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

Pros & Cons of Different Small Business Retirement Plans As a small business owner, you may want a better retirement plan – one that will let you and your key employees save much more for retirement.  If the annual contribution limits on standard retirement plans disappoint you, you should know about these alternatives.  Simplified Employee Pension plans (SEPs). A SEP allows your business to set up and fund IRAs for your workers as well as for yourself. The employer makes 100% of the plan contributions, and the money contributed is tax deductible. The annual contribution limit is $55,000 in 2018.

5 Easy Ways For Businesses To Save On Their Taxes Download the Guide For Free Click Here FREE Is Your Company’s 401k plan up to date? Book a Free Consultation and find out. Click Here FREE Is Your Company’s 401(k) Plan as Good as It Could Be? Two recent court rulings may make you want to double-check.  How often do retirement plan sponsors check up on 401(k)s? Not as often as they should, perhaps. Employers need to be especially vigilant these days. Every plan sponsor should know about two recent court rulings. One came from the Supreme Court in 2015;

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

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

What beneficiaries need to know and consider. At first glance, the rules surrounding inherited IRAs are complex. Here are some questions (and potential answers) to consider if you have inherited one or may in the future. Who was the original IRA owner? If the original owner was your spouse, you have a fundamental choice to make. You can roll over your late spouse’s IRA into an IRA you own, or you can treat it as an inherited IRA. If the original owner was not your spouse, you must treat the IRA for which you are named beneficiary as an inherited

These tools can shield inherited IRA assets from lawyers and creditors. Inherited IRA assets are vulnerable in bankruptcy proceedings. Many older IRA owners and their beneficiaries do not realize this, but it is true. In Clark, et ux v. Rameker (2014), the Supreme Court ruled 9-0 that inherited IRAs cannot be defined as “retirement funds” under federal bankruptcy law. They now lack the protection that retirement savings accounts commonly get in bankruptcy courts.1 So today, a longstanding estate planning dictum is being reevaluated. If you have non-spousal heirs who seem at risk for bankruptcy, you might want to leave your

What pre-retirees owe could compromise their future quality of life. The key points of retirement planning are easily stated. Start saving and investing early in life. Save and invest consistently. Avoid drawing down your savings along the way. Another possible point for that list: pay off as much debt as you can before your “second act” begins. Some baby boomers risk paying themselves last. Thanks to lingering mortgage, credit card, and student loan debt, they are challenged to make financial progress in the years before and after retiring. More than 40% of households headed by people 65-74 shoulder home loan

An option that may help your retirement efforts. How should your 401(k) be invested? While some investors manage their 401(k)s themselves, others may seek a different kind of “hands-on” approach: having their retirement plan assets actively and professionally managed. Why should a 401(k) be actively managed? In a volatile stock market climate, there are potential drawbacks to leaving a 401(k) alone. If 401(k) participants don’t adjust asset allocations in response to market conditions or don’t adjust their investment mix for years, they can potentially lose on their investment. While “buy and hold” can be a successful investment strategy at times,

Retirement Savings

Why an early start (and accepting some risk) matters. Are you on track to save $1 million or more for retirement? If you are 50 or younger, you may need that much in savings to generate the kind of retirement income you prefer.   Personal finance website NerdWallet recently did some math concerning this very objective. What kind of sustained savings effort would a 30-year-old with nothing invested need to make to amass $1 million in retirement savings by age 67, assuming a consistent 6% annual return? (Keep in mind, a tax-advantaged retirement account is not the only potential source of

The individual 401k plan is probably your biggest retirement asset but is neglected the most. The bull market that we are currently enjoying turned eight years old last March.  That has been a good thing for your 401k account.  The bad news is that the average length of a bull market is just under 5 years. A bull market behaves a lot like an escalator.  It climbs slow and steady over time. But bear markets behave a little differently.  They behave almost like an elevator.  They can almost free fall and have huge losses in short amounts of time. If

In some cases, they may be. Read on. Do you itemize your tax deductions? Then you might have a chance to partly or fully deduct the cost of the advisory fees you pay for the investment, legal, and tax advice you receive. Under federal tax law, you may deduct “investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income.” In addition, you can “usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund

Things to check and double-check. Estate planning is a task that people tend to put off, as any discussion of “the end” tends to be off-putting. However, people without their financial affairs in good order risk leaving their heirs some significant problems along with their legacies. No matter what your age, here are some things you may want to accomplish this year regarding estate planning.  Create a will if you don’t have one. Many people never get around to creating a will, not even buying a will-in-a-box at a stationery store or setting one up online. A solid will drafted

This may be one of the best things you can do for your financial health. If you had a chance to save hundreds of thousands of dollars over time at no great cost to your lifestyle or your monthly budget, would you take it? An easy-to-use retirement savings option that might go a long way to giving your retirement savings a boost? Look at what the standard 401(k) can offer you. Tax-deferred growth. The money you save and invest in a traditional 401(k) grows without being taxed. You only pay taxes on it when it is withdrawn.1 Compounding. As the

This employee benefit & hiring incentive may help your office compete. Great employees are hard to find. This truth applies for all businesses, including healthcare offices. The challenge just begins at the point of hiring. Finding top-notch workers is one thing; retaining them is another. If your business offers no 401(k) plan, this amounts to a recruiting disadvantage. Fewer potential employees may want to work for a company that offers no retirement savings plan.  That may also encourage turnover, which could add to your office’s financial headaches.   Just how much do employees value benefits like 401(k)s? In its 2016 annual

Have you heard of the Savers Credit? You may qualify if you contribute to an IRA, SEP-IRA, SIMPLE, 401(k), 403(b), or 457 retirement savings plan.1 You can qualify for the Savers Credit for the 2017 tax year if you are a) married filing jointly with income of $62,000 or less, b) married filing separately or single with income of $31,000 or less, or c) filing as a head of household with income of $46,500 or less.1 To be eligible for the credit, you must be 18 or older, you must not be a full-time student, and you cannot be claimed