Our daily roundup of retirement news your clients may be thinking about.
Pension buyout or payments for life? Start with the trade-offs
People who have the option to get a sizable lump-sum payment of their pension need to weigh the trade-offs before making a decision, according to this article on MarketWatch. A pension or annuity payment is preferred if they have a conservative investment approach, expect to live longer, have no plans of leaving assets behind when they die, and are confident that the pension plan will continue to be financially viable. The lump-sum payment is recommended if clients are open to take on investment risk, have an average life expectancy, want to leave some assets to family, friends and charities, and are concerned the pension plan won't last. --MarketWatch
Changes coming to target-date mutual funds
401(k) participants need to know the changes to target-date mutual funds, which are among the most popular options in employer-sponsored retirement plans, according to this article on USA Today. More plan sponsors are replacing their record keeper's proprietary target-date funds with custom target-date funds, according to a report from Callan Investments Institute. The trend is a result of a combination of factors, such as the lagging performance of proprietary target-date funds and the need to document the process, says Lori Lucas, an executive vice president of Chicago-based Callan Associates. --USA Today
IRA mistakes to avoid
The Individual Retirement Account is the top receptacle for retirement savings as assets in IRA accounts amounted to over $7.3 trillion in the third quarter of 2014 based on figures from the Investment Company Institute, according to this article on Morningstar. While it is easy to open an IRA, retirement savers can still make wrong decisions along the way. For example, clients should not wait until the 11th hour to contribute. Read about that and other common mistakes that IRA investors need to avoid so they can make the most of their accounts. --Morningstar
Tax-filing tips for retirement fund withdrawals
People who withdrew an amount from their retirement accounts last year need to include these withdrawals in their tax returns, according to this article on CBS Moneywatch. They should have received from the retirement plan's administrator or IRA custodian Form 1099 R, a document that provides the total withdrawals made from the account after making the withdrawal. Clients are advised to check the figures in several boxes carefully to make sure that the form bears accurate information and they include the right details in their tax returns. --CBS Moneywatch
Retirement planning: 3 things baby boomers need to know
There are 10,000 baby boomers who turn 65 per day, meaning more of them are expected to tap their retirement savings, according to this article on the Motley Fool. Most of these baby boomers are in their peak earning years, so they are advised to cut on unnecessary spending and increase contributions to their retirement accounts, according to one expert. --The Motley Fool
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