Archive for Retirement – Page 2

Can you contribute to the traditional ira and claim deductions incase you worked part of the year?

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Sunday, August 28th, 2011

Can you contribute to the traditional ira and claim deductions incase you worked part of the year for the employer that has retirement plan and you contributed to 401K?
Considerting that you were employed for rest of the year.

Did not get any clear answer after lot os searching. Any ideas?

You need to do the worksheets in publication 590.

The fact that you were covered by the 401K in the rest of the year (whether you contributed or not) affects your ability to deduct for an IRA even if you weren't covered for the first part of the year.

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Categories : IRA
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Can my employer deny my early 401k withdrawal if I'm ok with the penalty and tax?

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Saturday, August 27th, 2011

The above answer is partially correct. The need for approval is only applicable to portions of your funds that are not fully vested. any of the funds that are your direct contributions are full access this also goes for any fully vested funds. However you will need to speak to a company rep. to request the withdrawal no matter what but their approval is not guaranteed to be needed depending on the situation. Oh, and he is also correct that in most cases the Reason for withdrawal plays a major factor in its acceptance.

No. Your employer can not deny your early withdrawal. It is so stated and contracted (by your employment) that you both agreed that money would be placed in this account, in whatever way. Employers have the stupidity to say unconscious things due to your leaving. by law the employer has no time period to close your account for you to withdraw. if it is a large sum of money, get a lawyer if you want the funds. Truth, get the necessary papers, by calling the plan administrator (company holding funds), complete, make a copy for self, forward back to the company, call to insure receipt. It is in the best interest of anyone under the age of retirement to place the funds in an IRA account at your own bank with no penalty, than a cash withdrawal. Early withdrawal means IRS takes 40% off the top; 30% early withdrawal, 10% taxes on the total. if you are in need of money try another avenue. The headache, hassle, and giving money away to the gov is not the right choice. Money doesn't make the world go round, it just makes it possible for you to have more material items, love makes the world go round. Weigh your options. if it's a small amount of money (under 10,000) use an IRA. once you forward papers back to company they hassle your employer, you hassle them until you get what you want. Don't be mean or sly. do the right thing for futer self preservation. Live life, not life live. be good. :)

It depends on the rules of the plan. Some plans have minimum distribution rules. The plan administrator should be able to tell you the exact rules that apply. You can also look at the plan documents which should say what the distribution rules are.

If you aren't employed there any more, then they have to let you take it. if you're still employed there, then yes they can deny your request unless the rules of their plan say otherwise – check the plan paperwork.

Yes. As long as you are still employed by the sponsoring firm they do NOT have to allow you to take any distributions at all. This is very common. The circumstances under which you are allowed to take an in-service distribution are defined in the plan. Just because the funds are fully vested or are an IRS approved reason does NOT guarantee that the plan will or must allow the distribution.

If they will not allow you to take a distribution, you'll have to quit your job first. once you no longer work for the sponsoring firm you can take distributions as you see fit.

YES – there are only certain hardship reasons that you are allowed to withdraw money for a 401 AND it has to be approved by your employer/401k administrator (usually someone in your company)

yes and no — yes on that portion that has not been vested and no on your money that was put in to the fund.

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Categories : 401k withdrawal
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Which method is maxing out your 401K?

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Thursday, August 25th, 2011

Common advice is to be sure and max out your 401K contribution. are they referring to the maximum percentage that your employer matches your contribution. or are they referring to the maximum contribution set by a IRS limit, currently $15K?

Referring to max limit that you can contribute and defer your taxes. are you absolutely sure the max limit is 15K?

They probably mean the employer match. it is well worth it to you to make the most out of your employer's match since it is like free money. I think that the IRS limit is really high and unrealistic for most people to contribute into their 401K.

They are talking about the maximum contribution allowed. the reason for this is that it reduces your tax burdon while increasing the amount of money you are putting towards retirement.

Another option that you have is to contribute the maximum percentaget that your emploer matches and then take anything above and beyond that and contribute it to an IRA. You might want to do this in the case where your employers investment options aren't performing and you could do better outside.

Here's my thought. If your employer offers a matching 401k plan, then the bare minimum you should contribute is the maximum the employer will match. You will not find a better investment for your retirement savings plan. If you can afford to contribute more then I would recommend to do so as the tax defferred saving capabilties of the plan far outweigh any other investment options.

Establishing and maintaining your retirement plans should begin as early in the work life as possible. the more you contribute today, the sooner you can stop working in the future. Those who do not save for the future are destined to work forever… something I certainly don't want to do!

Good luck and I hope this helps!

Match what ever you employer matches.

It's certainly advisable to contribute to your 401k (or 403b) up to the amount matched by your employer – that's free, risk-free money.

After that, if you qualify for a Roth IRA (your income can't be too high or it's phased out), stick $5,000 in one of those. Growth in the Roth IRA is tax-FREE if withdrawn for retirement after age 59 1/2 (versus the money withdrawn from the 401k which is taxed). You're putting after-tax money into the Roth, but what you are doing is "diversifying" your risk of being in an equal or higher tax bracket at retirement.

If you think that's not possible, consider that tax rates are at historical lows and we're under a huge and growing deficit.

The MINIMUM I would invest is up to the maximum company match.

Maxing out a 401(k) refers to making the maximum contributions in a tax year, currently (as you said) $15k

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Categories : max 401k contributions
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Recommend Us – With Google Plus One

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Tuesday, August 23rd, 2011

According to new research issued by the Department for Work and Pensions last week, girls who are born in the UK this year have a one in three chance of living to the age of 100. the figures suggest at least half a million people will be over 100 by 2066.

This represents a likelihood of eight times more likely than the chances 80 years ago. Boys have a one in four chance. Additionally, those who are around 20 are thrice as likely as their grandparents and twice as likely as their parents to reach the golden age.

Pensions Minister Speaks Out

The Department for Work and Pensions has based the figures on the predictions from the Office for National Statistics, which show the likelihood of those over 100 in 2066. Pensions Minister, Steve Webb, is stressing the fact that the UK needs to save more for their own retirement, due to increased longevity.

If you are interested in a pension scheme which is both easy and cheap, simply look at Virgin’s stakeholder pension for more information.

Mr. Webb said, “These figures show just how great the differences in life expectancy between generations really are.

“the dramatic speed at which life expectancy is changing means that we need to radically rethink our perceptions about our later lives.

“We simply can’t look to our grandparents’ experience of retirement as a model for our own.

“We will live longer and we will have to save more.”

Lord McFall’s Report

Last week, the former chairman of the Treasury select committee, Lord McFall of Alcluith, published a report about the pension system needing improvement due to lack of funds, highlighting the need for consumers to save more. in addition to his report, this news on increased longevity means more people should focus on their options before retirement.

If you are concerned about what your savings can do, try fill in our pension enquiry form to speak to an independent financial advisor.

Lord McFall said that his report pointed out problems for the public sector but also maintained that the private sector had its own issues. he said of the general public, “”Too many people are stuck in a complex, costly and inefficient system that relegates the consumer’s interest to second place. on top of that, they simply aren’t saving enough to secure a decent retirement.

Annuity is a way of keeping your pension safe. By buying annuity, in affect you are insuring your money. Have a look at our annuity comparison table below for the latest rates.

“People need to get more bang for their buck or they’re not going to bother with a pension. instead they’ll end up spending today, ignoring tomorrow and scraping by in poverty on the state pension. We cannot stand by and let that happen. the complacency of many in the pensions industry is alarming.”

Pension reforms are becoming more and more demanding on consumers at a time of high consumer costs, and these reports only compound the problems facing those wishing to ensure savings in retirement.

You could also start your own pension by looking at our pension calculator to find the best rates tailored to you.

Read More Pension News

Interested in speaking to a qualified professional about your pension and annuity options? Fill in our quick pension enquiry form

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Inside Futures: Relevant trading-focused information authored by key players in the futures, options and forex industries

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Sunday, August 21st, 2011

Dow Jones Industrial Wipes Out 2011 Gains, Your 401K and Stock Portfolio could have Been Spared By a Hedge

 You've worked hard to advance your career or build your business.  You've worked even harder to save for your retirement.  Yet when it comes to protecting your savings, you only work hard on finding the biggest investment firm/advisors and hand them your money.  You feel safe because you are working with one of the biggest names in the industry.  You've been working with them for sometime and do not want to change because you are afraid to loose the little attention you get from the licensed broker.  if you are in a city like New York, you even feel privileged that they accepted you as a customer. 

It is markets like these that make you question your relationship with your investment firm and your broker's knowledge.  most of the brokers in these firms are working really hard to sell you the highest profit margin item on the shelf without violating any laws.  when the market goes up, they know that you will be a happy client.  when the market goes down, their only defense is that market will bounce back and that you should invest more now.  Sounds familiar?

While I am not an equity broker, nor am I trying to compete with your stock broker, I am disgusted by this casual attitude about protecting your savings.

Most of us in the financial field know for a fact that the only certain thing in the coming years in uncertainty.  as of now, no one can predict if the economy will improve or worsen.  What we know for a fact that in order not to miss out on a rebound, we need to remain invested. 

However, being invested alone is not enough!  One's investment needs to be protected.  Your portfolio needs to be hedged!

I challenge you to email me and inform me that your broker suggested that you hedge your portfolio using options.  I would be very surprised if 1 per 1000 of these brokers even knows how to hedge a portfolio using S&P and Dow Jones Futures.  if your broker did not advise you on hedging your portfolio, give him a call and ask him the following questions:

1- why is my portfolio down by this much?  He will probably tell you that the market is down by this much.

2- Ask him what is the correlation between my portfolio and the market, Dow or S&P?

3- why in the world did you not advise me on hedging my portfolio using S&P or Dow Jones puts and put spreads? 

Using a hedge, one could have substantially lessoned the impact of last week's move by paying a little insurance premium and buying put spreads.  the concept is simple, like home insurance protects your home against a catastrophic event; put options protect your portfolio against systematic risk, a drop in the entire market.

To establish a hedge, you need to determine the following:

  • 1- the correlation of your portfolio to the market.
  • 2- how much protection do you need, that is your hedging/risk policy.

Once you have answered these questions, placing the hedge in the futures market is easy.  if your portfolio is $250K or more, and would like to know how you could hedge against a downward movement in the market while keeping your upward profit potential uncapped, give me a call at 212-383-9453 or email me at with the best time to contact you and a bit of color about your holdings.  Do not forget to email me your broker's response to the above questions!

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Categories : 401k
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How do Roth IRAs work? Do they really double everything every year?

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Friday, August 5th, 2011

they definitely don't double every year. it is a retirement plan that has taxes taken out, that way when you retire whatever money it has earned is yours, tax free because the taxes are taken out in the beginning. Something like that, I'm not too familiar with IRAs..they are a confusing subject!

Certainly not. where did you get that idea? see ira.com.

I my case, I have invested the maximum amount the government allows each year starting in Dec of 1999. its invested in a mutual fund. I dollar cost average and even though it has not paid a dividend since Dec 1999, I have made money since a lot of shares were purchased at about 23 dollars per share and are now worth twice that. My shares our currently worth just under 30 thousand. not nearly enough to retire on. take my advice, start planning for your retirement while your still young.

no they do not double but it is a way to earn unearned nontaxable income!!!

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What is the difference between an IRA and 401K ? Which is better?

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Saturday, July 16th, 2011

I currently have a simple IRA @ work my understanding is that my boss meets 100% of what I put in @ end of year ! My credit union offers simple IRA and Roth IRA but isnt that the same as a 401K? Wich one is better?

Difference is limits (amounts you can put in) and vesting….limits for a Simple (or any other IRA) are much smaller. Additionally any IRA plan is automatically 100% vested and distributions can be made virtually at any time. So an employer who wants to be paternalistic and have employees save for retirement instead of just handing over the cash would choose a 401k.

Even though it is at work the SIMPLE IRA is still an IRA and counts against those contribution limits(4000).

A simple IRA is the same as 401K, which basically allows you to defer income. With a 401K, it should be better if your employer matches your contirbution, but sometimes the investments might not be the best. you could actually have both 401K and simple IRA. Anytime you open a priavet account,watch out for fees

With Roth IRA, you dont defer the income, but you dont pay income tax on gains..

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What is the penelty for cashing out a sep ira, roth ira and an individual ira prior to retirement?

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Friday, July 15th, 2011

Being laid off a last resort might be to cash is retirement to pay off mortgage. what are the downfalls?Thanks

SEP – income tax and a 20% penalty if SEP is less then 2 years old. 10% penalty after.
ROTH – 10% penalty and tax on all appreciation – YOUR contribution is never taxed.
IRA – income tax on all taxable %% and a 10% penalty.

These are federal only, states vary.

Helen, EA in PA

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Categories : ira and roth ira
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Recharacterization non-deductible amount from Tra. IRA to Roth IRA in-kind?

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Friday, July 1st, 2011

I would like to recharacterize some of my 2008 contribution from Tra. IRA to Roth IRA due to ineligibility to receive a full tax deduction. I found some advice/formula to calculate earning when filing income tax return investopedia.com/articles/retirement/03/092403.asp but this doesn't solve my problem when I try to recharacterize the non-deductible amount in-kind (stock). here is my scenario:
2/1/2008 contribute $100 to Tra. IRA and bought 5 stock A @ 20
3/1/2008 contribute $100 to Tra. IRA and bought 10 stock A @ 10

Now when filing income tax, I realize my non-deductible is $50 and stock A is in the price range of $5/share. What I want to do in this scenario here is to recharacterize $50 from Tra. IRA to Roth IRA in-kind without selling my stock and convert to cash.
Any help would be appreciated. thanks in advance.

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Categories : roth ira recharacterization
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Best retirement plan for 30 year old?

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Friday, July 1st, 2011

I'm almost 30 and I have not yet started planning financially for retirement. in the next month, I'll be eligible through work to start a retirement plan, but I have NO idea what I'm doing or the difference between the options. I make around 80K, have a 10k/yr child support obligation. any suggestions?

This is a way to make money for your retirement.
make-money-unselfishly.com
Annette Scott

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