NAWBO E-Bulletin

Event Recap

Fulfilling Your Hopes and Dreams: Planning for Your Retirement

On Tuesday, January 12, NAWBO's Members Only Meeting was hosted by Mesirow Financial in its new building at 353 North Clark Street in downtown Chicago. In addition to enjoying a continental breakfast sponsored by Sam's Club, members were treated to a personal welcome from Mesirow Financial's Chief Executive Officer Jim Tyree, and informative presentations by Chief Economist Diane Swonk, Senior Managing Director Dana Mikstay of Insurance Services' Life and Disability practice, Managing Director Adriana Duenas of Insurance Services' Employee Benefits practice and Investment Manager Lisa Dieter of Investment Management's Investment Advisory.

Lisa Dieter, investment manager in Mesirow Financial's Investment Advisory, urges all business owners to set aside some time to research and think about planning for retirement - a critical concern. Retirement planning is an "important, but not urgent" task that too often get pushed to the bottom of the "to do" list - often for months or years. Many business owners in Lisa's practice find they have limited options late in their careers because 100% of liquid funds, profits, and salaries have been poured back into the business. Upon selling, some business owners are forced to accept a low valuation of their business due to unforeseen life changes or simply bad timing. Having outside retirement assets in place provides liquidity and flexibility during a critical transition period - something everyone deserves.

Why should my business have a retirement plan?

Ø  Setting up a retirement plan is one of the best ways to defer income tax. Depending upon your company's needs and situation, you could defer as little as a few thousand dollars per year or as much as hundreds of thousands per year to reduce your income tax liability.

Ø  Having a plan in place helps attract and retain top talent for your business. A 401(k) plan, for example, allows your employees to defer as much as $16,500 of income per year. The tax savings for someone in the 25% tax bracket is more than $4,000 per year. If possible for your business, a company match sweetens the deal for prospective employees.

Ø  It's important for you and your employees to have a plan in place for retirement. Social security was never intended to fund 100% of retirement needs, and its future is uncertain at best. Offering a plan enables you and your employees to have an easy and disciplined way to save and plan for retirement.

How would I set up a retirement plan?

Ø  Determine the Mutual Fund Platform: The customary investment choices of a defined contribution plan are mutual funds that cover the investment spectrum from conservative money market/bond funds to more aggressive equity funds. The key to selecting the appropriate mutual fund company centers on the long-term performance of their offerings and the service they provide to the sponsor and participants. Ideally, the platform selected will not only include mutual funds from their own family, but also those of other fund families whose performance in a particular sector may be better.

Ø  Select a Third Party Administrator (TPA): The laws governing 401(k) plans require rather complex reporting and testing, and the manner in which recordkeeping and administration components are handled are critical to the process. In some cases, the mutual fund company, in addition to their fund choices, will include the TPA functions in their proposal for the management of the 401(k) plan. This is called a "bundled" product. If the TPA functions are performed separately it is called "unbundled." The key to determining the appropriate methodology depends on the quality of work and cost of the firms providing these services.

Ø  Select a Broker/Investment Advisor: The broker/investment advisor is the most important aspect of the entire process because he or she coordinates all of the various components, including, but not limited to:

o    Evaluating all of the mutual fund platforms for both performance and service

o    Ascertaining the best TPA available in terms of service and cost

o    Conducting all of the investment meetings for the plan participants to assist them in making appropriate mutual funds elections

o    Guiding the enrollment process for plan participants to ensure they are properly registered in the 401(k) plan

For more information about retirement plans and investing, contact Lisa Dieter directly at: 847.681-2306 or ldieter@mesirowfinancial.com.

Lisa Dieter is an Investment Manager with Mesirow Financial Investment Management Inc. Mesirow Financial does not provide legal or tax advice.  Advisory fees are described in Mesirow Financial Investment Management Inc.'s Part II of the Form ADV. Mesirow Financial Investment Management Inc. is an SEC Registered Investment Advisor, securities offered by Mesirow Financial, Inc. member NYSE and SIPC.

Please consult your tax advisor regarding any questions you may have with respect to your personal tax liability. The material had been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading strategy.