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403b Retirement Plan – A Brief Guide

admin — Fri, 24 Jun 2011 20:09:44 +0000

A 403b retirement plan is a good option to help you save for retirement years. It is primarily designed for employees of tax-exempt organizations, public schools and for ministers. The 403b plan has a range of options for these types of people and has various benefits to both employer and employee.

Firstly, the employer can take advantage of sharing the cost of the contributions with the employee. In some cases the employee is the only one who can make contributions into the retirement account. Happy workers who benefit greatly from a 403b retirement plan also means that the company is going to be able to keep them from moving to another job.

Employees that have this plan will also benefit from a range of advantages. The main benefit is that they can enjoy a reduction in taxable income as pre-tax contributions are made. They can also benefit from tax deferred earnings on plan contributions. There is also the option of being able to take out a loan or a “hardship withdrawal” on the 403b retirement plan. If withdrawals are made when employees have reached the specified adult retirement age, then they are less likely to pay so much tax on any assets.

The list of vendors should be obtained from the employer who can stipulate which financial institutions an employee may use. If an employee wants to use a certain investment company they can ask their employer to add it to the list of vendors.

Contributions to the 403b retirement plan can be stopped at any time and the amount being paid in can be changed too. Employers may limit the amount of times you can change the contribution value and it is best to check any restrictions before you start the plan.

When you take out a 403b plan, as well as your contributions you will have to pay investment company fees and administration fees. Investment fees can vary and will be specified by the investment company. The amount you pay is calculated on the whole amount you have in the account. For example if you have $100 in your account and the investment fee is 3%, you will be charged $3.

The 403b plan was introduced to ensure that workers in the occupations mentioned above were catered for after the adult retirement age. Employees of educational institutions and non-profit companies are provided with a pension plan, but the amount does not generally equal their salary. The 403b retirement plan therefore gives a supplemental income upon retirement.

If you want to find out more about the 403b retirement plan or its options you will find a myriad of information available on the internet. Alternatively you can speak to a financial advisor who will be able to help you further.

Retirement Plans

admin — Wed, 22 Jun 2011 16:14:43 +0000

Putting the wheel of retiring in motion is not an easy task but with better planning, all are possible. When still on your job, plan well and make sure that none of the details has been left out so that you will not regret it once you retire.

Most of us are troubled by the fact that if we are going to maintain our positions and ways of living once we retire. The really fact is that of course it will be challenging to live without the assured salaries we had before.

You should start checking your insurance coverage soon or later so that you may know exactly your financial situation so that you may start a back up plan. This will ensure you that at least you have something before your Medicaid benefits enters.

Start establishing budgets which you and your partner are satisfied that it will be able to maintain both of you no matter what kind of omen shall strike. Since we never know what magnitude emergencies can come, but is better if at least you have an idea that such thing happens.

As couples, try to think and plans for things which you will be doing together and those that you may do them individually. Despite the fact that your are a partner, each one of you have different and independent needs and all these has to be planed for.

Make sure that you have funds set aside to make it possible to pursue for carriers after retirements which are in your interest as partner and as individual.

Another factor of retiring well is to get rid of all the credits you took while still working. Make sure you retire debts free.

Try making sure that your home is paid for and your status to taxes is all clear before you retire. Never jeopardize with your retirements peace.

2011 Job Market Outlook

admin — Mon, 20 Jun 2011 01:07:49 +0000

The economic climate stemming from the financial industry crisis that began in December 2007 has been tough. Financial institutions, accused by Congress of taking too much risk when underwriting home mortgages-despite the significant leverage used by government agencies and regulatory bodies-responded by tightening their lending parameters for corporate and commercial clients. In addition, poor consumer spending seriously eroded profits of many companies, drastically reducing shareholder returns.

Economic Impact on Jobs

These two forces combined to stall business growth and job creation for the past two plus years, increasing the unemployment rate from about 5% to more than 10% today. For job seekers, the pool of available positions has shrunk even more. Consider that in a vibrant economy, there is much upward mobility. As new business launch or existing companies expand, they need good people to step in and run their operations. In addition, as businesses grow and profits soar, retirement and 401(k) account balances increase, prompting senior-level personnel to retire, or at least to go into some type of semi-retirement status, creating even more opportunity for upward advancement.

With housing values declining or, at best, flat-lining, and retirement accounts losing value, older workers have been forced to hold off retirement plans. Some people that had retired early jumped back into the workforce as well.

2011 Outlook

The big question now is what happens next. Many economists foresee only slight improvements to the job market in 2011. Some predict that unemployment will not fall below 10% until late in the year, if it all. However, much depends on the actions of the 112th United States Congress, which convenes in early January. Tax policy, particularly those policies that address corporate taxation rates, can have the quickest, most dramatic, and longest lasting impact to the job forecast. A reduction in the corporate tax structure signals to companies and investors alike that it is time to invest in and plan for business expansion and new start ups.

How Does This Impact My Job Search

When conducting a job search in this type of market, you need to plan for stiff competition. It is important to develop a good strategy for your search and begin your efforts by putting together a winning resume. Contact a resume professional to help you prepare a targeted resume document that will address the needs of both HR personnel and hiring managers.

Making a Retirement Plan

admin — Thu, 16 Jun 2011 14:38:03 +0000

Most people worried about what they can do when they are retired. So some people begin to make their retirement planning to ensure they have enough money when they get old in bad conditions in the future. So have you ever considered about this things in your life, if you say no. Then there are some items you must to do at this moment.

First of all, you should have a general idea of when you intend to retire. You don’t need to pick the accurate time, but it will help to come up with a target such as approximately a decade, or about fifty years. Ask yourself if you continue to need to be working when you’re sixty-five. Do you expect yourself in frond of the computer at fifty-five, or still choosing what you would like to do? It will a pity view which you don’t want to see.

If you choose to retire in a beautiful villa in the suburb, and you need to think about the long term practical and taxation issues relating to the receiving of pension income. Seeking professional advice is the first step in the right direction to finding the right financial solution – it will save you time and money in the long run and reduce your cost of delay significantly!

In short, there’s no better time to start planning for your retirement than right now. Despite you’re unsure what your income will be like in the coming years, it always helps to write down what you think you’d like to be doing when you retire so that you’ll at least have an idea of how much money you’ll need. Though planning retirement can be stressful, remember that not having a plan when you’re suddenly sixty years old is far worse than doing a bit of number crunching now.

Retirement Plan Pitfalls

admin — Sun, 12 Jun 2011 03:02:57 +0000

Have you ever completed your tax return to find out that you owe the federal government thousands of dollars? If so, I expect it was because you raided your pension or retirement plan. If you haven’t learned this painful lesson yet, you should read this article so that you don’t end up owing the IRS thousands.

“NEVER TAKE MONEY OUT OF YOUR RETIREMENT PLAN!” read the sign that hung in the tax accountant’s office. I knew this was an overstatement, but understood why the accountant had such a sign in his office. Too many times did I, as a tax accountant myself, have to console crying or angry clients after explaining to them that they owed the government thousands of dollars because they withdrew money from their retirement or pension plan. The worst part is that these people that withdrew were often already facing immense financial problems – job losses, foreclosures, and bankruptcies.

If you take money out of your pension or retirement plan, you will first find out that the law requires retirement plan administrators to withhold 20 percent of your money for the federal government. Most people are upset by this news and believe withholding this amount will cover their tax bill. After all, it is a lot of money. What’s important for you to know is that it’s only the beginning.

Most taxpayers still need to worry about more federal and state taxes due. If you’re in the 28 percent tax bracket, you’ll owe the federal government another 8 percent of the amount you withdraw. Worse yet, if you’re under 591/2 years of age, you’ll most likely be penalized another 10 percent. In addition, most states will tax you 5 to 10 percent.

How will this affect your tax bill? If you withdraw $20,000, the plan administer will withhold 20 percent, leaving you with $16,000. By April 15 you’ll realize that you owe another $3,600 to the federal government and $1,500 to the state. So by taking out $20,000 of retirement savings, you end up with only $10,900. Now you’re probably beginning to understand why that tax accountant hung the sign “NEVER TAKE MONEY OUT OF YOUR RETIREMENT PLAN!”

Sure, there are exceptions. There are a number of ways to avoid the 10 percent penalty – using the retirement proceeds for tuition, medical costs, or to buy your first time home (up to $10,000). Some states don’t have an income tax. And, of course, these penalties and taxes don’t apply to ROTH Individual Retirement Accounts.

What’s important to remember is that your tax advisor will be able to explain to you the financial consequences that specifically pertain to your situation. He or she may even be able to suggest alternatives, such as taking a loan out against your retirement plan. Remember, contributing to a retirement account is a wise choice, just don’t make the very unwise choice by liquidating your account before speaking to a tax professional.

Setting Up A Retirement Plan

admin — Thu, 09 Jun 2011 19:13:59 +0000

One of the best possible things you can do to provide for your retirement years is to set up a small business. Between the tax benefits you can receive, to the fact that you can often make a tidy sum of money, owning a small part time home based business is without a doubt one of the best things you could ever do. But this letter isn’t about that specifically; we’ll get into that as the year goes on. What I do however want to suggest is a “plan” that you can set up for your retirement goals.

If you are a sole proprietor of a small business and you make less than 200K dollars a year, you can qualify for a retirement plan called a ” combo Sole owner / 401K profit sharing plan”. I know that’s a mouthful, but it’s important to realize that this thing exists. Why? Because you can dump a ton of money in it.

Although you can indeed search the web and find enough information to set one of these up yourself, any financial advisor, or even the officers at your bank should be able to set one up for you quite easily and the going rate appears to be between three and four hundred dollars. I wholeheartedly
believe you should explore this.

Right off the bat you are allowed to put up to 12K dollars in your 401K plan. That’s a very healthy chunk right there, but wait it gets better. You are also allowed to donate up to 20% of your income into this thing under the profit sharing side of the equation. So as you can see, if you claimed say 60K dollars worth of income, you could put the upwards of 24K dollars a year into this plan. That’s right off the top, dollar for dollar donations folks.

For those of you who own your own small business, this is one of the most aggressive plans I’ve ever seen, and if you need a good vehicle to shelter some tax money, I can’t think of much better.

401(K) Retirement Plan Explained

admin — Tue, 07 Jun 2011 23:35:46 +0000

Well, ready or not, here we come!

The 401(k) plan makes it easy and convenient for you to save money for retirement. Once you enroll, your contributions are automatically deducted from your paycheck before you even get to see it. This forces a strict savings discipline on you usually an absolute necessity if you’re not good at looking to the future. Since you are planning to pass through the retirement stage of your life in style instead of as a pauper (and it’s hard to foresee this and save when you receive a full pay-check), this is a real advantage that will help make your retirement as comfortable as possible. If you’re using this plan, you may even retire at age 55 and gain full access to your money, penalty-free! This, in part, is a semblance of the sheer beauty of the plan. Aren’t we poetic?!

Do remember that your contributions deducted from the paycheck are tax-deferred, thereby decreasing your current income tax. (That news calls for a pat on our back!) However, there is a limit to how much you may contribute to a 401(k). This limit is set by the Congress and set forth in the Internal Revenue Code. Your employer, too, may limit your contributions to a percentage of your salary, depending on how much he really likes you. Additionally, he may also choose to match all or a part of your contribution. (Yes, it’s time for you to go through your company’s policies regarding the plan if you haven’t already!) It’s also time to polish those rusty apple polishing skills – pun intended!

Most 401(k) plans provide you with a range of investment options, including stock funds, bond funds, balanced funds, international funds, and company stock. You may decide (on your own) how your contributions are distributed among the plan’s offerings by considering your long-term financial objectives, your tolerance for risk, and how close you are to retirement age. We do not advise you to fear risky investments since those are the ones making the greatest amount of money. Others may think differently and suggest that a more conservative allocation strategy is ideal as you get older. Don’t pay too much attention to those behind the times financial advisors; they’re all ageist!

Regardless of your allocation strategy, it is critical to closely monitor the progress of your 401(k) plan. The plan is required by law to provide you with an annual statement in order to assist you with the management. Many plans will also provide you with quarterly statements, online access, and toll-free numbers offering 24/7 access to your current balance.

Each 401(k) plan also specifies when and how often you can make changes to your investments. While some plans permit you to make daily changes, others allow a limited number of transactions per year. At any rate, you are responsible for checking up on your plan’s performance and making allocation changes whenever deemed appropriate. Please make sure you’re not smashed on the day you decide to make those changes!

Certain 401(k) plans also allow you to access your savings in case of a financial emergency before reaching the age of eligibility. This access may come through a loan (with interest) or a hardship withdrawal. In case of a hardship withdrawal you will have to pay ordinary income tax on the amount withdrawn and pay a 10% penalty to the government if you don’t meet one of the following exceptions: (1) purchasing a principal residence; (2) avoiding eviction from your present residence; (3) paying tuition for yourself, your spouse, children or dependents; (4) funeral expenses for a family member; and (5) medical expenses exceeding 7.5% of your AGI.

Oh and we lied when we said that the 401(k) plan always permits you to make penalty-free withdrawals if you retire at age 55. While it is true that you may make such withdrawals at this particular age, it is also correct that certain 401(k) plans only allow you penalty-free access to your savings at age 59.5 years. Again, it is for you to choose the plan that meets your needs. Just remember that by April 1 following the year in which you turn 70.5 years old or retire (whichever is later), it is obligatory to begin withdrawing from your 401(k). So let’s hope you will have so much money coming in that you won’t have to withdraw before turning 70.5! Yes, were also finding it a little odd that we have to refer to ages in decimals (who says seventy point five ?!)- But that’s how it goes, my friend!

Retirement Plan – Don’t Count on Social Security For Your Retirement Plan

admin — Mon, 30 May 2011 04:16:54 +0000

There are big headlines on the internet about Social Security being in the red this year. They are paying out MORE than they are getting in this very year. Did you catch that? Not running out of funds in 10 years or 5 years or 2 years, but this very year!

The Congressional Budget Office had issued a report saying that would happen in 2016. WRONG! Between the early retirees and job losses, both due to the downturn in the economy the last few years, there are fewer people paying into the system and more folks receiving benefits.

We’ve all known it was coming, so it shouldn’t be a big surprise, right? But it is one of those huge, major type, awful things that you don’t want to see happen, so you try not to think about it or dwell on it. Humph! And I am hoping to retire within the next 5 years. Guess that will be up in the air. How about you?

It is not all terrible news, but maybe this should serve as THE wake-up call for all of us. There is a surplus which the government has in trust funds. This is currently estimated to last until 2037, although that number will surely be adjusted in the future. The main issue with the trust funds is that the government has borrowed from them to pay for other programs and things they couldn’t pay. So the majority of the funds now reside in IOU’s which will have to be paid back somehow by some other funds from somewhere else. Does this sound promising to you?

Even if they do, by some miracle, find the money to pay back the IOU’s, it is still only estimated to last until 2037. What happens to us when that runs out? What happens to our children when they reach our age? And our children’s children?

What are our options? What are our children’s options? What will work when we all need to retire and still have money to live on? Very few companies still maintain a retirement account for their employees. And let’s face it, who works for the same company for their whole life anymore? That is much more of the rarity than it is the common place. So where will the money come from?

I believe we need to stop thinking the government is going to care for us in our ripe old age. The only ones we can truly depend on to take care of us is ourselves, and maybe other family members. Have we all saved enough money? Woefully, no. By far, the vast majority of people do not have enough money in retirement accounts or savings. So where does that leave us? What can we do?

We need to start up our own retirement funds. How can we do that when we already need most of, or all of, the money to live on? We need to find and capitalize on second jobs or work from home and internet opportunities which do 2 things: pay for themselves and grow a residual income. And since many are short on extra funds, the opportunities need to be cheap. Very cheap.

Would you do something to build a residual “retirement fund” for yourself and your family if it only cost – - let’s say, only cost the price of one dinner in a local restaurant? Or the price of 2 cups of specialty coffee? Or less than the price of 2 movie tickets? And what if it paid for your investment in 1-3 months?

But you don’t think you have the time. You aren’t a salesperson. You don’t want to have to do anything to make money. Well, there are lots of opportunities out there. You just need to find the right one for you. One which costs very little money, takes very little time, sells itself, and can grow a wonderful residual income which you can use for your retirement plan.

Crucial Items In Your Retirement Plan

admin — Sun, 29 May 2011 12:57:27 +0000

There are countless retirement schemes available for the bulk of populace. Examples include the 401(k) and IRA plans. Those who desire a welcoming and promising life upon their retirement should keep up with a good plan. If you had not the slightest idea about how to manage your financial affairs stretch the planning up to your golden days, you are advised to seek the help of a planner. A good planner will assist you in organizing your current finance, investment and properties to ensure that you do not collapse with nothing after you retire. Besides, it is also the planner’s job to warn you should there be any errors in your retirement plan.

It is undeniable that retirement planners are imperative, especially in the modernized world where people have plenty of properties and investments issues to handle yet not having sufficient time to ponder deeply about retirement. In fact, with the working stress and hectic schedule it never crosses the mind of common community about the need of a good future plan. Furthermore, time passes as quickly as people do not realize and without them being aware of it, their retirement approaches and that is when they start to worry what to do after they retire. Most people have a blank mind coming to a sudden halt of working days, having no specific direction to head hence explaining the significance of a preparation for the retirement.

Several trivial items that you cannot afford to neglect from your retirement scheme include the emergency plan. Because humans have no magical powers to foresee the future, you can never predict when you will encounter shiny or rainy days. But never forget to prepare for emergency days. Anytime beyond your expectation, there might be occurrences of death, injuries or other money-demanding situations where you need to fork out your savings to address those matters. Without a good financial planning, you can never have extra figures in your account to feed during emergencies. But with an organized plan and proper savings, you can avoid panic and aggravation when anything unexpected happens.

From there, you should be able to mark the importance of retirement planners. Although some working companies might offer you some retirement plan, it is preferable to have your own planning considering you are dealing with something of utmost privacy. To look for a good and trustworthy planner, you will need to conduct some research. Try to begin your plan as early as possibly to ensure that you have enjoyment and relaxation being the prevailing elements upon your retirement.

Best Safe Investment Strategies For 2011 and Beyond

admin — Thu, 26 May 2011 22:28:42 +0000

The best investment strategies for 2011 and beyond will reflect the new realities in the world of investments: better safe than sorry. Diversification is the key to good investment strategies, but as the future unfolds finding the best alternatives in each investment class could get a bit tricky. Here’s a basic guide geared to making life easier for average investors, which includes most of us.

The challenge facing investors today: how to put together the best investment strategies to make your money can grow without too much risk. Stock funds and bond funds are always part of the mix for most folks, and so are good safe investments. Looking down the road, there could be more trouble in the world’s debt markets; and America’s plans to stimulate a luke-warm economy by lowering interest rates to new lows might not have the intended effect. So, let’s look at how to stay out of harm’s way in 2011 and beyond in case another shoe drops, starting with what are and what are not safe investments.

Going into 2011, bonds and bond funds were like magnets for people who wanted higher interest income in relatively safe investments. Compared to other alternatives investors got higher interest income, but many people don’t understand the safety issue. Truly safe investments are fixed in nature, pay interest, and do not fluctuate in value. Bonds have a fixed interest rate but fluctuate in value as they trade in the open market. Bond funds have worked well for average investors over the years as interest rates have fallen to historical lows. Don’t push your luck here.

The flip side: when interest rates and/or inflation heat up bond funds holding long term bonds in their portfolios will be anything but safe. They will lose significant value. Your best investment strategy here is to go with intermediate and short-term bond funds. You will make less in interest income, but these funds are definitely safer than long term funds. Money market funds are safe and will pay higher interest income as rates rise. There’s only one problem with them for 2011. Unless or until interest rates take off, they are paying next to nothing.

The real challenge until rates move up is in finding good safe investments that pay a respectable rate of interest… without locking in a rate for too long. No one could have predicted mortgage rates at less than 5% or 5-yr CDs at less than 2%, but it happened. Your best safe investments might not be found in mutual funds in 2011, but you may be overlooking some options elsewhere. If you are in a retirement plan (like 401k) you may have a fixed or stable account available. If you own a retirement annuity or universal life policy it may have a guaranteed minimum interest rate. In either case the interest rate could be quite attractive relative to other options.

Stocks and bonds are still the cornerstones of a good investment strategy. And for the vast majority of people mutual funds are the best way to invest in both. We’ve discussed how to move toward a safe investment strategy in bond funds. With stock funds we can do this in two different ways: by increasing diversification and by favoring conservative funds with a good history of paying dividends. We’ll start with the latter.

When the economy and/or optimism are growing, growth and small-company stock funds are often the best investment. These funds can grow dramatically in value as stock prices run up, but they rarely pay much in the form of dividends. In times of high uncertainty equity-income funds that invest in high-quality dividend paying stocks can be a step in the safe direction. If the market goes south they should be less volatile on the down side, and the dividends they pay can cushion the blow somewhat.

The best investment strategies for stock (equity) funds in 2011 and beyond will focus on increasing your scope of diversification. Too many Americans own general diversified equity funds that only invest in U.S. stocks, and ignore the rest. One of the best ways to get more diversification is with international and global equity funds. Another way is to add specialty stock funds to your portfolio. Gold funds have been one of the best investments for several years, but history shows that gold can get real cold real quick. Don’t put more than 5% of your investment dollars in gold funds. Consider natural resources, real estate, and basic materials specialty funds as well to add even more diversification.

The best safe investment strategies going forward will focus on reducing risk in the stocks and bonds department, while getting the best rates available on the truly safe investments in your portfolio. With increased diversification you can lower your overall risk and still make your money grow over the longer term. If another financial crisis rears its ugly head… you now have investment strategies geared to the safe side to keep you out of major trouble in 2011 and beyond.