Because Your Money Matters » Retirement Matters

Information on 401k Options

GuestPoster — Thu, 28 Oct 2010 14:42:04 +0000

This article will help you find all you need to know about the 401k plan in your company.

You need to understand your own plan options. Every 401k plan is different; however, they all have one document, available from your Human Resources Department, called the Summary Plan Description.

This is where you will find all the details on your own 401k options. It is important that you actually read it. Some surveys have suggested that most employees feel their retirement benefits are more confusing than their health care benefits. This is not really a surprise. There is little formal education required for a college degree on the subject of investing for retirement or investing in general. It is no wonder most people feel this way about their retirement benefits.

The most important thing you will find in the Summary Plan Description will be the investment options available to you once you enroll in the plan and begin making contributions. Depending on your plan these investment options may be divided between what is referred to as the main menu and a self directed brokerage account. The main menu typically consists of a selection of mutual funds picked by your company’s Plan Provider, perhaps a company like Fidelity Investments, and approved for the plan by members of your company that serve on an investment committee. There are usually ten or more mutual funds from which to choose. The main menu may also include the option to buy your own company’s publicly traded stock.

The self directed brokerage account is a bit different. Here the investment choices are generally broader than those available on the main menu. Your investment committee, at the recommendation of the Plan Provider may have imposed limitations on this option. There may be a limit as to how much of your plan assets you may journal to this option. In addition, there may also be annual fees associated with this 401k investment option.

Again, your company’s 401 Summary Plan Description will be the place for you to find those answers.

Tips for a Healthy Retirement

GuestPoster — Mon, 20 Sep 2010 23:30:58 +0000

Looking forward to retiring early and spending the rest of your days sailing around the world on a cruise ship? Here are some simple tips to get you started.

Force yourself to save. Sign up for automatic deductions from your paycheck and/or checking account and have the money deposited into your retirement savings accounts without you ever seeing it or getting a chance to spend it.
Avoid overspending. Credit cards are incredibly useful, but may have ruined more lives in modern America than anything else short of alcohol. A debit card can offer the same protections and cashback bonuses without letting you spend more than you make, and you can still keep a credit card locked up for emergencies.
Be aggressive early, conservative later. When you’re young, you want to be looking to increase your money as quickly as possible; closer to retirement, it becomes more about wealth preservation. Female investors in particular tend to be insufficiently aggressive with their early investments, leading to insufficient savings later in life.
Avoid debt. This ties back in to point number 2; the easiest way to screw up your retirement is to saddle yourself with debt that will take years (and a lot of money that should be going into your retirement funds) to pay off. If you can’t pay for it in cash, or at least pay it off by the end of the month, don’t buy it!
Minimize debt. Although some people do, in fact, save up and buy houses and cars with cash, if you just can’t wait that long, seek out the lowest interest rates and shortest terms. A 15-year mortgage, for example, will give you higher monthly payments than a 30-year mortgage, but you’ll pay much less money overall due to both the lower interest rate and (more importantly) less time for the interest to accrue.

For more great tips on finance and investing, be sure to check out Twenties Retirement, the financial site for people who like to plan ahead.

Eliminate Debt Plan: a Step Closer Towards Freedom

GuestPoster — Mon, 16 Aug 2010 14:10:03 +0000

Are you finding yourself getting deeper and deeper in debt, and Eliminate debt plan is not working? Perhaps you should take a closure look at your attitude towards debt elimination. Freeing yourself from piles of debt may seem impossible, but with the right attitudes and outlook, it can be accomplished.

Be aware of your financial problems. Denying that you are in debt will never help you out. Accept your current situation and make tangible and realistic plans. Sit down and make a record of your full financial budget. This includes all your income from full time to your part time job. It also includes all your expenses. Evaluate our belongings. Scrutinize what valuable things you have. If the case calls for it, you can sell it and pay your debt.

A major thing you need to do is to stop using your credit card no matter what. This will stop you from incurring and adding more debt. Pay your existing credit card debts ahead of time. By doing so, you can go around paying high interest rates. Do away with unnecessary expensed like going out and watching movies or eating out. Only buy things that you need. And another thing, use cash in all your transactions. If doing all these still does not solve your debt problems, you can consider getting loan consolidation.

Your attitude greatly affects your plan. And any debt elimination plan, no matter how extensive it is, it will not work if you are not determined to succeed. If you need more income then find a part time job or sell some of your things. How to eliminate debt is one thing, how to avoid incurring debt is another. When you are done paying all your debts, don’t do back to your old practices. Know when to save and when to splurge.

What Makes A Self-Directed 401k Different?

GuestPoster — Tue, 03 Aug 2010 23:19:59 +0000

One of the best investments you can make for your future is to open a retirement account. One of the best retirement accounts to open is a self-directed 401k. But what is a self-directed type of 401k? In order to explain that, one should know what a basic 401k is. A 401k is an employer-provided retirement account that you can put money into directly from your payroll. You have the option to have your taxes deducted or not before putting the money in. With the current situation of Social Security in the United States, a 401k retirement plan is a wise investment.

Unfortunately, as mentioned above, a 401k is traditionally employer-initiated. If your employer does not make one available for you or if your company is too small for a 401k group account, you won’t have the chance to open an account. Of course, that was then. If your problem is the latter reason, there is now a way for you and your company to have a 401k account. Here is where self-directed types of 401k come in. A 401k that is self directed is a 401k with no account requirements. Most financial institutions require a company to have a minimum amount of members before they can open a group account. This is no longer the case for a 401k that is self directed. These types of 401k are like a cross between an IRA and simple a 401k. You get the benefits of both.

A 401k is a great investment for the future. You can never be too sure about your future. The best way to ensure it is by investing funds for your future use. A 401k is a great way to save for future needs. With the help of a 401k, you can have a better future.

Roth IRA Withdrawal Rules

GuestPoster — Tue, 27 Jul 2010 20:13:54 +0000

Usually the Roth IRA withdrawal rules remain the same from year to year, however be aware that they are reviewed by the federal government on a yearly basis and they are subject to change. If you have a Roth IRA then it is your responsibility to keep informed of any changes that are made to the withdrawal rules.

As of 2010 the Roth IRA Withdrawal rules for qualifying Roth IRA withdrawal are as follows:

Withdrawals from an IRA may begin tax and penalty free when you reach the age of 59 ½ years. However that doesn’t mean that you have to wait until that age to make a withdrawal. Any money that you have contributed is always available tax and penalty free because the Roth IRA is funded with money that you’ve already paid tax on. However, any earnings on the contributions are subject to tax, plus a 10% penalty if you withdraw early. There are several circumstances in which the 10% penalty is currently waived.

If you are disabled, a new home buyer or using the money for higher education you may be exempt from the Roth IRA qualifications withdrawal penalty. Under the 2010 Roth IRA withdrawal rules you may withdraw up to $10,000 for the purchase of your first home. And you may withdraw any amount for higher education as long as the expense is considered qualified by the IRS. They have a pretty broad definition of qualified expenses, including tuition, books, fees and supplies.

The big downside to taking an early withdrawal from your IRA is that you have now lost the future growth potential of that money. Even if you have additional liquid funds later in life, you are capped on the amount you can contribute to a Roth IRA each year, so you will never catch up on the money you’ve withdrawn. So, unless you have no other resources it makes the best financial sense to keep any Roth IRS withdrawal to a minimum until you are retired.

Tips for a Healthy Retirement

Play It Safe With Bond Funds

GuestPoster — Tue, 27 Jul 2010 03:05:01 +0000

For some people the stock market and traditional forms of investment can have a little bit too much risk associated with them. This can be particularly true for those who have retirement coming up soon. When this is the case, then they need some way to grow their money without risking losing it all. The easiest way for them to do this is to buy bonds.

Bonds can be an investment in either investment grade corporate bonds or government bonds. They are considered much safer than investing in the company’s stock itself. The companies take your money as a loan to help them pay off their debt and then pay you back after a predetermined amount with interest added on. They are safer than stocks because the stock can move rapidly up or down and you could lose your shirt in the process. With a bond, you are guaranteed to make money on your investment so long as the company makes good on it’s debt (they almost always do). Any company that would not make good on it’s debt is not worth investing in anyway.

In order to spread around risk even more, some choose to invest in bond funds. These funds work in the same way that a mutual fund works with stocks. It gets you invested in a wide basket of bonds all for a small amount of money. This means that you won’t face the risk of getting invested in one single bond that doesn’t end up getting paid out. It also means that you don’t have to worry about doing any research into your investments for yourself. You can just set aside a certain amount of money each month and just watch it grow and grow.

If you are looking for a new way to grow your money, then you might consider buying into some funds that invest in bonds.

Understanding IRA Rates on CDs

GuestPoster — Mon, 26 Jul 2010 19:23:54 +0000

Individual Retirement Accounts are tax-deferred savings plan that taxpayers and soon-to-be retirees build for their retirement. Several investors are fully aware that the contributions placed in these plans will advance sans dividends, taxation on gains, or interest until the cash is withdrawn for retirement. Simple cash, CDs, mutual funds, and stocks are investments that can be procured through an IRA. This article will focus on certificates of deposit and their IRA interest rate.

Certificates of Deposit Basics

Though CDs have a relatively low rate of return, CDs are safe investments since they are insured. At present, the NCUA and FDIC raised the insurance limit for Individual Retirement Accounts to $250,000 each bank as well as credit union requests.

Many banks recommend IRAs that are CD-specific to their customers, making an impression that CD-based IRAs and regular investment-based IRAs are not the same. In reality, an IRA is a specific tax arrangement applied to several different investments by the IRA tax rules. These assets should use the exact same regulations and policies stipulated by the Internal Revenue Service.

Term of CDs

The term of the CDs openly corresponds to the cash housed in the CD. Thus, a five year CD will mean that there is security of gains for five years. You should note though, that IRA CDs may vary somehow. CDs come with several rules that govern the use of funds. These rues incorporate extensive tax penalties when cash is distributed from the account before you even become 59 ½ years of age. On the other hand, there are no tax implications if you buy a new CD or you plan to transfer a CD in your own IRA account.

Advantages

Until the contributed funds inside the IRA are distributed, you will not face taxation. Therefore, IRA account generates interest for your retirement that is free from tax. This feature permits you to have more funds saved for your retirement.

A CD-specific IRA also comes with other benefits. First, you are granted full control over your money since the CD is set up under your name and social security number. In addition, the credit unions and banks are intermittently wiling to remove premature distribution penalties depending on your financial circumstance.