Our daily roundup of retirement news your clients may be thinking about.Highlights of Obama plan to tax wealthy
President Barack Obama is expected to include in his upcoming State of the Union address a proposal that would increase taxes for affluent families. The additional revenue from the proposed tax increase would be used to fund programs designed to assist the middle-class. Some of these programs would require an automatic enrollment in an IRA of workers without access to a workplace retirement plan to increase people's retirement savings, and enable certain part-time employees to participate in employer-sponsored retirement plans.--The New York Times
Catching a clients missing 401(k) match
Donald F. Dempsey Jr., a financial advisor, found that a 401(k) participant didn't receive the full employer match contribution she was supposed to receive because her total contributions reached the limit earlier than scheduled, according to this article on The Wall Street Journal. To enable the client to receive full 6% employer match contribution, Dempsey advised her to contribute 15% of her bonus and only a certain percentage of her salary every month so that her contributions won't exceed the limit before she receives the full 6% employer match. Financial advisors need to watch out for similar issues especially when they are handling cases of highly-paid clients who claim to have maxed out their 401(k) plans early in the year, Dempsey says. --The Wall Street Journal
A prescription to save the American retirement system?
A book by Alicia Munnell, Charles Ellis, and Andrew Eschtruth, succeeded in identifying the issues with the country's retirement system and even made recommendations on how to fix the problem, writes Scott Cooley, Morningstar's director of Policy Research. The experts made the following recommendations: upper-income taxpayers to assume the greater burden of the Social Security tax; home equity to be included in retirement; and mandatory auto enrollment in retirement plans, Cooley writes. However, "the authors are clear that they have focused on making the existing retirement system work better, rather than contemplating more wholesale changes," such that "they spend little or no time on alternative retirement systems that exist in other countries." --Morningstar
3 ways to maximize your Social Security benefits
People can maximize their Social Security benefits if they defer the benefits until they reach 70, when the monthly benefit value would be about 24% higher than the check they would receive at 67, says Selena Maranjian, an expert with The Motley Fool. Retirees may also opt to file for and suspend their benefits at full retirement age to boost their benefits by 8% and enable their spouse to claim a spousal benefit on their record, says Dan Caplinger. Another way to get the most of their Social Security benefits is to educate themselves about the system including the rules, and develop a plan based on circumstances such as income history, health, and age, says Dan Dzombak. --The Motley Fool
Why your employer may be your best financial advisor
More employers are providing their workers with professional advice on their 401(k) plans as well as other services designed to enhance their financial prospects, according to a survey by Aon Hewitt. Some 69% of employers are providing online investment guidance, 53% of them are offering phone access to financial advisors, while a third-party investment advice is provided by 49% of employers, the survey finds. More companies also reduced their plans' administrative and other costs. --Time Money
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