Simply Junior

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.

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.

For generations, Americans have been told they would have financial stability in their ‘golden’ years with social security. In addition, we were told to invest money in the stock market for a positive growth. Conventional wisdom now tells us that social security will not be there even for the Baby Boomers. Will the stock market be a good alternative?

On January 14, 2000, the stock market closed at 11,723 points. Ten years later, in the summer of 2010, the stock market is right around 10,000 points, meaning that if you had invested 10 years ago, you’ve lost money in the market. But what is the future of the stock market?

From CNBC.com: “The Dow Jones Industrial Average will lose about half of its value over the next couple of years as it follows a Nikkei-like pattern of several sharp rallies in an overall decline”, according to Charles Nenner, founder and president of Charles Nenner research. “Stocks are currently in a bear-market rally, and looking at charts and past trends, unemployment and leading indicators suggest the Dow will drop to 5,000 in the next two to two-and-a-half years”, Nenner told CNBC in an e-mail.

Deflation will arrive, along with a sharp double-dip recession, pushing the Dow lower, although, like the Japanese market, stocks will see several jumps of 30 percent to 40 percent, he said. “Things look really bad for the next 10 years,” Nenner said.”

The bottom line is that no one really knows what the stock market is going to do during the next ten year though indicators point towards a decline. Gold is hot right now, but will it continue to grow during periods of inflation? Given the uncertainty of the market, why would anyone invest in stocks anytime soon?

The answer is to invest your retirement account in a safe Savings Account that offers you a guaranteed interest rate. A Safe Savings Account is similar to a bank CD or a Annuity in that you safely invest money for a guaranteed interest rate. It is better than a CD or Annuity in that Safe Savings Accounts offer a higher interest rates than CD, TBills, or Mutual Funds without all the money gobbling fees of an Annuity.

You cannot create a financial plan unless you have a guaranteed interest rate. A safe Savings Account is the only retirement vehicle that will allow you to calculate your earnings to the penny! Anything else is just financial guessing; and in these uncertain times, taking chances just doesn’t make any sense.

They say death and taxes are the only two things you can really count on. Well, 2010 is shaping up to be a really good year to die because the estate tax is being set aside for a year under a law passed way back in 2001.

Obviously, there is really no good year to die. When considering estate taxes, however, it is a subject that has to be discussed. With this in mind, the 2010 year presents a very unique situation. One of the biggest, nastiest taxes in the Internal Revenue Code is terminated for just this year and can result in huge savings for those who pass on.

The estate tax is a brutal tax because, well, the dead can’t vote. The tax works by creating a certain dollar amount exemption for an estate and then massively taxing any value above that amount. It is one part of the tax code that only makes sense with an example, so let’s look at one.

The estate tax changes each year. That being said, it traditionally has had an exemption amount of $1,000,000 and a tax rate of 55 percent. [Yes, 55!]. So, let’s say I die with a home, retirement account and term life insurance policy for $1,000,000. My wife and two kids survive me. The total value of my estate is $1.6 million dollars. Remember, my $1,000,000 life insurance policy counts as part of it.

So, what is my tax situation? Well, the first million is passed on tax free. The tax on the remaining $600,000 is huge. At 55 percent, we are talking $330,000 in tax. So my family ends up with $1,270,000 right? Nope. They will also have to pay estate tax at the state level and income tax on the distributions from the retirement account. Overall, the taxes may eat as much as one half of what I left them. It is a huge tax burden.

2010 is a unique year. Why? There is no estate tax this year. Yes, you read that right. It has been phased out over the years under a 2001 law. The problem is the phase out ends at the end of this year and returns to the one million/55 percent standard on January 1, 2011.

This is why 2010 is a good year to die. Well, as good as it can be!

Bankruptcy isn’t always the best solution for you, and there are definitely some drawbacks that you need to be aware of. However, sometimes people looking for a better strategy end up surrendering some of their most valued assets. Should you use your retirement or pension plan to avoid bankruptcy?

In most cases your pension plan is secure from any creditors who want to come after you because of unpaid bills. Even so, many people feel that they have to do everything they can to pay off their bills and avoid bankruptcy. Declaring personal bankruptcy seems like a horrible thing for them, and they are willing to do anything as long as they can leave Chapter 7 as a last resort.

The problem with this line of thinking is that you are putting up a valuable asset -your retirement plan-which would otherwise be protected from creditors. There are several reasons why you should not borrow against your retirement plan.

First of all, if for any reason you are unable to repay the loan on your pension plan, you may have to face up to some tax consequences. Likewise, if you lose your job, you may be forced to repay the loan right away. But the biggest argument against using your 401(k) or other retirement savings is simply this: most of the debts that you’re looking to pay off will probably be wiped out in bankruptcy, while your retirement account will be perfectly safe from the hands of any creditors.

The sad thing is that many consumers are convinced by well-meaning family members or credit counselors with hidden motives that bankruptcy is the worst choice you could possibly make. We’re not saying that you should take this decision lightly, but you shouldn’t be so quick to put up your most valuable assets as collateral for your debt. Your home and pension plans are usually protected by your state, so why would you put them on the line in order to pay off unsecured debt like credit cards?

Unsecured debts by definition are not backed up by anything. We’re not encouraging irresponsible spending or fraud, but many honest people simply make the mistake of spending too much or charging too much. If you find yourself in this deep hole, make sure to have a strategy for protecting your assets while at the same time eliminating your debt.