Name
Title
John Hancock Investments
Date
Welcome to “Common IRA mistakes”
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.
2.
3.
4.
5.
6.
7.
Making common rollover mistakes
Not considering a Roth IRA
Forgetting catch-up contributions
Failing to name a beneficiary
Having an outdated beneficiary
Naming a trust as a beneficiary
Not knowing your distribution options regarding
inherited IRAs
8. Overlooking income-tax deductions with inherited IRAs
9. Not cleaning up old retirement accounts
10. Trying to do it by yourself
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A beneficiary primer
What is a beneficiary?
The person(s) or entity you wish to inherit your account/assets
when you die
Who chooses your beneficiary?
You do (as the account/asset owner)
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A beneficiary primer
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 assets.
Successor
If you inherit an IRA, your listed beneficiaries become the
successor beneficiaries.
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A beneficiary primer
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 dies before John.
JOHN
SUSAN
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A beneficiary primer
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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Mistake #4
Failing to name a beneficiary
Mistake #4
Failing to name a beneficiary
Issue
If 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.
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Mistake #4
Failing to name a beneficiary
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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Mistake #4
Failing to name a beneficiary
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.
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Mistake #4
Failing to name a beneficiary
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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Mistake #4
Failing to name a beneficiary
Strategy
As soon as you open an IRA, make sure you name
primary and contingent beneficiaries.
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Mistake #5
Having an outdated beneficiary
Mistake #5
Having an outdated beneficiary
Issue
You might make distributions to unintended
beneficiaries, such as an ex-spouse.
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Mistake #5
Having an outdated beneficiary
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?
* Although the names have been changed for privacy, this is a true story from John Hancock Signature Services.
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Mistake #5
Having an outdated beneficiary
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 her 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!
* Although the names have been changed for privacy, this is a true story from John Hancock Signature Services.
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Mistake #5
Having an outdated beneficiary
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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Mistake #5
Having an outdated beneficiary
Strategy
Plan an annual review of your beneficiary designation
forms to make sure they are up 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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Mistake #7
Not knowing your distribution options
regarding inherited IRAs
Mistake #7
Not knowing your distribution options regarding
inherited IRAs
Issue
If 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.
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Mistake #7
Not knowing your distribution options regarding
inherited IRAs
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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Mistake #7
Not knowing your distribution options regarding
inherited IRAs
Strategy
As soon as you inherit an IRA, make sure you name
primary and contingent beneficiaries of your own.
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Mistake #9
Not cleaning up old retirement accounts
Mistake #9
Not cleaning up old retirement accounts
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.
The average person changes jobs about 11 times
during his or her lifetime.1
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.
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Mistake #9
Not cleaning up old retirement accounts
Strategy
Consolidate multiple retirement accounts into a single
IRA and simplify your records.
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Mistake #10
Trying to do it by yourself
Mistake #10
Trying to do it by yourself
Issue
Do you have someone to help you set long-term goals
and plan for the future?
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Mistake #10
Trying to do it by yourself
Strategy
 Financial advisors and professionals
 Accountants
 Insurance planners
 Attorneys
You might use some or all of these professionals
over the course of your life.
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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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John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America’s most trusted brands, with a heritage of financial stewardship dating back
to 1862. Helping our shareholders pursue their financial goals is at the core of
everything we do. It’s why we support the role of professional financial advice and
operate with the highest standards of conduct and integrity.
A better way to invest
We build funds based on investor needs, then search the world to find proven
portfolio teams with specialized expertise in those strategies. As a manager of
managers, we apply vigorous oversight to ensure that they continue to meet our
uncompromising standards and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set of
investments backed by some of the world’s best managers, along with strong riskadjusted returns across asset classes.
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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.
For more information, contact John Hancock Investments at 800-225-5291 or
visit jhinvestments.com.
A word about risk
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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.
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