Roth IRA Contribution Limits for 2005, 2006, 2007, etc
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)

401k and IRA Rollovers - Direct IRA Rollover Rules - 20% IRA Withholding Law
A Direct IRA Rollover is when your 401k retirement savings (or 401k distributions) are transferred directly from your old employer's account to your own Individual Retirement Account through a trustee-to-trustee transfer. This means the money never actually reaches your hands, it is wired from your old 401k administrator to your new one. With this method, no taxes are withheld and you will NOT have to pay any penalties. (Read Full)

401k Retirement Savings Inheritance
Each 401k plan has its own set of complex rules. For example, some 401k plans will allow you to store up your 401k inheritance treasure for years (without any withdrawals and any taxes being charged on them). However, other 401k plans will want you to withdraw this inheritance within a certain period of time, after which you may be assessed a penalty of 10% or more. If you inherit someone else's 401k, be sure to thoroughly read the Summary of the 401k Document and all its details to find out what tax rules apply to your instance of 401k inheritance. Usually, there are a special set of rules if the deceased 401k saver was your spouse and you are the beneficiary of your spouse's 401k retirement savings. (Read Full)

Quiz #4: Roth 401k FAQs Quiz
Sample Q:

1)Which of the following is the correct choice regarding pre-tax and after-tax 401k contributions:

Roth IRA Rules - Roth IRA Retirement Planning
In this section, we look at the general rules that apply to both the traditional IRAs and the Roth IRA.
1) Restricted Transactions
You are not allowed to perform all of these following transactions under both the traditional and the Roth IRA.

• Borrowing funds from your IRA to pay off debt or loans
• Buying personal property with funds from your IRA
• Selling your personal property to an IRA (Read Full)

IRA (Individual Retirement Account) Rollover v/s IRA Transfers - IRA Rollover Rules
1) From One IRA to Another All retirement savings from the old IRA account are withdrawn by the retiree and the IRA Custodian writes a check to the retiree. The retiree then stores this money in his checking account for a maximum of 60 days. Within these 60 days, the retiree must rollover these savings to a new IRA account with a new broker such as Charles Schwab. This type of a rollover is limited to once every 12 months... (Read Full)

US Department of Labor Proposes Safe Harbor Rule to Encourage 401k Retirement Saving
The US Department of Labor unveiled a Safe Harbor Plan for corporations that automatically enroll their employees and workforce in 401k retirement plans. US Department of Labor Secretary, Elaine Chao, quotes "Too many workers, some overwhelmed by investment choices or paperwork, are leaving retirement money on the table by not signing up for their employers' defined contribution plan. This regulation would boost retirement savings by establishing default investments for these workers that are appropriate for long-term savings" (Read Full)

Quiz #3: Quiz on Saver's Credit: 401k Contributions Tax Credit for Low Income & Middle Income Consumers
Sample Q:
The highest tax credit that you can get on your 401k contributions is:

Blackout Period - 401k Retirement Glossary
A Blackout Period (limited or denied access) in terms of 401k retirement plans is an average of 60 days of the year during which plan participants are NOT allowed to modify the structure and covenants of their 401k retirement plans. For example, if the job of 401k administrator is being moved from one bank to another, a blackout period may occur to easily facilitate this move. (Read Full)

Withdrawing Penalty Free Distributions from your IRA (Individual Retirement Account)
The annual pre-tax or after-tax contributions you make towards a 401k retirement savings plan is meant to help you have sufficient income upon your retirement. However, there might be immediate times when you desperately need the money, examples include huge medical bills, death of spouse, disability, etc. If you withdraw money from your IRA account before the age of 59 and 1/2, you will be subject to a 10% early-distribution penalty as well as local and federal state taxes. (Read Full)

What is a 403b Plan? 403b Distributions & Contributions? Advantages & Disadvantages of 403b Plans
403b plans are retirement savings plans that allow you to make annual dollar contributions (just like 401k plans) and let them grow tax-deferred up until you withdraw them (upon retirement). Note the fact that 403b plans allow for pre-tax contributions (that is from your Gross Wage). (Read Full)

Sticking with your 401k Retirement Account Pays Off Long Term, study reveals
A study carried out by 2 Washington DC state organizations revealed that 401k participants who contributed payments towards their employer sponsored 401k retirement plans over the past 7 years have seen growth rates of over 50%. This is inspite of the tech boom bust of 2000 and market declines in 2002.. (Read Full)

Quiz #2: Quiz on 401k Loans - Can You Withdraw Money from your 401k Account as a Loan?
Sample Q:
You can borrow upto ___% of your entire retirement savings from a 401k plan in the form of a loan:

Saver's Credit: 401k Contributions Tax Credit for Low Income & Middle Income Consumers
If you fall in the category of low income savers, you may be eligible for a tax credit of $1000 on contributions made to 401k retirement plans, 403b plans, 457 government plans, IRA (Individual Retirement Account) or Roth IRA. This new legislation called the "Saver's Credit" went into effect in 2002 (thanks to the Economic Growth and Tax Relief Reconciliation Act of 2001) and is a reduction to your Gross Income (so that you have a less taxable income). It cannot be used as a $1000 refund for extra cash flow... (Read Full)

401k Investment Options
In general, there are 8 investment options available to most 401k plan retirees. You can diversify your portfolio into high risk and low risk investments and this will determine your total nest egg upon retirement. If you want a safe secured income upon retirement, we suggest investing in low risk securities.

1) Stock Mutual Funds: Stock mutual funds are invested in various stocks traded in the public. The value of stock mutual funds fluctuates highly from day to day but over a longer term, they are known to have better returns than some of the other above investments example US Treasury Bills, Government Bonds, etc. (Read Full)

Effects of the The Economic Growth and Tax Relief Reconciliation Act of 2001 on 401k Plan Participants
Effects of the The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) brings about new reforms that allows 401k plan participants to be able to save more for retirement now. From 2004, the maximum 401k contribution limit increases to $13,000 and rises to $15,000 by the year 2006. Furthermore, workers over the age of 59.5 are now allowed to make "catch-up" contributions of $3000 more in 2004, with this amount rising to $5000 in the year 2006... (Read Full)

Differences between 401k Pre-Tax Contributions & After-Tax Contributions
Pre-tax contribution is the amount of deductions you make from your monthly gross wage into your 401k retirement savings account, BEFORE taxes have been deducted. By making pre-tax contributions, you are lowering your current taxable income. For example, if you earn $10,000 per month, and contribute 10% of it towards a 401k retirement savings account, then your current taxable income is lowered to 90% x $10,000 = $9000. Instead of paying taxes on the $10,000, you will be paying taxes only on the $9000! (Read Full)

Frequently Asked Roth 401k Questions
1) What's the difference between a Roth 401k and traditional 401k pre-tax deferral plan?
In a traditional 401k plan, annual contributions are made with pre-tax dollars (meaning BEFORE taxes have been paid). On the other hand, a Roth 401k plan requires annual contributions to be made with AFTER-tax dollars (after taxes have been paid). For example, if you earn $50,00 a year: (Read Full)

401k Retirement Plans for Self Employed (Solo) Persons
If you own a small business where you are the employee or you and your spouse manage the business, then a solo 401k self employed retirement plan is a good retirement choice. Thanks to the Tax Relief Act of 2001, owners of self employed or solo 401k plans have the following advantages:
1 ) 100% Contribution Choice: You can contribute however much you want per year.
2) Higher Contribution Limit: You can contribute more funds than any other 401k account e.g a Roth IRA, traditional 401k, etc. (Read Full)

Comparisons between Roth IRA, Roth 401k and Old Traditional 401k Retirement Plans
Effective January 1st, 2006, employers now have the ability to combine the retirement options provided by traditional 401k retirement plans and Roth IRA plans into one effective plan, called simply, the Roth 401k. The Roth 401k is essentially similar to the traditional 401k and Roth IRA plans but differs in some ways as well. Below, we have outlined the main similarities and differences between the three: (Read Full)

Common 401k Investing Mistakes - How to Avoid Them
You work very hard on your job and make good pay. You dedicate some of this pay for your retirement and can't afford to lose it right? Well here's some good tips on how to avoid some of the most common 401k retirement saving mistakes that could cost you your life savings:
1) Diversify Your Investments
You probably will hear this from every financial expert. If your employer offers one type of mutual funds to invest in, do NOT put all your money into it. Diversify your savings into multiple mutual funds that are yielding different returns. Do not put all your eggs into one basket! (Read Full)

Important Questions on 401k Catch Up Contributions
In the reforms brought about by the Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), a new concept called the 401k catch up contributions was introduced. 401k Catch Up contributions allow retirement participants over the age of 50 to contribute extra payments each year ($5000 in the year 2006). This move was done so as to encourage people to plan and start saving money for their retirement, because its only your money that will help you during retirement! (Read Full)