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If you want to live a happy life, your personal finance is something you must pay attention to. The reason is because financial problems tend to cause problems in other areas of life. If you get your personal finance in order, you will greatly reduce the possibility of having problems in other areas of your life.

One part of personal finance I’d like to discuss here is retirement planning. You need to prepare for your retirement. Since you no longer have your main source of income at that time, it’s essential that you are financially prepared for it. Continue reading ‘Three Reasons Why 401k is Good For Your Personal Finance’ »

Although an Individual Retirement Account or IRA has been the most popular retirement savings option in the United States, many people who are beginning to plan for their retirement and those who just opened their plan have several questions about an IRA account. This article will provide you what you should know about it and its tax advantages for your retirement savings.

In actual fact, there are different IRA types, which can be either self-provided or employer-provided retirement accounts. These include traditional IRA, Roth IRA, SEP IRA, Self-directed IRA and SIMPLE IRA. Continue reading ‘IRA Account – Your Ultimate Guide’ »

If you are living and working in the United States, you are definitely fortunate because you are capable of saving for your retirement and at the same time defer present income taxes on your saved funds and earnings until such time that you can carry out distributions or withdrawals. You can choose to place a portion of your wage or income to be directly paid or deferred into a 401k account, which is recognized as a contribution.

In actual fact, this retirement investing option is an employer-sponsored account. Your employer or company has the full discretion to grant you benefits as their employee by optionally selecting to match up part or all of your contribution by means of making additional contributions in your account or grant you with profit sharing benefits in your retirement account. Continue reading ‘401k Account – Are You Eligible?’ »

As you are aware, a Roth IRA and Roth 401k will have a significant effect on retirement planning over the upcoming year. Those who fall into the Generation X and Y crew will soon realize that their Roth IRA will be a very important part of their investment planning. Basically, it is the best possible planning tool for anyone that is under the age of 50. In 2009, there are some significant changes that have been made in the rules, as well as in the phase-out limits. There are seven changes that everyone with this account, or even those planning to start one, should be aware of.

#1: Free money and then more free money! While a Roth IRA is a great retirement savings tool, a 401k is also a great option. If your company offers any match, take advantage of it. This is like getting free money. After you take the offered match, you can then tend to your account which will later provide you with tax-free money when you make an IRA withdrawal from the account after reaching retirement age. Continue reading ‘Roth IRA 2009 Rules’ »

If you are changing jobs, you might have this question, “Do I have to rollover my 403b?” The answer is “no”. You don’t have to transfer the funds into a new account when you stop working for the school or charitable organization that you are currently with, but you might want to.

The rules for 403-b rollovers are the same as for 401-K retirement plans. If you are going to work for another employer that offers the same plan, you can transfer your old account into the new financial organization. Fees may be attached to the transfer, but they are typically minimal. Continue reading ‘Do I Have to Rollover My 403b?’ »

Rules Which Apply to Married Couples

Many people wonder how the Roth IRA rules and regulations change when they get married and what happens when filing jointly or separately. These are important questions to ask, and the answers must be understood. Your Roth IRA account is one of the most powerful tools when planning for retirement and still considered the best IRA choice, so it is very important that you know and understand how things work.

Married and Filing Separately or Jointly?

The first thing to consider for married couples with a Roth IRA is the IRA contribution limits. In 2009, if the married couple files their taxes jointly, they can only have a combined AGI of $176,000. If the amount is higher, you will not be allowed to make further contributions to your Roth IRA. Some people believe they can avoid this by filing separately, even if they are married. This will not solve the problem. In this case, the married individual that is filing separately can only make contributions to the Roth IRA if the modified adjusted gross income does not exceed $10,000. The IRA limits are so low because the government wants to deter married couples from filing separately. If this situation arises, you cannot do anything about any contributions that were made in previous years, but you will be required to remove any contributions that were made in 2009. Continue reading ‘Roth IRA Married Filing Separately Or Jointly’ »

For several years now the IRS has allowed 401(k) participants the opportunity to take what is known as an “in-service non-hardship withdrawal” from these retirement accounts. But just because they allow it doesn’t mean your plan administrator does.

A growing number of plans are beginning to give in to the demands of participants. Especially in light of the increasing number of complaints about high fees, lack of investment advice and the limited investment choices available in these plans.

This new withdrawal option is especially welcome during the current economic downturn. Instead of being locked in to the limited choices, high fees, etc. of your employer’s plan, you can withdraw funds and roll them into an IRA which has an almost limitless variety of choices. These choices will give you more control, more flexibility. Continue reading ‘How to Take Control of Your 401(k) And Avoid Common Rollover Mistakes’ »

Government rules allow use of your IRA for more types of investments than the conventional trustees – like banks and mutual fund companies – allow. But you must steer clear of violation self-dealing rules for those nonconventional IRA investments. Besides that, the taxation of IRAs obliterates the tax-advantages of some alternative investments.

This article overviews some nonconventional investments for IRAs, the tax rules and restrictions on self-dealing that apply, and suggests reasons for and against investing in them.

Individual Retirement Accounts (IRAs) is a government qualified retirement plan. You fund it from tax-deductible contributions or tax-free rollovers from another retirement plan. It grows tax-deferred. But when you take money out, it’s taxed as ordinary income – often high tax rates. After turning 701/2 you must withdraw at least minimum required distribution yearly.

Most people have accumulated a lot of money in qualified plans. Taking money out loses a lot to income taxation. So they often consider what other investments they can use for their IRAs besides the conventional stocks, bonds, and associated fund types. Continue reading ‘A Self-Directed IRA – The Pros and Cons’ »

Most employees in the United States have the benefit of having their retirement fund put up in a structured fund held for them by their employers. In the 401k provision of the tax code, employers are mandated to set up a 401k program wherein their workers are allowed to save up a portion of their income in their 401k account so that they can successfully accumulate funds for their retirement. These 401k programs work by allowing the employees to invest in various instruments to grow their retirement fund. In other companies, there is a matching employer contribution to what the employee elects to contribute to his 401k account. Such contributions are not done on a pre-tax basis wherein income taxes are not deducted on the year the contributions are made. Taxes are deffered on the contributed money as well as its earnings upon withdrawal of the retierment fund in later years.

The Internal Revenue Code’s 401k provision stipulates certain limitations to the amount that an employee can contribute to his 401k account. The total 401k contribution limits apply to the matching contribution of the employers as well. Generally, the total amount of contribution should not exceed the total amount of compensation that the employee receives. 401k contribution limits increase every year starting with $45,000 in 2007, to $46,000 and $49,000 in the years 2008 and 2009 respectively. After year 2009, the limits on total contributions to 401k accounts shall increase in increments of $1,000 based on the inflation index. Excess contributions of an employee to a 401k account will result in the employer being slapped with penalties from the violation of the tax code. These excess contributions will be tagged “non-qualified” and cannot be held in the 401k retirement account. Continue reading ‘401k Contribution Limits – How Much Can You Put Into Your 401k?’ »

When you have the discipline to set up a savings instrument early in your life, you are likely to successfully accumulate money enough to last you through your retirement years. It is the person you are today, capable of earning money and making decisions as to the use of that money, who can best prepare for life in later years. Such is the principle behind the setting up of 401k plans. Employers and employees in the United States have the benefit of being able to set up a savings instrument in the 401k retirement plan to be able to accumulate enough money that they can use when they retire. While the money that is contributed to the 401k retirement plan, including the employer’s matching contribution, is automatically vested in the name of the participating employee, the funds are not readily available for unsubstantiated withdrawals. There are 401k withdrawal rules that need to be followed.

Generally, the only kind of withdrawal that is allowed in the 401k program is the 401k hardship withdrawal. This means that the reason for your need for the additional money should be because of some kind of financial emergency such as the death of a family member, illness in the family, mortgage refinancing, and property repairs for calamity damage among others. Making a withdrawal from your 401k account for any one of these hardship reasons would bar you from being able to make contributions to your 401k account for at least 6 months. Continue reading ‘401k Withdrawal Rules – Reaping the Rewards of Saving’ »

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