'Ares Management employees can leverage the Roth IRA's tax-free growth, flexibility in retirement withdrawals, and estate planning advantages to enhance their long-term financial strategy, especially as tax rates fluctuate over time.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group.
'Ares Management employees can significantly enhance their retirement planning by utilizing Roth IRAs to maximize tax-free growth, reduce taxable income in retirement, and strategically plan for future tax changes, offering a powerful tool for long-term financial security.' – Kevin Landis, a representative of The Retirement Group, a division of Wealth Enhancement Group.
In this article, we will discuss:
-
The tax-free growth and withdrawal benefits of a Roth IRA and how they compare to traditional retirement accounts.
-
How the Roth IRA helps enhance estate planning and tax flexibility for Ares Management employees and retirees.
-
Key strategic advantages, including contribution accessibility, conversions, and managing potential future tax increases.
The Roth Individual Retirement Account is an attractive option for Ares Management employees looking to grow their wealth and create tax-efficient savings in an ever-changing Retirement Planning landscape. Its structure - which allows tax-free growth and withdrawals - gives strategic benefits for long-term financial health.
Growth & Withdrawals Without Taxes.
When Ares Management professionals contribute to a Roth IRA, they contribute after-tax cash - money already taxed. Unlike traditional IRAs that may offer immediate tax deductions for contributions. The Roth IRA does not. But it compensates by making growth of the account and distributions during retirement fully exempt from federal tax and often not taxed at the state or local level either. This can add value to retirement savings when investments can grow tax free.
No Minimum Distributions Are Required.
There are no required minimum distributions (RMDs) during the owner's life - a major benefit for Ares Management employees considering a Roth IRA. Some other retirement accounts require RMDs starting at age 73, that may raise taxable income. Lacking RMDs gives estate planners more freedom in estate planning and may increase the wealth passed to heirs.
Benefits of Estate Planning
Though inherited Roth IRAs require RMDs, their tax-free withdrawal benefit makes them a popular part of an estate plan. Some complicated issues for Ares Management employees using a Roth IRA for estate planning require financial and legal advice.
Flexible Retirement Tax Planning.
And for Ares Management retirees, Roth IRA withdrawals are tax free under certain conditions - giving you considerable flexibility with taxable income. This flexibility may let retirees switch from taxable account withdrawals to Roth withdrawals to reduce taxable income and extend the life of their retirement funds while reducing taxes.
Potential Reduction in Surtaxes
The Roth IRA may reduce exposure to Net Investment Income Tax (NIIT). Unlike traditional retirement plan distributions that might trigger NIIT tax liabilities, qualified withdrawals from a Roth IRA do not count toward income thresholds that trigger this surtax.
Managing Possible Future Tax Increases.
Historically unstable tax rates and low federal income rates mean some Ares Management employees can take advantage of today's low tax rates on contributions and potentially save taxes should rates rise in the future.
Contribution Accessibility
A Roth IRA lets you contribute at any age as long as they have earned income. Especially for Ares Management employees - this could let them absorb unexpected costs without a financial hitch.
Age-Related Continued Eligibility
Unlike other retirement plans that cap contributions at age sixty-two, the Roth IRA lets Ares Management employees contribute as long as they earn income. That helps particularly if you continue to work into your later years to build your retirement savings.
Opportunities for Conversion
Those Ares Management employees with incomes that exceed IRS contribution limits for Roth IRAs still can convert money from traditional IRAs or other retirement accounts. Taxes paid on this strategy could pay off in the long haul as you move money into an account that can grow and withdraw without tax.
It is an excellent tool for retirement fund management that offers estate planning, tax efficiency and financial flexibility. Though it provides strategic options at all income levels and career stages, it requires planning and expert advice to maximize the benefits.
Spousal IRA Contribution Benefits
The spousal IRA contribution is often overlooked but is a valuable feature of the Roth IRA for those approaching retirement. This lets the working spouse contribute to a Roth IRA on behalf of a non-working spouse - effectively doubling the household capacity for tax-free growth and withdrawals. This is particularly relevant in couples where one partner has retired early.
Articles you may find interesting:
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
Sources:
1. Internal Revenue Service. Roth IRA Distribution and Conversion Rules . IRS, Jan. 2024, https://www.irs.gov/Roth-IRA .
2. Hodge, Scott. Historical Tax Trends & Roth IRAs . Tax Foundation, Nov. 2023, https://taxfoundation.org/Tax-Rates .
3. Block, Sandra. Estate Planning with Roth IRAs . Kiplinger, Oct. 2023, https://www.kiplinger.com/Retirement-RothIRA .
4. Curry, Benjamin. Roth IRA Contribution and Withdrawal Flexibility . Investopedia, Dec. 2023, https://www.investopedia.com/Roth-IRA-Flexibility .
What is the purpose of Ares Management's 401(k) plan?
The purpose of Ares Management's 401(k) plan is to help employees save for retirement by providing a tax-advantaged way to contribute a portion of their salary.
What types of contributions can employees make to Ares Management's 401(k) plan?
Employees can make pre-tax contributions, Roth (after-tax) contributions, and, if eligible, catch-up contributions to Ares Management's 401(k) plan.
Does Ares Management offer a company match for 401(k) contributions?
Yes, Ares Management offers a company match for employee contributions to the 401(k) plan, subject to specific terms and conditions.
How often can employees change their contribution amounts to Ares Management's 401(k) plan?
Employees can change their contribution amounts to Ares Management's 401(k) plan at any time, subject to plan rules.
What investment options are available in Ares Management's 401(k) plan?
Ares Management's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
Is there a vesting schedule for the company match in Ares Management's 401(k) plan?
Yes, Ares Management has a vesting schedule for the company match, which determines when employees fully own the matched contributions.
What is the maximum contribution limit for Ares Management's 401(k) plan?
The maximum contribution limit for Ares Management's 401(k) plan is set by the IRS and may change annually; employees should check the current limit for the year.
Can employees take loans against their 401(k) balance at Ares Management?
Yes, Ares Management allows employees to take loans against their 401(k) balance, subject to specific terms and conditions outlined in the plan.
What happens to an employee's 401(k) balance if they leave Ares Management?
If an employee leaves Ares Management, they can choose to roll over their 401(k) balance to another retirement account, leave it in the plan, or withdraw it, subject to tax implications.
How can employees access their 401(k) account information at Ares Management?
Employees can access their 401(k) account information through the Ares Management benefits portal or by contacting the plan administrator.
-2.png?width=300&height=200&name=office-builing-main-lobby%20(52)-2.png)
.webp?width=300&height=200&name=office-builing-main-lobby%20(27).webp)
-2.png)
.webp)