Our daily roundup of retirement news your clients may be thinking about.
Retirement investors may incur hefty losses if interest rates increase, but could post attractive returns amid high interest rates with high quality intermediate-term bonds, according to this article on MarketWatch. The Barclays U.S. Aggregate Bond Index brings a high quality, intermediate-term bond that has a 7-year maturity and boosts its average yield by adding newer bonds with higher yields and gives up maturing ones. While bond prices drop as interest rates rise, the decline is lower than the effect of the Index's yield increases. MarketWatch
401(k) plans are an important part of retirement planning for many Americans as the Investment Company Institute says that they have $4.4 trillion invested in these tax-deferred accounts, according to this article on Kiplinger. Vanguard Institutional Index, PIMCO Total Return and Fidelity Contrafund top the BrightScope's list of 101 funds for 401(k) plans. Know the other funds that make it to the list. -Kiplinger
The Internal Revenue Service issued a new rule that limits IRA rollover to one each year, but there is another new rule that retirement investors can use if they want a short-term loan without paying taxes, according to this article in The Wall Street Journal. The rule does not limit of rollovers from traditional IRAs to Roth accounts, meaning they can make the transfer any time they need. Read how clients can roll over an amount from a traditional IRA to a Roth IRA without triggering taxes. The Wall Street Journal
Claire McCaskill, D-Mo., in a letter called on the Government Accountability Office to conduct a study to determine the impact of the government's garnishment of retirees' Social Security benefits with student debt, according to this article in The Washington Post. Garnishing the benefits goes against the purpose of the program, said McCaskill in a statement. "Social Security is the sole means of retirement income for tens of millions of Americans, and allowing those benefits to be garnished for student loan debt cuts a dangerous hole in our safety net." The Washington Post
Retirement investors stand to gain if the Federal Reserve decides to raise interest rates, according to this article on Forbes. The increase in interest rates can result in higher rates paid by banks on savings accounts, Certificates of Deposit, and other savings instruments to attract customers, as well as interest rates on new bonds. However, the market value of bonds is likely to decline once interest rates rise, with price changes affecting only those who intend to sell their bonds. Forbes