How Recent Retirement Legislation Will Affect State Employees

Recently, the Arizona Legislature passed three retirement bills that will impact ASRS members,including teachers. Those affected would be wise to review these changes closely to determine how your retirement plans will be affected.

Balancing a Retirement Portfolio with Asset Allocation (March 2016)

The combination of investments you choose is as important as the individual investments themselves. In fact, many experts argue that it's even more important, since the mix of various types of investments accounts for most of the ups and downs of a portfolio's return. Each type of investment, or asset class, has strengths and weaknesses that let it play a specific role in your overall investing strategy. Some investments, such as stocks, may be chosen for their growth potential. Other asset classes, such as bonds, may provide regular income. Still others may offer relative stability or serve as a place to park money temporarily. And some investments may try to fill more than one role.

On November 8, 2016, Republican candidate Donald J. Trump won a closely contested election for president of the United States.

Late on election night, when it became evident that Trump was likely to win despite consistently trailing in the polls, foreign markets went into a deep dive.1 Many observers expected a similar reaction when the U.S. stock market opened on November 9, but after an initial drop, the S&P 500, Dow Jones Industrial Average, and NASDAQ rose throughout the day, and all three indexes closed up more than 1%.2 Although this was unexpected after the late-night surprise, it actually continued a two-day upsurge that began when Democratic candidate Hillary Clinton was expected to win the election.3

Tax Credit for IRAs and Retirement Plans (“Saver’s Credit”)

The Economic Growth and Tax Relief Reconciliation Act of 2001 made significant changes to IRAs and retirement plans. One provision of the act allows some low- and middle-income taxpayers to claim a partial, nonrefundable income tax credit (the “saver’s credit”) for contributing to certain tax-deferred retirement savings vehicles. The credit can be applied against the taxpayer’s regular income tax liability (or minimum tax liability, if paying under the alternative minimum tax system) and is in addition to any income tax deduction the taxpayer receives for making the contribution. The purpose of this provision is to encourage retirement savings among those who, typically, can least afford to save.

Understanding Employer Plans 

Before you can take advantage of your employer’s plan, you need to understand how these plans work. Read everything you can about the plan and talk to your employer’s benefits officer. You can also talk to a financial planner, a tax advisor, and other professionals.

Early Returns: How U.S. Markets Reacted to the Presidential Election

The Benefits of Tax-Advantaged Savings Vehicles

Taxes can take a big bite out of your total investment returns, so it’s helpful to look for tax-advantaged strategies when building a portfolio. But keep in mind that investment decisions shouldn’t be driven solely by tax considerations; other factors to consider include the potential risk, the expected rate of return, and the quality of the investment.

Hardship Withdrawals from Employer-Sponsored Retirement Plans

Hardship withdrawals are a type of “discretionary” distribution available from certain employer-sponsored retirement plans. Retirement plans aren’t required to allow employees to take hardship withdrawals while they are still working for the employer. Consult your plan administrator or your employer’s benefits department to find out if hardship withdrawals are available from your plan.

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