What Is Distribution Management?

    Distribution management is a proactive approach to planning withdrawals from retirement accounts and investment portfolios that addresses your immediate and future financial needs while mitigating your tax liability. The goal is to provide income to support your lifestyle now and for life in retirement, preserve wealth for heirs and charitable giving, and leave you with a legacy you can be proud of.

     

    Distribution Strategies: Income Planning for Every Age and Stage of Life

    To help you reach these financial milestones, your dedicated EP Wealth financial planning advisor enables you to prepare for retirement so you don’t potentially outlive your assets.

     

    Calculating Safe Withdrawal Rates

    The first step in a distribution management strategy is determining how much income you will need in retirement. Your retirement number is calculated based on your age, standard of living, and retirement targets while accounting for inflation.

    Beginning with this calculation, we help you determine a tailored amount or percentage that you can withdraw for retirement and investment accounts each year without depleting your retirement savings.

     

    Spreading Withdrawals Across Multiple Accounts

    EP Wealth advisors implement bucket strategies to meet your financial needs at different time horizons, funding immediate expenses and providing for long-term objectives. By dividing your assets into multiple buckets, you may be better positioned to weather market downturns, since your money is spread across different investments of varying liquidity and risk.

     

    Scheduling Withdrawals to Try to Mitigate Taxes

    We also use your retirement number as a benchmark to schedule pre-planned monthly, quarterly, or annual payments from retirement accounts and other investments using a systematic withdrawal plan (SWP). Methodical withdrawal sequencing taps into different accounts each year to manage your tax liability and retain as much money as possible in tax-advantaged accounts.

     

    Ladder Conversion for Early Retirees

    For those dreaming of an early retirement, shifting funds from a traditional retirement account to a Roth IRA multiple times over several years may also be possible. This process, known as a Roth conversion ladder, allows you to tap into tax-sheltered accounts before age 59 ½ while avoiding the 10% tax on early distributions—as long as it has been at least five years since you contributed to a Roth account.

     

    Additional Considerations for Managing Distributions

    Managing distributions is highly complex and involves many variables. To start, investment performance and market fluctuations affect the value of your portfolio holdings. In a down market, for example, you may need to sell additional assets to meet your target withdrawal amounts.

    Tax law changes, including contribution limits for retirement plans and shifts between tax brackets, also require adjustments to stay on track with your retirement goals. We help our clients navigate these changes.

    When looking toward the future, we also have to consider future healthcare costs, assess what you have earmarked for these expenses, and fine-tune your retirement plan based on your health history and medical coverage.

    A successful distribution management strategy reflects your income needs and tax considerations while preserving your portfolio. Investment management advisors at EP Wealth work towards optimizing your withdrawal strategy and maximizing distribution opportunities to stretch your retirement savings. To learn more, contact an advisor near you.

     

    DISCLOSURES:

    • EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability
    • Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
    • Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
    • The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
    • Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
    • EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
    • The content of this report is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions; including changes to retirement benefits, social security, and/or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.
    • All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.
    • Laws vary by state. The information presented herein is intended to be general in nature and may not apply to your state of domicile. Please consult local legal counsel to determine the best practices for your state.
    • Please consult with a CPA, tax professional, and/or attorney regarding your specific situation before implementing any of the strategies referenced directly or indirectly herein.

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