If you are going through this transition or know of someone who is, please read on, AEGIS Financial Advisors can help along the way…
You should seek AEGIS advice if:
Recently we have been able to work with an individual in his early 50’s who was a Senior Vice President of Sales and Marketing for subsidiary of a fortune 200 company.
We were asked to help him and his family transition to a similar position with the new company, in another state, to allow him and his wife to be closer to his daughter after she and their son-in-law had a baby boy, their first grandchild.
There are a number of financial vehicles that this individual was dealing with which included a 401(k) plan, a group term life insurance plan, a deferred compensation plan, a restricted stock option plan as well as long-term disability plan. Our goal was to help them transition with the least amount of tax as well as set up a plan for him to retire within the next 10 years.
In structuring the transition our goal was to keep his current income as low as possible since he was already in a high tax bracket.
We started by directly transferring his 401(k) plan to an IRA which allowed the funds to transfer without any tax implications.
For life insurance we applied for a substantial 10 year term policy. Although this individual was denied coverage we were able to get him coverage through his new employer where the underwriting was less restrictive. He was also able to get a long-term disability plan through his new employer.
The deferred compensation plan became 100% taxable upon termination. Since he received an upfront bonus from the new employer to cover some of the tax on the deferred compensation, our goal was to delay the payment until the next year when his taxable income would be lower. We were successful in getting the deferred compensation plan paid in a year following transition.
The stock option plan was concentrated in the prior employer stock. We were able to roll over the stock in kind into an investment account and begin a plan to diversify those holdings and spread the tax on the gain over the next few years.
The family now is looking forward to retirement with their plan in place, close to their grandson enjoying watching him grow, and hoping another one comes along soon.
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