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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!

The 401(K) Plan – The Foundation of Your Retirement

admin — Tue, 25 Jan 2011 10:41:46 +0000

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 ®

How to Find No-Fee Work at Home Assembly Jobs

admin — Tue, 18 Jan 2011 22:01:03 +0000

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.

What Are the Best Retirement Plans?

admin — Thu, 18 Nov 2010 14:41:39 +0000

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.

How to Avoid Debt Problems

admin — Mon, 25 Oct 2010 21:32:27 +0000

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.

Rules For Saving

admin — Sat, 21 Aug 2010 06:17:07 +0000

Remember Aesop’s fable of the grasshopper and the ants? When winter came, the grasshopper went hungry because of a lack of adequate preparation. The story is used to teach children the value of hard work and saving.

Today’s world promotes spending making saving up very hard to do. Temptations abound everywhere. However, adequately preparing for the uncertain future can certainly help when the unforeseen strikes.

Saving money provides you with a benefit you may not immediately feel. However, this does not and should not detract from the importance of saving money.

The most obvious advantage of saving up is of course, extra money. But don’t get tempted yet.

Saving money will give you extra cash to use for emergencies like illnesses, accidents, natural disasters and sudden loss of a job. You won’t have to go into debt to handle such events.

If you have a healthy amount saved, you won’t have to use credit to purchase a high ticket item. You can avoid the repercussions of going into debt.

Saving up also gives you a headstart on the future. You take control of your future when you save up for college, a house, a car or even retirement. Your future won’t be so uncertain when you know that you’ll have a cushion to land on when things go wrong.

Here are a few rules for saving you should remember.

Budget

Start your savings program with a budget. Will you be using a monthly, quarterly or yearly budget? A monthly budget is easier for most people as bills come every month.

Determine your income. How much money will you make in a month after taxes? Will you have any additional sources of income other than your paycheck?

Determine your expenses. Some expenses remain fairly constant like your phone, water, cable and light bills. If you pay rent, this should be another constant expense too. You will need to determine which expenses fluctuate monthly. These can be your food, gas, clothing and entertainment expenses.

Now that you’ve determined what your expenses are, eliminate all unnecessary expenditures.

Record all your income, savings and expenses faithfully and diligently.

Create a savings plan

Set a goal. How much money will you need? How much should you save to reach that goal in a reasonable period of time? If you’re saving for the future, most experts would suggest having at least enough to cover three to six months worth of expenses.

Always keep records. You will want to know how much money you have already saved and how much you have spent.

Invest wisely and carefully. You can use your current savings to create even more savings by participating in low risk investments.

Create a savings account. There are many types of savings account available. You can choose from the most basic of accounts to a high yielding savings account to a money market account.

You can even encourage your children to save with a piggy bank. You can accompany them to the bank to open their own account once the piggy bank is full. Start the concept of saving while they’re still young and they’ll naturally imbibe the virtue.

Spend less. This is the difficult part. The trick here is not to stop spending but to moderate your spending. Cut back on eating out. Have home cooked dinners instead. Pack lunch to work. Your packed lunch will cost less and will most likely be healthier for you than takeout fare. Cancel your cable subscription if you don’t watch TV. If you can get your internet without a phone line, go ahead. If you’re mostly on the road, a landline may not even be necessary if you have a cell phone.

Pay off your debts religiously. Interest on debts can drive the cost of your debt all the way up. Once you’ve gotten your debt out of the way, you can now start on your savings plan for the future. And stay out of debt.

Look for discounts in auto insurance quotes

admin — Wed, 10 Mar 2010 15:27:35 +0000

Over the decades the marketers have managed to pull off a very clever trick. If you go back to earlier times when people did their shopping in markets and corner shops where everyone knew everyone, the prices were always negotiable. Bargaining was part of the art of shopping. Asking for a discount or, if times were hard, a little time to pay was not shameful. All stall holders and shopkeepers knew you (and most everyone who lived in the neighborhood). There was a sense of community as people worked hard to get by (if not get ahead). But it all changed. Slowly, you were made to understand the retail price was fixed and, if you wanted credit, well, that was what banks were for. It came hard to many who had relied on the informal help offered by the retail trade. Household budgets grew into straightjackets and, if there were not enough dollars to see you through to the next paycheck, that was your problem. Loan sharks lurked outside pawnshops waiting for their prey. And then, like turning a valve to release pent-up steam in a boiler, the credit boom solved the problem for many. For those who had managed to stay solvent, credit cards and housing equity loans were there for the asking. Paying the asking price at the store was no longer a problem. The habit was set in stone. The retailers had won.

Well, hard times are here again and there should be no shame in getting the maximum reduction in the prices you pay for any goods or services. In the case of insurance, this means looking very carefully at the small print of the application process and the quotes you get. There are discounts available. All you have to do is identify what they are and how you get access to them. Not surprisingly, insurance companies are not wholly comfortable with allowing you to pay less. But, sometimes, it pays them to offer you incentives. Let’s start with the obvious. Insurers benefit if they retain careful drivers. So you should always look for a discount if you stay loyal and make no claim during a year. The longer you stay with a company, the larger the discount you should earn. If the company does not play fair and reward you, the other side of the coin is the introductory discount offered to persuade you to jump ship to another insurer. All the information about you and any claims you have made is shared between the insurance companies in the Comprehensive Loss Underwriting Exchange (CLUE). If you have a good driving record, the quotes should always encourage you to change. Indeed, many people in your situation game the system and move every year to earn another welcome discount. This so-called “churning” helps keep the loyalty discounts real.

This site has a search engine for auto insurance quotes. To trigger the search, you fill in a questionnaire. In this first article, the first discount should be offered automatically. But, if your current insurance company is only interested in a premium hike, you could try an email asking why no loyalty bonus or discount has been offered. Should this be met by silence, you can then look through the auto insurance quotes from the other companies with a clear conscience. You have given your current insurer the chance. If it prefers not to reward your loyalty, there is no reason to stay loyal.

Tips For Taxes on Tips

admin — Sun, 28 Feb 2010 02:06:00 +0000

Understanding the complicated world of taxes is difficult enough for a regular paycheck. Adding tips into the mix just makes everything more confusing. Failing to properly report the full amount of tips you are given can get you into a lot of trouble with the IRS. However knowing what as an employee you need to report or what as the business owner you are responsible for can sometimes be a fine line. Here are some tips and tricks for knowing how to report your tips on your taxes.

“Tips” are defined by the federal government as “a gift or a sum of money tendered for a service performed or anticipated.” Generally if an employee makes over twenty dollars in tips a month, they must report them. After they finish working for the night, a waiter must record how many tips they made for their employer so that the proper tax amount can be withheld from their next paycheck. Social Security Taxes “on the gross amount of tips and wages for all employees” is paid by their employer. Employers should keep track of the tips for every sale made in their establishment each evening. This way, they can remit the proper amount to the government.

If employees do not report all of their tips to their boss, the employer can be held liable for “the employer’s share of the social security and Medicare taxes on the unreported tips.” It is your job, as employer to withhold and pay taxes with the information you do have from your employee. If you have more than ten staff members working on a typical day than you fall into the category of a “large food or beverage establishment” and you are required to allocate or distribute tips to your employees if the amount of tips reported is less than eight percent of gross sales. If the amount of tips is larger than eight percent, you are not required to allocate, but you must still file the “Employer’s Annual Information Return of Tip Income and Allocated Tips” form. Taxes should still be withheld and paid on allocated or non-allocated tips.

How to Become a Millionaire By Maxing out Your 401k

admin — Sat, 23 Jan 2010 04:56:04 +0000

With your employee 401k retirement plan, becoming a millionaire is incredibly easy. You simply enroll in your employer’s plan, look over the fund choices your company offers to invest in, and then select how much of your pay you want to contribute. Then just relax and watch your retirement account increase. Every now and again just take a look to see if you need to re-balance your account. It is all automatic and you likely won’t even notice the money missing from your paycheck every month.

While a retirement 401k account can seem boring, there are plenty of reasons to get excited:

This activity can make you a multimillionaire with very little effort. A 25-year-old making $40,000 a year who invests 10% of their salary into their 401k plan would have $1.9 million when they are ready to retire (assuming 10% average annual return). Now, let’s that same person receives a 5% raise is received every year. That 401k plan is now worth $3.2 million. Would you be able to live comfortably off of $300,000 during retirement? That’s what you could expect to earn just off the returns on that nest egg. Note that this does not even take into consideration employee matching benefits that would also boost your 401k. This is free money you could be leaving on the table if you are not taking advantage of your company’s matching program.

Time is the investor’s best friend when it comes to building wealth and making your retirement account grow. The sooner you start contributing toward your 401k, the more money there will be at retirement. Compound interest is so powerful that the time variable probably pays a bigger role than you think. The person above, for example, who’s making $40,000 and starts contributing at 35 will only have $1.1 million – a difference in nearly a million dollars.

Your 401k makes it easy for you to invest like a millionaire and put your money directly in an investment account before you are taxed on your income. Self-made millionaires are experts at minimizing their income so they don’t have to claim as much on their taxes. Since your 401k acts as a tax shelter and contributions are pre-tax contributions, you pay less taxes on your take-home pay, invest with tax-free money, and assist in remaining in a lower income tax bracket altogether.

These are just a few benefits of taking advantage of your employer’s 401k plan. Get started now if you haven’t already, or push as much money as you can if you are already enrolled in your company’s plan. At the very least, take full advantage of your company’s matching program so you are not passing up free money.

No Fee Work at Home Data Entry – What You Need to Know

admin — Thu, 21 Jan 2010 13:01:28 +0000

Who wouldn’t love to find a no fee work at home data entry job? While there are a few out there, securing one of these positions is another matter. What few are available have long lists of people waiting for a position to come available. While you probably won’t get one of these jobs, all hope is not lost!

There are plenty of data entry opportunities on the internet, some which enable you to work for employers, and some that allow you to be your own boss. If you are serious and dedicated, you can make money online doing work you absolutely love. Who doesn’t want to work from home on their own schedule?

Here are a few examples of what you can find online:

1. Freelance writing. If you become a writer, you can literally write your own paycheck. This doesn’t require experience or any type of degree. Good spelling and grammar are the only qualifications. There are millions of online business owners looking for people to write articles and other web content for their businesses.

2. Ad placement work. There are over 17,000 companies you can place ads online for. This data entry opportunity enables you to make large commissions when someone makes a purchase from your ad. This is one of the most popular ways to make money online.

3. Traditional data entry. For a small membership fee, you can gain access to hundreds of employers looking for people to do all sorts of work from transcription to coding. Why is there a fee? This covers online help 24/7 and daily updating of the job database. These are real jobs that require no fees other than the initial membership.

These are a few ideas that may help you find the work you are looking for. If you are having trouble finding no fee work at home data entry jobs, there are other options. Pay a small fee, and get access to all of the work you want! Learn more about these opportunities and others at our site – we’ve done all the research, you just find the perfect opportunity for you.