What New IRS Rules Mean for Your Retirement Account-Joanne Cleaver

A few folks thought they could use their individual retirement accounts for short-term loans to themselves. The Internal Revenue Service was not amused. Starting in 2015, new rules apply for withdrawing money from an IRA with the aim of rolling it into another IRA investment, taking possession of the funds yourself in the process.

The short version of the new rule is that you can only roll over an account this way once every 365 days, investment advisors say. But the longer version is: Don't even try to skirt this rule.

"The rollover rules have been tightened -- a lot," says Ed Slott, a certified public accountant and chief executive officer of Ed Slott & Co., which runs professional training courses on IRAs. "Everybody with an IRA needs to know about this because at some point, everybody with an IRA wants to change investments."


"Any time you're tempted to move money, talk with a financial professional, because tax rules are different for IRAs and 401(k)s," says Doug Orton, vice president of MFS, a Boston-based asset management firm. "Don't get fooled into thinking that a rollover is a no-fault transaction. Sometimes people make horrific mistakes by assuming there's no penalty. "
Start thinking now about how this will affect the management of your retirement accounts, recommends David W. Smith, an advisor with Strategic Wealth Management in Bend, Oregon. If you were considering taking distributions from any IRA account this year, know the IRS has stated that existing rules apply through Dec. 31. After that, the new rules -- which are still being fine-tuned -- will apply.
The important distinction is that there are still no limits on rolling over IRAs and Roth IRAs from one institution to another. That's called a "trustee to trustee transfer," and you can do that as often as you want, Slott and other IRA experts say.


You can also shift money among different types of retirement accounts -- say, from a 401(k) to a Roth IRA -- without complications. Of course, before making any moves, have a one-on-one discussion with a financial advisor to make sure you are well within the guidelines. You should also talk through the potential tax implications of shifting funds among accounts.
However, the new rules do apply to rollovers in which "you say, 'I want to move the money, but give me the check,'" Slott says. "You can only do that once every 365 days."
It's important to note the rule specifies "every 365 days," not once a calendar year, he says. That means you can't take cluster withdrawals, or closely timed withdrawals and deposits, giving yourself access to those retirement funds for two penalty-free 60-day periods in a row.
Although it has been relatively rare for IRA account holders to play roulette with their financial futures, the option was too much for a few people to resist. Most often, advisors say, those who used the 60-day rollover period inappropriately did so to fund business cash flow, college tuition bills and other big-ticket cash shortages.


It was never a commonplace gamble, but the ploy was sufficiently flagrant to elicit a strongly worded IRS slapdown and stringent rules advisors expect will apply to all without exception or mercy. Translation: Take your money for a stroll and return it a day late, and you will face huge losses for the privilege.
Slott says the smartest way to sidestep rollover woes is simply to not take the money yourself. Always direct the money from one institution to another in a "trustee to trustee" transfer.

If you take a risk for, say, trying to use rolling IRA funds for a do-it-yourself bridge loan as you buy one house before selling the other, you could pay a very high price. If the money is not redeposited in another IRA within 60 days and you are younger than 59½, you will pay a 10 percent penalty, Slott says. And the funds will likely be subject to income taxes.

You might get away with it. But you might not. As Slott says, "Why invite disaster?" 

Culled from US News

PHYSICAL AND EMOTIONAL SATISFACTION AS A VERITABLE PART OF PENSION SCHEME-Odunze Reginald

In the 4ps of Marketing, we talk about the product, price, promotion and the place element, which is the distribution element of marketing; the 4ps have been expanded to 8 Ps and Even 12Ps. But we shall be more interested in the 8 Ps of Marketing which talks about product, price, promotion, place, process, people , permission marketing and Physical and Emotional satisfaction.

Kotler (1980: 9) aptly captured this scenario when he defined marketing in his earlier book as the “set of human activities directed at satisfying needs and wants through exchange process. But in his later edition, he tends to overlook this basic element of satisfaction in his definition of marketing.

Leo Burnet said “ Don’t tell me how good you make it, tell me how good it makes when I use it” Le Boeuf (1987;23) stated that customers will exchange their hard earned money for only two reasons:

Good feelings
Solutions to problems.

Continuing Le Boeuf (op cited) stated that the success or failure of any business depends on how many it rewards with two things stated above and how well it does it” and as Francis Rodgers , a former Vice President of Marketing for IBM put it ”The secret is to understand the customers problems and provide solutions so as to help that customer be profitable and feel good about the transactions” Feeling good about a transaction brings out the best in the customer and makes him to be physical and emotionally satisfied.

Therefore the need for customers physical and emotional satisfaction in the pension scheme cannot be over emphasized. This is because when the customer is satisfied and is convinced not beyond reasonable doubt as in the legal profession or beyond points of further dispute as in the physical science but in being firmly convinced within himself that he has made a wise decision will you be able to say that the customer is going to have emotional or physical satisfaction. Each and every one of us have at one time or the other made transactions , having been convinced by the marketer, or the sales person but goes home feeling dissatisfied at that transaction, the result is that the customer develops a deeper hatred about the organization, its product or service and even the sales person.

The reason behind this is that when a customer is fully convinced that he made a decision by himself, and is getting appropriate quality service , the better the customer feels satisfied and will be in better position, to even go as far marketing the product or service to other of his colleagues, creating awareness even when you are not there. Not only that the inexperience and vulnerability of fresh employees makes them susceptible to asking questions from their old colleagues about the state, degree and effectiveness of the pension fund administrators as the present themselves for enrollment to the pension scheme..

You can imagine what the answer will be if you as a pension fund administrator is not going the extra mile to satisfy your customers.

Personal and Emotional satisfaction will always create more customer base to the organizations involved and will definitely lead to a good will. Good will is an intangible assets in most balance sheets of organization and it has monetary value.

When an organization has consistently satisfied its customers, it leads loyalty, customer patronage; pension fund administrators may not understand it now as National Pension Commission has not lifted the window of transfer. As the loyalty and patronage will in turn provide increase in profits, return on investments and spur the organization to contribute positively to the development of the environment or locality in which they find themselves, thereby increasing the intangible assets.

The power of Branding and its effect on Pension Business-Odunze Reginald C

I have a friend who has that hatred for Americans that he developed a theory called the conspiracy theory, he linked the theory to American’s ambition of controlling the financial resources of the world, he was so enthusiastic about the theory that he even link the exportation of Ebola Disease to Nigeria as part of the conspiracy theory with the American aim of developing a drug and making money from it and bearing in mind that Nigeria is the most populous country in African. He went on to say that the other African countries impact will be minimal but the effect on Nigeria will create a maximum impact. Hence the exportation to Nigeria through Patrick Sawyer. But I am not interested at this point on the conspiracy theory that will be a study for the later time. But one thing that marvels me is that after his conspiracy theory, he ends up taking a bottle of Coca-Cola.  He has become obsessed with the Cola drink.  That is the result of branding, even though he dislike American, but he loved their Cola.

In a special report in 2003 by Business week captioned “The Best Global Brands”, Annual Ranking of the top 100 Brands. In a sub title “Brands in an age of Anti Americanism” the report stated and I quote” Park Young Hoon of Seoul was quick to clench his fist and yell slogans against George W Bush in a giant rally denouncing the US president’s tough policy on North Korea. The report went on to say “but that doesn’t mean the 33 year old Computer Engineer is willing to loosen his grip on his favorite American coffee or cola” 

“Calling for political independence from the US is one thing and liking American brands is another” he says off course I like IBM, Dell, Microsoft, Starbucks and Coke”

The report also stated that “Yemeni students were out burning American flags, chanting kill the Americans noted by Valenti CEO of the Motion Pictures Association of Americans, as soon as the theaters open at 7pm, bingo, they are all there”.

 The popular Islamic fighters also states that they are against western education, but bingo, they are carrying the latest assemblage of state of the art weapons and ammunitions which are the products of foreign countries  , they are also  uploading their videos, pictures of the exploits in You tube, and other social networks, the Islamic State militants  that killed the American In Iraq were busy castigating the Americans, yelling anti American slogans, but by evening they are communicating their exploits in Twitter, Face book and You tube. One thing is to hate a country, a society and another thing is to like its product or service.

This is the importance of branding and building a brand loyalty , as customers will always run to your brand unknowingly after making attacks on the company or the country in which the products originates.

People have at one time or the other condemned the activities of the Japanese and the Germans during the Second World War, but they cannot do without the German Machines, Mercedes and the Japanese automobiles like Honda and Toyota. Even when they cast aspersions on these countries, they cannot do without their brand of automobiles.

Branding is very important in business and its impact in pension industry cannot be over emphasized. Building a successful brand in the pension industry requires the positive actions of the operators of the scheme as bad news emanating from one organization will adversely affect the activities of the others. As a name is so interwoven that any bad image adversely affects other localities and families that associates with bad name, as the African adage states that it is one finger dipped in oil that affects the other fingers.

What then is Brand?   Branding is a name, term, symbol or sign used to identify a product or service.

Adirika et al (1997:127) noted that branding is a major issue in product strategy  , on the one hand developing  a branded product requires a great deal of long term investment spending especially for advertising, promotion and even packaging”

Adirika et al (op cited) stated that brand is a name, term, symbol, or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitions.

The American Marketing Association AMA defines a brand as a name term, sign, symbol or design or a combination of them intended to identify the goods or services one seller or group of sellers and to differentiate those of other sellers.

McCarthy et al 1985, in Anyanwu (1993:39) defined branding as the use of a name, term, symbol, design, or a combination of these to identify a product. And according to Toyin Benson, “a brand can be described as the total sum of various consumer perceptions and beliefs formed over time as a result of various contacts with the product under reference, it can be seen as a combination of meaning ( in terms of proposition,) a reference point ( in terms of category) , an identifier  of a brand ,( in terms of name or logo) within  a global positioning framework  ( in terms of global benchmarking”)

Laura Lake (2011:1) “therefore it makes to understand that branding is not about getting your target market to choose you over the competition but it is about getting your prospects to see you as the only one that provides a solution to their problems.

Lake identifies that a good brand will achieve 5 objectives

Deliver the message clearly

Confirms your credibility

Connects your target prospect emotionally

Motivates your buyer

Concrete user loyalty.

Name is one of the major element of a good brand and in fact impacts more on the brand than other element (Benson)

Even in real life, names are so much valued that individual and family are always protected by those owning their names from any form of tarnish, stain or blemish and when a names goes wrong either by bad character , people find it difficult to answer such names again, I have never come across one answering Judas or Jezebel based on the characters they exhibited in the Bible.

A good name therefore becomes a selling point both to the individual and to the organization. Nowadays women attached their maiden names before attaching their marital name and some have worked so hard that they even find it difficult to attach their marital names especially in the movie industry. That is power of a name and even the Holy aptly captured that a good name is better than silver and gold.

Creating lasting impressions by a brand is hinged on the strength, quality and appeal of the brand to the customers. The combination of the brand elements coupled with the expectations on delivery symbolize a promise by the brand which the consumer expect to fulfill a need (Benson)

It is the fulfillment of the need according to Benson that helps to build a brand equity and leverage effectively on this over a long term. Continuing Benson went on to highlight that the “pricing distribution and availability of the brand helps to reinforce the consumers patronage of the brand.

The pension industry is roughly ten years in Nigeria and with the recent speculations of the lifting of the transfer window, Pension Fund Administrators need to work hard to create an enduring brand, this is because when brand do not meet up with the expectations  of the consumers and customers, they move elsewhere  and look for alternatives probably never to come back as noted by Benson. Continuing he stated that when brand meet with up with expectations, i.e. consumers expectation, then a lasting impression is made and  a chemistry is established with the customer as was observed with the global brand reports of Business week.

The various customers of the PFAs are looking up for such brands in the pension industry, this is the time for the PFAs to create such brand and take us away from the old practice of failure in the pension industry. Failure is no longer an option coupled with the stringent principles of the National Pension Commission , PenCom and other regulatory organs and act, like the Banks and other Financial Institutions Act 1991, as amended, or the Money Laundry prohibition Act , 2004,  the Advance Fee fraud Act and other fraud related offences Act 2006  and the pension Reform Act 2oo4 which has been repealed , and the Pension Reform Act 2014 are all geared  towards the success and creation of an enduring brand in the pension industry . 

Odunze Reginald

Managing Partner, Chareg Consulting, Managing online Editor, Pensionsbenefit.com, Reginaldodunze.com and theverynewsinfo.com