Archive for retirement

Tax Planning for Retirement Workshop to be Held at MMCCU (Rescheduled)

Members Encouraged to Attend Workshop “Tax Planning for Retirement”

Marshfield Medical Center Credit Union (MMCCU) will host a “Tax Planning for Retirement” workshop in partnership with Neufeld Capital Management on February 19 at MMCCU.

The workshop will begin at 4:30pm and feature speaker Chris Neufeld, Investment Advisor Representative and Tax Consultant. Anyone within 10 years of retirement or already retired is encouraged to attend.

Neufeld will educate members on new tax laws, help members make informed decisions and capitalize on tax savings, and explain income and distribution planning.

“As members make the transition from working to retirement, there are many changes that can impact your financial situation. While you may think it’s best to go it alone, meeting with a qualified financial advisor can help understand all the nuances within tax law and financial planning,” said David Murphy, MMCCU VP of Finance & Risk. “We are happy to make this workshop available to our members to be better equipped to make this transition.”

Other financial workshops will be held in the upcoming months, each featuring a different topic. Visit www.mmccu.com to learn more.

To register for this event, please call 715-316-4832.

The Difference Between a Traditional and Roth IRA

What is the difference between a Traditional and Roth IRA?

David Murphy, VP of Finance and Risk, explains the difference between a Traditional and Roth IRA, and how MMCCU can help with this complicated subject….

While on the surface it may appear Traditional and Roth IRAs (Individual Retirement Accounts) are the same product, the main difference between the two lies in the tax treatment for both products.

Contributions to Traditional IRAs may be subject to special tax treatment under the IRS rules including eligibility for a tax deduction.  Contributions to Roth IRAs are not deductible.  With both IRAs, there are limits to how much and if you can contributed based on your adjusted gross income and, in the case of Traditional IRAs, participation in other retirement savings plans.  There is also a difference in when you must take distributions from your IRA depending on if it’s a Traditional or Roth IRA.

While Roth IRAs do not require you to take distributions upon reaching a certain age, owners of Traditional IRAs must begin taking an annual Required Minimum Distributions no later than April 1 in in the year following when you turn 72.

The qualifying age recently changed with the passing of the Further Consolidated Appropriations Act of 2020, which contained provisions for the SECURE Act signed into law by President Trump on December 20, 2019.

Who benefits most from each type of IRA?

While both types of IRAs have their advantage, the best way to determine which product works best for your financial situation is to talk to your tax advisor or financial planner to truly understand the nuances of each product.  While we can offer IRA accounts and provide general information, we cannot offer tax advice.

In general, contributing to an IRA allows you to grow money earmarked for retirement tax-free until distribution.  There are exceptions the IRS provides to when distributions from your IRA may be penalty-free, and again, your tax advisor would be the best resource to provide that guidance to you.  One caveat for a Roth IRA is you may take distributions anytime tax and penalty free provided the amount is equal or less than your contribution.

How can MMCCU help with IRA’s?

We provide Traditional and Roth IRAs to our members looking to build up their retirement savings outside of what they may already contribute to a 401(k) or 403(b) plan.  We offer liquid IRA savings accounts and IRA certificates, and depending on when/if you would need to access the funds in your IRA, both the liquid IRA savings and the term IRA certificates have their advantages.

We also coordinate Required Minimum Distributions (RMDs) and ensure they are handled properly for our members required to take money from their IRA accounts.  If you’re close to retirement, one consideration for members is to request a 401(k)/403(b) to IRA direct rollover, which would remove your funds with your work retirement plan and deposit the funds at the credit union.

As a federally-insured financial institution, the deposits of our members are insured up to $250,000 (more depending on the type of account), so you can worry less about the safety of your retirement funds if they are deposited with us.  Our financial service officers are ready to address your needs and help assist in setting up your IRA today.

We also work with FocusTax Solutions out of Brookfield.  Their representative, Kenneth Courts, is on site during the tax filing season to file tax returns for our members, but he can also provide financial guidance and the impact a change to your finances can have on your overall tax liability.

Remember, it’s never too late or too soon to start saving for retirement! For more information, contact MMCCU at (715) 387-8686.

What to Know About Saving for Retirement

It’s easy to believe there’s never a good time to start setting aside money for retirement. Perhaps you’ve recently graduated from college and you have student loan payments to make, or you are looking at purchasing your first home and are trying to save for a down payment. Perhaps you had your first child and are working through the expenses of raising a child.

There’s always plenty of life to get in the way of saving for retirement. However, a dollar saved today can yield so much more in retirement through the power of compound interest. $1,000 invested at age 25 earning an 8% return will be give you $21,724.52 at age 65.

“As the old adage goes, the best day to start saving for retirement was yesterday. The second best day to start saving is today,” said David Murphy, VP-Finance & Risk. “Any day you’re able to set aside money for retirement or for the future is a positive step in your financial well-being. Saving $1,000 at age 45 earning an 8% return will still give you $4,660.96 at age 65. While your investment hasn’t had time to generate the higher earnings as displayed in the example saving at 25, your $1,000 is still giving you more in retirement than saving nothing at all.”

How Much to Save for Retirement

“The amount to set aside from each paycheck boils down to how much money you wish to have when you retire,” said Murphy. “Your best bet may be to speak to an investment advisor to walk you through your plans during retirement, to account for unknown expenses, like health care, and to come up with a target balance for your retirement plan at your target retirement date.”

“Once you know how much you wish to have saved up, you can work backwards based on assumption of how many years you plan on working and what rate of return you anticipate earning on your savings to determine how much you need to save each paycheck,” he added. “If your employer offers a 401(k) or 403(b) plan, you may have access to planners or planning tools to help you make these calculations.”

There are several factors to consider when determining target retirement savings. Questions to address include: Will you be traveling in retirement? Will you be a snowbird and live your winters down south while spending summers up north? Will you continue to own a home, or will you downsize to a condo or an apartment? Do you anticipate health issues and think you’ll need more money set aside to cover health expenses?

What Does MMCCU Offer for Retirement?

MMCCU offers Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs) to help save for the future and to account for the ever-growing costs of health care.

“Both products have tax advantages tied to them, but you will want to speak with your tax advisor to determine if these accounts can help you lower your tax liability,” said Murphy.

“In addition to the products discussed above, we’ve partnered with FocusTax Solutions based out of Brookfield and work with Neufeld Capital Management locally to provide educational seminars to help prepare individuals for retirement, what to expect with health care, and how to navigate Social Security and Medicare,” he added. “You can check with us to see when the next workshops are occurring, or feel free to reach out direct to Chris or Deanne at Neufeld Capital Management for more information.”