Winter 2005
A publication of the Hanson McClain Retirement Network
Specializing in retirement planning for telecommunication employees
SECOND CAREERS
Tim Allman:
- about Hanson McClain
Getting Into the Swing of Things
Retirement Network
The Hanson McClain Retirement Network is a
nationwide network of independent financial advisors
specializing in working with employees and retirees
of telecommunication companies. Advisors affiliated
with the Hanson McClain Retirement Network have
helped thousands of telecommunication employees
plan their financial future. They understand how
you are personally affected by changes in company
SBC retiree Tim Allman
admits right away that he’s
addicted. What he craves
makes his heart race and his
body sweat, and the more he
does of it, the better he feels.
His habit-forming drug is
completely legal, though. What
Tim can’t stay away from is
swing dancing—specifically
West Coast Swing.
pension and savings plans.
The advisors featured in this newsletter are
each affiliated with the Hanson McClain Retirement
Network. They specialize in your company’s
pension and savings plans, conduct educational
workshops, and provide Independent Personal
Retirement Overviews (IPRO™).
Advisors are not endorsed by nor affiliated
with any specific telecommunication company or
labor union. You’ll be provided with independent
financial advice.
For more information, visit our website at
www.retirement411.com or call us at 800.525.8844.
What’s Inside...
2
Community Service ....................................... 2
Stats 411 ......................................................... 2
Pension Points ................................................ 3
Telephone Trivia ............................................. 3
Case Study ...................................................... 3
IRS to the Rescue ........................................... 4
Playing with Words ........................................ 4
Getting Organized .......................................... 4
v Money Matters ...............................................
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“I worked for SBC for
31½ years, and every position I had was
extremely stressful. Swing dancing was
a wonderful release of tension for me. It
was the only time I turned off my pager.
When I was dancing, nothing was going to
interrupt it.”
Swing dancing styles abound, but boiled down, there
are essentially three main forms: Lindy Hop, known as
the original swing dance; East Coast Swing, favored by
country music fans and allegedly the easiest form to learn;
and West Coast Swing, which features mostly blues, pop
or rock music and is said to be the hardest to learn due to
the intricacy of the lead-follow skills.
In most ballroom dance styles, including West Coast
Swing, men are referred to as “leaders” and women are
called “followers.” This terminology is not necessarily
endearing to an independent woman, but the reality is
that women are the stars on the dance floor. “The whole
idea behind these dances is
for the man to show off the
woman, to make the woman
look good,” Tim says. Put
another way, the man serves
as the frame and the woman as
the picture. All eyes are on her.
In West Coast swing, couples
dance in a slot—a designated
area or zone on the floor. The
challenge, Tim says, is to make
the dance look good while
remaining in the slot. “West
Coast Swing is a very difficult dance to master and can
be a humbling experience,” Tim continues. “When I
started back in mid-1996, I had more than two left feet;
I had three. I almost gave up after the first eight weeks.”
Tim’s financial advisor, Karl Simmons, could have
told you that Tim would never toss in the towel that
easily. “Tim has a competitive nature. When he finds
something new, you can be sure he’ll get into it with
both feet,” Karl says, chuckling at the pun.
True to his nature, Tim began practicing incessantly.
“It became such a challenge for me, I couldn’t stand
it.” His effort paid off. Within a year, he had earned the
rank of novice-level Jack & Jill champion in the Texas
state competition.
Rankings stem from accumulated points earned when
a dancer wins or places during a competition. The premise
behind Jack & Jill competitions is to challenge the
participants to dance well while being partnered with
someone they’ve just met. The newly paired couples make
up the dance routine as they go and are judged on timing,
Continued on page 2
“ T h e o r n a ment of a house is the friends who frequent it.” —Ralph Waldo Emerson
00_Q105
2 Winter
2005 v Retirement 411
COMMUNITY SERVICE
FINANCIAL 411
Money Matters
The Power
of the Network
BY SCOTT HANSON
Setting Up
‘Stretch-IRA’ Can
Help Beneficiaries
IRA Beneficiary Designation
Supersedes Will
Q:
Q:
A:
A:
What do I need to do to have my IRA
be a “stretch-IRA”? I’ve read about
stretch-IRAs and even received a phone solicitation
trying to sell me a stretch-IRA. I want my kids to get
my IRA when I die and avoid as much tax as possible.
The term “stretch-IRA” refers to a
strategy used with an IRA, not to a
variety of an IRA. The stretch-IRA is what can
happen to an IRA after your death. When an IRA
has people listed as beneficiaries, as opposed to a
trust or estate, the individuals have an opportunity
to stretch the IRA disbursement for the rest of
their lives. Children cannot roll the IRA into their
own IRAs, but they can leave it intact and take
distributions based upon their life expectancy.
The benefit of stretching the withdrawals for
several years or decades is maintaining the tax-deferred
growth. If the IRA were fully distributed at death,
the money would be fully taxable and would lose
the ability to grow tax-deferred.
For your children to have the greatest flexibility,
you’ll want to make sure your IRA custodian can
do two things at your death: a) split the IRA so
that each child can control his or her own money;
and b) allow a beneficiary IRA to continue for the
remainder of the beneficiary’s life. Although tax
law permits stretch-IRAs, not all IRA providers
are accommodating, so check with your investment
advisor to be sure your children can take advantage
of the stretch rules.
My husband and I each have
an IRA, and if one or both of
us die, what happens to the IRA? Does it get
handled just like any other asset through the
will process? Or do we have to do something
specific in order for it to pass to our heirs?
All qualified retirement
accounts, including IRAs,
401(k)s, 403(b)s, etc., will transfer at death
based upon who or what is listed as the
beneficiary on the account. The beneficiary
designation supersedes any will or trust you have.
For example, if you have a will or trust that states
your surviving spouse is to receive all of your assets
at your death, but you have an ex-spouse listed as a
beneficiary on your IRA (you forgot to change it), your
ex-spouse will receive the account. Your surviving spouse
will be left out in the cold.
If your spouse is listed as the primary beneficiary
on your IRA, upon your death he or she can either keep
the IRA in your name and be listed as beneficiary of the
account or transfer your IRA into an IRA in their name.
The IRA can continue to grow tax-free, and your spouse
will be taxed only when money is withdrawn from the
IRA. Furthermore, retirement accounts bypass probate as
long as there is somebody listed as a beneficiary
on the accounts.
The rules are not as flexible if a non-spouse is listed
as a beneficiary. Non-spouses cannot transfer the IRA
into their own IRA. In addition, there are still required
minimum distribution rules for all beneficiary IRAs. v
Scott Hanson is a co-founder of the Hanson McClain Retirement Network. He is a Certified Financial Planner ™ practitioner, Chartered
Financial Consultant, Certified Fund Specialist and a Practitioner with the Financial Planning Association.
Scott is also a financial talk show host and a columnist. His weekly “Money Matters” column is syndicated nationally.
Tim Allman:
Continued from page 1
technique and teamwork. Dancers can achieve a national
ranking, or at least recognition, through competing in the
larger annual events: the USA Grand Nationals in Atlanta,
Georgia, and the U.S. Open in San Jose, California. Tim, of
course, has attended both. How did he do? He’s a two-time
U.S. Open finalist.
Several years ago, Tim started teaching others the joy of
swing, giving private lessons in his home a few times a week.
He says the most difficult thing for people to learn, regardless
of gender, is also the most crucial: the hand-to-hand
connection. “It’s the essence of the dance, whether it’s a
fox trot, a salsa, or whatever. The key to dancing well is to
become sensitive to your partner’s movements.”
Thinking about taking a few classes? Bring your
leather-soled shoes and your patience. “Nobody does this
quickly and looks good. Just like any other sport, it takes
time and muscle memory. But it’s great fun.” v
STATS
350 million
mento
Ph o t o : S a c ra
The Hanson McClain Retirement Network is composed
of independent advisors specializing in retirement and
financial planning services. These advisors span the United
States, north to south and sea to sea.
These financial advisory offices also take pride in being
good corporate citizens by giving back to the communities in
which they live and work. Every year, these offices donate
their time and money to many charitable events, including
food banks, the Make-A-Wish foundation, educational
projects, disaster relief, and fundraising efforts such as
golf tournaments, barbecues and raffles.
For example, for the past five years, Hanson McClain
Inc. in Sacramento, California, has been a title sponsor
of Run to Feed the Hungry, an annual 5K/10K race. Held
every Thanksgiving Day, the event draws upwards of
15,000 participants and raises more than $300,000 for the
Sacramento Food Bank.
“When our firm gives to charities, we also get
involved by actively working to help them raise funds,
taking part on committees and taking board of directors
seats,” says Pat McClain, co-founder of Hanson McClain.
“Giving isn’t written into our business plan; it’s simply
part of our firm’s culture.” v
411
60 m.p.h.
Number of
cans of chicken noodle soup
sold annually in the U.S.
Velocity of the
average cough.
216
43
Average number of noodles in
each can of Campbell’s chicken noodle soup.
60%
Percentage of cans of chicken noodle
soup purchased during cold and flu season.
100 m.p.h.
Velocity of the average sneeze.
re wer
Bee /Owen B
Number of
muscles used to frown.
17
Number of muscles used to smile.
15
Average number of times per day a
person laughs.
“A fa m i l y i s a u n i t c o m p o s e d n o t only of children but of men, women, an occasional animal, and the common cold.” —Ogden Nash
Retirement 411 v Winter 2005 3
PENSION POINTS
Beneficiary Designations: What’s in a Name?
Telephone Trivia
BY LINDA MEYER AND KEVIN NENTWICH
When was the last time
you verified beneficiary information
for your retirement
plans and insurance policies?
Properly designating a beneficiary and keeping the
forms ensures that your assets are distributed according
to your wishes upon your death. Making such designations and letting your family members know now where
to find the appropriate paperwork reduces the chance of
misunderstandings after your death.
A will is also necessary to ensure the proper
disposition of your estate upon your death. You also may
want to consider setting up a power of attorney in the
event you are unable to sign for yourself during an illness.
You can change your beneficiary at any time by
completing a new beneficiary designation form and
returning it to the plan administrator. Once received,
this new form will supersede any previously completed
form. If you fill out a new document but do not send it to
the plan administrator, the form is not a valid document.
Do your beneficiary designations
1.
chance to invest in Alexander Graham
fit within the
Bell’s telephone company in favor
parameters of your will?
Your beneficiary designation is an integral part of
your entire estate planning. Naming a beneficiary for a
particular plan, like an IRA, may inadvertently result in
one individual receiving more of your estate than you
intended. If you don’t choose a beneficiary for your
plans, consult the plan documents to determine what
default will be used for distribution purposes.
Start the year right by taking some time to review
your benefit information. Speak with your financial
advisor to ensure that your plans are in order and that
your assets will be handled according to your wishes
after your death. v
Linda Meyer is the pension research manager for the Hanson
McClain Retirement Network. She has over 32 years of experience
working for a telecom company in such areas as pension and
disability issues between employees and administrators.
Kevin Nentwich is a Certified Financial Planner™ practitioner
with more than 10 years of financial planning experience. His firm,
Financial Consultants of America, is affiliated with the Hanson
McClain Retirement Network.
Securities offered through Securities America, Inc. Member
NASD/SIPC. Advisory Services offered through Securities
America Advisors, Inc., Kevin M. Nentwich, Representative.
Financial Consultants of America and Securities America are
separate entities.
What famous writer passed up the
of the unsuccessful Paige typesetting
machine?
a. Mark Twain
b. Edgar Allan Poe
c. Ralph Waldo Emerson
2. Which President installed the first
telephone in the White House?
a. Rutherford B. Hayes
b. Ulysses S. Grant
c. Grover Cleveland
3.
What does the “M” stand for in
the name of the long distance
provider MCI?
a. Marketing
b. McGowan
c. Microwave
Answers: 1-a, 2-a, 3-c
As we begin a new year, now is a good time to
make sure your financial records are up to date. When
was the last time you verified beneficiary information
for your retirement plans and insurance policies? Do
your beneficiary designations fit within the parameters
of your will?
CASE STUDY
Retirement Planning: Making the Connection
For a financial advisor, a calculator
can be the most important tool in the
toolbox. In this case, a calculator
played a key role in meeting a
telecom employee whose lifespan
was shorter than he suspected.
After an onsite workshop presentation outlining
the benefits of planning ahead for retirement, the financial
advisor discovered he’d packed up everything but his
calculator. The advisor found a telecom employee to let
him back inside the building. As the advisor returned
to the exit, calculator in hand, he thanked the telecom
employee and handed him a business card. “If you ever
need any help planning for your retirement,” the advisor
said, “give me a call.”
When an early retirement offer cropped up soon
after, the telecom employee remembered the encounter
and called the financial advisor. After meeting
with the advisor and completing an Independent
Personal Retirement Overview (IPRO™), the retiree
decided he wasn’t quite ready to retire because he still
enjoyed his job. Over the next year, the advisor met
several times with the employee, free of charge, to help
him plan his future retirement. And then suddenly, time ran
out. A few months after the last appointment, the employee’s wife called the advisor. Her husband had passed
away unexpectedly and she needed help with the paperwork
from the telecom company to start her survivor’s benefit
process.
At the appointment, the wife clearly was overwhelmed
by the unexpected loss of her husband. Going over the
paperwork, the advisor discovered some of the necessary
forms were missing from the packet. The next morning,
the advisor immediately called the benefits office and
conferenced in the wife, who gave permission for the
advisor to act on her behalf.
Through previous planning meetings with the
advisor, the good news was the employee already
had many things in order for his wife. Because the
advisor had taken the time to get to know the employee
during their meetings, he gained a greater insight into
the employee’s hopes and wishes. This knowledge,
coupled with an in-depth understanding of telecom
company plans, allowed the advisor to quickly
complete the paperwork and get the process under
way—which proved invaluable to the wife during a
highly stressful time.
The chance meeting made from retrieving the
forgotten calculator turned out to be a more important
connection than either party could have imagined. In
addition to your financial situation, make sure your
advisor knows your retirement dreams and goals. It
could make all the difference. v
“ W i n ter is on my head, but eternal spring is in my hear t.” —Victor Hugo
4 Winter
2005 v Retirement 411
72(t) Distributions: IRS to the Rescue
If you are one of the many Americans who dreams
But, wait. There are a few more items to factor in:
of retiring early but aren’t sure you’ll have the income
• Payment period - Once 72(t) distributions start,
they must continue for five years or until you
turn 59½, whichever period is longer. Afterwards,
you are free to change the amount of the payments
or stop receiving them altogether.
you need, you may be surprised to learn that the Internal
Revenue Service can help. 72(t) distributions can be
a valuable tool to help you meet immediate income
• Payment calculations - The IRS approves
needs during your retirement. That’s the good news.
of three methods to calculate the amount of a
72(t) payment:
What’s the not-so-good news? Their help comes
with lots of rules and penalties for noncompliance.
1. Life expectancy
(required minimum distribution)
Fortunately, there’s more good news: your Hanson
McClain Retirement Network-affiliated financial
advisor speaks the IRS’s language and can guide you
through the process.
If you have a retirement plan or IRA and want to
take out money before the normal retirement age, you
can. But there’s a catch. According to IRS Code Section
72(t), if you’re younger than 59½, you’ll most likely
get hit with a 10% penalty—and you may have a state
penalty, as well.
2. Amortization
A few scenarios counteract this penalty, such as:
3. Annuitization
• You become disabled
• Your medical expenses total more than 7.5% of
your adjusted gross income
• You take the distributions as part of a series of
substantially equal periodic payments (SEPPs)
• And, lastly, you die (note: make sure your beneficiary
forms are up to date)
g
n
i
y
with Words
a
Pl
BY
A hangover is the wrath of grapes.
Reading while sunbathing makes you
well red.
A bicycle can’t stand on its own
because it is two tired.
Time flies like an arrow; fruit flies
like a banana.
1.
2.
3.
Local Area Network in Australia:
the LAN down under.
4.
A lot of money is tainted—
it taint yours and it taint mine.
5.
He had a photographic memory that was
never developed.
Santa’s helpers are subordinate clauses.
MARIA GRACIA
This year can be your most organized yet, if you follow these simple tips:
A chicken crossing the road is
poultry in motion.
Bakers trade bread recipes on a
knead-to-know basis.
Sound confusing? It can be if you don’t fully
understand the program. If you are considering a 72(t)
distribution, work closely with your financial advisor
to ensure the distributions meet your cash flow and
retirement objectives. v
6 Tips
for Getting Organized in the New Year
Dijon vu—the same mustard as before.
Does the name Pavlov ring a bell?
Each method produces a different figure. Your
financial advisor can help you decide which one is
best for your situation.
6.
SET GOALS WITH DEADLINES. The first step in getting organized is goal setting. Do you want to
organize your home? Your office? Your exercise program? Your family? Your time? Jot down exactly
what you want to do, and designate a deadline for accomplishing that goal. The deadline should be as
specific as possible (e.g. Feb. 10, or July 7, etc.).
MAKE MINI-GOALS. Break your goals down into small, bite-sized pieces. For instance, instead of a
large goal, such as organizing your entire house, choose one room at a time. Or, instead of organizing
all of your business files, start with one drawer. Smaller pieces are easier to accomplish.
DESIGNATE REWARDS. Always designate an enticing reward for each goal you accomplish.
The reward acts as your motivator and helps you achieve your objectives.
USE A CHEERING SECTION. Inform your family and/or friends of your goals. Ask them for their
support. Ask them to ask you about your accomplishments from time to time, so you stay on track.
LAUGH AT MINOR SETBACKS. Don’t expect everything to run perfectly smooth. As with any
improvement you’re trying to make, there are bound to be bumps in the road. Don’t get discouraged.
Ask questions. If it looks like you’re not going to accomplish your goal by your deadline, simply
reschedule. It’s better to get back on track than to give up.
KEEP A “CAN DO” ATTITUDE. Attitude is everything. If you think you’re going to fail, you will.
If you think you’re going to succeed, you will. Zig Ziglar, a motivational speaker, always says that
to succeed, you must get rid of that “stinkin’ thinkin’” and set your mind to achieving your goals.
“ H a p p i n e s s i s h aving a large , loving, caring, close-knit family in another city.” —George Burns