Tag Archives: Pension Buy out

January 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our January 2019 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast format as well as Video!

Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

January – 2019 Video

Financial Planning Tip (s) –

Get and Earlier than normal start on those Taxestaxes control-1027103_1280

Here in this post, we remind everyone that due to the new tax laws, it will be a good idea to get your tax information to your professional as soon as possible.

If your using tax software, be sure to do the recommended updates as we feel certain there will be necessary updates to the tables along the way.

Corrected 1099’s are the usual, with only a few last year, we will give everyone the green light once we get our first round of corrected tax forms – but again go ahead and get started with your taxes!

Stunning Findings about your old employer 401kabonded dawn-3358468__480

We had long suspected as much, but in this post we review a Cerulli study that interviewed over 800 401k providers, only to find out that less than 30% really want your funds once you leave.

We have experienced less than stellar service over the years with former employees 401k plans – leading to our long suspicion of these findings.

Make Pension Changes/Decisions Carefullythumbs-up-2056022__480

While our favorite commencement benefit for pensions (100% jt survivor) is fairly straight forward, the simplicity ends there.

In this post, we review recent trends in buy outs and what to watch for, as well as the many scenarios we have experienced that are not always in our best interest.

Capital Market Comments –

Good News – Recovery without a Re-test – So far

What a different a month makes – WOW! We literally have gone from the sky is falling to sunshine!

In our summary post in December, we mentioned that fast moving slumps, such as the one we had, frequently do not last long….

Here, earlier in the month we also mentioned that we fully expected some type of retest of those lows before we gained our footing.

We still do expect some type of re-test, but as of this date we have had the following positives that have added to the markets better mood:

  1. Federal Reserve (FOMC) have turned very cautious about raising rates further (We are happily surprised at their yielding, and even more surprised at market participants joy)
  2. Tariff talks are making progress – Interestingly, China has seen a slow down in their economy making for slightly more urgent talks – with a little compromise and statesmanship a resolve looks more likely – again a positive for capital markets.
  3. Earnings are still cranking along – For the prior 4-6 quarters, earnings were red hot and hitting on all cylinders, so hot, they were not sustainable. Companies are still reporting good earnings, just not the Red Hot, overheated earnings from prior quarters – this is good news as it avails the FOMC to not have to raise rates to slow the economy –

All in all a Win- Win!

Have a Great Day – Talk to you at the end of February!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
street-cents

Why you should Be Careful before taking that Lump Sum offer of your Pension, especially if your are receiving a monthly benefit already – Careful analysis is needed with ANY Pension decision

We have seen pensions that actually give you less money on a monthly basis if you wait longer! Not Kidding…

We have seen pensions dramatically lose money on their present value lump sum benefit over time (very short time in a few cases) monitoring is needed.

We have seen pensions that never break even, if you take them early versus waiting (similar to first point mentioned.)

We have seen offers to buy out monthly pension benefits in the form of a lump sum that are horrible.

We have seen lump sum offers that are too good to pass up (fewer times, but it happens)

We have run into pensions that if the participant passed away before the pension commenced, the spouse received NOTHING, but once the pension commenced the spouse was a full 100% beneficiary.

We have seen random offers from outside companies to buy pensions off – out of no where- usually not a good deal.

Be Careful with Pension DecisionsTrade - handshake-2056023_960_720

Most pension decisions are irrevocable, due to the actuary calculations that are put into place once a decision (contractually binding the company) is made.

While our favorite pension benefit decision (Jt survivor- as mentioned here) in great detail) is fairly straight forward, little else about pension decisions are easily understandable, compound that with the irrevocable nature of the decision, caution and analysis is warranted.

Recently we have run across a few buy out offers from different sources, reminding us of the complexity of pensions and bringing our thoughts to you in this post.

By reverse engineering these offers, a very complex situation can be turned into black and white.

Use caution when deciding on pension decisions as they are mostly irrevocable and frequently offers and changes, may not always be in the participants’ favor.

Have a Great “Clear Pension Benefit” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Something never seen in 28 years – Now happened twice in a month – Pension Offer

After almost three decades in the financial industry, it has up to this point, been safe to say:

Once you begin that pension, you will never have a chance to change it.!”

Not anymore !

In force Pension Plans – offered buy outs

Frequently pension plans that are not paying (beneficiary has not started monthly benefits) are offered buyouts. We have never seen in force (benefits are paying currently) pension plans being offered a buyout, until now, and go figure, we have run into two in the last month.

Items to know –Lump Sum

Don’t automatically just take the cash – it is likely a big sum of money compared to what you may be receiving on a monthly basis, BUT frequently the offer is skewed towards a greater benefit for the company.

Carefully review EVERY detail and how it relates to your situation – longevity, continuity, heirs, beneficiaries, age, financial need are just a few items to consider – call us before you make ANY moves.

Be very skeptical of any company that is not directly associated with your pension plan– The more hands between you and your money, the less you may ultimately receive.

Lot’s of scams and abuse – Along the line of the prior point, there have been many scams as well as abuse in this part of the financial world, laws have begun to prohibit many from taking these type of benefits – be careful and check the facts.

Call us –While there are very distinct times when one should or should not accept an offer such as this, most fall in the gray area. We have the ability to reverse engineer the offer to see how it stacks up as well as dissecting all the fine points of the offer!

Have a Great Day!

John A. Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225