Reed Financial Planning Services



427 Naubuc Ave, Building 427, Ste 101
Glastonbury, CT 06033





Updates from our Advisors

Is your Social Security benefit taxable?                                                      

Social Security is an important source of retirement income for many.  Yet few people understand how Social Security is taxed.  You may be surprised to learn that 15% of your Social Security benefit is always received tax-free.  And with a little planning, some people can lower the amount even further.  Here's how it works.

Social Security is taxed based on what they call your combined income.  Combined income is the total of your adjusted gross income, any nontaxable interest and half of your Social Security benefit.    

If you are single with combined income is less than $25,000, you may not owe any taxes on your Social Security benefit.  With combined income between $25,000 and $34,000, up to 50% of your Social Security benefit is taxable.  And if your combined income exceeds $34,000, then up to 85% of your benefit is taxable.

For married people and file jointly, combined income under $32,000 could mean that you don't owe any taxes on your Social Security benefit.  With combined income between $32,000 and $44,000 up to 50% of your Social Security benefit is taxable.  If your combined income is above $44,000, up to 85% of your Social Security benefit may be taxable.  

If you believe that your combined income in retirement may be close to one of the thresholds, it may benefit you to plan to have some income that wouldn't be included in the combined income calculation.  This could mean using cash savings, Roth investments, cash value life insurance or home equity to supplement other income sources.  Even if you're able to keep your taxes lower for a few years, it means more of your Social Security benefit will come to you rather than going to the IRS.    

For more information or to understand the specifics of your situation, you should consult a tax-advisor, accountant and a Financial Advisor.


Many people wait until they are near retirement to begin looking more seriously at their financial planning.  But financial planning should be a life-long process.  Beginning early, monitoring, reviewing and updating your plan as your life changes will help you stay on track and work toward the goals that are important to you and your family.

Below are some quick topics you should be considering at various stages of your life.  Taking a little time today to address your financial plans can make a big difference down the road!

Beginning Your Career 

starting your financial plan, opening a retirement account, emergency fund - Start an emergency fund.

-  Open a retirement account and start saving.

- Keep your debt under control.

- Begin outlining a plan illustrating your financial goals and strategies to work towards achieving them.



Buying A House And Starting A Family.

life insurance, financial planning, estate planning, updating beneficiaries- Review your Life Insurance needs.

- Review and update your beneficiaries.

- Get a Will, Living Will & Power of Attorney.

- Start saving for college.

- Review your financial plan, updating your goals, review your investments and make updates or changes as needed.



mid-career, financial planning, retirement planning, Connecticut Teachers Retirement System, buying back time- Get more serious about your retirement planning and begin doing some more comprehensive planning.

-  Review your life insurance needs and estate planning documents and update as needed.

- If you are a CT public school teacher and have time to buy back, get that done.

- Educate your children about the importance of financial planning.  Share your successes as well as experiences that helped you learn the importance of proper planning.

- Begin understanding your parents financial situation and plans and if they may impact your.  For instance, are they financially secure or are you part of their long term contingency planning?



comprehensive financial planning, retirement income plan, investments, pre-retiree- Develop a comprehensive investment and retirement plan that analyzes your assets, clearly outlining your financial goals and includes a Retirement Income Plan.

- If need be, increase contributions or reorganize your investment accounts.

- Review your beneficiaries and estate planning documents and update as needed.

- Understand any important deadlines or other challenges that may lie ahead as you plan for your retirement and develop strategies to address any foreseeable challenges.

-  Begin discussing your plans with your your children.

- Thing about your long term plans and the resources you may have available in the event you or your spouse needs care or becomes incapacitated.




We often hear misconceptions about how and when you can take a distribution from your retirement plan.  There's no easy answer to that general question as IRA's, Roth IRA's, 403(b)'s, 401(k)'s and 457 plans all have different IRS rules when it comes to taking a distribution.  And then to complicate things even further, each employer can have their own rules pertaining to their respective 403(b), 457 or 401(k) plan.  Lastly, there are different kinds of distributions such as hardship withdrawals, unforeseeable emergency withdrawals, early withdrawals, loan options and normal withdrawals.  Below are some general guidelines that pertain to normal withdrawals that are not subject to the IRS's 10% early withdrawal penalty.  Qualifying for a withdrawal outside of the rules listed below may results in additional taxes, charges and/or penalties.  Just remember to check with a Financial Advisor and your Tax Advisor for the details specific to your situation.

IRA Distributions

You can take a distribution from an IRA or Rollover IRA when you turn 59 1/2.  The amount withdrawn from your IRA would be subject to ordinary income tax in the year that you take the withdrawal.

ROTH IRA Distributions

Similar to IRA Distributions, you need to be at least 59 1/2 to take a normal distribution from a Roth IRA.  However you must also have held the Roth IRA for at least 5 years in order to get the tax-fee treatment on the earnings. 

401(k) Distributions

You can access the funds from a 401(k) after you leave that employer.  However taking withdrawals before the age of 59 1/2 may result in an early withdrawal penalty from the IRS.  If you continue to work beyond the age of 59 1/2, the plan may allow you to take a distribution even while you are working.  This is often referred to as an in-service withdrawal.  You would need to check with your benefits office to determine if your particular 401(k) plan allows for this type of withdrawal when you are still working.

403(b) Distributions

403(b)'s distribution rules can get a bit more complicated.  You will have both the IRS rules as well as plan-specific rules.  Here are the IRS guidelines regarding permissible 403(b) withdrawals;

- When you separate from service with the employer

- When you obtain the age of 59 1/2

- If you become disabled

For more information about 403(b) distributions, please visit the IRS website at:

457 Distributions

457 Plan distributions are pretty cut and clear. 

- If the plan allows, you may have an unforeseeable emergency withdrawal.

- When you separate from service from your employer.

For more information about the 457 distributions, please visit the IRS website at:


Some 401(k), 403(k) and 457 plans offer the option of taking a loan from your retirement account.  General IRS rules state that you can take 50% of your account value up to $50,000.  The loan is not reflected on your credit history and in some cases, a portion of the interest that you pay goes back into your account.  If you fail to repay the loan, the unpaid balance is treated as a withdrawal and applicable taxes and early withdrawal penalties would apply.  The plan document, benefits office or service provider can provide you with the specifics of your plan's loan availability.

Hardship and Unforeseeable Emergency Withdrawals

The IRS does understand that investors may fall on hard financial times.  Therefore they do allow for certain withdrawal options even if you are still employed.  You will often need to supply specific documentation when requesting the withdrawal and it's up to the employer or third party administrator to either approve or deny the withdrawal request.   Qualifying reasons for a hardship or unforeseeable emergency withdrawal request include;

- to prevent the impending foreclosure or eviction.

 - to pay for unreimbursed medical expenses for you or a family member

- to pay for education expenses for you or a family member

Note that the 10% early withdrawal penalty may still apply if a hardship or unforeseeable withdrawal is taken.   For more information about these types of withdrawals, please consult your benefits office.  More information can also be found at the IRS link listed here.

A few other things to consider

- Make sure that you plan for your withdrawal strategy well in advance of needing the funds.  Failure to do so may result in extra fees, taxes or withdrawing at a loss which can all impact the longevity of your nest egg.

- In most cases, you can take your withdrawals either on a regular basis such as monthly, quarterly or annually. You can also simply elect to take lump sum withdrawals as needed.

- There are some investments that have liquidity restrictions.  In other words, you can only access your funds at certain times or take out a certain percentage of the funds each year.

- Certain kinds of investments have something called a Deferred Sales Charge.  This means that if you take funds from the account within a certain number of years after staring the account, the investment company may impose a sales charge as the funds leave the company.  This charge usually goes away over time and there is often a percentage of the funds that are free to move annually without a deferred sales charge.




We help out clients understand their CT Teachers Pension benefit and determine when they might be able to retire.  As part of this service, we often help them buy back time into their CT Teachers Pension.  Here area  few important things for teachers to remember;

- You must qualify to be able to purchase time by completing the appropriate form and getting an invoice from the State of CT.

- Document your buyback as soon as possible and get your invoice. In some cases, it can become more expensive the longer you wait.

- You can fund your buyback from either after-tax bank savings, retirement money (as long as it's in the teacher's name) or a combination of the two.  We can help you plan for the buyback and help you decide which type of funds to use.

For more information about buying back time take a look at the Connecticut Teachers Retirement System's website;|#41337 or give our office a call.