1080 Financial Group
Founding Partner / Financial Adviser
Stephen Rischall is an award winning financial adviser and public speaker. He has been recognized as one of the top "40 Under 40" financial advisers by InvestmentNews and was ranked in the top 10 of the Investopedia 100. He has also been featured in the Wall Street Journal, Los Angeles Times, and more.
Stephen began learning to invest using his own money at the age of thirteen. While in college he began his career in the financial services industry while helping his mother recover from financial fraud. He earned his BS in Honors Finance at California State University Northridge and received a special commendation for managing the University Corporation Student Investment Fund. He started building his practice after college at a large brokerage firm where he met his business partner, Matt. They recognized many conflicts of interest working in that environment and knew they could do better for their clients independently. In 2013, they put plans in motion to launch 1080 Financial Group and by 2015, the firm became a Fiduciary fee-only Registered Investment Adviser.
Earlier in his career, Stephen was recognized as a "20 in their 20’s" honoree for being an outstanding young entrepreneur and has also been recognized as a "Valley's Trusted Advisor". He actively serves his community and is known as "the financial advisor that won't retire before you do". In his free time, he enjoys mountain biking, skiing, snowboarding and gardening.
B.S. - Honors Finance & Financial Management Services, California State University Northridge
Chartered Retirement Planning Counselor, College for Financial Planning
Assets Under Management:
Investment management and financial planning services offered through 1080 Financial Group, a Registered Investment Adviser.
Investopedia Advisor Insights - Stephen Rischall
Yes you can.
Any distribution from an IRA account will count towards satisfying your annual Required Minimum Distribution, including dividends. Be sure to use this information from the IRS to calculate your annual RMD which considers your age and the prior year end (12/31) value of all applicable qualified retirement accounts.
If the total amount of dividend distributions you receive during the year does not surpass the total Required Minimum Distribution, you will need to withdraw additional funds from your qualified accounts to satisfy the requirement and avoid penalties.
Stephen Rischall, CRPC
Treasury Bills are on the most conservative end of the spectrum.
In general, treasury securities are amongst the most secure investments in the United States and entail some of the least risk. Furthermore, compared to other treasury securities, Treasury Bills have the shortest maturity of a year or less until you receive your investment principal back. Treasury Notes are issued with maturities ranging between 2–10 years and Treasury Bonds between 10–30.
Keep in mind, securities with longer maturities tend to pay higher yields, but do entail more risk.
Stephen Rischall, CRPC
You are correct, it will be best to first ensure you receive the full match (5% in this case) for participating in the 401(k) plan. Next you’ll want to contribute the maximum to your Roth IRA ($5,500 in 2017 plus an additional $1,000 catch-up contribution if age 50+). Then shift back to the 401(k) and do your best to reach the maximum employee contribution ($18,000 in 2017 plus an additional $6,000 catch-up if age 50+). Ideally you will be able to fund these accounts consistenetly thrughout the year, with the goal in mind of maxxing out contributions to both. This would equate to $1,500 per month to the 401(k) and approximately $458 per month to the Roth IRA.
Your strategy of using the Traditional IRA to consolidate old retirement accounts/plans makes complete sense. So long as you have access to a traditional 401(k), which offers higher contribution limits and possible matching contributions, it’s best to use that for making the most of your tax-deductible contributions. You can leave the Traditional IRA as is for now.
Be aware, there is a limit on how much income you can earn while still qualifying to contribute to a Roth IRA. For 2017 that threshold starts at $118,000 if filing single or $186,000 if married filing jointly. If these income limits impact your ability to save in a Roth IRA, ask your employer to consider allowing Roth 401(k) contributions to the plan, there are no limits on earned income to make Roth 401(k) contributions.
If your employer does not offer a retirement plan, your only option is to establish an Individual Retirement Account (IRA) for your personal retirement savings. There are two types of IRAs to choose from, a Traditional IRA or Roth IRA, each with special tax benefits for retirement savings. Please note, IRA contributions should be made from personal funds, your employer cannot make these contributions for you directly.
Both types of IRA accounts have an annual maximum contribution limit in 2017 of $5,500 plus an additional $1,000 if you are over the age of 50. In general, you should choose a Traditional IRA if you favor an immediate tax deduction in the year the contribution is made, however you will owe income taxes on all distributions when money is withdrawn in the future. A Roth IRA is best if you prefer to forgo a current tax deduction in favor of completely tax free withdrawals in the future.
You can learn more about which type of IRA is best for you by reading this short article.
Stephen Rischall, CRPC
The tax impact is the same whether you distribute the funds directly from the 401(k) or an IRA. It will be faster to distribute funds direclty from the 401(k) rather than waiting to complete the rollover and then distributing funds.
Assuming all your contributions to the 401(k) were made with pre-tax dollars, you will owe income tax on the entire amount withdrawn from the account. This is because you received an income tax deduction for the tax year(s) you made contributions and the funds inside a 401(k) and IRA grow tax-deferred.
Be aware, if you are under age 59 ½ when making a withdrawal from a retirement account, such as an IRA or 401(k), you will be subject to an early withdrawal 10% tax penalty by the IRS, there are a few exceptions.
If you do not need to access the full balance of funds in the 401(k) it would be best to Rollover funds to an IRA to maintain the tax deferred status and avoid potential early withdrawal penalties. Then you can make partial withdrawals from the IRA Rollvoer account only if absolutely necessary. Hopefully in doing so, you will be able to maintain a portion of the funds in a retirement account.
Regardless, any funds distributed from a traditional 401(k) or IRA will be treated the same from a tax perspective.