Name Title John Hancock Investments Date. Welcome to Common IRA mistakes 2 Today, you’ll have an...

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TitleJohn Hancock InvestmentsDate

Welcome to Common IRA mistakes

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Today, you’ll have an opportunity to:

Review some of the most common mistakes

Discuss their implications

Learn how to avoid them

Take a look at actual case studies

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10 common IRA mistakes

1. Making common rollover mistakes2. Not considering a Roth IRA3. Forgetting catch-up contributions4. Failing to name a beneficiary5. Having an outdated beneficiary6. Naming a trust as a beneficiary7. Not knowing your distribution options regarding

inherited IRAs8. Overlooking income-tax deductions with inherited IRAs9. Not cleaning up old retirement accounts10. Trying to do it by yourself

A beneficiary primer

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What is a beneficiary? The person(s) or entity you wish to inherit your

account/assets when you dieWho chooses your beneficiary? You do (as the account/asset owner)

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Primary and contingent The person you most wish to receive your assets is your

primary beneficiary If that person is not alive at the time of your death, then

contingent beneficiaries will inherit your assetsSuccessor If you inherit an IRA, your listed beneficiaries become the

successor beneficiaries



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JOHN SUSAN

Hypothetical example John is married to Susan,

and they have two children,Claire and Luke.

John names Susan as his primary beneficiary, so she would inherit his assets if he died.

He names Claire and Luke as contingent beneficiaries; they would inherit his assets if Susan was deceased.

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To name a beneficiary Complete the beneficiary section when you open a

retirement account, or fill it out later (not recommended). You’ll need to provide your beneficiary’s Social Security number and that person’s relationship to you.

To change your beneficiaries Fill out a beneficiary designation form from the company

that holds your account and mail it in. The company must receive the form for it to be valid.

To get a beneficiary form Call, write, or download the beneficiary designation form

from the company’s website.


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Failing to name a beneficiary

Mistake #4

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IssueIf you don’t name a beneficiary, it can require distributions from your IRA, loss of any ability to stretch the IRA, and a lump sum payout to your estate resulting in probate. IRAs do not pass to next of kin by the stipulations

in a will They pass according to the terms of the IRA’s

beneficiary designation form

The IRA beneficiary designation form could be one of your most important estate planning documents!

Mistake #4Failing to name a beneficiary

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What happens to your IRA if you don’t name a beneficiary? The IRA will be subject to probate

Probate can be a costly, time-consuming, public process The default beneficiary will generally be the account

owner’s estate This then requires distributions from the IRA to be made as

a lump sum or to be fully distributed within five years after the account owner’s death

The highest income-tax rate is 39.6% This will most likely result in a loss of the stretch option


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What is a stretch IRA? Under the stretch IRA strategy, required minimum

distributions (RMDs) are calculated based on the beneficiary’s life expectancy. Example: Your IRA will be inherited by your 40-year-old son, whose life

expectancy is 85. The first year after inheriting the IRA, he would be required to withdraw only 1/45 of the account’s value. The next year, he would withdraw 1/44 of the account’s value, and so on.

A stretch IRA allows you to prolong the tax-deferred or tax-free status over one or more generations,

“stretching” its value.


A sad example: Leon and Beth*Leon, a John Hancock client, opened a Roth IRA in 2009 and didn’t name beneficiaries on his form. When Leon died in 2011, since no one was named, the funds could only be distributed to his estate.This required a lot of legal and probate research, costing time and money.Eventually, the assets went to Beth, Leon’s wife; but the whole process could have been much cheaper, easier, and faster.

* Although the names have been changed for privacy, this is a true story from John Hancock Signature Services.

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StrategyAs soon as you open an IRA, make sure you name primary and contingent beneficiaries.


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Having an outdated beneficiary

Mistake #5

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IssueYou might make distributions to unintended beneficiaries, such as an ex-spouse.

Mistake #5Having an outdated beneficiary

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A sad story: Carl, Sarah, and Denise* Carl opened an IRA in 2005 and named his wife,

Sarah, as his beneficiary. Carl divorced Sarah in 2007 and married Denise in

2010, but he never updated the beneficiary form on his account.

In 2011 Carl died, and Denise called to inquire about the funds. But because Carl didn’t change his beneficiary, Denise did not inherit the assets. His assets went to his ex-wife, Sarah.


Do you think that’s what Carl intended?


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Pension pickle: Bruce and Ann* Bruce and Ann were married for 20 years. Ann’s pension statement indicated that no beneficiary

was named, so Bruce assumed as husband he would be the beneficiary.

After Ann’s death, an old beneficiary form was found, naming Ann’s sister as her beneficiary. It was dated four years before Bruce and Ann met!

Because Ann never updated her beneficiary form, her sister inherited the assets.


Avoid this mistake!


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IRA owners should review their beneficiary designations: At least annually When getting married When there is a divorce When there is a birth or adoption of a child After the death of a family member Whenever there is a significant life event


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Strategy Plan an annual review of your beneficiary

designation forms to make sure they areup-to-date and accurate. To change a beneficiary designation on an

IRA or other account, you must actively change it by filling out a new beneficiary form.

Missing forms? Ask your financial professional for the beneficiary forms you need. Be sure to regularly review and update your accounts.


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Not knowing your distribution options regarding inherited IRAs

Mistake #7

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IssueIf no successor beneficiary is named and the primary beneficiary dies, your IRA will distribute to your estate, pass through probate, and will result in the loss of stretching the IRA.

Mistake #7Not knowing your distribution options regarding inherited IRAs

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The beneficiary receives the IRA The beneficiary should name a successor beneficiary If the beneficiary dies prior to receiving all of the IRA

distributions, the successor beneficiary could continue stretching the distributions over the remaining life expectancy of the deceased beneficiary

The successor beneficiary may be able to maximize the stretch potential


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StrategyAs soon as you inherit an IRA, make sure you name primary and contingent beneficiaries of your own.


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Not cleaning up old retirement accounts

Mistake #9

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1 Source: “Number of Jobs Held, Labor Market Activity, and Earnings Growth Among the Youngest Baby Boomers: Results from a Longitudinal Survey,” Bureau of Labor Statistics, U.S. Department of Labor, 7/25/12.

Issue Complicated recordkeeping, asset allocation

mistakes, and inconsistent or contradictory beneficiary designations can lead to problems

401(k)s may have different rules regarding distributions

Keeping track of multiple IRS Form 5498s can prove difficult

Mistake #9 Not cleaning up old retirement accounts

The average person changes jobs about 11 times during his or her lifetime1

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StrategyConsolidate multiple accounts into a single IRA and simplify your records.

Mistake #9 Not cleaning up old retirement accounts

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Trying to do it by yourself

Mistake #10

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IssueDo you have someone to help you set long-term goals and plan for the future?

Mistake #10 Trying to do it by yourself

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You might use some or all of these professionals over the course of your life.

Strategy Financial advisors and professionals Accountants Insurance planners Attorneys

Mistake #10 Trying to do it by yourself

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Common IRA mistakes

Our goal today

Review some of the most common mistakes

Discuss their implications

Learn how to avoid them

Take a look at actual case studies

Did we reach our goals?

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A trusted brandJohn Hancock has helped individuals and institutions build and protect wealth since 1862. Today, we are one of America’s strongest and most-recognized brands.

A better way to investAs a manager of managers, we search management teams with specialized then apply vigorous investment oversight meet our uncompromising standards.

Results for investorsOur unique approach to asset management has led to a diverse set of investments deeply rooted in investor needs, along with strong risk-adjusted returns across asset classes.

Why John Hancock?

John Hancock Funds, LLC ▪ Member FINRA, SIPC

601 Congress Street ▪ Boston, MA 02210-2805 ▪ 800-225-5291 ▪ jhinvestments.com

NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY.

For more information, contact John Hancock Investments at 800-225-5291 or visit jhinvestments.com.

A word about riskA fund’s investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.

MF188845 BB10MISSPPT 8/14

This material was prepared to support the promotion and marketing of John Hancock products. John Hancock, its distributors, and their respective representatives do not provide tax, accounting, investment, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, investment, or legal statements made herein.

This material does not constitute tax, legal, or accounting advice and neither John Hancock nor any of its agents, employees, or registered representatives are in the business of offering such advice. It was not intended or written for use and cannot be used by any taxpayer for the purpose of avoiding any IRS penalty. It was written to support the marketing of the transactions or topics it addresses. Anyone interested in these transactions or topics should seek advice based on his or her particular circumstances from independent professional advisors.

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