Category Archives: IRA
Roth or Regular? Don’t Waste the Advantage
MIAMI (TheStreet) — If you are qualified for either a Roth or Regular IRA, or your 401(k) plan offers a Roth and a regular, which should you choose? Unfortunately, no one can give you an absolute answer, but here are some of the considerations:
First, always remember that our government could change the tax laws at any time. Changing to a flat tax, for instance, would probably be a disaster for Roth economics. What Uncle gives, he can take at any time. But, still, it’s highly unlikely the government would change Roth tax-free distributions for existing plans.
No one can give you an absolute answer which is better, but there are some IRA details to consider.
Having said that, if tax advantage is a driving factor for you, here are some tax guidelines:
The Why of Retirement
HUNT VALLEY, Md. (TheStreet) — Before you retire ask yourself why.
First and foremost, if you’re unhappy, burned out, frustrated … figure out a plan to retire even if you don’t think you have the funds to retire fully in the lifestyle you desire. These negative emotions will leave you disabled or worse if left unchecked, so you likely need at least a sabbatical to regroup. (A sabbatical is like a mini-retirement to refresh, which will provide time to develop a plan to start anew.) A great book that will help you decide if a sabbatical is right for you, and more importantly how to do it, is Reboot Your Life: Energize Your Career and Life by Taking a Break (Beaufort Books, 2011).
Don’t just entertain yourself until you die. Thinking about true joy, fulfillment and a legacy.
The New Retirement Rulebook
BOSTON (MainStreet) — The rules of retirement are in need of a rewrite.
The loss of company pensions, longer lifespans, concerns over Social Security and a volatile investing world are among the forces that have made planning for a financially secure retirement more challenging than ever.
Longevity and market volatility mean that retirement goals and how to reach them have changed.
Retirement strategy has long been almost entirely focused on the accumulation of assets, but study after study has continually moved the goal post for what is needed in savings — $ 500,000, $ 1 million, $ 3 million.
Schwab Announces All Index-Fund 401(k)s
BOSTON (TheStreet) — Retirees might have another $ 115,000, on average, if they’ll just let Schwab work a little less hard for them.
That is, Schwab thinks retirees can benefit as it offers them less active management of funds but more advice.
On Tuesday, Schwab Retirement Plan Services — a 401(k) provider to approximately 1.5 million workers saving through company retirement plans — announced an index fund-focused 401(k) platform it says is “designed to lower costs, simplify investing and help workers better prepare for retirement.”
It’s cheaper to offer index funds than actively managed mutual funds in 401(k) plans, and Schwab says it has a way to let retirees take advantage of that.
…
How to Ensure Your Inheritance at Tax Time
NEW YORK (MainStreet) — Losing a person in your life is difficult enough without having to figure out how to hold on to what they left you.
The approaching tax season only brings more worries for those who’ve lost a friend or loved one and received an inheritance for their trouble. That last gift from mom, dad, the grandparents or anyone else in your circle can seem like a touching gift at first, but can also incur serious penalties for heirs unsure how to handle it.
Estate tax and inheritance tax laws written in Washington and state capitals can take a bite of what’s left behind, but they don’t have to.
“Don’t feel like you need to be in a rush to make an investment decision after a person passes away,” says Chris Hobart, CEO and founder of Hobart Financial Group in North Carolina. “You’re in a rush and don’t know all the rules, then all of a sudden you realize you owe taxes on all this money after you’ve bought a car or bought a pool.”
Your 401K Match Just Got Axed; Now What?
NEW YORK (TheStreet) — According to a New York Post report, “embattled” PepsiCo CEO Indra Nooyi is considering eliminating the company’s matching contribution to employee 401K retirement accounts, as well as 4,000 layoffs.
Pepsi’s employees also have a separate pension plan, independent of the 401-K, according to the report, but the elimination of the match raises the question of what an employee should do if a 401K match is eliminated. Is it still worth making a tax-deferred contribution into the 401K? Is it worth avoiding the taxes?
PepsiCo employees may not wish to toast CEO Indra Nooyi
For starters, a matching contribution to a 401K is a wonderful thing. If, for example, your employer is willing to match half your contribution up to 3%, and your gross salary is $ 50,000 a year, and you contribute 6% of your salary in a year, you contribute $ 3,000 to the 401K and the employer contributes $ 1,500. That’s a fat 50% immediate return on your investment for that year.
10 Resolutions For the Retirement Industry
BOSTON (MainStreet) — Heading into 2012, one can only hope that the economy improves and retirement plans continue to recover.
But whatever good news, bad news and curveballs the next 12 months bring, we offer the following 10 resolutions we hope folks who earn their living providing retirement services will consider making:
If 2008 didn’t make it clear, the party’s over. And that means it’s time for the retirement industry to make some profession-healthy resolutions for the new year.
1. We’ll say enough already with the golf courses and beaches.
For 2012, we urge a resolution that retirement marketing focus more on the reasonable dreams of real people, not the flights of fancy wealthier clients may harbor.
Troops Worry About Retirement
BOSTON (MainStreet) — Military families are more concerned about their retirement prospects than economic conditions, inflation, debt and health insurance.
That’s the upshot of recent survey results from First Command Financial Services. It found that 71% of middle-class military families (those with household incomes of at least $ 50,000) cited government cuts to military retirement benefits as the financial issue that concerns them the most. The economy came in second at 54%, followed by the cost of gas at 51%.
Big changes that could be afoot for military pensions are a top financial concern for enlisted men and women.
Legacy-Minded Boomers Buy Custom Biopics
BOSTON (MainStreet) — The gathering of loved ones throughout the holidays can have patriarchs and matriarchs thinking about the legacy they will leave behind for their family.
As these folks visit financial advisers to update wills, trusts and financial bequests, they may find themselves steered into a less tangible arena.
As baby boomers age, many see a need to pass along personal history, ethics and life lessons.
According to a recent study by Allianz Life Insurance Co. of North America, there are four pillars to leaving a legacy, three of which — financial assets and real estate, personal possessions of emotional value and wishes to be fulfilled — typically are related to finances and money. A fourth objective is to impart values, ethics, traditions and life lessons, something 75% of surveyed baby boomers and their parents placed as the most important. Life lessons, ethics, values and traditions were all part of this category.
