BBA in Accounting
Assets Under Management:
Fee Based Only - Fiduciary with No Conflicts of Interest
#Yes Primarily Term
No information presented constitutes a recommendation by Revere Asset Management, to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities by Revere Asset Management. Revere Asset Management does not offer or provide any opinion regarding the nature, potential, value, suitability or profitability of any particular investment or investment strategy, and you are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs.
You can take out the principal portion, or contributions, made to the Roth, but gains become tricky. If you take out gains under the age of 59 1/2, there will be a 10% penalty as well as tax. If over 59 1/2, you only avoid the 10% penalty, not the tax on the gains. There are very few limited exceptions or "qualified distributions" that avoid the 10% penalty under the age of 59 1/2, but you must have had the Roth IRA for at least 5 years.
The only other options is to do a "60 day rollover" where you take the money out with the intention of putting the money back in within 60 DAYS! This is a hard number deadline and is only to be used when you believe you can put the money back within 60 days. If you don't, the rules above apply.
Hope this helps. Dan Stewart CFA®
An LLC taxed as a "C" Corporation gets preferential treatment and a lower tax rate on the first $50K of income at 15%, and then 25% the next $25K. Additionally, if the company invests in dividend paying stocks, the company gets what is known as a Dividend Received Deduction, or DRD, where they can write off 70%-80% of the dividend completely. So, to the extent you are going to own dividend paying stocks, there can be a benefit and you can accumulate funds inside your LLC to let it compound. The trick is getting it out of the corporation later to you with the least amount of tax.
One note though, as you accumulate monies inside the LLC though, make sure the monies are "appropriated" for some (possible) future use, whether you actually do or not is okay. It just needs to be earmarked and documented for something like expansion, new building, etc. This is can be easily done with corporate minutes. You just don't want "unappropriated," retained earnings inside the company over $250K, or $150K if Professional LLC, as they will deem you a holding company and add a penalty tax of 30%. This is a complicated question and you need to seek someone with a strong accounting background in this area for advice. This is not your typical financial planner question, but dives into numerous tax law questions. And more often than not, the trouble and hassle isn't worth the tax savings for just the difference in tax rates. It can be worth it if you consistently and continuously do it so the compounding takes effect. One last thing, if you have no or very few employees, you should consider a retirement plan. There are some that will allow you to make very large contributions if you are trying to shelter large amounts of income. Best of luck!
Assuming it is a Defined Benefit Plan (DBA or Pension Plan), you can certainly "roll" into an IRA. In fact, based upon the information you gave about needing some of the money, you will almost certainly want to do that. This is because with company retirement plans like DBAs, 401(k)s, etc.. there is a mandatory 20% withholding taken off the top and sent to the government, whether you owe 20% tax or not. It will simply be netted against your tax return and you may be giving the IRS an interest free loan. You see, they penalize you for not paying enough, but they don't pay you interest when you overpay.
With an IRA distribution, you set the percentage amount withheld, whether it be 5%, 10% or even 0%. So, you can match more closely to what you think your tax liability will be. Just generalizing and without knowing your personal situation, I would take 1/2 the IRA distribution before the end of this year and the other 1/2 on January 2nd next year. This way you spread the tax liability over 2 years and it may not push you up into a higher tax bracket. This is to stimulate your thinking about the planning process.
Lastly, you need to get moving quickly on the IRA rollover from the annuity. Insurance companies are notorious for holding the money and slowing down the process with detailed, minutiae paperwork that needs to be Notarized etc. You may need some help on this to get it done and transferred into the IRA before year end. Then process a distribution request so the new brokerage firm (hopefully discount brokerage) distributes the 1st half by year end because they get bottlenecked with distribution requests in mid December before Christmas. Best of luck!
Whenever there is a major change - company structure, merger, etc.. there is a "blackout period." Even simply switching a Third Party Administrator (TPA), which is the plan's "accountant," can trigger a blackout period. Under ERISA guidelines, this can take up to 90 days (max), but this should have been disclosed to you before the blackout period so you could make any necessary changes to your allocations of funds.
It is probably nothing to be alarmed about and is just the switching over to a new provider, TPA, or due to the merger itself. But it is definitely worth the phone call to HR. They should be able to give you answers, especially on your own withholdings which are always 100% vested and yours. Remember, this should have been disclosed before any Blackout Period.
I would say this though, you may have an opportunity to rollout your existing balances to an IRA Rollover where you have complete control and are not limited to their plan's investment choices, usually 12 or less mutual funds. Whenever there is a major change in the plan, which this sounds like this definitely qualifies, you must be given that option because it changes your original "deal" and you may not want to contribute your already accumulated assets going forward.
This doesn't preclude you from contributing and making new contributions to the plan, it just allows you to rollout your existing balances into an IRA Rollover. It will almost certainly provide you with more flexibility. In fact, as people change jobs, they should normally roll each old balance into their IRA Rollover and begin fresh with each new 401(k). This way, they will accumulate a nice rollover with unlimited options along with a 401(k). Hope this helps.
It's never to early to begin saving, whether it be for college, retirement, or otherwise. If you are talking about for your kids, though, I am not a big fan of 529 Plans. This is because they have limited investment choices and you can only make changes once per year. I would rather open an individual or joint (with spouse) taxable investment account, pay the tax, and have control of my destiny.
Educational IRAs are very limited in how much you can put in each year, but does leave you with more choices and flexibility. Uniform Trust to Minors Act (UTMAs) & Uniform Gift to Minors Act (UGMAs) are not as common anymore for some very good reason. You are gifting, or giving away control, of the assets. So while you control minors, once they reach the "age of majority," either 18 or more often 21, they can raid the account and buy a little Red Corvette (or worse) and there is nothing you can do to stop them. There are actually seniors in college teaching classmates how to raid their accounts.
For this reason, I usually prefer counseling my clients to have their own investment account that they can own and control. When the time comes, write a check. This is not what you will hear from the mainstream investment community. I want to think my child will be very responsible (and have been blessed as they are), but a lot of things can happen.
That said, these are tools which can be used for other planning. For instance, wealthy grandparents could use a 529 Plan to gift $50K into the plan and remove from the estate. So, the lack of investment direction and control is offset by a high estate tax (55%) once you are over approximately $11M joint & $5 1/2M individual. If you have complicated issues, seek advice. But for someone starting out early, I usually advise to save early in an account that you can keep and have control. Hope this helps.