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You've no doubt heard many of the old adages about building a retirement nest egg: Aim to save $1 million, withdraw 4% a year to live on, plan for expenses that are 75-80% of your pre-retirement expenses. But a lot has changed since these rules were created, including a massive financial crisis. So is it time to tweak our retirement rules?
How much money you’ll need to save every year to achieve your retirement goals depends on a number of personal factors that include: your life expectancy; your desired lifestyle; whether you want to help your family financially; your health care costs; inflation; taxes; and your average return on investment in your retirement accounts. Thus, it is important to sit down and write out your individual retirement goals. Retirement planning can be as simple or complicated as you make it and working with a financial planner can help this process immensely.
After 10 years of marriage, you and your spouse decide to divorce. You amicably agree on a 50/50 split of all assets. But wait. Through your employer, you have a pension. Likewise, your spouse has a 401(k). You both have IRAs. How do you legally divide these retirement assets? More importantly, how do you divide them without incurring tax penalties? To avoid the mistakes in that befall many couples as they divide their retirement assets, it pays to familiarize yourself with the basic IRS rules that govern these matters.
What happens if someone sues you and the only substantial asset you have is your 401(k) plan? Can that be attached by a creditor or lawsuit? Knowing the rules that govern the vulnerability of these accounts to creditors can help you to prepare if you have to file for bankruptcy or have a judgment filed against you in court.
Planning for retirement requires understanding how retirement accounts work and designing a strategy that fits your present and future financial situations. Even with unique retirement strategies designed for individual circumstances, there are retirement rules that everyone should follow. Knowing these rules help you meet your financial goals and retire comfortably.
Planning for retirement can be a difficult task, with so many options available. One important distinction between types of retirement investments is whether they're qualified or non-qualified. A qualified plan is approved by the government and allows a contributor to avoid paying taxes until she withdrawals her funds. Qualified retirement plans are offered by many employers as part of a hiring incentive package.
The F. Edward Hébert Armed Forces Health Professions Scholarship Program, better known as HPSP, is a scholarship designed to help recruit military personnel to work in a medical capacity within the forces. The student is classed as military staff during the period of study and military training, but this time is not counted towards the years of service that determine military retirement benefit entitlements.
The terms "qualified" and "non-qualified" money are usually used in conjunction with retirement plan assets. Understanding what makes money "qualified" leaves all other types of accounts as non-qualified money. The rules for certain types of investments or account change whether the money is qualified or non-qualified.
401k plan participants contribute regular amounts to their retirement plans each year. Companies and financial institutions provide these accounts as a way of helping individuals save for retirement. Most 401k plans require that the account holders reach a specified age before making a withdrawal. However, these plans may allow for emergency withdrawals under certain conditions.
Unemployment benefit payments are paid to you by the state of Ohio when you lose your job involuntarily. A 401k plan is a retirement plan that allows you to defer a portion of your income and invest it for your own retirement. You should understand how your 401k plan benefits affect your unemployment benefits if you cash in your 401k prior to applying for benefits.
Saving for retirement is a hot topic of conversation among everyone from young people just starting careers in their 20s to folks in their 60s contemplating retiring in the very near future. Politicians and financial advisrrs exhort individuals to take responsibility for their future and save as much as possible. Many companies offer a variety of long-term savings plans designed to encourage employee participation and savings. The programs involve two kinds of strategies: qualified plans and non-qualified plans.
If you lose your job and then run out of unemployment benefits, you'll almost certainly be in a financial jam. Normally, you receive unemployment benefits from the state. However, this money may not be enough. You may be tempted to draw on your 401k plan for additional funds. Make sure you understand the full impact of this decision.
Qualified retirement plans fall under are the Employee Retirement Income Security Act (ERISA). These plans are not subject to the same rules concerning creditors, judgments and bankruptcy that apply to other investment accounts.
Annuities are insurance policies which guarantee you an income for life or for a set period of time. However, you are not required to use the money during your lifetime. Instead, you may leave the money to a beneficiary. If you do, then the money may be stretched over their lifetime. As long as the annuity is not in a retirement plan, you should have no problems doing this.
401k plans are a common form of retirement savings plan offered by employers. Most employees understand how they can defer part of their salary into their 401k account as a pre-tax retirement contribution. However, knowing how to take money out of a 401k plan is less well known. There are many rules and regulations regarding how and when money can be taken from a 401k account.
If your employer offers a 401(k) plan and you have made contributions to the plan, you lower your taxes in the year of the contribution and take advantage of the tax-sheltered growth. However, the Internal Revenue Service restricts when you can use money from a 401(k) plan and imposes penalties on certain early withdrawals.
The IRS allows employer retirement plans to offer participant loans. This option is unique to employer-sponsored plans such as a 401(k) plan and not permitted in consumer savings plans such as individual retirement accounts. Taking a 401(k) loan gives you access to retirement capital without triggering a taxable event and ultimately losing tax-deferred growth benefits.
The money you put into your 401k is designed to be long-term money for your retirement, not short-term money to pay bills and cover current expenses. That is why the IRS uses tax penalties to discourage workers from tapping their 401k plans too soon. Even so, there are ways you can access those funds, including loans and hardship withdrawals.
Annuities are tax-deferred retirement savings structures designed to create income streams at a certain date, either sooner or later. Immediate annuities are usually discussed in terms of lottery or structured settlement winnings. Deferred annuities can be either qualified or non-qualified. The difference is how the tax structure works and what contributions are allowed. Both are regulated by the Internal Revenue Service.
Investors purchase qualified annuity contracts with pre-tax earnings whereas non-qualified annuity contracts are bought with after-tax earnings. Funds inside an annuity contract grow tax-deferred, regardless of whether the premiums used to fund the contract consisted of qualified or non-qualified funds. Withdrawals from qualified and non-qualified accounts are taxed very differently.
When you cash in your 401k, the funds you actually receive typically amount to less than the closing 401k balance. Taxes, mutual fund redemption fees and custodian fees often reduce a lump sum withdrawal by more than 30 percent. You can delay the tax penalties by transferring your 401k balance into another tax-sheltered account, but other fees are unavoidable.
If you own an annuity, you might be able to make qualified contributions to the account. A qualified annuity is an annuity that's housed inside a qualified retirement account such as an IRA. Because of this, contributions are subject to the rules and procedures that apply to these types of accounts.
SIMPLE IRA retirement plans are a type of retirement plan that both you and your employer contribute to. The combined contributions help you to build retirement savings that you'll eventually use to supplement Social Security and any other retirement income that you have coming to you. However, if you don't want to contribute to a SIMPLE plan, you don't have to.
Recessions occur when economic activity is significantly reduced for more than a few months. The impact of a recession usually reaches beyond Wall Street. If you have a 401(k), your money can be lost depending on the length and nature of the recession. Consider the advantages and disadvantages of maintaining your 401(k) during times of significant loss.
If you are getting ready for retirement, you have some big decisions to make. Among them is what to do with your employer's 401k plan. You must balance your need for income against a tax code that penalizes you with higher rates if you take too much income and with severe penalties if you don't take enough. You may want to move assets out of the 401k for a variety of reasons, including broader investment choices in IRAs, a better fee structure and the absence of employer rules that stand between you and your money.
Qualified retirement benefits allow you to defer some of your income for your retirement. These benefits may or may not be part of an employer-based plan. Sometimes, your employer sets up a qualified plan on your behalf and funds it without any participation from you whatsoever. In all cases, it's helpful to know what these plans are and how they work.
Even given the many available types of IRAs, or individual retirement accounts, most are not considered qualified accounts unless they adhere to certain restrictions set forth by the federal government. Many people who earn income through an employer have an option to invest in a retirement plan provided by the company. This plan receives tax benefits up front when investing. Many IRAs do not qualify for these same type of benefits and are considered to be non-qualified.
401(k) plans are retirement accounts that shield your retirement savings from an income tax liability until you retire. However, if you owe money to the IRS for back taxes, your 401(k) plan is vulnerable. The IRS may seize your account for the payment of taxes. Make sure you understand how this process works and what you can do about it to save your retirement.
401(k) plans allow employees to save for retirement while they are working. Your contributions are not taxed; your employer transfers money to your 401(k) plan each pay period before withholding income taxes from your paycheck. You must keep 401(k) funds in the account until you reach retirement age and must make withdrawals regularly after you enter the seventh decade of your life. You pay taxes when you withdraw funds.
Qualified retirement plans are those that receive special tax privileges from the IRS. These plans include IRAs and 401k plans. Non-qualified plans also provide significant advantages to individuals and businesses. These advantages allow non-qualified plans to provide benefits that qualified plans cannot duplicate.
The loss of a job is a terrible blow, both personally and financially. If you're fortunate enough to have received a good severance package, however, your former employer might have bought you a bit of time before money becomes a major concern. If that's not the case, you might be tempted to tap into your retirement savings to ease you through the pinch. Although it's often possible to draw money out of a 401(k) to cover expenses, the early withdrawal will cost you. Don't touch your retirement savings until you understand your options.
The United Auto Workers union has been active since 1937. The pension plan it provides is carried by many auto companies. This includes companies based out of Japan such as Honda, Toyota and Mitsubishi.
When facing a financial emergency, your 401(k) retirement funds might look like a tempting bailout source. It's difficult to touch your 401(k) before you near retirement age, but depending on your individual plan, certain situations do permit you to make an emergency loan or permanent withdrawal. Just because you can doesn't mean you should, however. In most cases, taking money out of your 401(k) should be a last resort.
A 401(k) plan is an employer-sponsored, qualified, defined-contribution retirement plan that falls under ERISA, or the Employee Retirement Income Security Act of 1974. Under a 401(k) plan, worker contributions and earnings are tax deferred, but withdrawals are subject to income tax. As of 2010, a 10-percent penalty generally applies to withdrawals prior to age 59 and a half, unless the withdrawal is for education, a down payment on a first home, disability, medical expenses or to avoid eviction or foreclosure. Exceptions also apply for individuals over 55 who are leaving a company, and for individuals making level withdrawals over their…
When Congress designed the 401(k) plan, the intent was to encourage workers to put aside money to provide for their own retirements. Since Congress intended for 401(k)s to be long-term investment programs, they built stiff penalties into the law to discourage workers from raiding their 401(k)s prior to reaching retirement age. Nevertheless, the drafters were also concerned that if there was no possibility of accessing the funds in an emergency, workers would not contribute to the plans. As a result, Congress allowed for access to the money under certain conditions.
The Navy's Health Professions Scholarship Program pays a substantial proportion of your tuition while you are studying to be a doctor, dentist, optometrist or other health care professional. This is in exchange for active duty status in the U.S. Navy once you graduate. Once you are active duty, you fall under the same guidelines as every other active duty sailor. This means that your retirement options are the same as the rest of the military's.
A 401k retirement plan can be a great solution for an employee seeking income for the golden years. The Internal Revenue Service sets up general rules on how the plan should be run but leaves ample leeway for the individual company to decide on the particulars. One feature that usually accompanies the 401k is the employer matches the employees' contributions to some extent. It's up to the company to decide how much. To find out what your options are with your job and how to access the 401k retirement program, contact the plan administrator.
Specific UAW retirement rules, such as retirement age, penalties for early retirement, and pensions and insurance provided, vary depending on the employee's United Auto Workers contract. Most older contracts are more generous in their retirement benefits. More recent contracts generally offer fewer pension and insurance benefits for retirees. The union has provisions to prevent problems and fraud in managing retiree benefits.
Georgia provides a defined benefit pension plan for public employees that work for the state. The Employees' Retirement System of Georgia administers the rules for seven separate retirement plans for different sets of employees ranging from judges to district attorneys to legislators and other public employees. Public school teachers are covered under a separate plan administered by the Teachers' Retirement System.
A non-qualified retirement plan is one that meets neither the IRS nor ERISA requirements for advantageous tax treatment. (ERISA refers to the Employee Retirement Income Security Act of 1974, which set forth legal guidelines for pension plans.) Employers fund non-qualified retirement plans that contain more flexible provisions than qualified retirement plans. The benefits paid upon retirement are taxed as ordinary income, but are then eligible to be put into an IRA in order to defer taxes.
Transitioning to retirement can be challenging if you don't understand some basic rules concerning your retirement accounts. Retirement accounts need to be transferred from your existing employer to a brokerage. In some cases, you will need to roll over your 401k, for example, from your existing employer. The rules concerning retirement and your retirement accounts are very specific.
The US Army requires its service men and women to serve a minimum of 20 years before they can qualify for retirement. The mandatory retirement age for the Army is 62. Time in service may be continuous or not, and may even represent service to other branches of the military or even civilian federal employment. Additionally, the Army Reservists and Army National Guardsmen have retirement plans, and a disability retirement system is also in place.
A SIMPLE IRA is a retirement plan created to meet the needs of small business owners with less than 100 employees. The acronym SIMPLE stands for Savings Incentive Match PLan for Employees. SIMPLE plans were created by the US Government to give small businesses the ability to create plans to compete with 401k options available at larger employers. Although termed an "IRA," SIMPLE plans have their own special rules.
The U.K. Government's DirectGov website reports changing rules regarding retirement and pensions in 2010, taking a number of years to raise the retirement age of both men and women to 68 by 2046. The U.K. Government has rules regarding the different types of pensions available to U.K. citizens and the rights of employers and employees to retire at an agreed-upon age.
The Internal Revenue Service recognizes a variety of qualified retirement plans. These plans offer significant tax breaks, which can include tax deductions for contributions, tax-sheltered growth and tax-free withdrawals at retirement. To prevent people from taking advantage of the tax advantages, the IRS has specific rules about distributions from retirement accounts.
When defined-benefit pension plans were no longer in fashion and workers were challenged to put money away for retirement, the federal government stepped in and passed legislation that created 401(k) retirement plans. These plans gave taxpayers incentives to save. If employees followed strict rules as set out in the legislation, they were able to put money away that would remain tax-free until withdrawal. Thus, they would accumulate capital for their retirement at a faster rate.
A 401(k) is a retirement plan, in which you can save for retirement and defer income taxes on this saved money. A portion of your wages is deposited into this 401(k) account. Usually these plans are sponsored by your employer, and the investment might include a combination of the following: mutual funds, stocks or bonds. The point of the 401(k) is to give you some security once you retire. However, there are stringent guidelines that govern what and when you can use this money.
The Rule of 85 allows for early retirement benefits in pension plans. This sometimes controversial stipulation permits retirees to avoid pay reduction for drawing benefits before the age of 65 if they have worked for a sufficient number of years.
Annuities are investment vehicles backed by various types of investments. They have many different labels for the same product. For instance, an annuity can be an immediate annuity, a fixed annuity, and a non-qualified or qualified annuity.
