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July Outlook by the Numbers

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Do you have questions on the housing market, labor market and interest rates? Check out UMB Investment Management team’s July 2017 Outlook by the Numbers for a quick snapshot on these and other economic drivers.

Also, be sure to review the following articles for more market and wealth management information…

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Follow UMB‡ on LinkedIn to stay informed of the latest economic trends.

 Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Active, Passive or Complementary Investing?

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Most of the debate around passive versus active investing comes from those advocating for one approach over the other. We, on the other hand, believe they are complementary and not mutually exclusive. Based on our research, neither an all-passive, nor all-active portfolio, is the optimized portfolio. Rather, optimal appears somewhere in the middle. Blending both active and passive investing strategies can provide a more attractive risk-return profile.

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Read our full perspective by clicking here or learn more about our Private Wealth Management division. See what we mean when we say, “Your story is our focus.


K.C. Mathews joined UMB in 2002. As executive vice president and chief investment officer, Mr. Mathews is responsible for the development, execution and oversight of UMB’s investment strategy. He is chairman of the Trust Investment, Asset Allocation and Trust Policy Committees. Mr. Mathews has more than 20 years of diverse experience in the investment industry. Prior to joining UMB, he served as vice president and manager of the portfolio management group at Bank of Oklahoma for nine years. Mr. Mathews earned a bachelor’s degree from the University of Minnesota and a master’s degree in business administration from the University of Notre Dame. Mr. Mathews attended the ABA National Trust School at Northwestern University and is a Chartered Financial Analyst and member of the CFA Institute. He is past president of the Kansas City CFA Society and a past president of the Oklahoma Society of Financial Analysts.



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Summer InSight: Retirement, Cash Flow, Loans and the Economy

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Summertime marks the mid-point of the year, so now is a good time to take a moment to check in on your full financial picture, including a review of your goals and progress you’ve made toward milestones. Statistics show almost four million Americans anticipate retiring in the next 15 years, and there are key considerations that can help anyone prepare, whether retirement is right around the corner or 20 years away.

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We encourage everyone to have a solid plan for retirement, which begins with understanding your core numbers: anticipated age of retirement, how much income you’ll need to maintain your current lifestyle after retirement, and the value of your assets and cash savings. Having a clear picture of your current and future states makes establishing priorities simpler. Keeping these numbers in mind as you make other financial decisions ensures your goals and choices remain in alignment.

While retirement planning is critical for your future, there will always be plenty of present-day matters to attend to. This issue of InSight covers several topics related to life events and the economy. Beth Brown, senior vice president and senior wealth advisor, discusses steps to consider when you are faced with an unexpected financial windfall to help ensure your plan supports your objectives. Shelly Addington, vice president and private banking client manager, provides an educational construction loan overview, including what you can expect from the process from start to finish. And KC Mathews, UMB Bank executive vice president and chief investment officer, delivers an economic analysis that covers the impacts of political and policy shifts.

For more details on these and other financial matters, read the full Insight issue or visit our Private Wealth Management page.


Dana Abraham is president of the Personal Banking Division and is responsible for the delivery of comprehensive financial services. Her areas of focus include Wealth Planning, Private Banking, Personal Trust, Investment Management and Insurance. She joined UMB in 2005 and has more than 20 years of experience in the financial services industry. Abraham earned a bachelor’s degree in business administration with a concentration in both accounting and economics from the University of Louisiana. She is a graduate of Leadership Overland Park and Kansas City Tomorrow Leadership programs.



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Are you ready for retirement?

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It is anticipated that almost four million Americans will retire in the next 15 years, forcing many to face the question, “Am I ready for retirement?” As this growing number of Americans consider the next chapter in their lives, they are discovering a gap in their retirement plan.

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Retirement is one of the largest transitions a person will encounter in their lifetime, yet only one-third of Americans feel they are financially prepared. According to Mintel’s April 2017 Consumers and the Economic Outlook report, 11 percent of Americans nearing retirement age are preparing to look for new, higher-paying jobs as a way to improve their financial situation.

By proactively planning and establishing priorities in advance, individuals will be better equipped to have a successful transition into their golden years. Whether retirement is right around the corner or 20 years away, these key considerations can help establish a level-set for retirement preparation.

What’s your number?

First ask yourself “How much money do I need to live?” and “How much money do I have?” These questions can help establish a goal and define areas that should be closely analyzed. If financial gaps exist, assess and determine how to fill them.

It is important to consider the financial implications of several critical areas, including:

  • Average living expenses
  • Healthcare
  • Mortgage or rent
  • Property and other tax obligations
  • Charitable giving
  • Legacy considerations

How much and how long do you want to work?

Over the last 15 years, a shift has been taking place—it no longer has to be “all or nothing” when it comes to employment. More people are retiring in stages, or semi-retiring. Instead of completely stepping away from a career, they might transition out of a role slowly.

Additionally, many Americans are planning to work longer or stay involved in their businesses beyond what is considered traditional retirement. According to the latest data from the U.S. Bureau of Labor Statistics, almost 20 percent of Americans 65 and older are now working.

Think about where you would like to be on this spectrum to help determine when, and to what degree, your earning potential will change.

Establish priorities

If the priority is retirement, establish goals and create a plan first and foremost. Perform an in-depth analysis of the entire financial portfolio to assess total assets and decide if retirement goals are achievable. Determine if your portfolio assets can support your desired lifestyle during retirement. If a path to retirement is clear, then begin to think about secondary priorities; these could include leaving a legacy, charitable giving or the opportunity to travel more often. If the path to retirement isn’t clear or if financial assets come up short, consider putting off retirement for a few years, saving more money, adjusting an estimated living plan or reassessing assets.

Create a clear plan

Planning is the most important aspect of a successful transition into retirement. Planning early and reevaluating often is critical. One way to establish a sound financial plan is to work with a financial advisor, who can help you not only establish goals, but work to make them a reality.

Additionally, financial advisors can help counsel families where members may have different goals or considerations that need to be taken into account. They can help communicate each person’s unique goals and assist families in creating a shared plan that meets everyone’s needs.

Finally, they can also track your progress and help identify any changes you may need to make along the way.

For anyone considering retirement, asking the important questions, creating a strategic plan and consistently evaluating progress can help lead to a successful transition. Working with a financial advisor can alleviate questions and ensure that a plan is being considered from all angles, providing valuable support for this life transition.

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.


Dana Abraham is president of the Personal Banking Division and is responsible for the delivery of comprehensive financial services. Her areas of focus include Wealth Planning, Private Banking, Personal Trust, Investment Management and Insurance. She joined UMB in 2005 and has more than 20 years of experience in the financial services industry. Abraham earned a bachelor’s degree in business administration with a concentration in both accounting and economics from the University of Louisiana. She is a graduate of Leadership Overland Park and Kansas City Tomorrow Leadership programs.



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Is the Bond Market Wrong?

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After the surprise election results in 2016, domestic markets experienced the “Trump Bump,” which entailed a traditional risk-on shift—investors bought stocks and sold bonds to prepare for the presumed good times ahead. Stock values and interest rates both shot higher in anticipation of a boost to both economic activity and inflation.

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Trump Bump to Trump Slump

However, after a few months of treading water early in the New Year, interest rates began a steady decline. The 10-year Treasury note dropped from 2.60 percent to 2.25 percent in just a few weeks.

This occurred despite an early increase in overnight rates by the Federal Open Market Committee (FOMC) and clear messaging that they are prepared to continue the upward march in rates as part of a gradual “normalization.” All the while, stock prices remained resilient and repeatedly bumped up against all-time highs.

Debates and Head-Scratching

The drop in long-term rates created a flattening of the treasury yield curve, something that typically occurs near the end of a Fed tightening cycle, as the economy begins to slow down.

This rate drop and curve flattening has triggered a healthy debate throughout the

investment industry. It appears the bond market is signaling that the economy isn’t going to be nearly as strong as the equity market is discounting.

Historically, a flattening yield curve has been a strong, early indicator of economic deceleration—so the divergence between stock prices and interest rates has unleashed some serious head-scratching.

Disagreement Abounds

As a further complication, the Fed Funds futures market—the bond market’s estimate of where overnight rates are headed—is substantially below the FOMC’s estimates for where they’re planning to move rates. The FOMC expects overnight rates (and money market rates) to head to 1.50 percent in 2017 and rise to 2.20 percent in 2018, which is good news for savers. However, the futures market is placing overnight rates at only 1.25 percent and 1.50 percent in 2017 and 2018.

It appears that the bond market currently disagrees with both the FOMC and the stock market on the strength of the economy and the path of rates, raising the question, “Is the bond market wrong?”

Countering the Contrarian View

At this point, our answer is “yes, we believe the bond market is wrong.”  While it’s usually not fruitful to bet against the bond market, we believe several factors are causing it to paint a contrarian (versus the stock market) picture at this time:

  1. Assumption that the new administration will not get any stimulus plans enacted
    The bond market appears to be responding to the president’s early challenges with enacting campaign promises.
  2. Global interest rates
    Global interest rates are still well below the U.S. The glut of excess savings from around the world is still chasing U.S. rates whenever they rise, making it difficult for our rates to rise as much as they might otherwise.
  3. Normalization cycle
    Bond investors around the world are assuming the current Fed normalization cycle will play out in a similar manner to how the entire global financial crisis cycle has unwound—much slower than anyone anticipated. They are betting against any “upside surprises” for the economy or inflation, and it’s been a very long time since we’ve had either.
  4. Extreme caution in rising rates
    The bond market believes the FOMC will exhibit extreme caution in edging rates higher because it fears rising rates will tip the economy back toward a slowdown.The bond markets are not signaling that an economic slowdown is eminent, but rather that rate normalization will not be possible at the pace indicated by the Fed and most forecasters.

Why we believe the bond markets are wrong:

  1. We believe the new administration will succeed in enacting tax cuts and infrastructure programs—both will involve compromise and delays, but they will ultimately be accomplished, and both should point toward higher rates.
  2. We believe the global savings glut is in the very early stages of abating, so the artificial “lid” on interest rates may be slowly dissipating.
  3. While the last decade has been one of extremely slow movements from the Fed, it appears wage pressure is building throughout our economy—a precursor to inflation. Economic momentum is turning upward in Europe as well. These trends will allow the Fed to push forward with rate normalization at the pace reflected in most forecasts.
  4. Interest rates are exceptionally and unsustainably low, particularly given that we are experiencing a modest global upturn. Even after the Fed’s projected upward adjustments, interest rates will still be exceptionally low—modestly higher rates are not a threat to the economy or a barrier to normalization. For these reasons, we believe the bond markets are not properly reflecting the most likely path for interest rates over the next two years. There are risks to this outlook, but the most likely outcome is an upward shift of roughly 1.00-1.50 percent over the next two years.

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.


Mr. Kelley is managing director of fixed income at UMB and is responsible for overseeing the product development and management of the fixed income holdings for the Wealth Management division. Mr. Kelley earned a Master’s of Business Administration from Baker University in Kansas City.



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Q&A Series with Ben Morris, President of UMB Healthcare Services

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Part Two: Ann Mond Johnson examines how employers can effectively maximize their employees’ health care benefits

Repeal and replacement of the ACA didn’t happen, now what? UMB Healthcare Services’ Strategic Advisory Council, made up of five leading industry experts in a variety of health care, benefits and research-related fields, will discuss the uncertainty surrounding health care and how to manage health care costs in our April 27th webinar. Gearing up for the webinar, we asked members of our Strategic Advisory Council questions about their outlook for the future of health care and tips for managing health care costs. 

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In this Q&A series, I talk with Ann Mond Johnson, health care innovator and executive, about how employers can effectively maximize employees’ health care benefits, make wellness a key aspect of company culture and the future of making health care easier to understand and access.

What should employers be doing to effectively maximize their employees’ health care benefits?

Employees can maximize their benefit dollars when they understand what they’re selecting and are able to choose benefits that are most appropriate for them and their families. After all, people don’t want to buy health insurance; they want security for themselves and their families. They need protection against a financial disaster. Employers can help employees make better health care selections by providing comprehensive education on benefits and how to use benefits year-round. By engaging in the health care conversation throughout the year, employers can help employees make informed, thoughtful decisions.

How can employers make wellness a part of their culture?

Everything we’ve seen and read indicates that the most effective organizations “practice what they preach,” starting at the top of the organization. It doesn’t have to be very involved or expensive. Given that there are five big contributors to good health (tobacco, food choices, BMI, physical activity and unmanaged stress) focusing on at least one of these can likely make an impact. Employers can encourage a culture of wellness for their employees by providing useful resources such as timely and educational communications, sponsoring teams of employees for local races and having healthy food choices in on premise facilities.

Is health care going to become more complicated or easier for consumers?

It is imperative to make it easier for people to access and understand health care. But what does that really mean? First off, it needs to be easier for consumers to make the right decisions about their benefits, starting with health insurance. Second, they should understand how to make decisions that impact their health. Employees also need to understand what constitutes reliable sources of information. Finally, since we’re consumers until we become patients, we need more insights and transparency about the choices we make when we become patients – about drugs, physicians, treatments and facilities.

Are there any other topics or points that you want to touch on?

There is a growing acknowledgement of a close link between physical, emotional and financial health. Employers have the opportunity to help guide and encourage employees to make informed decisions about their general wellness. Offering programs that look at overall wellness is a great way to encourage the happiness and health of employees.

View this brief video for further thoughts from Ann Mond.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.pulation Survey/Housing Vacancy Survey, Series H-111, U.S. Census Bureau, Washington, DC 20233.




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Dust off Your Finances: Spring Clean Your Financial House

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Spring is just around the corner, and with that comes the proverbial spring
cleaning. While most people recognize the value of scrubbing their homes, we recommend dusting off your finances as well.

Consider these tips to help ensure your financial house is cobweb-free.

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Settle In for a Review

  • Review the titling and ownership of all financial accounts. Make certain any accounts owned and titled in a trust, or have a Payable upon Death designation, will meet desired intentions if a transfer were to take place.
  • Review your credit report to make sure
    you’re in positive standing. You can request a free copy once every 12 months from annualcreditreport.com.
  • Review insurance policy and retirement account beneficiaries. This is particularly important if there has been a recent change in marital status. A spousal waiver will be needed if the beneficiary is not the spouse.

 Prepare for the Future

  • Execute a will and a living will. If these documents already exist, they should be reviewed on a regular basis. Circumstances and viewpoints change, which can heavily impact desired allocations and intentions.

Check Up on Your Cards

  • Check the interest rates that are being charged on all credit cards. For individuals who carry balances, consider consolidating to the card with the lowest interest rate or even contemplate a Home Equity Line of Credit as the interest may be tax-deductible.
  • Utilize a credit card that offers rewards. Many of these now carry no annual fee and offer cash back in addition to the travel and merchandise rebates.

Evaluate Your Employer Benefits

  • If financially possible, make the most of your 401(k) by contributing to the level that takes advantage of the full employer match.
  • Review your health insurance coverage options to ensure you are making the best selections for yourself and your family. If you are currently enrolled in a High Deductible Health Plan coupled with a Health Savings Account, review your contributions to make sure you are maximizing your saving options.

Examine Your Life Insurance

  • Make certain existing coverage will meet the financial needs of your family if any member were to pass away, not just the primary income source for the family. Also, if the only secured life insurance is provided by an employer, consider pricing other term policies. Remember employer-provided insurance may not transfer if there is a change in jobs.
  • Research long-term care insurance. Ask your insurance provider about this coverage to ensure it offers home health care in addition to nursing home care. Life expectancy is much greater than it used to be, and in-home and community care continue to rise in price.

Freshen Up on Your Investments

  • Review or create an investment policy statement (IPS). This is an agreement with a financial advisor that states your investment purpose, time frame and risk tolerance. An IPS clearly states the investor’s goals and helps provide clear expectations, consistent communications and true accountability for both the advisor and the investor.
  • Conduct homework for obtaining professional services from investment consultants, estate planning attorneys and certified public accountants. Seek references from trusted friends and colleagues and stick with specialists. Professionals will be able to offer insights and guidance that will help individuals succeed in reaching their financial planning goals.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.pulation Survey/Housing Vacancy Survey, Series H-111, U.S. Census Bureau, Washington, DC 20233.


As a Private Wealth Management regional manager, Brent is responsible for the growth and support of new customer relationships as well as supervision of regional sales associates. He is also responsible for oversight and delivery of the financial planning discipline within the region. With nearly 30 years of experience private wealth client relationship management, Brent is a seasoned banking professional with deep Texas roots. He attended the University of Texas at Arlington, where he earned a bachelor’s degree in finance, and is a Candidate for CFP® certification. He serves as a board member of the Dallas Parks Foundation.



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Individual retirement trust: a new way to save for retirement

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An individual retirement trust allows you to maintain the tax advantages that come with saving and investing in an individual retirement account (IRA), while providing you with the long-term control of a trust. You may be familiar with the uses and benefits of an IRA, and you may have a good understanding of trusts, but this unique solution can be the best of both worlds.

Individual retirement trust: a new way to save for retirement

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The basics

An IRA, whether Roth or traditional, is a savings mechanism that allows you to invest funds for your future retirement. The sooner you begin putting money into an IRA, the more time your money has to grow before you reach 70½, the age at which you are required to begin taking distributions from the account. IRAs prepare you for retirement and provide tax advantages, allowing you to choose whether to make contributions tax-free (traditional) or receive your distributions tax-free (Roth).

A trust is an estate planning tool that allows you to set aside funds for specific beneficiaries to receive when you pass away. Trusts can be managed by a third party called a trustee. The trustee handles management of the trust, including things like managing trust investments, making distributions to beneficiaries and taking care of trust assets, both during your lifetime and after your death.

An individual retirement trust combines the tax advantages of an IRA with the long-term control of a trust. This type of account allows you to save for retirement while maximizing tax advantages and ensures your IRA funds are distributed according to your wishes. Simply select your beneficiaries—whether people, organizations or charities—and the percentage of funds each beneficiary should receive, plus any conditions you have in mind. Once you have selected beneficiaries and determined percentages of distribution, the trustee oversees all of the distributions, including adjustments you may direct over time.

Using an individual retirement trust allows you to bypass the complicated IRS requirements involved in naming a trust as an IRA beneficiary, which is an alternative option. The trust portion of the account also helps protect your legacy from asset seizure by the potential creditors of your beneficiaries. If your heirs inherit your IRA assets without the protection of a trust, funds can be taken by a beneficiary’s creditors in the event of a beneficiary’s bankruptcy.

Also, individual retirement trusts can be set up with disability provisions that ensure your accounts are maintained in the event of your illness or long-term incapacitation. In this case, the trustee will take over the management of your retirement fund investments, coordinate bill pay and administer distributions as set forth in the document—all without the need for a separate guardian or conservator.

Who can benefit from an individual retirement trust?

Individual retirement trusts offer a unique structure that may not work for everyone. Most importantly, this structure is best for those who already have significant retirement assets and are concerned about the future management of those assets.

If you are particularly tax-sensitive, you may benefit from an individual retirement trust because it allows you to maximize the tax deferment available through the stretch payout option, whether the IRA is a traditional or Roth account.

If you have divorced and remarried, this solution can help you streamline the inheritance process by allowing you to select a variety of beneficiaries with varying inheritance percentages. Step-children can be included, as can organizations of your choice. For blended families, individual retirement trusts are beneficial in that they provide extensive control over the distribution of assets. Specifically, beneficiary designations will not be changeable, even after your passing, which ensures the heirs you have chosen are provided with exactly what you have determined for them regardless of later marriages or life changes.

Individual retirement trusts are also good vehicles for those concerned with the use of the funds by heirs and seek to include limitations. Any amount set aside for a beneficiary that is more than the required minimum distribution (RMD) can be subject to the trustee’s discretion.

Bottom line:

An individual retirement trust can help you achieve the tax advantages of an individual retirement account paired with a comprehensive asset management plan for your heirs–now and in the future. You will be able to build and customize your legacy with multiple beneficiaries, long-term control and detailed asset distribution options. Combining an IRA with a trust can streamline your legacy administration and simplify the process in one efficient document.
 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Conley is a vice president and legal counsel for UMB Private Wealth Management. He is responsible for reviewing estate planning documents and working with attorneys, clients, trust and bank associates regarding various legal issues that arise in the creation of trusts and estates. He joined UMB Private Wealth Management in 2000. Mr. Conley is an attorney and Certified Public Accountant. He is licensed to practice law in Kansas and Iowa.



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Financial Word of the Week: Mutual Fund

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Financial Word of the Week - mutual funds

A mutual fund is an easy way to invest your money and receive the benefits of a diversified investment portfolio. The fund is usually made up of multiple types of investments like stocks or bonds. The fund’s portfolio manager handles your money invested in the fund.

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Just like with any investment tool, there are advantages and disadvantages to consider.  Here’s a short list:

Advantages:

  • Investors with smaller amounts can get into the game. Your investment is affected by ups and downs of the market and may generate additional taxable income.  Remember, you are pooling your investment with a group of people who are all hoping to make a profit.
  • You are working with professionals who have your best interest in mind. Mutual funds bring diversification, meaning you can spread your money out into multiple investment strategies. The funds are usually very liquid as well, meaning you can access your money in a short period of time..

Disadvantages:

  • You don’t have control over the fund – the portfolio manager and the market do. It will be important to trust your portfolio managers in the decisions they will make for you and to carefully select funds based on your risk tolerance and investment time frame.
  • Management fees are most likely associated with the fund, so it is important to understand the fee structure. Another thing to consider is that you will not know the exact price of your fund before you invest or redeem. The price of most funds is determined once every business day after the market is closed and your trade is valued at that price.

If you want more information about mutual funds, we recommend doing some research through the U.S. Securities and Exchange Commissionor the Investment Company Institute.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Financial Word of the Week: Individual Retirement Accounts (IRAs)

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Financial Word of the Week

So far this month, we talked about a few savings account options, including HSAs, FSAs and 401(k) plans.  Two other common retirement savings account options are traditional IRAs and Roth IRAs.

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Traditional IRAs

A traditional IRA (Individual Retirement Account) is a savings account for retirement that gives you tax advantages. The contributions you make to your traditional IRA might be deductible from your taxes depending on a few circumstances.

The IRS sets the limit on how much you can contribute. This year the maximum amount is $5,500 or $6,500 if you are 50 or older. Even if you contribute less than this amount, your contribution is still eligible for tax deductions.

Generally, if you are contributing to a traditional IRA, you cannot access the money without a tax penalty until you are 65, have participated in the plan for at least 10 years or terminate service with your employer. You can learn more on the IRS website.

Roth IRAs

A Roth IRA is a savings account for retirement where the contributions are not tax-deductible. Roth IRAs are very flexible. You can withdraw your regular contributions without a tax penalty or fee; however, you generally cannot withdraw your earnings on the contributions without penalty until you are 59.5 or have held the account for five years.

In order to be eligible to contribute a Roth IRA, your modified adjusted gross income must be less limits established by the IRS. There are also contribution limits. It may seem like a no-brainer, but you cannot contribute more than you make in a year if your earned income is less than your contribution limit. So if you make $4,000 a year at a part-time job, you wouldn’t be allowed to contribute $5,000 to your Roth IRA using other funds like interest from another savings account.

Another advantage is if you decide to work during retirement, you can continue to contribute to the account. You can also leave money in your Roth IRA for as long as you live. Learn more on the IRS website.

While there are many savings options available, always do your research first and talk to a trusted financial advisor to ensure you are using the best account for your unique retirement goals.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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