Tax Increase Prevention & Reconciliation Act of 2005 and 401k Retirement Plans
Published on: January 16th, 2007
The Tax Increase Prevention & Reconciliation Act (TIPRA) of 2005 was signed into law by President Bush on May 17, 2006. TIPRA includes a provision that facilitates the conversion of Traditional IRAs to Roth IRAs. If you read the article on Roth IRA Rules, you will know that if your Modified Adjusted Gross Income (MAGI) exceeds $100,000, you are NOT eligible for a Roth IRA conversion. Why would you want to do a Roth IRA conversion? Tax-deferred growth of earnings, tax-free distributions and no minimum required distributions (RMD) are some of the reasons. (Read Full)

What Happens to your 401k when you are Divorced?
Published on: January 7th, 2007
Throughout your working years, you have built up a huge nest egg of retirement savings, probably a joint account with your spouse. However, what happens to this 401k plan if you go through a divorce? If you undergo a divorce, your spouse and any dependents are eligible for a share of your 401k retirement savings. The court settling your divorce will issue a statement called Qualified Domestic Relations Order (QDRO) that will clearly state how much of your 401k nest egg will be given out, when it will be paid out and how the division of retirement assets will occur. (Read Full)

Summary of Provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001
Published on: December 19th, 2006
The retirement provisions included in the Economic Growth and Tax Relief Reconciliation Act of 2001 are summarized below:

• Deferral limits of 401k, 403b and 457 retirement plans increased to $11000 for the year 2002, then increasing $1000 per year upto $15000 in 2006. After this, the deferral limits will inrease by $500 a year.
  
• SIMPLE IRA limits increased $1000 per year starting 2002, up until $10,000 in 2005. This limit will be reduced to $500 a year after 2010. (Read Full)

Risks of Investing 401k Retirement Plan Savings in Company Stock and how to Minimize that Risk
Published on: December 17th, 2006
Many Corporations have learned from the fraud cases of Enron and WorldCom that they have to minimize their risk when most of their employees' retirement savings are invested in company stock. What happens when the stock takes a deep plunge and employees lose a big chunk of their retirement savings? Million dollar lawsuits!

(Read Full)

Tree of Life Mandates NYLIM to Administer $100 Million 401k Plan
Published on: December 13th, 2006
Tree of Life (see company description below) has appointed the New York Life Investment Management LLC (NYLIM) firm to administer and manage its $100 million nest egg 401k plan and provide bundled services. Operating in St. Augustine, Florida, USA, Tree of Life is a world known distributor of organic and natural food products. (Read Full)

Mutual Fund Retirement Assets Surpass $10 Trillion Mark
Published on: December 8th, 2006
A study conducted by Investment Company Institute concluded that the combined total value of US mutual funds has surpassed the $10 trillion mark. The size of the mutual fund investments has increased by $286 billion, up 2.9% from last September. The largest amount of growth was seen by stock funds, growing up to $5.67 trillion, up 3.8% from last September. (Read Full)

401k Participants Okay Investment Decisions but Worry About Running out of Money During Retirement
Published on: December 8th, 2006
In a recent 401k survey conducted by the New York Life Investment Management LLC (NYLIM), many 401k participants agreed that they are making the correct investment decisions when it comes to investing their retirement savings, but still worry that they will not have enough money to survive on upon retirement. The survey had a sample population of 8,958 401k participants and 60% of them acknowledge that they are making the right investment decisions. However, only 40% out of all 401k participants are certain that they will not run out of money upon retirement. (Read Full)

Quiz #5: Roth IRA Contribution Limits from 2005 - 2009
Published on: December 5th, 2006
Which of the following is NOT an eligible income type to be able to contribute towards a Roth IRA?

Become a Millionaire with your 401k Retirement Plan
Published on: December 1st, 2006
In the year 2004, the average household savings in USA averaged 0.8% of disposable income (income after all your expenses have been paid off). This rate has been the lowest since the Great Depression and the past 3 decades have seen savings rates of over 7%. Why is this 0.8% rate so low? Is it because Americans are just bad at saving money, or too much of our disposable income is going towards paying off our homes? In order to reach your goal of having $1 million upon retirement, here are a few suggestions: (Read Full)

Roth 401k - A Look at the Final Roth 401k Rules
Published on: December 1st, 2006
Starting December 30th, 2005, the US Treasury Department issued and confirmed the Roth 401k Rules for 401k retirement plan savers. These Rules come into effect starting January 3rd, 2006 and we will look indepth at some of these Roth 401k rules.

Roth 401k Portability
Roth 401k Retirement assets (cash, mutual fund investments, etc) can be rolled over to other Roth 401(k)s, Roth 403(b)s, and Roth IRA(s). These rollovers can be done via Direct 401k Rollovers. (Read Full)

Benefits of Having a Spouse for Individual Retirement Accounts (IRAs)
Published on: November 22nd, 2006
If you have a spouse and are married, your federal tax rate could actually be lower than that of a bachelor working full time. This is because the US Tax System favours married couples more than unmarried individuals when it comes to taxation and retirement 401k plans. This article will summarize some of the extra benefits available to married couples when it comes to 401k retirement plans. (Read Full)

401k Leads USA's Private Retirement Plan List
Published on: November 18th, 2006
A study conducted by the Investment Company Institute found that 401k Retirement Plans are the #1 Retirement Saving Investments made by working people in the USA. This study comes at a time when 401k plans are turning 25 years old (the official birthday of 401k plans is on November 10, 2006). 401k Retirement Plans now have 47 million active participants, which is more than double the size of Private Defined Benefit Plans that have about 21 million active participants. 401k Plans currently hold $2.4 trillion in retirement assets (liquid cash and investments) while private defined benefit & pension plans hold $1.9 trillion. (Read Full)

Financial Engines Achieves $7 Billion in 401k Assets Management
Published on: November 17th, 2006
On Nov 6th, 2006, Financial Engines announced that 401k retirement savers have given the company over $7 Billion in 401k retirement assets, up $1 billion from the last month. Thanks to the Pension Protection Act of 2006, more companies are encouraging their employees to sign up for 401k retirement plans via automatic setups. Executive VP of Financial Engines, Larry Raffone quotes, "As more large companies wind down their defined benefit plans, many seek to deliver greater value through their 401k plans, and managed accounts fit well within that strategy..." (Read Full)

Pension Protection Act of 2006 v/s Economic Growth and Tax Relief Reconciliation Act of 2001
Published on: November 3rd, 2006
The Pension Protection Act of 2006 became law on August 17th, 2006 and is the biggest pension and retirement reform brought about since the Employee Retirement Income Security Act of 1974 (ERISA). Apart from affecting Pension Plans, the Pension Protection Act of 2006 has various effects on Individual Retirement Account (IRAs) as well as Defined Contribution Plans. (Read Full)

IRS Announces Max 401k Contribution Limits for 2007
Published on: October 26th, 2006
The IRS (Internal Revenue Service) announced on October 18th, 2006 the cost of living adjustments to pension and 401k retirement plans for the upcoming tax year of 2007. These adjustments are carried out by the Commisioner under Section 415 of the Internal Revenue Code. The 401k max contributions for the tax year 2007 and previous years is detailed below:
Note: The max 401k contribution for the year 2007 is $15,500 which is up $500 from the year 2006. (Read Full)

How to Avoid IRS Penalties on your IRA (Individual Retirement Account) Savings
Published on: October 25th , 2006
If you withdraw money prematurely from your IRA (if you are less than 59.5 years of age), this is known as an Early IRA Distribution. You will be assessed a 10% early distribution penalty on this withdrawal (on the gross amount). The IRS however does allow you to withdraw money prematurely from your IRA on special circumstances. For more on this, see Withdrawing Penalty Free Distributions from your IRA (Individual Retirement Account) If you fall under any of these cirumstances, be sure to have your IRA custodian or administrator sign and initial your Distribution Report. (Read Full)

Simple IRA (Individual Retirement Account) v/s Simple 401k Retirement Savings Accounts
Published on: October 20th , 2006
The following table shows the yearly contribution limits that an employee can make towards both his Simple IRA and Simple 401k account. On top of the normal contributions, employers are allowed to make Employer-Matched Contributions of upto 3% of the Employee's Compensation. For example, if an employee makes $50,000 a year, the employer is allowed to make an extra $1500 (3% x $50,000) contributions on behalf of the employee. (Read Full)

Defined Benefit Pension Plans - Retirement Planning
Published on: October 19th , 2006
Defined Benefit Pension Plans are the traditional pension plans where both you and your employer withhold a certain amount of your gross wage, manage it until retirement and this guarantees you a specified monthly income for life, upon your official retirement. The total monthly payment you will receive depends on how long you have worked, and how big your pension nest egg is. (Read Full)

Roth IRA Contribution Limits for 2005, 2006, 2007, etc
Published on: October 14th , 2006
Contributions towards your Roth IRA account do NOT have to be made in the form of a lump sum payment. For example in the year 2008, you could contribute $5000 / 12 months = $417 per month for 12 months. Or you could contribute $5000 / 4 = $1250 every 3 months. Or you could contribute $2500 every 6 months. You get the idea? (Read Full)