Rall Capital Management
With a career that spans more than 25 years in the financial services industry, Bob Rall, CFP®, has a passion for helping families achieve a better return on life through comprehensive financial planning and investment management.
Bob began his career with Prudential Insurance and later joined the Dean Witter brokerage firm in Cocoa Beach, Florida. He soon realized that though he enjoyed the relationships he had developed with clients, he felt disdain for Wall Street’s culture. In 2000, he joined an independent, fee-only financial planning and investment management firm, and in 2004, he launched his own independent, fee-only firm, Rall Capital Management.
While most advisory firms focus on ultra-high-net-worth clients, Rall Capital Management caters to an underserved group, the so-called “mass affluent.” These are the families of more modest means with less room for error when planning their financial futures and managing their investment portfolios. Bob finds gratification in providing the quality financial planning and investment management services they need to achieve all that they want in life.
Bob is a CERTIFIED FINANCIAL PLANNER™ professional and member of the Financial Planning Association (FPA) and National Association of Personal Financial Advisors (NAPFA). He is a contributing writer for the Journal of Financial Planning and has served in a variety of volunteer positions with the FPA.
Away from the office, Bob and wife Gina are active members of the local running community. His passion for running has led him to serve on the board of Space Coast Runners, a nonprofit group promoting fitness through running and walking. In addition, Bob, Gina, and their adult children, Adam and Jenna, are deeply involved with Brevard County’s Special Olympics program. The relationships the family has developed through the program have become a powerful part of their lives.
Areas of Expertise
· Budgeting and debt management
· Investment management
· Retirement planning
· Social Security and Medicare planning
· Tax minimization strategies
· Education planning
· Insurance analysis and guidance
· Estate planning
BS, Communications, Ohio University
Certified Financial Planner(R) designation, College for Financial Planning
Assets Under Management:
The Trump Bump
Rall Capital Management Introduction
I would not recommend withdrawing from your 401(k), even if you were not subject to the 10% penalty. Don't forget, that in addition to the 10% penalty that is incurred if you are under the age of 59-1/2, you will also pay tax on the amount withdrawn. $150,000 in additional income will most likely throw you into one of the highest tax brackets, so you would pay 28-33%, and possibly more, tax on your distribution. When you add the 10% penalty, you would be paying close to 40% in taxes. Another thing I would mention is that you have a 3.65% mortgage rate, which is extremely low historically. If your investments in your 401(k) can average more than 4% over the years, you are way ahead by staying invested.
First, congratulations on building a solid emergency fund. That's one of the building blocks of a solid financial plan. Unfortunately, there's not a great answer for you. In today's low-interest rate environment, you will not earn much on savings. My advice is to research the online banks. Since they do not offer brick and mortar buildings, and provide all of their services online, they are able to pay a bit more on their deposit accounts. It won't be a lot, but better than getting next to nothing.
There are several similarities between a Simple IRA and a Traditional IRA, and several differences. First, the similarities: Both accounts follow the same investment, distribution, and rollover rules. They are both tax-deferred accounts, meaning that you do not pay tax on any growth or earnings inside the account until you make distributions, presumably once you are retired. They are also similar in that the contributions you make are tax-deductible. We should note that there are limits on the deductibility of IRA contributions based on factors such as income and whether you participate in an employer sponsored retirement plan. The plans are also similar in that any distributions you take from the account prior to age 59-1/2 will result in a tax penalty of 10%. The Simple IRA can be a bit harsher. If you withdraw from the plan in the first two years, you'll face a 25% early withdrawal penalty.
Now for the differences: The Simple IRA is actually an individual account that you hold as part of a small employer's retirement plan. You contribute to the account via payroll deduction, and the employer also contributes with a match. The employer can choose between a matching contribution or a nonelective contribution. The major difference between the accounts is the amount you can contribute. Currently, the IRA contribution limit is $5500 per year. If you are over age 50, you are allowed a catchup contribution, increasing the maximium contribution to $6500. For the Simple IRA, you can contribute $12,500 per year, and the over-50 catchup is $3000, allowing you to put away $15,500 towards your retirement.
My first reaction to your question was to challenge your comment regarding the statement that "...there are no fees per se other than a $25/year fee." While it may be correct that you don't "see" any other fees besides the $25, annuities typically have mortality and expense charges amounting to 1% or more, fund expenses on the underlying investment funds of 0.50 to 1.5%, and sometimes more fees, depending upon the "options/riders" that are built into your contract. Unfortunately, you have to dig pretty deep to find these fees. But they are there.
As to what you should do upon retirement. A 1035 is on the right track, but not quite. You can process a rollover of the account into an IRA account and maintain the tax-deferred status. Since you are not taking a distribution, the funds will not be taxed until you do start taking distributions, which must start by April 1 of the year following the year you turn age 70-1/2.
I hope this helps.
Life insurance is intended to provide income replacement for those who are dependent on your income. If you are retiring, you will no longer have income from your salary, so you may not have a need for life insurance unless you have a life-only pension payment. Other reasons to maintain life insurance would be for final expenses, debt elimination, and education funding. If you have sufficient assets to cover your final expenses, you have no debt, and your kids/grandkids are not dependent on you for education expenses, then you may not need life insurance any longer.