Ready or Not, IRA Deposits Are Headed Your Way
By Stephanie Swanson, CIP, CHSP
IRA assets are growing due to a variety of reasons—stock market volatility, rollovers from retirement plans, generational savings trends, an evolving IRA life cycle—and all of them present ways for your financial organization to gain new deposits. But just reacting to the marketplace isn’t enough. To capitalize on these opportunities, you must have a proactive strategy—and it starts with IRA education.
When your organization demonstrates extensive technical knowledge of IRA topics, from portability to beneficiary options, your clients receive the customer service that they expect—and your risk of compliance errors decreases. Fewer mistakes means retaining your clients, protecting your reputation, and securing more IRA deposits.
Consider Your Opportunities
Anytime individuals move their retirement savings, financial organizations have an opportunity to grow their deposits. And the money is moving. Consider the following reasons why it’s prime time for IRA deposits, and how an IRA education can lead to claiming them.
The stock market’s ups and downs have triggered IRA owners to look for ways to preserve their retirement savings. They may be seeking the stability and security that a bank or credit union provides. Consequently, clients may turn to your organization for information about Traditional and Roth IRA eligibility requirements, benefits, and potential distribution penalties. Accurately answering these types of questions for your clients can prevent them from making hasty withdrawals or contributions that could result in unexpected tax liability later. Eventually, this may lead to an increase in deposits as you gain their trust.
Rollovers and Portability
As far as IRA contributions go, rollovers are king. The “U.S. Retirement Markets 2018” Cerulli Report shows that from 2012 to 2017, almost 96 percent of total Traditional IRA contributions were rollovers from employer-sponsored retirement plans. Rollovers will continue to grow as more workers retire. Over the next 10 years, 10,000 baby boomers will turn 65 every day. Many of them will be looking for somewhere to put their 401(k), 403(b), or other employer plan savings. According to an Investment Company Institute research report, in 2016, the average Traditional IRA rollover amount for individuals ages 65‒69 was $183,041. Being knowledgeable on portability rules and their potential consequences can aid your organization in capturing these large rollover amounts.
Required Minimum Distributions (RMDs)
A miscalculated RMD or one not taken timely could result in a hefty excise tax (i.e., 50 percent of the amount not taken) for the IRA owner. Traditional and SIMPLE IRA owners who are age 70½ and older will count on you to help with these calculations. Making an RMD error or providing wrong information could not only cost your IRA owners, but could cost you their business.
Beneficiaries and Inherited IRAs
Beneficiaries commonly have many questions about their inherited IRAs. Clearly explaining their distribution options and their RMD obligations is a great way to build trust and form new relationships—ultimately keeping their deposit dollars at your financial organization.
Find Your Education Solution
Your organization may already have a strategy in place to secure deposits—but what about the required expertise? Maybe you have an IRA expert on staff who can handle the tough IRA topics—but for how long? After all, Pew Research Center found that 74 million baby boomers are in the process of leaving the workforce, taking decades of experience, education, and expertise with them.
If your IRA expert is nearing retirement, it’s important to ramp up your staff’s IRA expertise sooner rather than later. Ascensus offers a variety of IRA training and professional development options.
Instructor-led training: Seasoned instructors travel to your organization to deliver training; choose an intensive program (e.g., IRA Institute) or customize a workshop for your organization.
Distance learning: Learn where you want, when you want. Enroll in a blended-learning program (e.g., IRA University) for a well-rounded experience, or hone in on specific topics by completing eLearning modules or attending webinars.
Training materials: Conducting your own training can be daunting and time consuming. But a toolkit such as Ascensus’ IRA Training Organizer™ makes it easier with a tried and true curriculum, training materials, and study guides.
Certification programs: Attending educational conferences and earning professional designations (e.g., Certified IRA Professional (CIP)) expands knowledge and boosts IRA owners’ confidence in your expertise.