Financial Planning Hawaii
FINANCIAL PLANNING HAWAII
At Financial Planning Hawaii, J.R. provides comprehensive financial planning and investment management guidance to individual investors, including small business owners, working professionals, and retirees. His approach places equal emphasis on the important investment and non-investment aspects of financial planning.
His value proposition involves helping people manage their finances more efficiently and catching/correcting potentially costly planning mistakes. To facilitate this, J.R. provides each client with a platform that enables them to centralize, organize, monitor and maintain all aspects of their financial lives.
Compensation structure includes flat fee planning, asset-based management fees, and/or traditional transaction-based charges. Frequent communication, up front disclosure, objectivity, and transparency are the hallmarks of his practice.
See Also – Financial Planning Hawaii YouTube Channel
NEST EGG GURU
J.R. is also a co-founder of Nest Egg Guru, a web-based application for helping financial advisors evaluate their clients' college and retirement planning preparedness. The application is 100% client-facing and has a user-friendly design that makes it easy to test how changing factors that are within one’s control may impact the planning outcomes.
Nest Egg Guru features a powerful simulation engine, critical functionality that is not offered in competing applications, and a low annual subscription price for a private labeled advisor portal. The application was recently featured in Financial Planning Magazine and AdvisoryQuest.
See Also: Nest Egg Guru YouTube Channel
QUALIFICATIONS AND EXPERIENCE
J.R. has published numerous papers in peer-reviewed academic journals including Journal of Financial Planning, Journal of Wealth Management, Financial Services Review, and Retirement Management Journal. Papers he co-authored on retirement income sustainability won the Certified Financial Planner Board of Standards® and International Foundation for Retirement Education (InFRE) best paper awards.
Articles he has written on a wide range of financial planning topics have been published by Investopedia, MSN, The Christian Science Monitor, Nasdaq.com, Advisor Perspectives, Thought Catalog, etc. His commentary has also been featured in The Wall Street Journal, Chicago Tribune, Financial Planning Magazine, and many other publications.
J.R. is recognized as one of the top financial professionals in Hawaii. He has been a financial advisor since 1989. He holds a B.A. in economics from Williams College.
BA, Economics, Williams College
Assets Under Management:
Financial planning services are provided through Financial Planning Hawaii, Inc, a Registered Investment Advisory firm. Investment brokerage services and wrap fee investment advisory platforms are provided through J.W. Cole Financial Inc. and J.W. Cole Advisors, Inc., a dual-registered broker-dealer and registered investment advisor. National Financial Services, LLC [NFS], a Fidelity Investments© company, serves as custodian for client assets and provides clearing and trade execution for client accounts. Financial Planning Hawaii is a separate company from J.W. Cole and NFS. Financial Planning Hawaii does not take custody of client assets nor do its advisers accept discretionary authority over client accounts.
What Makes Financial Planning Hawaii's Approach Unique?
Is Financial Planning Just About Investing?
Why Do You Describe Financial Planning as a Treasure Hunt?
What Else Sets You Apart From Other Financial Advisors?
The short answer to your question is “YES, there are many important considerations you should make before you make an irrevocable decision to annuitize your AXA Equitable variable annuity’s lifetime income benefit rider.”
Before you make such an election, you should make sure that you clearly understand the terms of the lifetime income rider and your options for systematic withdrawal under the contract. For instance, some AXA Equitable VA contracts allow the contract holder to spend down the contract through systematic withdrawal while still preserving the right to annuitize the contract later at a higher payout amount. This has the advantage of allowing the contract owner to retain control of the contract and to leave the remaining balance to beneficiaries. It may also maximize the benefit the contract holder may receive over his/her lifetime.
If you do not need the income and/or still have significant earned income, you may also wish to consider allowing the benefit base in the contract to continue to accrue and to elect a higher lifetime income amount later.
If and when you do decide to annuitize you should also consider which annuitization option is best for you (e.g., straight life, joint live with spouse, life with period certain, etc.).
Because of the complexity of VA contracts and riders and the potential tax implications of your decisions, you may do well to consult with a CPA or financial planner in your area for guidance.
As an aside, it is worth mentioning that, for all of the (justifiable) scorn and vitriol that is directed toward variable annuities, many issuers of VA contracts in the 2000s got caught up in a marketing war that lead them to make guarantees on VA contracts that were overly robust. These actions caused many insurance companies to take huge charges against their earnings and even to exit the VA business entirely. AXA is one of the companies that made overly generous guarantees on many of its VA contracts, though I do not know if yours was one of them. For many years, AXA has been trying to buy back some of the contracts that are causing the company to lose money. This saga is chronicled in the following articles:
AXA reverses course on variable annuity buyout (Investment News 2018)
Be Wary of Insurers Offering Annuity Buybacks (Kiplinger’s 2018)
AXA Equitable’s Accumulator “Buyout Offer,” Should You Accept or Not? (Annuity 123 2016)
Offered a Buyout on Your Lifetime Annuity? Just say no. (Jane Bryant Quinn 2013)
Variable Annuities Look To Bail On Guarantees (Forbes 2012)
As other respondents to the question have articulated, if you establish a SEP for your business, you must include all employees who have attained age 21, have been employed by you for any part of 3 of the last 5 years, and whom have received at least $600 in wages for the business tax year.
If you make a contribution to your own SEP, IRS requires you to make the same % of income contribution to all eligible employees has you made for yourself.
If an objective is to maximize your own retirement savings while minimizing employee contributions, you may wish to consider a Savings Incentive Match Plan for Employees (SIMPLE IRA) or a Safe Harbor 401(k) plan.
For more information on this, the IRS provides a great, plain English chart comparing the different types of small business retirement plans in order of complexity.
The following table presents maximum Social Security benefits paid to a person who retires in 2018
|Age||Monthly Beneft||Annualized Benefit|
Here are links to related articles -
Social Security's Maximum Benefit in 2018 (Motley Fool)
The answer to your question requires an understanding of the different rules that apply to 401(k) plans, Roth IRAs, Traditional IRAs (deductible and non-deductible), and Roth conversions (including so-called, "back-door" Roth conversions).
As a starting point, you should understand that while Roth IRAs, Roth Conversions, and Roth 401(k) accounts all receive after-tax contributions, different rules apply to eligibility,distributions, and portability/transferabiliy. For instance, money converted from a tradtional IRA to a Roth IRA (including funds converted through a "back-door" conversion), cannot be withdrawn without being subject to a 10% IRS penalty until 5 years after the conversion or the Roth IRA owner reaches age 59 1/2. In contrast, ordinary Roth IRA contributions (but not earnings) may be withdrawn tax and penalty free at any time. Similarly, Roth IRA money can never be transferred into a Roth 401(k), but Roth 401(k) money may be tranferred into a Roth IRA upon separation of service or retirement. As a third example, Roth IRA contribution eligibility is determined by income level. Roth Conversions and Roth 401(k) accounts are not subject to income limits. See also -
Roth IRA and Roth 401(k) Portabilty Rules - Rollover Chart - IRS.gov
In your question, you noted that you are maximizing your 401(k) contribution. The 2017 salary deferral limit for 401(k) plans is $18,000 ($24,000 if you are age 50+). While these $ amounts may be allocated any way you see fit between traditional and Roth 401(k) accounts, if you have already maxed out your traditional 401(k), you cannot put additonal funds into a Roth 401(k).
The decision to contribute to one or the other or some combination thereof, depends upon your age and tax bracket. Generally, speaking if you are young with modest income, the Roth 401(k) may be a great choice. If you are older (less time until retirement) and are in a high marginal tax bracket, your interst may be better served by making pre-tax traditional 401(k) contributions. Another guideline is that if you anticipate being in a lower tax bracket in retirement than you are now, you may wish to favor pre-tax 401(k) contributions. If you are unsure, consult with your CPA. See also -
Roth vs Traditional IRA: The Four Factors That Determine Which Is Best (Nerd's Eye View)
Most financial planners agree that it is wise for investors to have retirement assets in both pre-tax and Roth accounts at retirement, as it may give them greater flexibility to control their income tax liability in retirement. Thus, if you have already maxed out your 401(k) deferrals and your income is too high to be eligible to make an additional Roth IRA contribution, then a back-door Roth Conversion stategy may be a nice way to get additional retirement savings into a Roth IRA.
The strategy involves making a non-deductible traditional IRA contribution and documenting it on IRS Form 8606. After the contribtion is made, the IRA holder may then elect to convert the IRA to a Roth IRA. Since the IRA is funded with after-tax money, there should be no tax due on the conversion. This two-step process is effectively a legal loophole that allows people to circumvent the IRS Roth IRA income eligibility rules. However, because the Roth IRA is funded via a conversion, the aforementioned Roth Conversion rules apply.
An important caveat to the back door strategy is that the conversion is only tax free if the IRA holder does not have any other IRAs with pre-tax money (including rollover IRAs, SEPs, and SIMPLEs, but not 401(k), 403(b), etc.). If he/she has other pre-tax IRA money than the conversion would be taxable in proportion to the total value of non-deductible and pre-tax IRAs. For further info, the following is a link to an article I wrote for accounting software firm, Indinero -
As you can see, there are many complex rules involved in your decisions. I hope this information steers you in the right direction.
The IRS rules do not require that SEP-IRA participants establish their accounts at the same financial insitution, but the company's SEP-IRA plan document may require you to do so. This restriction is permited by the IRS and is not uncommon, as it can be unwieldy for company to have make employer contributions at multiple financial institutions. To answer this question, you should request a copy of the adoption agreement or just ask the owners. For more on this, see the following IRS link -
SEP Plan FAQs - Establishing a SEP (IRS.gov)
IRS Rules also permit you to maintain a separate tradtional IRA or to merge the two. You may also make traditional IRA contributions to your SEP-IRA, assuming your income level permits you to participate in an employer plan and still make deductible IRA contributions. See IRS Link - 2017 IRA Deduction Limits - Effect of Modified AGI on Deduction if You Are Covered by a Retirement Plan at Work
As a word of unsolicited advice, it has been my experience that banks often do not offer the most competitive or efficient investment choices for retirement accounts, and are sometimes staffed with commission-based sales people. If you choose to establish your SEP-IRA at a bank, be sure to ask the rep if he/she is acting in a fiduciary capacity and ask to see his/her SEC Form ADV, which offers a plain English summary of the reps experience, background, potential conflicts of interest and regulatory history.