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Oneok Employees: Navigating Market Dips with Roth Conversions for Retirement

Market downturns can create a unique tax-efficient window for Roth conversions, and for many Oneok employees, this strategy—when timed and planned carefully—may enhance long-term retirement outcomes. – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement Group.

Roth conversions during market volatility can be a smart strategic move for Oneok employees seeking to manage future tax liabilities and improve retirement flexibility. – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

Best timing for Roth conversions during market downturns.
Tax implications and Medicare considerations.
Retirement planning strategies with long-term value.

Why Roth Conversions Can Benefit During Market Volatility.

While some caution against retirement accounts like 401(k)s in volatile markets, Roth conversions present a compelling opportunity for Oneok employees. This involves moving money from tax-deferred accounts like traditional IRAs or 401(k)s into Roth IRAs where earnings are not taxed. The reasoning is simple: Converting when market values are lower reduces the taxable amount and opens up more growth potential when the market recovers.

Thoughtful Roth Conversion Planning

To convert - it takes more than market conditions to consider your tax outlook, future income needs, and other economic factors. Financial planner Russell Hackmann recommends Roth planning for five to ten years to accommodate complicated financial modeling. These projections can help assess the impact on inheritances and required minimum distributions (RMDs) in a context of broader retirement strategy.

Timing Roth Conversions During Market Changes.

The timing of a Roth conversion often matters. Converting during market downturns means assets are moved at temporarily reduced values with potential for future growth. Such an approach should be evaluated alongside your overall financial plan, considering present and future tax rates as well as estate planning - particularly for Oneok employees working in retirement.

Tax & Medicare Effects.

The conversion typically involves selling assets in tax-deferred accounts to a Roth. This can mean higher taxable income in the year of conversion and potentially put people in a higher tax bracket. And people over 65 could see higher Medicare premiums because of IRMAA (Income-Related Monthly Adjustment Amount) rules that tie premiums to income.

Prepare Financially for Conversion.

Paying taxes from outside funds instead of the converted amount may help avoid having the transferred amount reduced to a Roth IRA. This is particularly important during economic uncertainty when liquidity for unplanned expenses is essential. Two types of reserves - one for regular expenses and one for conversion-related taxes - may help employees plan ahead.

Long-Term Value and Considerations

The resulting reduction in RMDs may reduce future tax brackets for retirees. For those with large retirement balances, acting earlier could save on future taxes. This makes it a consideration for Oneok employees looking to improve their retirement planning outcomes.

Roth conversions may help with tax management and long-term retirement planning. But they require close review of an individual's financial profile, tax considerations, and market conditions. Detailed planning tools or financial professional advice can help direct those choices toward longer-term goals.

Becoming proactive and responsive to changes - like IRS life expectancy table updates that affect RMDs - is also important. These changes also extend the timeline for tax-deferred growth and make Roth conversions more appealing to some employees over age 60.

Five prestigious financial publications support the claim of Roth conversions. Identifies each source with author name and publication date, page/reference, and explains how it helps retirees and defends the arguments in your article.

Articles you may find interesting:

Sources:

1. Schwab-Pomerantz, Carrie. Roth Conversions Can Benefit Retirees, Even With IRMAA Considerations. Kiplinger , 8 Feb. 2024, Kiplinger Article .

2. Benz, Christine. Why You Should Consider a Roth Conversion Now. Morningstar , 31 Oct. 2022, Morningstar Article .

3. Templin, Neal. Roth Conversions Can Be a Smart Way to Reduce Required Minimum Distributions Later. Barron’s , 21 Nov. 2023, Barron's Article .

4. Rae, David. Roth Conversions During a Market Downturn Make Financial Sense. Forbes , 14 June 2022, Forbes Article .

5. Dore, Kate, CFP®. Roth IRA Conversions Are Up as Investors Seek to Reduce Future Taxes. CNBC , 16 May 2023, CNBC Article .

What specific factors does ONEOK, Inc. consider when determining an employee's eligibility for retirement benefits, and how do these factors align with commonly understood retirement planning principles in the context of the ONEOK, Inc. Retirement Plan?

Eligibility Factors: ONEOK, Inc. considers several factors when determining eligibility for its retirement plan, such as date of hire, age, and participation in certain programs like the Profit Sharing Plan. Employees must have been hired before January 1, 2005, and must meet the minimum age of 21 to be eligible(ONEOK_Inc_Retirement_Pl…). These factors align with common retirement planning principles, such as ensuring long-term employment and participation in benefit programs.

How does the structure of the ONEOK, Inc. Retirement Plan impact the financial planning strategies of employees who are nearing retirement age, particularly in relation to their final average earnings and years of credited service?

Plan Structure and Financial Planning: The ONEOK Retirement Plan uses a formula based on Final Average Earnings and Years of Credited Service. This structure impacts employees' financial planning, as it encourages maximizing years of service and optimizing earnings in the final years before retirement(ONEOK_Inc_Retirement_Pl…). Employees nearing retirement should focus on maximizing both variables for a stronger financial outcome.

In what ways can changes to the IRS limits in 2024 affect the retirement planning of employees participating in the ONEOK, Inc. Retirement Plan, and how can they adapt their strategies to accommodate these changes?

IRS Limits and Impact on Planning: Changes to IRS limits, such as increases in contribution caps or income thresholds, could affect employees’ ability to defer taxes and maximize savings(ONEOK_Inc_Retirement_Pl…). Employees can adapt by adjusting their contributions to their 401(k) or other retirement accounts in line with new limits, ensuring they stay within allowable tax advantages.

For employees considering early retirement, what are the implications of selecting this option under the ONEOK, Inc. Retirement Plan compared to waiting for normal retirement benefits, and what should they consider regarding potential reductions in benefits?

Early Retirement vs. Normal Retirement: Opting for early retirement under the ONEOK Plan can lead to a reduction in benefits, as payments are reduced based on the Early Retirement Benefit Reduction Schedule(ONEOK_Inc_Retirement_Pl…). Employees should consider their financial needs and health before making this decision, as waiting until normal retirement age results in higher monthly benefits.

How does the process for applying for retirement benefits at ONEOK, Inc. work, and what specific documentation and timelines should employees be prepared to navigate in order to ensure a smooth transition into retirement?

Retirement Application Process: Employees must request a retirement estimate online or through HR, and submit retirement forms and documentation to initiate benefits(ONEOK_Inc_Retirement_Pl…). Timely submission is key to ensure a smooth transition, and benefits usually begin the first of the month after retirement.

What options are available to employees of ONEOK, Inc. if they wish to change their designated beneficiaries in the retirement plan, and how can they ensure that these changes are executed properly?

Changing Beneficiaries: Employees can change their designated beneficiaries by submitting a pre-retirement death beneficiary form(ONEOK_Inc_Retirement_Pl…). Spousal consent is required for changes that involve someone other than the spouse, and notarization is needed to ensure proper execution.

How does ONEOK, Inc. manage the investment of its retirement plan assets, and what guidelines are in place to ensure that participants' funds are invested prudently and in alignment with their retirement goals?

Investment Management: ONEOK manages its retirement plan assets in a trust, with investments overseen by plan fiduciaries following an investment policy(ONEOK_Inc_Retirement_Pl…). This policy ensures that funds are invested prudently, balancing risk and returns in alignment with participants' retirement goals.

In terms of employee rights under ERISA, what recourse do employees of ONEOK, Inc. have if they believe their benefits are being mismanaged or if they encounter issues when filing claims related to their retirement benefits?

ERISA Rights and Recourse: Employees have rights under ERISA, including the ability to file claims and appeals if they believe their benefits are being mismanaged(ONEOK_Inc_Retirement_Pl…). If claims are denied, they can appeal and ultimately take legal action under Section 502(a) of ERISA if necessary.

What procedures does ONEOK, Inc. have in place for communicating changes to the retirement plan, and how can employees stay informed about updates that may affect their benefits or retirement planning?

Plan Updates and Communication: ONEOK communicates changes to its retirement plan through electronic and physical notices(ONEOK_Inc_Retirement_Pl…). Employees are encouraged to stay updated by regularly reviewing these communications and contacting HR if they need clarification.

How can employees of ONEOK, Inc. reach out for additional information regarding the retirement plan, and what are the best practices for utilizing the resources available for retirement planning assistance?

Accessing Retirement Information: Employees can contact ONEOK HR Solutions or access the Employee Self-Service platform for detailed information about their retirement plan(ONEOK_Inc_Retirement_Pl…). Best practices include regular consultations with HR to stay informed and plan effectively for retirement.