Early Withdrawal of IRA| 401K |Retirement Plans

Moving From an Employer-Sponsored Plan to an IRA

2008-09-26T06:56:00.003-07:00

If you are leaving a job for other reasons and retirement is still some time away, the financial issue if retiring may seem too distant to matter. However, they matter all too soon, and the decisions you make today will affect your retirement lifestyle- for better or for worse.

Many people in or near retirement are realizing that they may have underestimated their financial needs. As a result, they are concerned about having enough money to maintain their pre-retirement standards of living.

Here is why:
• Resources need to provide for extended retirements, as people are living longer.
• Social Security benefits are shrinking
• Taxes may further reduce retirement assets.
• Inflation erodes long-term purchasing power
• Unexpected expenses may deplete resources faster then anticipated.

Your financial future starts with careful planning.
It would be a good idea to talk to your financial professional who will help you:
• Determine how much retirement income you will need
• Identify your "income for life" sources
• Estimate how long your retirement income may last
• Calculate how much additional income you may need
• Evaluate your additional income sources

Working together with your financial professional, you can consider all aspects of important issues such as:
• The impact of taxes on withdrawals
• Which accounts should be accessed first
• How various decisions may impact your estate plan
• The effects of inflation on your retirement assets
• Handling expenses-anticipated and unexpected
• The best use of other sources of income, such as Social Security

The sooner you start planning, the more time you will have on your side. And more time-used wisely-may mean more money for your retirement years.

We have an extensive knowledge of the ever-changing insurance industry. One of the benefits of utilizing the services of The Life Insurance Group is that we offer many types of life insurance coverages and guaranteed-renewable insurance from a broad range of companies. By gaining a complete understanding of your specific insurance needs, we can best develop solutions to meet your individual situation. Because we offers a multitude of life insurance products, you benefit from knowing that we are working for you directly.

As a result of this, we are committed to excellence in our work on behalf of you, and we define success from your terms, not ours. Our sense of customer satisfaction, and solution-driven actions work to help you retain more of what you have worked so hard to earn.

Rollover Your 401(k) Into an IRA

2008-09-26T06:56:00.002-07:00

During your lifetime
By rolling over your employer-sponsored plan an IRA, you are no longer limited to the allocation options selected by the employer's plan. You can decide which options are the best fit for you given your specific retirement time line, the return you would like to achieve, and the level of risk with which you are comfortable. Employers often decide which allocation options to offer within their employer-sponsored plan based om minimized their fiduciary liability. For you, however, this may be your entire retirement nest egg, accumulated over many years, providing the only means of funding the retirement lifestyle you would like to live. Make sure you work with a financial services professional to decide what strategy is best for you.

Consolidate for easier money management
If you have several retirement plans from former employers, you may choose to consolidate your retirement accounts into a single rollover IRA to simplify managing your assets during retirement.

For your beneficiaries
After your death, a rollover IRA can mean more control over how your remaining IRA assets are distributed to your beneficiaries. Assets can be distributed to match the financial circumstances of each of your beneficiaries.

Before age 59 1/2
Most distributions taken from a retirement plan before age 591/2 will be subject to a 10% premature distribution penalty along with the income taxes due at the time the funds are distributed. There are, however, certain circumstances where withdrawals from a retirement plan prior to age 591/2 are allowed with no additional tax penalties. Ask your financial professional about all the options available, including in-service distributions and substantially equal periodic payments (SEPPs).

At age 70 1/2
Required minimum distribution rules apply once you reach age 701/2 , and you may be subject to significant taxes and penalties if distributions are not taken as required.

Pre-1987 after-tax contributions
If your 401(k) balance includes pre-1987 after-tax contributions, you may be able to receive a separate check for these contributions and roll the after-tax dollars directly into a Roth IRA in a tax-free transaction. Ask your financial professional for more details.

Company Stock
If you hold employer securities in your retirement plan, you may be able to reduce your overall income tax liability by taking distribution of the company stock before rolling over the balance of your plan over to an IRA. Ask your financial professional for more details on "net unrealized appreciation".

Estate Planning
You may have other assets adequate for retirement so that you don't require the funds in your IRA for living expenses. If so, there are options for creating a strategy that can extend your IRA assets to your beneficiaries, providing future financial security for your children or grandchildren. Ask your financial professional about a stretch distribution strategy.

Plan For Your Future With a Roth IRA

2008-09-26T06:56:00.001-07:00

An ideal way to save towards your retirement is through getting a Roth IRA (Individual Retirement Account) or a 401K Plan used by both large and small businesses. Once you have set up your IRA then you can start making payments into it. But there are certain items that you should be aware of.

Firstly you are actually limited as to how much you can contribute towards an IRA in each financial year. It is currently no more than $4,000 or 100% of your earned income, depending on which is the lesser. However, if you are over the age of 50 your contribution limit to this type of IRA is $4,500. Plus there is no limit regarding age and a person is able to contribute at any age. You need to be aware that these differ from the 401K contribution limits.

For you to be able to contribute to your Roth IRA you need to have an income which is taxable and at any one time your adjusted gross income should be less than $110,000 for an individual or $160,000 for a couple who file joint returns. However, for couples who file their own separate returns this figure goes down to $100,000.

You need to be aware that your Roth IRA contributions will be reduced when you are actually contributing towards a traditional IRA as well. So if you are making contributions to both a Roth and Traditional IRA these should not exceed the total amount of contributions you are allowed to make in any given year. But with a Roth IRA the contributions you make on these will be reduced if your income goes above a certain limit.

However there is another method you can use for contributing towards a Roth IRA known as the conversion method. This allows you to convert your traditional IRA over to Roth one. To do this you need to take the IRA out of one account and within 60 days of getting the funds immediately transfer it into your Roth IRA account. Although all Roth IRA contributions are taxable you should be aware that any withdrawals or distribution of the funds are not.

When it comes to making your contributions to your Roth IRA you can do so at any time of year. However, you must make sure you do so before the due date for your tax return in a year not including any extensions offered. As they are not tax deductible then the Roth IRA contributions should not be reported on your tax returns.

Carrying out some research and you will soon see how important a Roth IRA can be to you having a more stable financial retirement because they are tax free when distributed. As part of your retirement planning one should be considering the importance of taking out a Roth IRA.

Above we have provided you with details regarding Roth IRA contributions and what things you need to be aware. It is also advisable that you discuss the matter with your financial adviser as they can help to ensure that you select the right one that will ensure that your retirement is a much happier one as well as being a more financially sound investment as well.

401k Rollover - Managing Your 401k Rollover

2008-09-26T06:56:00.000-07:00

If you've been with an employer for some time and have managed to save up a pretty penny or two in your 401k plan, it might be time to start thinking of what to do with that money in the event that you have to find a new company to work for.

Ideally, you've got the perfect job, you're doing what you love, and your company is in good financial standing. Even if this describes you, you don't want to get complacent. If you don't have a "plan B" of sorts, you may wind up losing a hefty chunk of the money you've saved up thus far. With all of the downsizing and layoffs and low wage growth we've seen recently, it is, to be frank, just not safe to not think about this. No matter how safe you think your job is (and it very well may be, but you just can't be too sure these days), you need to at least have a rough idea of what your plan B options are...

You've got a few options to choose from, each with its own advantages and disadvantages. No one plan is right for everyone, rather, it depends on your circumstance, and the shape of your account.

• Leaving your 401k right where it is

If you have an exceptionally good 401k plan with your former employer, it might be a good idea to just not touch it. One instance where you definitely don't want to move your money around is when you have stock with your former employer's company through your 401k. You get a nice, hefty tax cut on employer stock. If you want to keep that stock, no matter what you do with the rest, keep that stock through your old employer's 401k plan.

• Moving your 401k into your new employer's plan

If you plan on moving your 401k entirely into your new company so that you can purchase your new-employer's stock, or because they simply have a better plan, or better options, make sure that you have your former employer send the money directly to your new employer. When you ask for a check, a chunk is taken out of it in taxes, and isn't put back in unless you put that money back into a 401k within sixty days. You can only do one non-direct transfer a year, so if you move from company to company more than most people do, you should definitely have the money sent directly.

• Moving your 401k money into an IRA

IRA has a number of advantages, but a tax break isn't one of them. The other advantages may outweigh that, though. For example, in the event of your death, your heir(s) will have a much easier time dealing with an IRA than a 401k. Many 401k plans don't allow any non-spousal recipients to cash the money out through an IRA, and it can be hard receiving money in small distributions, which are less of a tax burden, than in one large sum. In comparison, it's not hard to find an IRA program that will allow your heir or heirs to withdraw their inheritance as they see fit.

Benefits of Having an IRA

2008-09-26T06:55:00.000-07:00

The amount of debt you carry will adversely affect the amount of money are able to save. When you are buried in debt you are making payments to interest that could be going toward your savings. You could be gaining interest on savings rather than paying it out on debts owed.

If you think of saving money to buy the things you want rather than using credit cards you can save a lot of money each month. But it is up to you. How important is it to have what you want right away, versus not having to pay high interest charges?

The bigger concern is not the purchase of isolated things, but the matter of saving for your future. An IRA (Individual Retirement Account) will help you put away money for your future. What are the negatives and positives of this?

The money you save in an IRA is a tax deduction, so there are tax benefits. Also, as you save money you benefit from compounding interest on your savings. A look at an online calculator will give you a good idea of how your savings can grow as interest compounds.

The tax benefit is that you are not taxed on the money until the future when you use it. Normally your tax rate will be much lower and you will pay less taxes on the money than if it was taxed at the time you earned it. This is not true in every case, but with the majority of people it has proven to be the case.

There are many IRA options available today and the system has evolved a bit in recent years. But the basic principle is the same - up to $2,000 per year deposited into an account tax free.

One new option is the Roth IRA. It has some flexibility in that if you are 59+ years of age and have had your account for at least 5 years you can make tax free withdrawals from your account. Also money can be drawn if you are purchasing your first home.

The 401k (named after a provision in the 1978 Internal Revenue Code) is also a very popular long term savings program. Employers put tax-deferred money into an account for their employees. No income tax is paid on the funds until they are taken out of the account.

A Forex Trading System Course For the Dream Life

2008-09-07T08:41:00.005-07:00

A dream car, a nice suit, oodles of money in the bank a trophy wife and then I'll be happy. I don't ask much. Now whilst I like the idea of sipping cocktails on the beach, my feet are firmly on the ground now I've found a forex trading system course that promises the lifestyle I want with the salary I need. It isn't really about that opening line above, it is about the right work life balance and making the most of every moment we live. Fulfilling our potential.

So what does it involve, how does it work and where do you find it?! Whoah there for a moment because the forex trading system course that works for me won't necessarily work for you. Different styles, different markets and different personalities mean you need to find what works for you, replicate it and scale it up. Only then you can start sipping your own cocktails.

So stop searching for the Holy Grail and start looking to implement your own strategy and develop your own forex trading system course. So what do you need and how do you start?

Well first you need to brush up on that all important knowledge. Build your knowledge base and put it into practise on a demo account. Paper trade to start because knowledge is nothing until you put it into action. Think back to school or college days and how the real world works is long way from the classroom.

Time. Our biggest most valuable asset and you're going to have to invest it. Learning is great but learning alone is resting on the wrong side of the 80:20 rule so put the time away to learn and apply. Be diligent, disciplined and don't sacrifice your family or social life otherwise the dream will turn into a nightmare as the clock ticks 1, 2, 3 and even 4am. I've been there and I've got the wrinkles to show.

To start your career, trade on a paper basis, winning, losing and refining your trading strategy until you're ready to go live. It is at this stage you need the capital to invest. Now stop and think how you would feel with hundreds, thousands or even tens of thousands on the line. Are you prepared to lose it?

This is the true test of your mettle and you will be glad of the time you spent testing on that demo account.

Now how much capital you need is a controversial issue but there are a number of forex trading system courses (eg. Forex Brotherhood) that teach you everything and throw in a $500 trade account to play with. Worth thinking about and a "no brainer" in my opinion.

With the above in place, the next step is to take action. There are stacks of forums that teach you all you need to know the only problem I have are the tangents they go off on and lack of structure. There are a good many forex trading courses that exist to teach you the ropes. I prefer this method of learning simply because I like to see live trades set up, have someone talk me through what they are looking at, why they are doing 'that' and and indicators they have in place. There is no substitute for watching and learning from a veteran trader (I hate the term forex guru).

Regular updates are a good resource although you have to be careful as one a day can be a little 'short sighted' and it is often good to get one from your forex broker account (they often do a free newsletter) along with an independent update to cross reference. A final tip would be to get involved in a tight nit forum, build relationships and make the most of the experienced members knowledge!

No, Seriously, Follow the Rules!

2008-09-07T08:41:00.004-07:00

You may want to familiarize yourself with the self directed IRA rules before you set up an account. The rules regarding self directed IRAs are really the same as those that apply to any tax-deferred or tax-deductible retirement account. Here are the basics and a little background.

Self directed IRA rules come from the Employee Retirement Income Security Act of 1974 or ERISA for short (thank God for acronyms, haha), the Internal Revenue Code on Prohibited Transactions and unrelated business income tax or UBIT. If you fail to follow the rules, your account could lose its tax-deferred status and there could be severe tax consequences.

The laws and codes are long and sometimes difficult to understand, but let's just break it down into four categories. They are prohibited transactions and investments, self-dealing, indirect benefits and UBIT.

There are certain transactions and investment types that can not be made within self directed IRAs. First we have prohibited transactions. You may not borrow money from it, sell property to it, use it as collateral for a loan or buy property for personal use. In addition, no one may receive unreasonable compensation for managing the account.

Some people consider the self directed IRA rules concerning investment types to be vague. Primarily, because you can invest in just about anything, except the following; artworks, rugs, antiques, metals, gems, stamps, coins and alcoholic beverages. That's all pretty straight forward. It is this next one that confuses people; "Certain other tangible personal property."

Companies that are familiar with self directed IRAs allow you to make specific types of investments that other clients have made over the years without running into problems. They include, but are not limited to, residential and commercial real estate, land and gold bullion, as well as, privately held and publicly traded stocks.

Next are the self directed IRA rules regarding "self-dealing". In short, investments should be made at "arms-length". Self directed IRAs and other retirement accounts are meant to benefit you and your beneficiaries in the future, not today.

If you used funds from the account to acquire an investment property on the beach, for example, you or your close family members cannot live there. That's just one example of self dealing. Another would be using the account to buy stock in a company that you or a family member owns. Sisters and brothers don't count though, only direct descendants and ancestors.

The third category is "indirect benefits". The self directed IRA rules regarding indirect benefits are similar the self-dealing prohibitions. We have a few examples of transactions that are prohibited because you (personally) would receive indirect benefits right now. You cannot use account funds to buy; a building in which you will have an office or work space, a personal residence, a vacation home or a retirement home.

Finally, there is the UBIT rule. Self directed IRAs are supposed to make money. Generally, those earnings are not subject to taxes, during the year in which they are earned. But in certain situations, UBIT may apply. In most cases, it is only applicable if the account borrows money to make an investment. For example, if there was not enough cash in the account to buy a specific piece of real estate, the account can apply for a mortgage. But, that would be considered "debt financing" and any profits or rental income from the deal would be subject to the UBIT tax.

Briefly, those are the important self directed IRA rules. Your accountant, the IRS or your attorney should be able to answer any other questions that you might have.

Legally Combine Your IRA With Your Spouse's IRA For More RE Investment Opportunities!

2008-09-07T08:41:00.003-07:00

What if you could legally combine your IRA with your Spouse's IRA and have 100% check book control wouldn't that open up more real estate opportunities for you?

Today's economy may be all doom and gloom on the evening news but for real estate investors it's a golden opportunity!

Especially when it comes to building massive wealth inside of your retirement plan.

Right now I have seen bank owned properties in the Midwest as low as $30,000.

* If you had the combined power of all of your retirement monies you could pick up one or two of these, sell them via an installment note, season the note with twelve months of payments and sell the note.

The banks are running scared and it's pulling teeth to get a loan.

* So what, it's just another opportunity for the astute investor with a real estate friendly retirement plan. You could provide private money loans fully secured by free and clear real estate which will earn you a juicy 12-15% on your money.

Regardless of what type of opportunities appeal to you the key to success is saying goodbye to your IRA's.

Why? - Because of the restrictive and suffocating laws governing IRAs.

For example here are just 3 of the, you can't do this;

1. You can't legally combine your IRA with your spouse's IRA.
2. You can't borrow money from your IRA or loan it money from yourself.
3. You can't invest your personal cash into the same property as your IRA.

Don't despair, there is good news!

A couple of years ago Congress approved the final version of the self administrated (SA) Defined Contribution (DC) plan. This is an awesome, real estate friendly retirement plan that will give you 100% check book control, allow you to pool you and your spouse's retirement funds together and even invest your personal cash into the same property as your plan.

As a real estate investor if you are serious about applying your experience and skills to building massive wealth in your retirement plan, you need to work with a professional who can structure not only a real estate friendly self administrated Defined Contribution but a plan that has the right features for your situation.

Retirement and the Roth IRA

2008-09-07T08:41:00.002-07:00

An IRA is an IRA, unless it's a Roth IRA. Roth IRAs, which burst upon the investment scene not so long ago, offers some attractive departures from traditional IRAs, especially if it's being used as a retirement planning tool.

The Roth is the same as a traditional IRA in that it is not an investment in and of itself, but a vehicle to investing in other instruments such as stocks, bonds, bank certificates of deposit, mutual funds, and even real estate. That's pretty much where the similarities end and the differences begin.

With an ordinary IRA, the money you contribute is not subject to income taxes first, it comes straight from your gross salary. Taxes are paid when you withdraw the money and traditional IRA monies have to be withdrawn from the account when you turn 70 ½, or they become subject to higher tax rates.

In the case of the Roth IRA, the money you pay in comes from your net salary - in other words, you have already paid the income taxes on it. For many people it makes sense to have paid the income taxes up front when they are making more money, than later on when they need the money for retirement.

In addition, there are no taxes on the growth from your Roth IRA. What you put in, stays in, and earns additional money for you. And, the longer you leave it in, the more it grows.

At the same time, the Roth IRA is a bit more accessible since you can make withdrawals from it, provided you have had it for at least five years and you are at least 591/2 years old. There are no penalties for early withdrawal from a Roth IRA and, because the income taxes were paid up front, there is no tax to pay at the time of withdrawal.

There are some rules that govern contributions to a Roth IRA. For example, you can contribute up to $4,000 per year as an individual, but if you are 50 or older you can make an additional contribution of up to $1,000 as of 2006, in order to "catch up." As long as you have income - from either work or alimony in most cases, you can make contributions to a Roth and you can keep doing so, no matter how old you are. You don't qualify for full contributions to a Roth IRA if your modified adjusted gross income (AGI) is over $95,000, but can make partial contributions if you don't earn more than $110,000. Married couples can make full contributions to a Roth IRA if their joint income doesn't top $150,000, and partial ones if their income isn't over $160,000.

There can be retirement advantages to a Roth IRA, primarily that the taxes have already been paid and there are none due upon withdrawal. Many people have converted their traditional IRAs to Roth IRAs as part of their estate planning processes. The transfer rules are somewhat complex, however. In order to withdraw money from the traditional IRA, taxes on it must be paid at the time of withdrawal. If the additional income in the year the money is withdrawn kicks the individual into a higher tax bracket, the tax bite can be more than anticipated.

While there are advantages to the Roth IRA, make sure you consult with your financial planner and estate planner to make sure you are cognizant of and meet all the rules.

Rules Through Which You Can Avoid 401k Tax Penalties

2008-09-07T08:41:00.001-07:00

401k tax plan is a kind of retirement plan that help you in your older times. This plan is crafted keeping the needs of the people of this age of people of America. Whether they are doing business or service, they can avail the benefits of this retirement plan to the fullest. On the other side these retirement plans also cater to the requirements of the investors in the most appropriate way.

This is basically a retirement plan that is sponsored by the employer and enables the employee in saving money for the future plans. With this plan, the employer presents total guarantee for certain proportion of money as a kind of contribution from employer’s side. It has been estimated at the amount of 50 cents in a dollar. But in case, conditions and rules imposed in this plan are not complied properly, you get to pay 401k tax penalties.

401k tax penalties let the person to make payments timely so that implications of future investments can be met in the most appropriate way. The 401k tax penalties are to be paid only when one do not go according to the terms and conditions of this plan.

The best part of this retirement plan is that you do not have to pay tax deductions. However, 401k tax penalties make it difficulty for some people to carry forward this plan in the best possible, manner. If you want to take the things in the right manner, following are presented some of the laws that are to be taken care of with due care:

The first and foremost thing that needs to be taken care of is about the issues related with the early withdrawal. The fact of the mater is that in case of early withdrawals, penalty of 10% is supposed to be borne by the investor but only in case the withdrawal is done before the tenure of 591/2.

In case the withdrawal cannot be rolled over from one employer based plan to the other one, then the employee have to borne the consequences and have to bear the penalty of about 10%. But this percentage of penalty can be avoided in the condition that you leave the office at the age of 55 years or more. Also, in case, you become disabled, you can take the money at the earliest and you will not have to bear any kind of penalty.

In case you withdraw money in equal amounts of money, taking care of the audit as well as estimating amount of debt over the life expectancy, you can avoid the 401k tax penalties in a big way.

Some pre planning can help you tremendously in this regard so that you get to make most profitable retirement plans as well as fetch maximum amounts of returns. Also, if you take care of these above mentioned points, you can avoid the 401k tax penalties in the most substantial way. So, take care of these things and enjoy your future life with the help of retirement plans.

Self Directed Wealth - Why You Need Some Real Estate in Your Life!

2008-08-25T09:25:00.000-07:00

Making the right Roth IRA investments can mean the difference between a secure financial future and being dependent on social security and friendly relatives. That probably is not a nice way to put it, and it sucks...but it is the truth.

With a self directed Roth IRA, you have more choices than in the traditional managed account. Right now, choices are exactly what you need.

Diversification of the portfolio has always been advisable, but it is even more so, now. And, since stocks are falling across the board, you may have to come up with some "unique" ideas in order to continue to grow your accounts.

Many people are turning to real estate for Roth IRA investments. With the right deals, it is possible to turn a profit quickly!

Or, if you are interested in long term gains, you can hold residential or commercial property and even raw land within a self directed Roth IRA for any number of years. You have to choose the right custodian of course, because many brokers do not allow real estate transactions and other less traditional Roth IRA investments.

You also have to have time and knowledge. You need time to scan the newspapers for deals that seem potentially profitable. You have to have time to go and look at them, because what may look good in print could be located next to an abandoned tenement.

If the property needs renovation, you have to have the time to do it yourself or the financial ability to hire someone. You can make purchases and do repairs using self directed Roth IRA funds.

In fact, if you hold a property within the account, all expenses related to the property must come from the account. If you run short, you can make an additional contribution, as long as you will not exceed your yearly maximums.

Houses and other properties are allowable Roth IRA investments because they are considered easy to liquidate. But, if you are to be sure that your deals will be profitable or that your custodian will be able to sell in the event of your death, then you have to get some knowledge.

If you have little or no experience, you can learn. If you have no time, you are going to need some help though. There are experienced investors that are willing to "take you by the hand", so to speak and show you the ins and outs of the business. These investors are people who were already experienced in real estate investing that have popularized the option for self directed Roth IRA accounts. For example, individuals account holders that were already accustomed to using his or her personal funds for buying, rehabbing and reselling property.

By using your retirement account you too could avoid capital gains taxes, which is perfectly legal. In one deal alone, you can make over $20,000.00 dollars more because of the tax savings alone.

What Should I Do With My Old 401K?

2008-08-25T09:24:00.000-07:00

Over 50% of people that leave their employers find it difficult to make a decision on what to do with their old 401k plan. There are 3 basic options people can choose. Do nothing and stay in the existing 401k assuming your plan rules allow for it. Roll it over to a rollover IRA to increase investment choices. Cash it out and pay taxes and penalties.

Simple enough right? Wrong! For most individuals they make the decision to do nothing because they don't put the time into researching the different options. This can be very detrimental to their long-term plan and can have a dramatic impact when it comes time to start planning for retirement income.

If you leave your employer during the year you turn 55 but before 59.5, it might make sense for you to stay in the 401k plan to take penalty-free distributions. It will also make sense for you to stay in your plan if there are specific institutional funds that you like that are only offered in your 401k

Rollover IRAs make the most sense for most people because it offers flexibility of investment choice, continued tax-deferred growth, and guidance from your IRA provider. Consider the fees involved if you are working with a financial planner, broker, or insurance salesman. Keeping your 401k out of annuities can be extremely beneficial as there is no reason to pay for tax-deferred growth when you already have it free.

No one cares more about your personal investment situation than you. Do yourself a favor and take the necessary steps to become educated on all the options so you can live better in retirement.

Education is the most important aspect of investing and people should seek out professionals so they can become financially independent.