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What to do if you have to retire early

Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.

What to do if you have to retire early
Seniors who are forced to retire sooner than planned should weigh their options carefully before making any moves that could hurt their financial prospects, writes an expert on Kiplinger. For example, they will face a tax bill and possibly a penalty if they dip into their 401(k) prematurely, says the expert. Seniors who retire early should consider a part-time job, create a tax-efficient withdrawal strategy, adjust their portfolio when necessary and determine whether they should file for or delay their Social Security benefits.

While many clients are awaiting final regulations from the Treasury, a contingency plan for the tax-filing season has yet to be laid out from the IRS.
A pedestrian walks past the Internal Revenue Service (IRS) headquarters in Washington, D.C., U.S., on Tuesday, Jan. 8, 2019. The IRS will issue refunds to taxpayers even if the U.S. government shutdown extends into the filing season, a decision that may reduce political pressure on Congress and President Donald Trump to reach a deal to reopen the federal government. Photographer: Andrew Harrer/Bloomberg

How to divide retirement plan assets in a divorce
Couples who are filing for divorce can divide their retirement plan assets through a Qualified Domestic Relations Order, writes a Forbes contributor. A QDRO "is a judgment, decree or order for a retirement plan to pay child support, alimony or marital property rights to a spouse, former spouse, child or other dependent of a participant," writes the expert. "Although your divorce settlement may say you have rights to a portion of your spouse’s retirement plan, the distribution must be done pursuant to a QDRO so as not to disqualify the plan for assigning benefits to a person other than the plan participant."

Americans are saving more for retirement, but it may not be enough
Data from Fidelity Investments show that the average employee contribution to 401(k) plans rose 15% to $2,370 per account in the first quarter compared with the same period last year, according to this article on MarketWatch. The average employer contribution also hit a record high of $1,780. While the figures show a positive trend, some workers will need to boost their retirement plans contributions, as they need to save as much as 15-20% of their pay to secure their golden years.

A new fight breaks out over 401(k) fees
Data from BrightScope Inc. and the Investment Company Institute show that 401(k) fees dropped to 0.51% of assets in 2015 from 0.65% in 2009, according to this article on The Wall Street Journal. This prompted some 401(k) administrators to look for new sources of revenue. Despite the decline in 401(k) fees, a new lawsuit surfaces, alleging that some financial-services firms failed to protect the interest of 401(k) participants as they attempted to generate new revenue.

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