FAQs & Education

We manage various types of accounts, including (but not limited to) the following:

• Traditional IRA

• Rollover IRA

• Roth IRA

• SEP IRA

• Inherited IRA

• Profit-Sharing Plan

• Trust Account

• UTMA Custodial Account

• Individual or Joint Accounts

• 529 Plan (for college savings)

After speaking with one of our advisors to discuss your financial game plan, we will contact you to gather some personal information, along with any documentation that may be required. We then arrange for you to sign any required documents in person, by mail, or electronically.

The custodian requires verification for your name, date of birth, Social Security number, mailing address, phone number(s), employment history, and the source of your funds. In most cases, you also need your beneficiaries’ names and personal information.

If opening a trust account, you should also provide pertinent pages of the trust or a Certificate of Trust.

No, we have several options to accommodate our clients when signing documents. We can send them electronically (securely), via fax, or mail them to you with a pre-paid return envelope.

Yes, you can transfer your existing account. One of our associates will work with you to open the new account and prepare any required transfer paperwork. You’ll also need a recent statement for the account.

Typically, the cash balance and positions in the account are transferred electronically within a few days. In some unusual cases, a custodian is not able to accept a position in an account, and that position may have to be liquidated.

When opening an account, you are required to use a custodian. The custodian securely holds assets, provides your statements and tax documents, gives you online access to your account, and many other services. Council Oak Wealth is then given access to manage your investments through the custodial account.

We partner with two custodian firms: Raymond James and Charles Schwab. Both have unique benefits, which we’ll discuss with you before opening your investment account—neither charge account fees.

You’ll sign an agreement with the custodian to hold your assets when you open an account. This agreement lasts only as long as you choose to keep the account with the custodian.

You’ll also sign an asset management agreement with Council Oak Wealth, which very clearly outlines your fees and our services. You can also end this agreement at your discretion.

A 401(k) rollover is when you transfer funds from a company-sponsored retirement account into another retirement account.

Said differently, it’s a transaction through which assets held in your former employer’s 401(k) plan are moved into your own individual retirement account (IRA).

In some cases, we may suggest (or be required) to roll the 401(k) assets into a Roth IRA or taxable account, depending on how you made the initial deposit.

Any time you leave an employer, for whatever reason, you have the option to “roll over” your 401(k) into an individual retirement account (IRA). Depending on the 401(k) plan permissions, you might leave the funds in your prior employer’s plan or move the funds into your new employer’s plan.

Before rolling a 401(k) over to an IRA, consider the total costs, other investment options, and available planning advice. Other questions to ask yourself:

• Can I borrow money from the plan?

• Will the rollover be done free of taxation?

• Should I consider non-rollover options, such as Net Unrealized Appreciation (NUA), for the corporate stock?

First, you’ll meet with a Council Oak Wealth advisor to develop a complete plan. We then open the appropriate account to accept your 401(k) assets.

Next, your advisor schedules a conference call with you and the financial institution that sponsors the retirement plan.

During that call, the financial institution will get specific instructions for transferring funds into the new account with our custodian.

The proceeds can typically be moved electronically, though some 401(k) providers insist on mailing a check to you or our office. We will direct the 401(k) provider to the appropriate titling on the check, if necessary.

We use the wealth management process to determine how much of your portfolio should have historically been invested in the stock market. From there, we adjust your exposure to stocks, depending on your tolerance to risk and volatility, desired level of aggression, and market conditions.

We believe that fixed income should function to reduce the volatility of your portfolio in times of market dysfunction.

The safest investments in the world include U.S. Treasuries, FDIC-insured CDs, and most money market funds. Some lower quality or longer exposure choices include “junk” bonds, preferred stocks, and some international or emerging countries’ debts.

In our portfolios, we currently favor buying short-term bond ETFs, but also purchase individual high-quality corporate bonds with maturity dates under 10 years.

We sometimes buy a small portion of ETFs that give specific exposure to an area we determine is undervalued, such as high-yield bonds, preferred stocks, or international bonds.

If you are already retired, we prefer to match the maturity dates of your bonds to your liquidity needs for the next several years.

We do not favor mutual funds for most asset classes. Many aspiring investors unbeknownst to them, are charged an advisory fee plus an internal management fee on the mutual funds they own.

According to the Investment Company Institute , the average cost of owning an actively managed equity mutual fund was 0.71% in 2020. If you pay a fee to your advisor on top of that, the management costs could negatively impact your ability to meet your long-term financial goals.

We also have grown to dislike the year-end capital gain distributions that clients get from owning mutual funds in taxable accounts.

Our portfolios primarily use individual stocks and low-cost ETFs (most charge less than 0.10%), which have never surprised us with taxable capital gain distributions near the end of the year.

We offer a variety of portfolio styles, each with its own parameters. For example, our Momentum style has technical indicators and earnings improvement metrics that must be met before inclusion in any portfolio.

In our Global Allocation ETF portfolio, we start with broad diversification across many geographic areas and asset classes, then tweak the holdings according to economic expectations, geopolitical turmoil, and price and momentum improvements.

No matter which you choose, we’re transparent about the portfolios you own and routinely engage with you about any investment changes.

Our comprehensive wealth management process is a “deep dive” into your financial standing. As part of our approach, we review and analyze life insurance policies and annuities to ensure they properly fit into your long-term financial goals.

In addition to life insurance or annuity statements, some of the documents and details we may request include:

• Monthly statements of your assets (e.g., 529s, retirement, and non-retirement accounts)

• Current spending habits and desired retirement lifestyle

• Estate planning documents (wills, trusts, etc.)

• Social Security or other projected pension benefit statements

• 401(k) statements

• List of any real estate, cryptocurrency, or other assets

• List of all debt

If you own a business, a complete review of corporate structure, revenue, net income, debt, any plans for a merger, acquisition, or sale, a list of business-owned real estate, among other documentation, may be required.

Here are a few questions we will assist you in answering about funding your child’s education:

• How much will college cost in 18 years?

• What if I only want to partially fund my child’s education?

• What type of school do I plan for (private, public, or vocational)? And where (in-state or out-of-state)?

• Do I want to save in a way that only allows for withdrawal to pay for tuition, and not other expenses?

• What if my child doesn’t end up using the funds I set aside?

Depending on your answers, Council Oak Wealth Advisors implements one of multiple strategies and planning techniques. Some of the different vehicles to begin saving for your child’s educational expenses down the road include 529 accounts, Coverdell ESA, or UTMA.

There are a few ways to gift your assets:

• Qualified Charitable Distribution: A QCD, or Qualified Charitable Distribution, is a common avenue for retirees to satisfy RMDs (Required Minimum Distributions). It sends funds directly from your retirement account to a charity. The amount is excluded from your taxable income.

• Gift-appreciated stock: By gifting an asset that has been appreciated, you save on potential tax consequences if sold outright.

• Charitable Remainder Trusts: For high-net-worth individuals (HNWIs), we also consider Charitable Remainder Trusts (CRTs), private foundations, and donor-advised funds, among other techniques.

Keep in mind that any gift to another individual is exempted from gift tax if it is below $16,000. For 2022, the lifetime exemption for both gift and estate taxes is $12.06 million per individual or $24.12 million per couple. The lifetime exemptions change annually until 2025 (and sunset substantially to lower amounts after that).

The main difference between a Roth IRA and other types of retirement accounts is when you pay taxes.

With a traditional retirement account, you pay taxes when you make a withdrawal. Roth contributions receive no upfront tax deductions, but you can withdraw tax-free later on (for both contributions and earnings).

In other words, Roth IRA contributions are not tax-deductible (post-tax) and, therefore, under current IRS law, are disbursed tax-free. You must qualify for withdrawals: minimum age 59.5, and the account must have been opened for five years prior. Otherwise, a 10% penalty and possible taxation would be incurred. Conditions are also tied to annual income amounts.

Yes, as part of our comprehensive wealth management approach, we offer analysis on when you should start collecting Social Security benefits.

Our advice is based on your current needs, expected time horizon, and other assets available for withdrawal during retirement. We also consider the taxability of taking Social Security early, any income limitations that it may place upon you, and the impact of future taxation of other assets on your benefit.

Yes, we review and offer advice on various estate documents as part of our wealth management services. These include:

• Living Wills

• Powers of Attorney

• Revocable Trusts

• Irrevocable Trusts