Simply Junior

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!

Many employers will offer a 401(k) to their employees. A 401(k) plan offers many advantages to employees. The biggest advantage is tax-deferred investing. These accounts are not taxed until distributions are made.

For 2011, an employee can contribute up to $16,500 into a 401(k) plan. Taxpayers over age 50 are allowed to contribute another $5,500 as a “catch up” contribution for a total of $22,000. This catch up provision was implemented because Congress did not think people were saving enough for retirement. Imagine that-for once they got it right.

Why should you contribute to your 401(k) plan?

* You are on your own with your retirement. That’s right, Long gone are the days when someone would go and work for an employer for 30 years and then retire. They would be eligible for a pension and get their social security benefits. Now most companies no longer offer a pension plan.

* Although some employers have eliminated their pension plan, many will still offer a company match. If your employer offers a match, participate in the 401(k) plan at least up to the amount the company is going to match.

What is another big benefit to a 401(k) plan? Having the money taken out of your paycheck automatically. This is huge. Remember, you can’t spend money you don’t have.

Do you want to have financial piece of mind in retirement? Put the most you can into your 401(k) plan because you’re going to need it.

Action Item: Employees should be participating in their employer 401(k) plan. This should be at least up to the amount of the employer match. For employees that aren’t covered by a pension plan, the 401(k) plan will likely be the foundation of their retirement plan.

Thomas F. Scanlon, CPA, CFP ®

Home assembly jobs have been around for a long time. It consists of building several products for a company and after you are finished with it, you will send the products back to the company for a paycheck. There are many home jobs in the internet today. However, looking for a great home assembly job is different.

The best assembly job is one that has a good pay and that you won’t have to shell out anything. If you don’t know how to find no fee work at home assembly jobs, the best source would be the internet. There are websites that can offer you no fee work assembly jobs. The said website has forums, group discussions and referrals that can help you search for the best no fee work at home assembly jobs. All you need is a working computer, an internet connection, and a user name and password to register.

Finding a home job that will not cost you any money will be hard especially if you are looking for a way to pay for your bills. Most no fee assembly jobs pay lower than others because of the “no fee” statement. Despite this, there are still some who give a high pay and yet, you won’t have anything to pay. However, this information is very hard to find and is only available for those who are members of a group. This is where message boards and internet forums come in. They will help you find what you are looking for.

For many people, retirement is that light at the end of the tunnel which is worked for throughout the course of our entire lives. Many people believe that retirement is when they live on easy street for the rest of their lives, but there are many pitfalls on the way to this address. Decide which retirement plan best suits personal needs and choose between a 401K, IRA, Roth IRA, or investment 401K options.

A lot of people who work for corporations and companies are offered a 401k plan in their contract with that business. A 401K is a deduction straight out of a person’s paycheck that gets put into a company account that may or may not have a company match policy. This is the easiest and safest way to save for someone’s retirement, especially if the company is putting up free money.

An IRA, or an individual retirement account, is a way for people to save for retirement who are not offered traditional 401K plans due to lack of a plan at a company or if they are in business for themselves. These accounts allow people to pay up to $5000 a year to be contributed to the account.

Roth IRA’s work along the same basic guidelines as traditional IRA accounts, but there some significant differences to be aware of. There is no tax break for funds that are put into these account when the money is deposited. However, the depositor is able to make a withdrawal when the account has matured without paying taxes on the deposit or the gains. This makes this type of IRA very attractive for younger investors.

The stock market is probably the highest risk and the highest reward for planning a retirement. Some companies offer investments back into the company and on the market general with money that normally would go into a 401k. If a company is strong, it can be much better than taking a smaller profit from a mutual fund or 401k. However, when investing in weaker companies, people stand to lose their entire nest egg.

While there is no set best way to plan someone’s golden years, retirement plans are important to make and maintain so people don’t become burdens to their families and to society in general. Social security is not enough to keep a person in the standard of living at which they are accustomed, so extra support is required. Choose one of these methods and watch the nest egg grow as the light at the end of the tunnel gets brighter.

It seems everyone is now concerned about debt. After years of free spending in a good economy the reality of debt has sunk in. Overspending reached an all time high for most Americans in the last few years. Now everyone wants to know how to get out of debt and avoid debt problems.

Tips to Avoid Debt Problems

1. Stay away from credit cards. This is the easiest way to get into debt. It doesn’t take long for spending to get out of hand and for credit card debt to accumulate. When you charge something on a credit card it does not feel like you are spending money so it is easy to find yourself deep in debt.

2. Live below your means. There is no better way to guarantee no debt than to live below your means. If you consistently spend less than you earn you will not have any debt.

3. Recognize the value of money. You work hard to make money so you need to work just as hard to keep it. We tend to spend money without thinking of the purchases we make. Making an effort to be aware of spending and purchasing habits help you to appreciate the value of money and spend less.

4. Stick to a budget. A budget is a spending plan. If you don’t have a budget it is easy for spending to get out of control. Most people do not like to set up and follow a budget. But a budget is your spending and saving guide. You should not be without one.

5. Make saving money a priority. You should be saving money from every paycheck. I’m sure you’ve heard the saying “pay yourself first?” That is a good rule to live by.

6. Learn to distinguish between wants and needs. It is easy to overspend on things such as cell phones, cable, Internet and other household items. It is also important to realize that excess usually leads to debt. Most Americans have more stuff than they need.

Problems with debt create stress and tension so it’s important to learn how to avoid debt. Avoiding debt requires careful planning, setting goals and self-discipline. But the reward of peace of mind makes it all worth it! Avoid debt problems to have financial freedom.