Mission Point Planning GroupAnthony L. BucciPresident3912 12 Mile RdBerkley, MI 48072248-504-6015anthony@missionpointplan.comwww.missionpointplan.com

April 2016Six Potential 401(k) Rollover Pitfalls

What's New in the World of HigherEducation?

Give Your Retirement Plan an AnnualCheckup

What is the federal funds rate?

Mission Point News and NotesHow are you doing on those new year's resolutions?

Six Potential 401(k) Rollover Pitfalls

See disclaimer on final page

This is always the time of the year that I beginto go back to those testy New Year’sresolutions to see how I’m doing. Normally,even for me, it’s hit and miss. This year is nodifferent.

Why go back now to look at them?

Because the year’s not over!

There’s still time to achieve those goals youhad set out for yourself.

Financial success is much like accomplishingthose resolutions. Rarely does it go smooth.There a lot of starts and stops along the way.The point is to stick with it. Little habits likesaving 15% of your income, having anadequate emergency fund and living withinyour means don’t happen overnight. But theydo happen. Stick with it.

And if you’re having trouble. Call us!

Securities offered through Securities America,Inc., Member FINRA/SIPC. Advisory servicesoffered through Securities America Advisors,Inc. Mission Point Planning Group andSecurities America are separate companies.

You're about to receive adistribution from your 401(k) plan,and you're considering a rolloverto a traditional IRA. While thesetransactions are normallystraightforward and trouble free,

there are some pitfalls you'll want to avoid.

1. Consider the pros and cons of a rollover.The first mistake some people make is failing toconsider the pros and cons of a rollover to anIRA in the first place. You can leave yourmoney in the 401(k) plan if your balance is over$5,000. And if you're changing jobs, you mayalso be able to roll your distribution over to yournew employer's 401(k) plan.

• Though IRAs typically offer significantly moreinvestment opportunities and withdrawalflexibility, your 401(k) plan may offerinvestments that can't be replicated in an IRA(or can't be replicated at an equivalent cost).

• 401(k) plans offer virtually unlimitedprotection from your creditors under federallaw (assuming the plan is covered by ERISA;solo 401(k)s are not), whereas federal lawprotects your IRAs from creditors only if youdeclare bankruptcy. Any IRA creditorprotection outside of bankruptcy depends onyour particular state's law.

• 401(k) plans may allow employee loans.• And most 401(k) plans don't provide an

annuity payout option, while some IRAs do.

2. Not every distribution can be rolled overto an IRA. For example, required minimumdistributions can't be rolled over. Neither canhardship withdrawals or certain periodicpayments. Do so and you may have an excesscontribution to deal with.

3. Use direct rollovers and avoid 60-dayrollovers. While it may be tempting to giveyourself a free 60-day loan, it's generally amistake to use 60-day rollovers rather thandirect (trustee to trustee) rollovers. If the plansends the money to you, it's required towithhold 20% of the taxable amount. If you laterwant to roll the entire amount of the originaldistribution over to an IRA, you'll need to useother sources to make up the 20% the planwithheld. In addition, there's no need to taunt

the rollover gods by risking inadvertent violationof the 60-day limit.

4. Remember the 10% penalty tax. Taxabledistributions you receive from a 401(k) planbefore age 59½ are normally subject to a 10%early distribution penalty, but a special rule letsyou avoid the tax if you receive your distributionas a result of leaving your job during or after theyear you turn age 55 (age 50 for qualified publicsafety employees). But this special rule doesn'tcarry over to IRAs. If you roll your distributionover to an IRA, you'll need to wait until age 59½before you can withdraw those dollars from theIRA without the 10% penalty (unless anotherexception applies). So if you think you mayneed to use the funds before age 59½, arollover to an IRA could be a costly mistake.

5. Learn about net unrealized appreciation(NUA). If your 401(k) plan distribution includesemployer stock that's appreciated over theyears, rolling that stock over into an IRA couldbe a serious mistake. Normally, distributionsfrom 401(k) plans are subject to ordinaryincome taxes. But a special rule applies whenyou receive a distribution of employer stockfrom your plan: You pay ordinary income taxonly on the cost of the stock at the time it waspurchased for you by the plan. Any appreciationin the stock generally receives more favorablelong-term capital gains treatment, regardless ofhow long you've owned the stock. (Anyadditional appreciation after the stock isdistributed to you is either long-term orshort-term capital gains, depending on yourholding period.) These special NUA rules don'tapply if you roll the stock over to an IRA.

6. And if you're rolling over Roth 401(k)dollars to a Roth IRA... If your Roth 401(k)distribution isn't qualified (tax-free) because youhaven't yet satisfied the five-year holdingperiod, be aware that when you roll thosedollars into your Roth IRA, they'll now besubject to the Roth IRA's five-year holdingperiod, no matter how long those dollars werein the 401(k) plan. So, for example, if youestablish your first Roth IRA to accept yourrollover, you'll have to wait five more years untilyour distribution from the Roth IRA will bequalified and tax-free.

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What's New in the World of Higher Education?If you're a parent or grandparent of a collegestudent or soon-to-be college student, youmight be interested to learn what's new in theworld of higher education.

Higher college costsTotal average costs for the 2015/2016 schoolyear increased about 3% from the previousyear: $24,061 for public colleges (in-state),$38,855 for public colleges (out-of-state), and$47,831 for private colleges.1

Total average costs include direct billed costsfor tuition, fees, room, and board; and indirectcosts for books, transportation, and personalexpenses. Together, these items are officiallyreferred to as the "total cost of attendance."Note that the cost figure for private collegescited by the College Board is an average; manyprivate colleges cost substantially more--over$60,000 per year.

Higher student debtSeven in 10 college seniors who graduated in2014 (the most recent year for which figuresare available) had student loan debt, and theaverage amount was $28,950 per borrower.2It's likely this amount will be higher for theclasses of 2015 and 2016.

Student loan debt is the only type of consumerdebt that has grown since the peak ofconsumer debt in 2008; balances have eclipsedboth auto loans and credit cards, makingstudent loan debt the largest category ofconsumer debt after mortgages. As ofSeptember 2015, total outstanding student loandebt was over $1.2 trillion.3

Reduced asset protection allowanceBehind the scenes, a stealth change in thefederal government's formula for determiningfinancial aid eligibility has been quietly (andnegatively) impacting families everywhere. Youmay not have heard of the asset protectionallowance before. But this figure, which allowsparents to shield a certain amount of theirnonretirement assets from the federal aidformula, has been steadily declining for years,resulting in higher expected family contributionsfor families. For the 2012/2013 year, the assetprotection allowance for a 47-year-old marriedparent was $43,400. Today, for the 2016/2017year, that same asset protection allowance is$18,300--a drop of $25,100. The result is a$1,415 decrease in a student's aid eligibility($25,100 x 5.64%, the federal contributionpercentage required from parent assets).

New FAFSA timelineBeginning with the 2017/2018 school year,families will be able to file the government's

financial aid application, the FAFSA, as early asOctober 1, 2016, rather than having to wait untilafter January 1, 2017. The intent behind thechange is to better align the financial aid andcollege admission timelines and to providefamilies with information about aid eligibilityearlier in the process.

One result of the earlier timeline is that your2015 federal income tax return will do doubleduty as a reference point for your child's federalaid eligibility--it will be the basis for the FAFSAfor both the 2016/2017 and 2017/2018 years.

School Year Tax ReturnRequired

FAFSA EarliestSubmission

2016/2017 2015 January 1, 2016

2017/2018 2015 October 1, 2016

2018/2019 2016 October 1, 2017

American Opportunity Tax Credit nowpermanentThe American Opportunity Tax Credit wasmade permanent by the Protecting Americansfrom Tax Hikes Act of 2015. It is a partiallyrefundable tax credit (meaning you may be ableto get some of the credit even if you don't oweany tax) worth up to $2,500 per year forqualified tuition and related expenses paidduring your child's first four years of college. Toqualify for the full credit, single filers must havea modified adjusted gross income (MAGI) of$80,000 or less, and joint filers must have aMAGI of $160,000 or less. A partial credit isavailable for single filers with a MAGI over$80,000 but less than $90,000, and for jointfilers with a MAGI over $160,000 but less than$180,000.

New REPAYE plan for federal loansThe pool of borrowers eligible for thegovernment's Pay As You Earn (PAYE) plan forstudent loans has been expanded as ofDecember 2015. The new plan, called REPAYE(Revised Pay As You Earn), is available to allborrowers with federal Direct Loans, regardlessof when the loans were obtained (the originalPAYE plan is available only to borrowers whotook out loans after 2007).

Under REPAYE, monthly student loanpayments are capped at 10% of a borrower'sdiscretionary income, with any remaining debtforgiven after 20 years of on-time payments forundergraduate loans and 25 years of on-timepayments for graduate loans. To learn moreabout REPAYE or income-driven repaymentoptions in general, visit the federal student aidwebsite at studentaid.gov.

Tools for students

The Department of Educationand the Consumer FinancialProtection Bureau havelaunched the "Know BeforeYou Owe" campaign, whichincludes a standard financialaid award letter for colleges touse so that students can betterunderstand the type andamount of aid they qualify forand more easily compare aidpackages from differentcolleges. In addition, to helpstudents search for and selectsuitable colleges, theDepartment has launched itsCollege Scorecard online toolat collegescorecard.ed.gov.

Sources1 College Board, Trends inCollege Pricing 20152 The Institute for CollegeAccess and Success, StudentDebt and the Class of 2014,October 20153 Federal Reserve Bank ofNew York, Quarterly Report onHousehold Debt and Credit,November 2015

Page 2 of 4, see disclaimer on final page

Give Your Retirement Plan an Annual CheckupFinancial professionals typically recommendthat you review your employer-sponsoredretirement savings plan annually and whenmajor life changes occur. If you haven'trevisited your plan yet in 2015, the end of theyear may be an ideal time to do so.

Reexamine your risk toleranceThis past year saw moments that would tryeven the most resilient investor's resolve. Whenyou hear media reports about stock marketvolatility, is your immediate reaction to considerselling some of the stock investments in yourplan? If that's the case, you might begin yourannual review by reexamining your risktolerance.

Risk tolerance refers to how well you can rideout fluctuations in the value of your investmentswhile pursuing your long-term goals. Anassessment of your risk tolerance considers,among other factors, your investment timehorizon, your accumulation goal, and assetsyou may have outside of your plan account.Your retirement plan's educational materialslikely include tools to help you evaluate yourrisk tolerance, typically worksheets that ask aseries of questions. After answering thequestions, you will likely be assigned a risktolerance ranking from conservative toaggressive. In addition, suggested assetallocations are often provided for consideration.

Have you experienced any lifechanges?Since your last retirement plan review, did youget married or divorced, buy or sell a house,have a baby, or send a child to college?Perhaps you or your spouse changed jobs,received a promotion, or left the workforceentirely. Has someone in your familyexperienced a change in health? Or maybe youinherited a sum of money that has had amaterial impact on your net worth. Any of thesesituations can affect both your current andfuture financial situation.

In addition, if your marital situation haschanged, you may want to review thebeneficiary designations in your plan account tomake sure they reflect your current wishes.With many employer-sponsored plans, yourspouse is automatically your plan beneficiaryunless he or she waives that right in writing.

Reassess your retirement incomeneedsAfter you evaluate your risk tolerance andconsider any life changes, you may want totake another look at the future. Have yourdreams for retirement changed at all? And if so,

will those changes affect how much money youwill need to live on? Maybe you've reconsideredplans to relocate or travel extensively, or nowplan to start a business or work part-time duringretirement.

All of these factors can affect your retirementincome needs, which in turn affects how muchyou need to save and how you invest today.

Is your asset allocation still on track?Once you have assessed your current situationrelated to your risk tolerance, life changes, andretirement income needs, a good next step is torevisit the asset allocation in your plan. Is yourinvestment mix still appropriate? Should youaim for a higher or lower percentage ofaggressive investments, such as stocks? Ormaybe your original target is still on track butyour portfolio calls for a little rebalancing.

There are two ways to rebalance yourretirement plan portfolio. The quickest way is tosell investments in which you are overweightedand invest the proceeds in underweightedassets until you hit your target. For example, ifyour target allocation is 75% stocks, 20%bonds, and 5% cash but your current allocationis 80% stocks, 15% bonds, and 5% cash, thenyou'd likely sell some stock investments andinvest the proceeds in bonds. Another way torebalance is to direct new investments into theunderweighted assets until the target isachieved. In the example above, you woulddirect new money into bond investments untilyou reach your 75/20/5 target allocation.

Revisit your plan rules and featuresFinally, an annual review is also a good time totake a fresh look at your employer-sponsoredplan documents and plan features. Forexample, if your plan offers a Roth account andyou haven't investigated its potential benefits,you might consider whether directing a portionof your contributions into it might be a goodidea. Also consider how much you'recontributing in relation to plan maximums.Could you add a little more each pay period? Ifyou're 50 or older, you might also review therules for catch-up contributions, which allowthose approaching retirement to contributemore than younger employees.

Although it's generally not a good idea tomonitor your employer-sponsored retirementplan on a daily, or even monthly, basis, it'simportant to take a look at least once a year.With a little annual maintenance, you can helpyour plan keep working for you.

As you reconsider yourretirement income needs, itmight also make sense tocheck your expected SocialSecurity benefit and anyother potential sources ofincome. To get an estimateof your future SocialSecurity payments, go tosocialsecurity.gov andselect "my Social Security."

Asset allocation does notguarantee a profit or protectagainst a loss; it is amethod used to helpmanage investment risk.

All investing involves risk,including the possible lossof principal. There can beno assurance that anyinvestment strategy will besuccessful.

Page 3 of 4, see disclaimer on final page

Mission Point PlanningGroupAnthony L. BucciPresident3912 12 Mile RdBerkley, MI 48072248-504-6015anthony@missionpointplan.comwww.missionpointplan.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

IMPORTANT DISCLOSURES

Broadridge Investor CommunicationSolutions, Inc. does not provideinvestment, tax, or legal advice. Theinformation presented here is notspecific to any individual's personalcircumstances.

To the extent that this materialconcerns tax matters, it is notintended or written to be used, andcannot be used, by a taxpayer for thepurpose of avoiding penalties thatmay be imposed by law. Eachtaxpayer should seek independentadvice from a tax professional basedon his or her individualcircumstances.

These materials are provided forgeneral information and educationalpurposes based upon publiclyavailable information from sourcesbelieved to be reliable—we cannotassure the accuracy or completenessof these materials. The information inthese materials may change at anytime and without notice.

What is the federal funds rate?In December 2015, theFederal Open MarketCommittee (FOMC) raised thefederal funds target rate to arange of 0.25% to 0.50%, the

first shift from the rock-bottom 0% to 0.25%level where it had remained since December2008.

The federal funds rate is the interest rate atwhich banks lend funds to each other from theirdeposits at the Federal Reserve, usuallyovernight, in order to meet reserverequirements. The Fed also raised a number ofother rates related to funds moving betweenFederal Reserve banks and other banks. TheFed does not directly control consumer savingsor credit rates, but the federal funds rate servesas a benchmark for many short-term rates,such as savings accounts, money marketaccounts, and short-term bonds.

The prime rate, which commercial bankscharge their best customers, is typically about3% above the federal funds rate. Other forms ofbusiness and consumer credit--such assmall-business loans, adjustable-ratemortgages, auto loans, and credit cards--areoften directly linked to the prime rate. Actual

rates can vary widely. Fixed-rate homemortgages and other long-term loans aregenerally not linked directly to the prime rate,but may be indirectly affected by it

The FOMC expects economic conditions to"warrant only gradual increases" in the federalfunds rate. Most Committee members projecteda target range between 0.75% and 1.75% bythe end of 2016, so you can probably expect aseries of small increases this year. Althoughrising interest rates make it more expensive forconsumers to borrow, higher rates could begood for retirees and savers who seek currentincome from bank accounts, CDs, bonds, andother fixed-interest investments.

The FDIC insures CDs and bank savingsaccounts, which generally provide a fixed rateof return, up to $250,000 per depositor, perinsured institution. The principal value of bondsmay fluctuate with market conditions. Bondsredeemed prior to maturity may be worth moreor less than their original cost. Investmentsseeking to achieve higher yields also involve ahigher degree of risk.

Source: Federal Reserve, 2015

What is the federal funds rate?In December 2015, theFederal Open MarketCommittee (FOMC) raised thefederal funds target rate to arange of 0.25% to 0.50%, the

first shift from the rock-bottom 0% to 0.25%level where it had remained since December2008.

The federal funds rate is the interest rate atwhich banks lend funds to each other from theirdeposits at the Federal Reserve, usuallyovernight, in order to meet reserverequirements. The Fed also raised a number ofother rates related to funds moving betweenFederal Reserve banks and other banks. TheFed does not directly control consumer savingsor credit rates, but the federal funds rate servesas a benchmark for many short-term rates,such as savings accounts, money marketaccounts, and short-term bonds.

The prime rate, which commercial bankscharge their best customers, is typically about3% above the federal funds rate. Other forms ofbusiness and consumer credit--such assmall-business loans, adjustable-ratemortgages, auto loans, and credit cards--areoften directly linked to the prime rate. Actual

rates can vary widely. Fixed-rate homemortgages and other long-term loans aregenerally not linked directly to the prime rate,but may be indirectly affected by it

The FOMC expects economic conditions to"warrant only gradual increases" in the federalfunds rate. Most Committee members projecteda target range between 0.75% and 1.75% bythe end of 2016, so you can probably expect aseries of small increases this year. Althoughrising interest rates make it more expensive forconsumers to borrow, higher rates could begood for retirees and savers who seek currentincome from bank accounts, CDs, bonds, andother fixed-interest investments.

The FDIC insures CDs and bank savingsaccounts, which generally provide a fixed rateof return, up to $250,000 per depositor, perinsured institution. The principal value of bondsmay fluctuate with market conditions. Bondsredeemed prior to maturity may be worth moreor less than their original cost. Investmentsseeking to achieve higher yields also involve ahigher degree of risk.

Source: Federal Reserve, 2015

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