Planning for retirement should be an event that starts as early as possible in life. If you want to get some assistance in the matter, to get the best out of your money, than a consultant that specializes in retirement planning, may be the best choice for you.
A retirement planning consultant should first of all be able to advise you, as to the when and where you should invest your funds, in order to get the best returns. He should be able to pinpoint which ones out of all the options available in the investment market, is the best one for you.
Apart from this a consultant should also explain to you what the various adopted strategies might be. Just reading through a brochure or a leaflet is not enough for you to be able to make the best choice, for the money that will determine your future lifestyle. A consultant is exactly what you need.
When choosing a consultant, I would suggest that you always have a meeting with him beforehand, and talk to him to see how he feels. Some consultants even combine legal advice with financial planning as well as investment advice. You should always choose the individual with whom you can talk freely, and with whom you feel comfortable.
Don’t be fooled however, for a consultant is not there to do all the work for you. He’s there only to make your retirement plans a reality. You should always feel in control, and create your retirement plan just as you want it to be.
Planning for retirement does not necessarily have to be a complicated matter. Try writing down some basic facts like income, your office plan savings amount, as well as other investments you may already have. Think about what you would like your retirement life to be like, and discuss all your thoughts and plans with your advisor.
If you fail to plan, you are planning to fail. If you cannot do this by yourself, seek the assistance of a professional, but don’t just let it sit there, without doing anything.
Reference: http://projectstocks.com/2008/06/what-to-look-for-in-retirement-planning-consultants/
Tuesday, June 9, 2009
SOLO IRAs As A Retirement Option
We are living in a time of financial turmoil. If you want to take control of your future and your savings, then why not consider investing in a Solo IRA. This plan like the 401k plan, will also offer you immense tax savings as well as allowing you to take control of your future.
The most common type of IRA is the traditional one, which allows you to contribute up to a maximum of $ 5000 yearly. Apart from this, a traditional IRA also allows you to contribute from pre-taxed money if you don’t have an employer offered plan.
A Rollover IRA is created in the case that you loose your job or when your employer is taken over by another company. This plan will save you huge money in penalties that you would have to other wise pay, to withdraw funds from one plan to put them in another.
Finally a Roth IRA the money is taxed upon entrance into the plan, as opposed to being taxed upon withdrawal at retirement age. This gives rise to different rules, and so it’s best to consult your accountant or advisor, in case you decide to go for this option.
An IRA gives you the flexibility of making your own choices, as to where you want your money to be invested. You’re the boss! Profits received will be directly credited to the plan, and are not taxed at any point. With an IRA you may also choose to invest in real estate, and with the current rock bottom market prices, you will soon be building quite a portfolio.
With this plan, you are in control. You get to decide where the money goes, and how much you want to risk for your future.
Reference: http://projectstocks.com/2008/10/how-investing-in-solo-iras-can-protect-your-future/
The most common type of IRA is the traditional one, which allows you to contribute up to a maximum of $ 5000 yearly. Apart from this, a traditional IRA also allows you to contribute from pre-taxed money if you don’t have an employer offered plan.
A Rollover IRA is created in the case that you loose your job or when your employer is taken over by another company. This plan will save you huge money in penalties that you would have to other wise pay, to withdraw funds from one plan to put them in another.
Finally a Roth IRA the money is taxed upon entrance into the plan, as opposed to being taxed upon withdrawal at retirement age. This gives rise to different rules, and so it’s best to consult your accountant or advisor, in case you decide to go for this option.
An IRA gives you the flexibility of making your own choices, as to where you want your money to be invested. You’re the boss! Profits received will be directly credited to the plan, and are not taxed at any point. With an IRA you may also choose to invest in real estate, and with the current rock bottom market prices, you will soon be building quite a portfolio.
With this plan, you are in control. You get to decide where the money goes, and how much you want to risk for your future.
Reference: http://projectstocks.com/2008/10/how-investing-in-solo-iras-can-protect-your-future/
Plan For Your Future With Retirement Planning Services
Efficient retirement planning is certainly an issue that is on top of ever relatively older employee. Given that today we cannot rely solely on the funds given to us by social services, we all have to think and find ways of planning for our retirement.
There are nowadays various options available on the market, aiming at making our money grow bigger, faster. If however you are not sure, what the best option would be for your circumstances, you may try and ask for proper retirement planning services.
Some individuals like to ask for recommendations from friends of family. However even though these may be trustworthy, there is still the risk that they will not give you good advice, simply because they are not professionals. A professional financial advisor on the other hand, will talk to you to see what your plans and dreams are, and then help you to make these dreams come true. This will make a great difference for you and your family in the future, since it will mean more comfortable living.
The first thing a professional will do is assess your financial condition as it is presently. He will consider your age and your income, to come up with the proper investment option.
This advisor will also ask you about your present income level, as well as other plans that are generating you income, or the possibility of promotions or other sources of income. The type of lifestyle you will expect when you retire is another important factor that you will be discussing.
If you want good advice, then make sure you talk comfortably and give the advisor all the details he asks for. Finally always do some research yourself, on plans and investment options. These people are there to give you advice, but some homework from your end is always best.
Reference: http://projectstocks.com/2008/06/secure-your-future-with-retirement-planning-services/
There are nowadays various options available on the market, aiming at making our money grow bigger, faster. If however you are not sure, what the best option would be for your circumstances, you may try and ask for proper retirement planning services.
Some individuals like to ask for recommendations from friends of family. However even though these may be trustworthy, there is still the risk that they will not give you good advice, simply because they are not professionals. A professional financial advisor on the other hand, will talk to you to see what your plans and dreams are, and then help you to make these dreams come true. This will make a great difference for you and your family in the future, since it will mean more comfortable living.
The first thing a professional will do is assess your financial condition as it is presently. He will consider your age and your income, to come up with the proper investment option.
This advisor will also ask you about your present income level, as well as other plans that are generating you income, or the possibility of promotions or other sources of income. The type of lifestyle you will expect when you retire is another important factor that you will be discussing.
If you want good advice, then make sure you talk comfortably and give the advisor all the details he asks for. Finally always do some research yourself, on plans and investment options. These people are there to give you advice, but some homework from your end is always best.
Reference: http://projectstocks.com/2008/06/secure-your-future-with-retirement-planning-services/
Help Your Money Grow For Your Retirement
Even though you mind be young, and retirement age seems a whole lifetime away you still have to start saving and investing now.
Unfortunately with the present economic situation and the rise in the cost of living, saving and investing for your retirement has become more difficult. Your company might offer you a retirement plan in which you can save monthly from your salary. But are these plans safe? After recent events people are not so confident anymore. Don’t worry however; you still have other options available.
Why not invest in the stock market? You may choose between mutual funds, bonds, stocks and shares and other money market account. Even though these don’t have the retirement label attached to them, it doesn’t mean they are not worthwhile. You just need to be patient, choose the best option and let your money grow over time without withdrawing.
Depending on social security is a big mistake. You should take care of your financial future yourself by starting saving now, before it’s too late. Don’t count on inheritances that might never come!
You should examine how able you are to take risk, and what investment choices best suit your risk profile. There are so many investments which however finally all funnel down into three categories, which are cautious, medium, or aggressive investment options.
If you have a high risk tolerance level, than you can go for the most aggressive and volatile investments such as high risk shares. Normally we say that the younger you are, the larger the risk you can take, when it comes to retirement investments, since you have a long way to go.
Once you determine your risk tolerance level, you should move to researching the investments that you want to go for. If you do not feel sure about this, then don’t forget it is money you’re dealing with at the end of the day, so better seek the services of a qualified advisor, who will be able to guide you along the way.
Reference: http://projectstocks.com/2009/06/investing-in-your-retirement-future-let-your-money-grow/
Unfortunately with the present economic situation and the rise in the cost of living, saving and investing for your retirement has become more difficult. Your company might offer you a retirement plan in which you can save monthly from your salary. But are these plans safe? After recent events people are not so confident anymore. Don’t worry however; you still have other options available.
Why not invest in the stock market? You may choose between mutual funds, bonds, stocks and shares and other money market account. Even though these don’t have the retirement label attached to them, it doesn’t mean they are not worthwhile. You just need to be patient, choose the best option and let your money grow over time without withdrawing.
Depending on social security is a big mistake. You should take care of your financial future yourself by starting saving now, before it’s too late. Don’t count on inheritances that might never come!
You should examine how able you are to take risk, and what investment choices best suit your risk profile. There are so many investments which however finally all funnel down into three categories, which are cautious, medium, or aggressive investment options.
If you have a high risk tolerance level, than you can go for the most aggressive and volatile investments such as high risk shares. Normally we say that the younger you are, the larger the risk you can take, when it comes to retirement investments, since you have a long way to go.
Once you determine your risk tolerance level, you should move to researching the investments that you want to go for. If you do not feel sure about this, then don’t forget it is money you’re dealing with at the end of the day, so better seek the services of a qualified advisor, who will be able to guide you along the way.
Reference: http://projectstocks.com/2009/06/investing-in-your-retirement-future-let-your-money-grow/
401k Plan Facts
Within the US there are a number of saving plans that help individuals to save money for their retirement. The 401k plan, which is named after the section in the Internal Revenue Code that regulates it, is one of the popular plans, which are provided by employers for their employees.
Within this plan an employee can save an amount of money monthly from his salary, which amount can be then matched by the employer. These contributions are made from pre-taxed income, therefore saving the contributor from lots of tax money. These funds will only be taxed on the way out of the plan, when the contributor reaches retirement age.
This plan will also give the opportunity to your employer to contribute from hi side, up to 50% of your monthly payment, thus matching your savings amount.
These 401k plans give the employer the chance to decide on behalf of the employee, where the saved funds will be going; whether they will be invested in stocks, bonds or other investment choices that the employer and his advisors may deem fit.
As regards regulation, you may find it interesting to know that this plan is regulated by a section within the US Labor department, which is called the Employment Benefits Security Administration. Employees who work for the government may not contribute funds in the 401k plan.
For these people as well as self employed individuals, other similar retirement plans are available. Even for employees of private companies, other options are available that will give the employee more flexibility, in that they can control where the money is invested.
As for withdrawals out of the 401k plan, it is very important to understand that no withdrawals are allowed before retirement age. This plan also does not allow the funds to be paid out or signed over to another person, as the funds are regulated by the United States pension laws.
This plan is definitely a good choice; however one should always get as much information as possible before making his decision.
Reference: http://projectstocks.com/2008/10/401k-retirement-plan-facts-you-might-not-be-aware-of/
Within this plan an employee can save an amount of money monthly from his salary, which amount can be then matched by the employer. These contributions are made from pre-taxed income, therefore saving the contributor from lots of tax money. These funds will only be taxed on the way out of the plan, when the contributor reaches retirement age.
This plan will also give the opportunity to your employer to contribute from hi side, up to 50% of your monthly payment, thus matching your savings amount.
These 401k plans give the employer the chance to decide on behalf of the employee, where the saved funds will be going; whether they will be invested in stocks, bonds or other investment choices that the employer and his advisors may deem fit.
As regards regulation, you may find it interesting to know that this plan is regulated by a section within the US Labor department, which is called the Employment Benefits Security Administration. Employees who work for the government may not contribute funds in the 401k plan.
For these people as well as self employed individuals, other similar retirement plans are available. Even for employees of private companies, other options are available that will give the employee more flexibility, in that they can control where the money is invested.
As for withdrawals out of the 401k plan, it is very important to understand that no withdrawals are allowed before retirement age. This plan also does not allow the funds to be paid out or signed over to another person, as the funds are regulated by the United States pension laws.
This plan is definitely a good choice; however one should always get as much information as possible before making his decision.
Reference: http://projectstocks.com/2008/10/401k-retirement-plan-facts-you-might-not-be-aware-of/
Wednesday, June 3, 2009
Your retirement savings options
If you are looking for ways and means to invest money for your future, you will be glad to know that there are many options for you to choose from. The options can be narrowed down to the two most important savings vehicles, being the IRA and the 401k plan. These two accounts can be then divided in different types. The rules for both plans differ.
The 401k plan is a retirement plan which is employer based, and which carries the name of the tax code which regulates it. When contributing funds to this plan, you will be doing so from pre-tax income, and therefore saving lots of tax money.
The funds saved are then diversified into various stock options and funds, which you would have chosen beforehand. Your employer in this case will also have the option to match your savings amount, or a part of it. The funds will then be taxed when the times comes to withdraw, at pension age. At this point you will probably be in a lower tax bracket, thus saving lots of money in taxes.
IRAs are retirement accounts devised for individuals to invest on their own, as opposed to the 401k plan which is tied to your employer. In this plan you may invest up to $5000 yearly, and there is no way in which you can get the funds out before your retirement age. As opposed to the 401k plan, here the money is taxed on entry into the account.
Both accounts can help you maximize your retirement savings, especially if you decide to go for both, and balancing them out to reduce your taxes.
Reference: http://projectstocks.com/2009/06/how-to-invest-for-retirement/
The 401k plan is a retirement plan which is employer based, and which carries the name of the tax code which regulates it. When contributing funds to this plan, you will be doing so from pre-tax income, and therefore saving lots of tax money.
The funds saved are then diversified into various stock options and funds, which you would have chosen beforehand. Your employer in this case will also have the option to match your savings amount, or a part of it. The funds will then be taxed when the times comes to withdraw, at pension age. At this point you will probably be in a lower tax bracket, thus saving lots of money in taxes.
IRAs are retirement accounts devised for individuals to invest on their own, as opposed to the 401k plan which is tied to your employer. In this plan you may invest up to $5000 yearly, and there is no way in which you can get the funds out before your retirement age. As opposed to the 401k plan, here the money is taxed on entry into the account.
Both accounts can help you maximize your retirement savings, especially if you decide to go for both, and balancing them out to reduce your taxes.
Reference: http://projectstocks.com/2009/06/how-to-invest-for-retirement/
Thursday, May 28, 2009
Retirement Information for Baby Boomers
Retirement planning should be an important consideration for everyone, whether they are years away from their retirement and especially if retirement is just around the corner.
If financial topics make you feel uneasy, you still should put them on top of your learning list. Here are some easy to understand tips, regarding retirement especially for the baby boomers.
Tip #1
You should start by taking note of your current expenses, and think whether after your retirement you will want to live like you always have. If you think of retirement as travel, an expensive car and lots of days outdoors, you have to consider the expense that comes with this lifestyle. A retirement calculator is the perfect tool to help you assess this.
Tip #2
Make sure you know what benefits you will get from Social Security. This would normally sum up to be around 40% of your income before retirement. You should be receiving three statements yearly, which include a summary of the benefits you should expect when you retire.
Tip #3
Gather as much information as you can about employee benefits. Remember that information is power, and this will determine your future.
Tip #4
You should make it a point to invest in a 401k plan. This is an account that will save you lots of tax money, and which will also attract a contribution for your retirement from your employer.
Tip #5
If you do contribute funds into a plan, then no matter how bad your financial situation gets, do not make any withdrawals. This will result in you falling short, and not having the estimated sum of money when you retire.
Reference: http://freeretirementplanningadvice.com/home-and-family/5-baby-boomer-retirement-tips/
If financial topics make you feel uneasy, you still should put them on top of your learning list. Here are some easy to understand tips, regarding retirement especially for the baby boomers.
Tip #1
You should start by taking note of your current expenses, and think whether after your retirement you will want to live like you always have. If you think of retirement as travel, an expensive car and lots of days outdoors, you have to consider the expense that comes with this lifestyle. A retirement calculator is the perfect tool to help you assess this.
Tip #2
Make sure you know what benefits you will get from Social Security. This would normally sum up to be around 40% of your income before retirement. You should be receiving three statements yearly, which include a summary of the benefits you should expect when you retire.
Tip #3
Gather as much information as you can about employee benefits. Remember that information is power, and this will determine your future.
Tip #4
You should make it a point to invest in a 401k plan. This is an account that will save you lots of tax money, and which will also attract a contribution for your retirement from your employer.
Tip #5
If you do contribute funds into a plan, then no matter how bad your financial situation gets, do not make any withdrawals. This will result in you falling short, and not having the estimated sum of money when you retire.
Reference: http://freeretirementplanningadvice.com/home-and-family/5-baby-boomer-retirement-tips/
Wednesday, May 27, 2009
Fact or Fiction?
When it comes to retirement, even though there is nowadays plenty of information available everywhere you look, people somehow still come to believe in retirement myths, as the truth.
We are therefore going to cover in this article the most publicised myths that people believe in.
Myth #1
Retirement starts after your last day at work. This is a false statement since retirement should be seen as a new phase in one’s life. Like every change, this takes some accustoming to, and it will take you as long as twelve months to adjust and change your lifestyle.
Myth #2
If you think or rather hope that someone will be generous enough to take care of you when you retire, you might want to think again. Social Security will hardly pay your monthly bills, and if you are thinking that your children will take care of you, you should consider that life has changed, and this is increasingly difficult.
Myth #3
The next myth refers to monthly expenses, since most individuals believe that after retirement their costs will be low. You should consider the drying out of Social Security funding, and the fact that the cost of goods continues to rise. Considering that we can expect to live more than 20 years after we retire, this might be a recipe for disaster.
Myth #4
Some people believe that retirement is easy- not true. This period can even give rise to depression since after their retirement, people find out that all leisure and relaxation makes for quite a boring life.
Myth #5
Retirees think that retirement is great since they will get to be with their wife all day. This in reality needs some adjusting to, since couples usually don’t spend more than 20% of their time together. This is why in analysing divorce rates we find that the highest is for couples over 55 years of age.
Reference http://freeretirementplanningadvice.com/elderly-care/busting-the-top-retirement-myths/
We are therefore going to cover in this article the most publicised myths that people believe in.
Myth #1
Retirement starts after your last day at work. This is a false statement since retirement should be seen as a new phase in one’s life. Like every change, this takes some accustoming to, and it will take you as long as twelve months to adjust and change your lifestyle.
Myth #2
If you think or rather hope that someone will be generous enough to take care of you when you retire, you might want to think again. Social Security will hardly pay your monthly bills, and if you are thinking that your children will take care of you, you should consider that life has changed, and this is increasingly difficult.
Myth #3
The next myth refers to monthly expenses, since most individuals believe that after retirement their costs will be low. You should consider the drying out of Social Security funding, and the fact that the cost of goods continues to rise. Considering that we can expect to live more than 20 years after we retire, this might be a recipe for disaster.
Myth #4
Some people believe that retirement is easy- not true. This period can even give rise to depression since after their retirement, people find out that all leisure and relaxation makes for quite a boring life.
Myth #5
Retirees think that retirement is great since they will get to be with their wife all day. This in reality needs some adjusting to, since couples usually don’t spend more than 20% of their time together. This is why in analysing divorce rates we find that the highest is for couples over 55 years of age.
Reference http://freeretirementplanningadvice.com/elderly-care/busting-the-top-retirement-myths/
Monday, May 25, 2009
Retirement Plan Fees
The American government is currently working hard to solve the lots of issues related to retirement plans and their regulations.
One of the issues being worked upon is fee disclosures to participants as well as plan sponsors. Many were expecting a regulation for the 408b plans that requires the plan provider to disclose all the fees for the sponsors. This however has not been established yet. The issue is still to be tackled well and something is still expected as regards this matter.
In fact, the two congress houses wish for a proper legislation governing fee disclosure. The Special Committee on Aging has presented the Defined Contribution Fee Disclosure Act 2009. This act would compel plan sponsors of defined contribution plans, to disclose the entire plan fees to the participants.
This legislation should make it easier for plan sponsors to negotiate fees with their participants. Participants on the other hand would be in a better position since they will know exactly what the cost of their plan is.
Of the entire proposed legislation package, the only part that did not come to the final stage was the changes to Section C of the Form 5500. If a plan has at least 100 participants, the plan needs to report implicit returns. The thing is that plan sponsors are having a hard time getting this information, in the case that his service provider did not provide it. This is still a bit of a gray area, where lot of time is used up in filling in this form, without any significant end result.
As for the advisors, it is believed that these new regulations that will stiffen the environment may encourage a trend in the industry. This trend assumes that with tightened regulations retirement plan advisors will shift to being fee-based.
Reference: http://www.planadviser.com/magazine/article.php/4242
One of the issues being worked upon is fee disclosures to participants as well as plan sponsors. Many were expecting a regulation for the 408b plans that requires the plan provider to disclose all the fees for the sponsors. This however has not been established yet. The issue is still to be tackled well and something is still expected as regards this matter.
In fact, the two congress houses wish for a proper legislation governing fee disclosure. The Special Committee on Aging has presented the Defined Contribution Fee Disclosure Act 2009. This act would compel plan sponsors of defined contribution plans, to disclose the entire plan fees to the participants.
This legislation should make it easier for plan sponsors to negotiate fees with their participants. Participants on the other hand would be in a better position since they will know exactly what the cost of their plan is.
Of the entire proposed legislation package, the only part that did not come to the final stage was the changes to Section C of the Form 5500. If a plan has at least 100 participants, the plan needs to report implicit returns. The thing is that plan sponsors are having a hard time getting this information, in the case that his service provider did not provide it. This is still a bit of a gray area, where lot of time is used up in filling in this form, without any significant end result.
As for the advisors, it is believed that these new regulations that will stiffen the environment may encourage a trend in the industry. This trend assumes that with tightened regulations retirement plan advisors will shift to being fee-based.
Reference: http://www.planadviser.com/magazine/article.php/4242
Why the 403b market is different from the 401k
The 403b plans are regulated by a set of rules, which were composed in such a way that they reinvent all the plans that attract defined contributions. These plans are given by entities which are tax-exempt as are higher education institutions, school systems and other non-profit organizations.
The growing 403b plan market represents a very good business opportunity for financial advisors. It would however be a mistake for an advisor to assume that he may simple redirect from a 401k advice practice to a 403b tax-exempt field.
The K-12 sector and the higher education market do share many similarities; however there are also many and noteworthy differences to take into account. One significant difference between the two is that some higher education institution plans which offer contributions by the employer are governed by another legislation which is the ERISA, or the Employee Retirement Income Security Act. In fact it seems that plan sponsors sometimes set up a 401k plan, in order to keep their 403b plan, from being regulated by the ERISA.
This means that at the end of the day, the advisors who would like to enter the 403b plan market, will probably be working with plan that are governed by the ERISA, as well as with plans that are not. Advisors may also choose between the two which option, best suits their expectations.
Another major difference between K-12 plans and higher education plans is the presence of a union. In the higher education segment, there is a high degree of bureaucracy, since there are deans and heads of department to deal with. These people however will not have enough authority to effect changes, as well unions in the K market.
Reference: http://www.planadviser.com/magazine/article.php/4248
The growing 403b plan market represents a very good business opportunity for financial advisors. It would however be a mistake for an advisor to assume that he may simple redirect from a 401k advice practice to a 403b tax-exempt field.
The K-12 sector and the higher education market do share many similarities; however there are also many and noteworthy differences to take into account. One significant difference between the two is that some higher education institution plans which offer contributions by the employer are governed by another legislation which is the ERISA, or the Employee Retirement Income Security Act. In fact it seems that plan sponsors sometimes set up a 401k plan, in order to keep their 403b plan, from being regulated by the ERISA.
This means that at the end of the day, the advisors who would like to enter the 403b plan market, will probably be working with plan that are governed by the ERISA, as well as with plans that are not. Advisors may also choose between the two which option, best suits their expectations.
Another major difference between K-12 plans and higher education plans is the presence of a union. In the higher education segment, there is a high degree of bureaucracy, since there are deans and heads of department to deal with. These people however will not have enough authority to effect changes, as well unions in the K market.
Reference: http://www.planadviser.com/magazine/article.php/4248
Sunday, May 24, 2009
Plan rollovers and what plan sponsors look for
With the present financial situation, plan rollovers have become a very important factor for advisors who realize that the rollover sector is a way of boosting their firm’s asset base. Potentially there are good sums of money in the pipeline, with lots of financially fit clients seeking help and advice, since they are planning on leaving the plan that is offered by their employer.
The truth is that big money is being moved to IRAs from various qualified plans, and even bigger monies are expected in the future. Plan sponsors are however apprehensive about the fact that not everyone is getting a qualified advisor. Advisors are cherry picking the high net worth clients, and leaving the rest of the participants floating on their own.
In reality according to industry experts, plan sponsors who are thinking of going for a rollover solution, are looking for advisors that can give them three important things: first that the advisors will offer the same service to all the participants, notwithstanding their financial worth; that they offer a service model that quickly and efficiently deals with the assets not on the market; an open market place for the IRA providers, in such a way that no particular IRA providers are recommended.
With some careful decision making, and good cooperation between the plan sponsor and the advisor, the rollover can act as the missing link between individual wealth management, and advisory services.
Advisors are also provided with electronic systems and programs to help them with the record keeping process, to help them handle rollovers more efficiently and effectively.
Reference: http://www.planadviser.com/magazine/article.php/4249
The truth is that big money is being moved to IRAs from various qualified plans, and even bigger monies are expected in the future. Plan sponsors are however apprehensive about the fact that not everyone is getting a qualified advisor. Advisors are cherry picking the high net worth clients, and leaving the rest of the participants floating on their own.
In reality according to industry experts, plan sponsors who are thinking of going for a rollover solution, are looking for advisors that can give them three important things: first that the advisors will offer the same service to all the participants, notwithstanding their financial worth; that they offer a service model that quickly and efficiently deals with the assets not on the market; an open market place for the IRA providers, in such a way that no particular IRA providers are recommended.
With some careful decision making, and good cooperation between the plan sponsor and the advisor, the rollover can act as the missing link between individual wealth management, and advisory services.
Advisors are also provided with electronic systems and programs to help them with the record keeping process, to help them handle rollovers more efficiently and effectively.
Reference: http://www.planadviser.com/magazine/article.php/4249
Satisfied with your advisor?
When an advisor meets up with potential clients, the first thing they normally say is that they are doing well with their present advisor and they don’t wish to change. This is until however, the new advisor discusses with these individuals, what service they should expect from their advisor.
The point is that lots of people do not know what services their advisor should provide for them. Trying to compare the service of one advisor to another is not an easy task, and currently there is no benchmark in this sector against which to compare.
There are however five indications that can be used, to gauge the level of satisfaction you are getting from the relationship with your advisor.
1. First you should determine whether the advisor you are dealing with, has set any service goals, against which, his client may assess his service. Some advisors meet up regularly with their sponsors, and discuss with them the goals to be set for the coming financial year. The advisor will then set up a calendar which contains deadlines related to compliance as well as things that he will deliver.
2. Assess whether the sponsor is satisfied, with the fiduciary protection, which the advisor is providing him. The advisor should be able to identify a cautious process for decision making, for his plan sponsors, and he should be able to collect information needed and then assis his clients in making an informed decision.
3. You should assess whether the advisor has had any positive impact on the rate of employee participation and average deferrals.
4. A plan sponsor should be given all the fee-related information from the advisor. The advisor should therefore discuss all the fees with the sponsor, in an open line of communication.
5. Some sponsors are so happy with their advisors that they are willing to serve as a reference, to new and potential clients. References coming from previous clients who are satisfied with the service serve as a good gauge for the advisor.
Reference: http://www.planadviser.com/magazine/article.php/4250
The point is that lots of people do not know what services their advisor should provide for them. Trying to compare the service of one advisor to another is not an easy task, and currently there is no benchmark in this sector against which to compare.
There are however five indications that can be used, to gauge the level of satisfaction you are getting from the relationship with your advisor.
1. First you should determine whether the advisor you are dealing with, has set any service goals, against which, his client may assess his service. Some advisors meet up regularly with their sponsors, and discuss with them the goals to be set for the coming financial year. The advisor will then set up a calendar which contains deadlines related to compliance as well as things that he will deliver.
2. Assess whether the sponsor is satisfied, with the fiduciary protection, which the advisor is providing him. The advisor should be able to identify a cautious process for decision making, for his plan sponsors, and he should be able to collect information needed and then assis his clients in making an informed decision.
3. You should assess whether the advisor has had any positive impact on the rate of employee participation and average deferrals.
4. A plan sponsor should be given all the fee-related information from the advisor. The advisor should therefore discuss all the fees with the sponsor, in an open line of communication.
5. Some sponsors are so happy with their advisors that they are willing to serve as a reference, to new and potential clients. References coming from previous clients who are satisfied with the service serve as a good gauge for the advisor.
Reference: http://www.planadviser.com/magazine/article.php/4250
Saturday, May 23, 2009
CPA Retirement Plan options
An employer can offer you many benefits however the best one of all would be a retirement plan. This is a tool that employers use to attract as well as keep, employees who are highly qualified.
A CPA is able to offer a large number of retirement plans, whose specifications and features suit the needs of both individuals, as well as businesses.
CPAs offer three types of retirement plan, being the individual retirement plan – or IRA, the Corporate Retirement Plan as well as Retirement plans for the self employed.
Corporate retirement plans can be further classified into three categories:
• A simple IRA – which is like a retirement account for an individual. These are available in various types such as are the Simple IRAs, the traditional IRA, SEP IRA as well as the Roth IRA. Employers normally establish the simple IRA, while contributions made individually by participants go to a Simple or SEP IRA.
• A Simplified Employee Pension is a retirement plan which can be set up by both employers as well as self-employed persons.
• A Qualified Plan on the other hand, is set up by an employer, to provide retirement benefits for his employees and his beneficiaries.
• Finally a 401k plan is a plan that can take contributions by both the employee as well as the employer. This is applicable only for an individual who is a sole owner of a business, and his spouse.
When it comes to Individual retirement accounts, we find the traditional and the Roth IRA. The Roth IRA is the better option for the younger individual, or for someone who things that after retirement, he will be in a higher income tax bracket.
A Self-employed Retirement Plan follows the same rules as the corporate one. The major difference is that self employed persons or those who have a partnership, pay their tax on the 1040 as opposed to the Schedule C.
Reference: http://www.theking-ofcontent.com/351/cpa-retirement-plans-2/
A CPA is able to offer a large number of retirement plans, whose specifications and features suit the needs of both individuals, as well as businesses.
CPAs offer three types of retirement plan, being the individual retirement plan – or IRA, the Corporate Retirement Plan as well as Retirement plans for the self employed.
Corporate retirement plans can be further classified into three categories:
• A simple IRA – which is like a retirement account for an individual. These are available in various types such as are the Simple IRAs, the traditional IRA, SEP IRA as well as the Roth IRA. Employers normally establish the simple IRA, while contributions made individually by participants go to a Simple or SEP IRA.
• A Simplified Employee Pension is a retirement plan which can be set up by both employers as well as self-employed persons.
• A Qualified Plan on the other hand, is set up by an employer, to provide retirement benefits for his employees and his beneficiaries.
• Finally a 401k plan is a plan that can take contributions by both the employee as well as the employer. This is applicable only for an individual who is a sole owner of a business, and his spouse.
When it comes to Individual retirement accounts, we find the traditional and the Roth IRA. The Roth IRA is the better option for the younger individual, or for someone who things that after retirement, he will be in a higher income tax bracket.
A Self-employed Retirement Plan follows the same rules as the corporate one. The major difference is that self employed persons or those who have a partnership, pay their tax on the 1040 as opposed to the Schedule C.
Reference: http://www.theking-ofcontent.com/351/cpa-retirement-plans-2/
Thursday, May 21, 2009
401k Plan or IRA?
Saving for your retirement is not an option, it’s a necessity. When it comes to the where to save for your retirement, here you have the option.
Lots of people are facing an issue when it comes to choosing between an IRA and a 401k plan. So here is some information to help you solve this puzzle for the best. As far as tax is concerned, both a company provided 401k plan as well as a traditional IRA take the contributions before tax is charged to your salary, thus lowering the balance on which tax is charged.
The 401k plan does have an advantage however. In some companies the employer will match his employees’ contribution which would mean doubling your savings money. Other companies will offer you a percentage of your pay, and this is always something that you should take advantage of, because it is free money!
IRAs come in 2 types. The traditional IRA is the one we have mentioned above, where the contribution is tax deductible. The Roth IRA however, will invest your money post-tax. In this case however, on distribution upon retirement age, no tax is paid, and this is this plan’s major advantage.
So in short, the main 401k plan advantage is the match from the employer and the Tax advantage now, while the disadvantage would be related to the limited investment options that are available for your funds.
In an IRA, you will be responsible for all the investment choices and you will have to decided how much to invest, when and where. This makes this choice very flexible. The other advantage would be that you are able to control your tax liability by diversifying your savings into a Roth IRA and saving on future tax, or else going for a traditional IRA to lower your current tax liability.
Before making your decision, always assess your needs, as well as the risk you would like to take on your funds. Whatever choice you make, is always better than not saving at all.
Reference: http://cashmoneylife.com/2008/02/14/invest-401k-traditional-roth-ira/
Lots of people are facing an issue when it comes to choosing between an IRA and a 401k plan. So here is some information to help you solve this puzzle for the best. As far as tax is concerned, both a company provided 401k plan as well as a traditional IRA take the contributions before tax is charged to your salary, thus lowering the balance on which tax is charged.
The 401k plan does have an advantage however. In some companies the employer will match his employees’ contribution which would mean doubling your savings money. Other companies will offer you a percentage of your pay, and this is always something that you should take advantage of, because it is free money!
IRAs come in 2 types. The traditional IRA is the one we have mentioned above, where the contribution is tax deductible. The Roth IRA however, will invest your money post-tax. In this case however, on distribution upon retirement age, no tax is paid, and this is this plan’s major advantage.
So in short, the main 401k plan advantage is the match from the employer and the Tax advantage now, while the disadvantage would be related to the limited investment options that are available for your funds.
In an IRA, you will be responsible for all the investment choices and you will have to decided how much to invest, when and where. This makes this choice very flexible. The other advantage would be that you are able to control your tax liability by diversifying your savings into a Roth IRA and saving on future tax, or else going for a traditional IRA to lower your current tax liability.
Before making your decision, always assess your needs, as well as the risk you would like to take on your funds. Whatever choice you make, is always better than not saving at all.
Reference: http://cashmoneylife.com/2008/02/14/invest-401k-traditional-roth-ira/
Wednesday, May 20, 2009
Cashing Out The 401k Plan
If you are thinking of cashing out the funds that you saved in your 401k plan, then I suggest you think again. You might be going through financial difficulties right now, but in reality, if you cash your plan, it is going to cost you money both now, as well as in the future.
If you are in between jobs, or just waiting around for the next job to come by, then here are your options:
• Keep the funds in your old 401k plan
• Roll the plan over into the 401k plan, which your new employer offers.
• Roll it over into an IRA
• And finally you may cash your 401k plan, and suffer the penalties.
The best thing you could do before making your decision is consult your financial advisor or accountant. Cashing out your 401k plan, should be seen as the last resort in many cases.
Keep in mind that cashing out will cost you more, than using your credit cards to manage until the end of the month. Just to get an idea, if you decide to withdraw your 401k funds, you will have to firstly pay a hefty 10 percent penalty charge, which there is no way of getting around. You will also have to pay a tax percentage which runs around the 30 to 40 percent.
You should also consider that if you withdraw your saved funds, you will have to start from scratch, saving for your retirement age. If you’re in your forties or late thirties, then you might never accumulate again the required amount to see you through your retirement appropriately.
So at the end of the day, don’t just consider the charges and penalties, but also consider the effects that this withdrawal will have on your future.
Reference: http://hubpages.com/hub/Cash-Out-401k
If you are in between jobs, or just waiting around for the next job to come by, then here are your options:
• Keep the funds in your old 401k plan
• Roll the plan over into the 401k plan, which your new employer offers.
• Roll it over into an IRA
• And finally you may cash your 401k plan, and suffer the penalties.
The best thing you could do before making your decision is consult your financial advisor or accountant. Cashing out your 401k plan, should be seen as the last resort in many cases.
Keep in mind that cashing out will cost you more, than using your credit cards to manage until the end of the month. Just to get an idea, if you decide to withdraw your 401k funds, you will have to firstly pay a hefty 10 percent penalty charge, which there is no way of getting around. You will also have to pay a tax percentage which runs around the 30 to 40 percent.
You should also consider that if you withdraw your saved funds, you will have to start from scratch, saving for your retirement age. If you’re in your forties or late thirties, then you might never accumulate again the required amount to see you through your retirement appropriately.
So at the end of the day, don’t just consider the charges and penalties, but also consider the effects that this withdrawal will have on your future.
Reference: http://hubpages.com/hub/Cash-Out-401k
Monday, May 18, 2009
Where to Rollover Your 401k Plan
If you are one of the unlucky ones who has lost your previous job or maybe changed employer, then you will have the sum of money that you were saving in your 401k plan at your disposal, and the best option for you to choose is a rollover.
This way you will be transferring your old 401k plan into a new retirement account, without paying taxes or penalties that go with withdrawals. The rollover may be into one of three accounts:
1. If your new employer offers it, then you may rollover to another 401k plan. The advantage of this option is that even though your saved balance is still low, you will still be able to invest the funds in options that might give you a better return in the long term. The disadvantages of this option are that you will loose flexibility, since your employer will make the investment choices and not you. In addition you may be subject to high fees.
2. The second option is a Brokerage IRA, which will provide you with lots of flexibility. In this account you will be able to choose from lots of investment options. You will also be able to purchase stocks and bonds individually as you desire. The disadvantage of this option is the cost, since every time you trade, you will have to pay a fee, which you wouldn’t pay in the 401k plan.
3. The final choice is a Mutual Fund IRA such as the one offered by Fidelity. This is definitely the cheapest way to invest in the options that these companies offer, and the other advantage is that if you meet some requirements, you won’t even pay an account fee! The disadvantage in this case is that you will be tied to the investment choices offered by this particular company. You will also be tied with the minimum investment amounts, which vary from one option to another, and you may end up buying in one fund, while saving to invest in another.
Reference: http://genxfinance.com/2009/01/15/how-to-roll-over-your-401k-when-you-leave-or-lose-your-job-the-401k-rollover/
This way you will be transferring your old 401k plan into a new retirement account, without paying taxes or penalties that go with withdrawals. The rollover may be into one of three accounts:
1. If your new employer offers it, then you may rollover to another 401k plan. The advantage of this option is that even though your saved balance is still low, you will still be able to invest the funds in options that might give you a better return in the long term. The disadvantages of this option are that you will loose flexibility, since your employer will make the investment choices and not you. In addition you may be subject to high fees.
2. The second option is a Brokerage IRA, which will provide you with lots of flexibility. In this account you will be able to choose from lots of investment options. You will also be able to purchase stocks and bonds individually as you desire. The disadvantage of this option is the cost, since every time you trade, you will have to pay a fee, which you wouldn’t pay in the 401k plan.
3. The final choice is a Mutual Fund IRA such as the one offered by Fidelity. This is definitely the cheapest way to invest in the options that these companies offer, and the other advantage is that if you meet some requirements, you won’t even pay an account fee! The disadvantage in this case is that you will be tied to the investment choices offered by this particular company. You will also be tied with the minimum investment amounts, which vary from one option to another, and you may end up buying in one fund, while saving to invest in another.
Reference: http://genxfinance.com/2009/01/15/how-to-roll-over-your-401k-when-you-leave-or-lose-your-job-the-401k-rollover/
Sunday, May 17, 2009
Old 401k retirement plans
We all know by now that a 401k plan is a retirement account that we have with our employer, in which we save monthly payments or contributions from our salary.
Now at the moment, there are no limits imposed by law, as to the number of 401k plans that each employee can have at a given time. This means that you can have more than one account open, however you cannot contribute in all of your accounts. In fact, you can only contribute funds into one account, which is the one you have with your current employer.
Having more than one 401k plan accounts open, may not be the best thing to do. In fact you should try and consolidate all your old 401k plans, into the one you currently have. The same goes for an IRA. This way it will be much easier for you to watch your investments, and maintain control over your accounts.
If you are not sure whether you have an account opened with a previous employer, then you should follow the following steps in order to locate this:
• First start by contacting your old employers, and ask them to look at plan records, to check whether you had participated in their 401k plan. Prepare all the information they will ask you for such as social security number and date of employment.
• If you are not able to locate an old employer, then try and find an old 401k plan statement, and see whether this has any contact address for the administrating firm.
• The US government requires that a Form 5500 is filled and filed annually. You can therefore look for your employer’s name amongst these forms, on a free website.
Reference: http://www.401khelpcenter.com/faq/faq_39.html
Now at the moment, there are no limits imposed by law, as to the number of 401k plans that each employee can have at a given time. This means that you can have more than one account open, however you cannot contribute in all of your accounts. In fact, you can only contribute funds into one account, which is the one you have with your current employer.
Having more than one 401k plan accounts open, may not be the best thing to do. In fact you should try and consolidate all your old 401k plans, into the one you currently have. The same goes for an IRA. This way it will be much easier for you to watch your investments, and maintain control over your accounts.
If you are not sure whether you have an account opened with a previous employer, then you should follow the following steps in order to locate this:
• First start by contacting your old employers, and ask them to look at plan records, to check whether you had participated in their 401k plan. Prepare all the information they will ask you for such as social security number and date of employment.
• If you are not able to locate an old employer, then try and find an old 401k plan statement, and see whether this has any contact address for the administrating firm.
• The US government requires that a Form 5500 is filled and filed annually. You can therefore look for your employer’s name amongst these forms, on a free website.
Reference: http://www.401khelpcenter.com/faq/faq_39.html
Friday, May 15, 2009
Maximum 401k plan contributions and how soon they should be credited
The 401k plan is an account in which you can save monthly contributions, which will eventually accumulate into a lump sum, that you can make use of when you retire. The amount of money that you save will be then invested in various funds, to make the best possible growth.
The amount of money that you contribute in your 401k plan is not the same for everyone, and there is a maximum amount. The maximum amount of money that you can save, or defer, actually changes every year. In 2005 for example, the limit was $14,000. In 2006 it went up to $15,000, and from that year on it will increase by $500 yearly.
When it comes to how quickly your contributions, have to be allocated to your 401k plan by your employer, there are various government regulations. These regulations basically say that the contributions made by employees into their 401k plans, should be made at the earliest day possible. These also state that in no event, should these monthly payments be credited into the 401k plans, after the 15th day of the month, following which the contribution has been paid by the employee.
This means that for no reason should the payments be allocated after the 15th. The employer cannot however, wait until the 15th day of the month, to allocate the payments. If there is a possibility that the funds go in after only two days, then the employers should do the transfers immediately. This rule is here to protect participants and not for employers to abuse, and leave the surplus funds to be shown in their books.
Reference: http://www.401khelpcenter.com/faq/faq_main.html
The amount of money that you contribute in your 401k plan is not the same for everyone, and there is a maximum amount. The maximum amount of money that you can save, or defer, actually changes every year. In 2005 for example, the limit was $14,000. In 2006 it went up to $15,000, and from that year on it will increase by $500 yearly.
When it comes to how quickly your contributions, have to be allocated to your 401k plan by your employer, there are various government regulations. These regulations basically say that the contributions made by employees into their 401k plans, should be made at the earliest day possible. These also state that in no event, should these monthly payments be credited into the 401k plans, after the 15th day of the month, following which the contribution has been paid by the employee.
This means that for no reason should the payments be allocated after the 15th. The employer cannot however, wait until the 15th day of the month, to allocate the payments. If there is a possibility that the funds go in after only two days, then the employers should do the transfers immediately. This rule is here to protect participants and not for employers to abuse, and leave the surplus funds to be shown in their books.
Reference: http://www.401khelpcenter.com/faq/faq_main.html
Thursday, May 14, 2009
401k plan withdrawals, charges and exceptions
The current economic turmoil that we are going through at the moment has resulted in lots of people changing employers. This in turn has aroused various questions that relate to 401k plans, and the effects that a change in employer will cause. So here are a few guidelines to help out.
If you have a 401k plan with your previous employer and you need to get cash money out of it, all you need to do is to contact your former employer, and ask him to send you the required forms to be filled in. As an ex-employee, you can ask any time, to have your 401k funds cashed out.
What you should consider is whether this is the right option or not. Unless you are over 59 and half years of age, then you will be subject to a 10% penalty over the amount of money that you withdraw. Apart from this, your ex-employer will also retain an amount of money from the lump sum you need - that amounts to 20%, and send it as a down payment on income tax to our friends at the IRA.
If you are thinking whether there is a way around the penalty charges, the reality is that there isn’t. This penalty was set in place exactly for this reason which is, in order to put off people from spending their retirement money before they reach retirement age.
There are however some exceptions. If you are 55 years of age or over, and you are retiring early from the company who is sponsoring your 401k plan, then you are able to take monthly payments from your savings with no penalty. You will however pay income tax on the monthly payments.
The other exception is substantially equal periodic payment, which allows you to withdraw a given amount of money regularly from the 401k plan, for five years or until you reach 59 and half years.
Reference: http://www.401khelpcenter.com/faq/faq_main.html
If you have a 401k plan with your previous employer and you need to get cash money out of it, all you need to do is to contact your former employer, and ask him to send you the required forms to be filled in. As an ex-employee, you can ask any time, to have your 401k funds cashed out.
What you should consider is whether this is the right option or not. Unless you are over 59 and half years of age, then you will be subject to a 10% penalty over the amount of money that you withdraw. Apart from this, your ex-employer will also retain an amount of money from the lump sum you need - that amounts to 20%, and send it as a down payment on income tax to our friends at the IRA.
If you are thinking whether there is a way around the penalty charges, the reality is that there isn’t. This penalty was set in place exactly for this reason which is, in order to put off people from spending their retirement money before they reach retirement age.
There are however some exceptions. If you are 55 years of age or over, and you are retiring early from the company who is sponsoring your 401k plan, then you are able to take monthly payments from your savings with no penalty. You will however pay income tax on the monthly payments.
The other exception is substantially equal periodic payment, which allows you to withdraw a given amount of money regularly from the 401k plan, for five years or until you reach 59 and half years.
Reference: http://www.401khelpcenter.com/faq/faq_main.html
Tuesday, May 12, 2009
Tax and your 401k Loans
It is a common misconception that when you start saving money in a 401k plan, you will be paying income tax twice.
This is in fact sometimes claimed to be one of the reasons why, individuals should not opt for a 401k plan, as the vehicle that will help them save money for their retirement. The claims suggest that when saving in this plan, you will be paying tax first when making loan payments into the plan, and secondly when you come to take the money out, that is when you retire.
This is not true. A loan from your 401k plan, will not incur taxes, more than any other type of loan that you may possibly take from a financial institution. If you do take a loan from your 401k plan, then you will be paying it off from income, which is after-tax. Furthermore, contributions that you make into your 401k plan, as well as all the earnings to gather throughout the years, will only be taxed once; that is when the money is withdrawn, or distributed.
In short this means that withdrawing funds from your 401k plan or from any other source will not cost you more in tax money.
In economics we have a cost which we call the opportunity cost; which is the next best opportunity which you do not choose. In this case the opportunity cost would denote the money or earning that you would have made, if you would have left the saved money in the plan, and taken a loan from another source.
Reference: http://www.401khelpcenter.com/faq/faq_29.html
This is in fact sometimes claimed to be one of the reasons why, individuals should not opt for a 401k plan, as the vehicle that will help them save money for their retirement. The claims suggest that when saving in this plan, you will be paying tax first when making loan payments into the plan, and secondly when you come to take the money out, that is when you retire.
This is not true. A loan from your 401k plan, will not incur taxes, more than any other type of loan that you may possibly take from a financial institution. If you do take a loan from your 401k plan, then you will be paying it off from income, which is after-tax. Furthermore, contributions that you make into your 401k plan, as well as all the earnings to gather throughout the years, will only be taxed once; that is when the money is withdrawn, or distributed.
In short this means that withdrawing funds from your 401k plan or from any other source will not cost you more in tax money.
In economics we have a cost which we call the opportunity cost; which is the next best opportunity which you do not choose. In this case the opportunity cost would denote the money or earning that you would have made, if you would have left the saved money in the plan, and taken a loan from another source.
Reference: http://www.401khelpcenter.com/faq/faq_29.html
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