The IRA and the 401(k) Comparing their features, merits, and demerits. Taxes are deferred on money held within IRAs and 401(k)s. That opens the door for tax-free compounding of those invested dollars – a major plus for any retirement saver.1    IRAs and 401(k)s also offer you another big tax break. It varies depending on whether the account is traditional or Roth in nature. When you have a traditional IRA or 401(k), your account contributions are tax deductible, but when you eventually withdraw the money for retirement, it will be taxed as regular income. When you have a Roth IRA

Discover the 403(b) This retirement plan allows teachers & employees of non-profits to invest for their futures.  Does your spouse contribute to a 401(k)? You are probably eligible for a retirement plan that can help you save and invest for retirement in the same way – a 403(b). 403(b) plans actually predate 401(k)s. They first appeared in the 1950s. School districts and non-profit organizations commonly offer these retirement savings vehicles to their employees.1  Contributions to most 403(b)s are 100% tax deductible. Typically, you just defer a small percentage of your salary into these plans per paycheck, prior to taxes being

Getting Your Personal Finances in Shape for 2019 Fall is a good time to assess where you stand and where you could be. You need not wait for 2019 to plan improvements to your finances. You can begin now. The last few months of 2018 give you a prime time to examine critical areas of your budget, your credit, and your investments. You could work on your emergency fund (or your rainy day fund). To clarify, an emergency fund is the money you store in reserve for unforeseen financial disruptions; a rainy day fund is money saved for costs you

5 Retirement Concerns Too Often Overlooked Baby boomers entering their “second acts” should think about these matters. Retirement is undeniably a major life and financial transition. Even so, baby boomers can run the risk of growing nonchalant about some of the financial challenges that retirement poses, for not all are immediately obvious. In looking forward to their “second acts,” boomers may overlook a few matters that a thorough retirement strategy needs to address. RMDs. The Internal Revenue Service directs seniors to withdraw money from qualified retirement accounts after age 70½. This class of accounts includes traditional IRAs and employer-sponsored retirement

Underappreciated Options for Building Retirement Savings Facebook Google+ Twitter LinkedIn More people ought to know about them.  There are a number of well-known retirement savings vehicles, used by millions. Are there other, relatively obscure retirement savings accounts worthy of attention? Are there prospective benefits for retirement savers that remain under the radar? The answer to both questions is yes. Consider these potential routes toward greater retirement savings.      Health Savings Accounts (HSAs). People enrolled in high-deductible health plans (HDHPs) commonly open HSAs for their stated purpose: to create a pool of money that can be applied to health care expenses.

Tax Moves to Consider in Summer Making changes earlier rather than later. If you own a business, earn a good deal of investment income, are recently married or divorced, or have a Flexible Savings Account (FSA), you may want to think about making some tax moves now rather than in December or April.    Do you now need to pay estimated income tax? If you are newly self-employed or are really starting to see significant passive income, you may need to quickly acquaint yourself with Form 1040-ES and the quarterly deadlines. Every year, estimated tax payments to the Internal Revenue

The Turkish Currency Crisis Facebook Google+ Twitter LinkedIn Email WhatsApp A look at why it matters so much to the world, and the risk of a domino effect.  The collapse of the Turkish lira has become a major financial story. You may wonder why the financial media is devoting so much space to this, as Turkey is not exactly China or Japan or Germany. The fear is that Turkey’s problem hints at a greater crisis.1,2   Globally speaking, Turkey is not all that minor. Its economy is the world’s seventeenth largest, and while it is seen as an emerging market, it

Why the U.S. Might Be Less Affected by a Trade War Facebook Google+ Twitter LinkedIn Email WhatsApp The nature of our economy could help it withstand the disruption. A trade war does seem to be getting underway. Investors around the world see headwinds arising from newly enacted and planned tariffs, headwinds that could potentially exert a drag on global growth (and stock markets). How badly could these trade disputes hurt the American economy? Perhaps not as dramatically as some journalists and analysts warn.1,2 Our business sector may be impacted most. Undeniably, tariffs on imported goods raise costs for manufacturers. Costlier

Weekly Economic Update 8/13/2018 Facebook Google+ Twitter LinkedIn Email INFLATION AT 2.9%, CORE INFLATION AT 2.4% Friday, the Department of Labor reported these annualized gains through July of this year for the Consumer Price Index. Both the headline and core CPIs rose 0.2% last month, matching the consensus forecast of economists polled by Reuters. The yearly core inflation increase is the largest on record since September 2008. (The core inflation reading leaves out food and energy costs.) The Producer Price Index was flat in July, with the yearly advance declining slightly to 3.4%; the core PPI rose 0.3%, resulting in

Starting a Roth IRA for a Child or Grandchild This early financial decision could prove profoudly positive over time. Facebook Google+ Twitter LinkedIn Email Do you have a child or grandchild earning some income? Indirectly, that after-school or summer job might present a savings opportunity for that teenager. You could help your child or grandchild save for future goals by assisting them to create and fund a Roth IRA. So many people wish they had begun saving for retirement sooner. Imagine how your child or grandchild’s prospects for building lifetime retirement savings might improve by starting as soon as possible.      Here

Are Changes Ahead for Retirement Accounts? A bill now in congress proposes to alter some longstanding rules. Facebook Google+ Twitter LinkedIn Email Most Americans are not saving enough for retirement, despite ongoing encouragement to do so (and recurring warnings about what may happen if they do not). This year, lawmakers are also addressing this problem, with a bill proposing big changes to IRAs and workplace retirement plans.    The Retirement Enhancement and Savings Act (RESA), introduced by Senator Orrin Hatch, would amend the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) in some significant ways.1      Contributions to

Tax Changes Around the Home How the Tax Cuts & Jobs Act impacted three popular deductions. Facebook Google+ Twitter LinkedIn Email Three recent tax law changes impact homeowners and home-based businesses. They may affect your federal income taxes this year.   The SALT deduction now has a $10,000 yearly limit. You can now only deduct up to $10,000 of some combination of (a) state and local property taxes or (b) state and local income taxes or sales taxes, annually. (Taxes paid or accumulated due to trade activity or business activity are exempt from the $10,000 limit.)1,2 If you have itemized for

The Snowball Effect Save and invest, year after year, to put the full power of compounding on your side. Facebook Google+ Twitter LinkedIn Email Have you been saving for retirement for a decade or more? In the foreseeable future, something terrific is likely to happen with your IRA or your workplace retirement plan account. At some point, its yearly earnings should begin to exceed your yearly contributions. Just when could this happen? The timing depends on several factors, and the biggest factor may simply be consistency – your ability to keep steadily investing and saving. The potential for this phenomenon

Guarding Against Identity Theft Take steps so criminals won’t take vital information from you. Facebook Twitter LinkedIn Email America is enduring a data breach epidemic. The latest annual study of the problem from Javelin Strategy & Research, a leading financial analytics research firm, says that 16.7 million people across the nation were impacted by I.D. theft in 2017 – an all-time high.1 The problem is getting worse – much worse. Last year, 30% of U.S. consumers were alerted about data breaches by firms holding their personal information. In 2016, just 12% of consumers were so affected.1       Social Security numbers were

Leaving a Legacy to Your Grandkids Now is the time to explore the possibilities. Facebook Email Twitter LinkedIn Grandparents Day provides a reminder of the bond between grandparents and grandchildren and the importance of family legacies.   A family legacy can have multiple aspects. It can include much more than heirlooms and appreciated assets. It may also include guidance, even instructions, about what to do with the gifts that are given. It should reflect the values of the giver. What are your legacy assets? Financially speaking, a legacy asset is something that will outlast you, something capable of producing income or

A primer for parents and grandparents. A university education can often require financing and assuming debt. If your student fills out the Free Application for Federal Student Aid (FAFSA) and does not qualify for a Pell Grant or other kinds of help, and has no scholarship offers, what do you do? You probably search for a student loan. A federal loan may make much more sense than a private loan. Federal student loans tend to offer kinder repayment terms and lower interest rates than private loans, so for many students, they are a clear first choice. The interest rate on

Comparing the old rules with the new. The Tax Cuts and Jobs Act made dramatic changes to federal tax law. It is worth reviewing some of these changes as 2019 approaches and households and businesses refine their income tax strategies. Income tax brackets have changed. The old 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% brackets have been restructured to 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These new percentages are slated to apply through 2025. Here are the thresholds for these brackets in 2018.1,2  Bracket Single Filers Married Filing Jointly or Qualifying Widower Married Filing Separately Head of

A to-do list for the twentysomething. Did you recently graduate from college? The years after graduation are crucial not only for getting a career underway, but also for planning financial progress. Consider making these money moves before you reach thirty.        Direct a bit of your pay into an emergency fund. Just a little cash per paycheck. Gradually build a cash savings account that can come in handy in a pinch.   Speaking of emergencies, remember health insurance. Without health coverage, an accident, injury, or illness represents a financial problem as well as a physical one. Insurance is your way of managing

How much can you contribute this year? In 2018, you have another chance to max out your retirement accounts. Here is a rundown of yearly contribution limits for the popular retirement savings vehicles. IRAs. The 2018 limits are the same as in 2016: $5,500 for IRA owners who will be 49 and younger this year and $6,500 for IRA owners who will be 50 or older this year. These limits apply to both Roth and traditional IRAs.1 What if you own multiple IRAs? This $5,500/$6,500 limit applies to your total IRA contributions for a calendar year. So, for example, should

The U.S. might soon impose tariffs on certain imports. What if America taxes imported aluminum and steel? If it does, will other countries impose taxes in response, and what might that mean for the U.S. economy?    Conversations about tariffs and trade wars have been prevalent in the news stream lately. If a trade war does begin in 2018, it is worth considering the potential implications. In the scenario that could unfold, excise taxes would be placed on imported goods or materials sold to consumers or used by industries in America. These taxes would encourage retailers and manufacturers to buy such