Author: Web.com

What You Need to Know about Early Withdrawals from Retirement Plans*

Taking an early withdrawal from your Individual Retirement Account (IRA) may be tempting. But the tax penalty can make a significant dent in your long-term financial plan.

Here are some terms and requirements to keep in mind before considering an early withdrawal:

  • Early withdrawals are defined as taking distributions from your IRA or retirement plans before the age of 59½.
  • Taxpayers must report withdrawals to the IRS when they file their tax returns. They may owe income tax on withdrawals and pay an additional 10% tax penalty.
  • Nontaxable withdrawals aren’t subject to the 10% tax penalty. Examples include contributions on which taxpayers paid taxes before the money was deposited into the plan.
  • Rollovers happen when plan holders move money or other assets from 1 plan to another. The IRS allows a maximum of 60 days to complete a rollover to keep it tax-free.
  • Certain exceptions exempt plan holders from the 10% tax penalty. Many retirement plan and IRA rules differ.
  • Disaster Relief provisions exempt plan holders in certain disaster areas from the 10% tax penalty.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Tip adapted from IRS.gov[14]

[14] www.irs.gov/newsroom/things-to-remember-when-considering-early-withdrawals-from-retirement-plans

Markets Post Week of Growth

On Friday, the markets closed the week gaining traction. The Dow had 7 days of consecutive growth, rising 2.34% – its largest weekly gain since March.[1] Meanwhile, the S&P 500 rose 2.41%, the NASDAQ jumped 2.68%, and the MSCI EAFE increased 1.41%.[2]

 Various factors came together to support the growth. From geopolitical topics to strong corporate earnings, we’ll focus on 3 key developments that drove movement.

1. Energy Shares Boosted by Iran Nuclear Deal Withdrawal

President Trump’s decision on Tuesday to withdraw from the Iran nuclear deal helped push the energy sector higher. With the possibility of renewed sanctions on the horizon, the anticipation of a pullback from global oil supplies helped boost prices. Though oil prices fell from a 3½ – year high on Friday, it was the 2nd week of growth, driving energy shares to rise 3.8%.[3]

2. Technology Sector Jumps Amid Strong Corporate Earnings

After the technology sector’s months of stagnation – fueled in part by recent fears over privacy – it is now approaching all-time highs. Since April 25, the information technology sector has increased 9%. The movement is driving many investors to join the rally, while many analysts remain cautious.[4] Overall, the growth contributed 3.5%.[5]

This rally happened on the back of strong corporate earnings. Over 70% of total S&P 500 companies reported earnings growth that exceeded expectations. Last week’s positive reports helped push the index past 50- and 100-day moving averages.[6]

3. Inflation Remains Steady

The Consumer Price Index (CPI), which measures the price of goods and services, rose only 0.2% for the month in April and 2.5% over the year. These reports both missed and met expectations, respectively.[7] The tepid growth caused some investors to worry that the Federal reserve would raise interest rates more quickly, as the U.S. dollar fell and held below its 2018 high.[8] Some analysts, however, believe that the missed expectations should ease the Fed’s pressure to fast-track interest rates.[9] 

Looking Ahead

We will continue tracking geopolitical developments – from potential actions against Syria, tariffs on Iran, and preparations for President Trump’s upcoming meeting with North Korea’s Kim Jong-un.[10] In addition, key discussions around the American Free Trade Act and trade relationships with China remain on the horizon.[11] We also will gain our first insights on how well consumer spending performed in the 2nd quarter.[12]

If you would like to discuss any developments or gain a clearer understanding of how these issues may affect your portfolio, contact us today. We are always here to help you make sense of your financial life and gain clarity for the road ahead.

[1] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI®ion=usa&culture=en-US

www.cnbc.com/2018/05/11/us-stock-futures-dow-data-oil-and-politics-on-the-agenda.html

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

www.msci.com/end-of-day-data-search

[3] www.marketwatch.com/story/us-oil-prices-hover-at-3-12-year-highs-as-analysts-entertain-the-idea-of-100-crude-2018-05-11

www.cnbc.com/2018/05/11/us-stock-futures-dow-data-oil-and-politics-on-the-agenda.html

[4] www.cnbc.com/2018/05/11/wall-street-underestimates-how-strong-this-tech-rally-is-strategist.html

[5] www.cnbc.com/2018/05/11/us-stock-futures-dow-data-oil-and-politics-on-the-agenda.html

[6] www.bloomberg.com/news/articles/2018-05-11/better-late-than-never-for-s-p-500-as-tech-ignites-weekly-rally

[7] wsj-us.econoday.com/byshoweventfull.asp?fid=485631&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

[8] www.reuters.com/article/uk-global-forex/cpi-miss-keeps-dollar-below-2018-peak-sterling-falls-idUSKBN1IB027

[9] wsj-us.econoday.com/byshoweventarticle.asp?fid=494340&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

[10] www.cnbc.com/2018/04/12/asia-markets-trade-geopolitics-stocks-and-currencies-in-focus.html

www.cbsnews.com/news/tariffs-iran-sanctions-stoke-worries-of-a-global-slowdown/

[11] wsj-us.econoday.com/byshoweventarticle.asp?fid=494339&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

[12] wsj-us.econoday.com/byshoweventarticle.asp?fid=494340&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top

RCG Introduction

Welcome to the Ramsay Capital Group Blog and our first post!  We are excited to be in the Highland Park neighborhood of Saint Paul and enjoy working with people in this community (Mac Groveland, Summit Hill and Crocus Hill) and other surrounding neighborhoods in the Twin City Metro area.  We purchased this beautiful 1922 original Mom & Pop store in May of 2016 and spent the next four months renovating the main level.  During this process, we restored the hardwood floors and other period-specific details including a door in the floor we uncovered.  This was likely used to store dry goods and keep them cool.  Please stay tuned weekly for market updates, educational information and our thoughts on the markets. Some of the topics you can expect to read about here are:

  • Financial Planning
  • Portfolio Management
  • Overall Thoughts on the Market
  • Retirement Planning
  • College Planning
  • Life Insurance
  • Health Insurance
  • Disability Income Insurance
  • Long-Term Care Insurance
  • Estate Planning
  • Tax Tips
  • Neighborhood Events and Happenings
  • Restaurant / Foodie News

Our Mission at Ramsay Capital Group is to ensure the financial success of our clients now and throughout retirement.  We understand how hard you work and that retirement has varying definitions to different people.  We are client-focused and work closely to develop long-term relationships. Scott Ramsay is a Financial Advisor and founder of Ramsay Capital Group who lives and works with his family in the Highland Park and Mac Groveland neighborhoods of Saint Paul Minnesota.