Find Out Now If The New Roth 401(k) or 403(b) Is An Option For You
Woburn, MA (ContentDesk) October 26, 2005 -- Employers who offer 401(k) or 403(b) plans can start to offer their employees a Roth version of their plans on January 1, 2006. So, now's the time to ask your employer's benefits department whether they have started the process of amending their plan documents.
Don't be surprised if your employer balks, however, since Roth 401(k) s are scheduled to sunset on December 31, 2010 - meaning you'll have only five years to contribute to this type of account, unless a future tax bill extends their shelf life. A Traditional Salary Deferral Plan Versus A Roth
While contributions made to your current 401(k) or 403(b) plan reduce your taxable earnings, you will be taxed on money withdrawn from these retirement savings accounts eventually. With a Roth account, you forgo a tax savings today, but the money invested within the account grows tax-free - provided you're at least 59 1/2 and the account has been open for at least five years before any money is withdrawn, said Andrew Schwartz, founder of the MDTAXES Network, an affiliation of CPAs throughout the country that specializes in tax planning and preparation for healthcare professionals.
Let's say your Roth 401(k) account is worth $50,000 when you retire. You can withdraw the full $50,000 from that account and not pay a dime in income taxes. In the past, tax planning was easy.
"Do what you can to save taxes today" was the motto of the times.
The government, by always tinkering with the tax rules, gave credence to this philosophy.
Keep in mind that these Roth accounts contradict this philosophy since they force you to forgo a tax savings today.Should You Contribute To A Roth 401k or 403b Account?If you trust the government not to substantially change the Roth rules between now and when you retire, consider going with the Roth if:-You're relatively young and plan to keep the money invested for a long time-You're in a low tax bracket today, or feel that tax rates will be higher in the future-You've always wanted to contribute to a Roth IRA, but your income has consistently been too high for you to put money into one-You want your heirs to keep as much of the money they inherit from you as possible, since they won't owe income taxes on distributions received from Roth accounts.
(However, the amount they inherit from you might be less since you've paid higher taxes in years you contributed to a Roth 401(k).)-You don't rely on the tax savings realized on your current contributions to your 401(k) or 403(b) account to meet your household budget.How Much You Can ContributeFor 2006, you can elect to contribute a total of $15,000 into a 401(k) or 403(b) account through salary deferrals.
Anyone 50 or older by the end of the year can contribute an extra $5,000.
If your employer offers a Roth, you'll allocate your salary deferral between your Roth and non-Roth accounts.
Even so, any matching contributions made by your employer go into a non-Roth account.Amounts contributed to a Roth account at work don't limit the amount you can contribute into your own Roth IRA.
For 2006, you and your spouse can each contribute up to $4,000 ($5,000 if 50 or older) into a Roth IRA.
Eligibility phases out for single individuals earning between $95,000 and $110,000 and for married couples earning between $150,000 and $160,000.More Roth RulesContributions made into a Roth account must be segregated from your non-Roth money.
Elections to contribute to a Roth are irrevocable, and money can't be transferred between Roth and non-Roth accounts.
If you change jobs, you'll roll the money from your Roth account into your new employer's Roth 401(k), or into a Roth IRA. Don't worry too much about this decision.
As long as you take full advantage of the 401k or 403b plan provided by your employer, you've already made the right choice, summarized Andrew Schwartz.Andrew D. Schwartz, CPA is the editor and a major contributor to www.MDTAXES.com, a website that provides income tax and financial planning information geared towards healthcare professionals.
Yahoo! Internet Life magazine chose MDTAXES.com as one of the seven essential sites for the savvy do-it-yourself taxpayer. Schwartz has also appeared on CNBC's Money Club. He is available for interviews. Contacting one of the MDTAXES CPAs will help ensure that you minimize the taxes you pay on your professional and self-employed earnings..
Entrust Administration, Inc. Launches New Web Site Bringing Truly Self Directed Plans? Closer to Home
In addition to its wealth of educational material, www.iraplus.com offers the ability to select and open an account with one of Entrust's nationwide local offices. Opening an account could not be simpler. All the necessary forms are available online together with detailed, yet easy-to-follow instructions. And both customers and non-customers may access the local and national event calendars, newsletters and questions and answer board."As we continue to grow the website allows us to continually share our resources, experience and expertise with an ever expanding audience of smart investors who want to take control of their investments," commented Hubert Bromma, President and CEO of Entrust.
Lisa Moren, Marketing Director for Entrust added,
"The expansion of our CE courses for real estate professionals, CPA and CFPs has allowed us to educate the industry in the use of Entrusts World of Choices?.
"Visitors also...
Entrust Administration, Inc. Launches New Web Site Bringing Truly Self Directed Plans? Closer to Home
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The Road to Financial Freedom
The Road to Financial Freedom
By: Chris Cooper
http://www.credit-yourself.com
The road to financial freedom is a lot shorter than
you may think. For those of us who did not start
our lives wealthy because of our family, we only have 46 to 49 years of income producing ? more if you want to work into your "retirement" years.
During that time, we must complete our education or training, get a job or open a business, while meeting the many demands on what income we have left after taxes.
We have to provide for food and shelter, clothes and transportation, child rearing expenses, college tuition, vacations, Christmas presents, insurance premiums and more. The list never seems to end.
How is it that some people can retire at age 50 in
spite of all this while others will never retire at
all. If you read the article,
Get Rich Slowly - http://www.credit-yourself.com...
Ira > The Road to Financial Freedom
Writing the Chapters of Your Life: Surprising Insights Using This Special Journaling Technique
You have permission to publish this article electronically or in print, free of charge, as long as the bylines are included and the resource box is left unchanged. A courtesy copy of your publication would be appreciated. Writing the Chapters of Your Life: Surprising Insights Using This Special Journaling TechniqueCopyright 2004 Journal Genie, The Website That Talks Backhttp://www.journalgenie.comList-making is a favorite journaling technique and is often used to quickly jot down a numbered record on topics like "my beliefs," "my pet peeves," "the things I hate about myself," or "my strengths." However, there's a special type of list technique that moves beyond a simple itemization and into the realm of significant self-awareness. This special technijque has several names, including table-of-contents, life chapters, and stepping-stones, the latter term used by journaling expert, Ira Progoff. Using this technique the writer lists their most important life events, as though they were chapter...
Writing the Chapters of Your Life: Surprising Insights Using This Special Journaling Technique
Ira > Writing the Chapters of Your Life: Surprising Insights Using This Special Journaling Technique
Roth IRA Contributions
The Roth IRA, or the individual retirement arrangement, is an ideal way to save for the retirement years. An individual can open his own IRA and contribute funds to it. What an individual contributes to the Roth IRA is termed as the compensation income. If you are employed, then the compensation income is the paycheck you get in lieu of your services. Compensation income can also be the income you get from being self-employed, or what you get from an alimony settlement.
There is a limit to the amount which a person can contribute.
The Contribution cannot be more than $4,000 per financial year, or 100% of your earned income, whichever is less. To contribute to the Roth IRA, you need to have taxable income, and also the adjusted gross income should be less than $110,000 individually, $160,000 if you are married and file a joint return, and $100,000 if you are married but file separate returns. Also, the amount you contribute to the Roth IRA will be reduced by the Contributions...
Roth IRA Contributions
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The Road to Financial Freedom
The Road to Financial Freedom
By: Chris Cooper
http://www.credit-yourself.com
The road to financial freedom is a lot shorter than
you may think. For those of us who did not start
our lives wealthy because of our family, we only have 46 to 49 years of income producing ? more if you want to work into your "retirement" years.
During that time, we must complete our education or training, get a job or open a business, while meeting the many demands on what income we have left after taxes.
We have to provide for food and shelter, clothes and transportation, child rearing expenses, college tuition, vacations, Christmas presents, insurance premiums and more. The list never seems to end.
How is it that some people can retire at age 50 in
spite of all this while others will never retire at
all. If you read the article,
Get Rich Slowly - http://www.credit-yourself.com...
Ira > The Road to Financial Freedom
Consumer Directed Health Plans
Most of you have heard about "consumer directed health plans". The Bush administration has been a strong supporter of this concept as a way to get a handle on soaring healthcare costs. The recent inaugeration of Mr. Bush signals that consumer directed health plans will increasingly make up a larger percentage of group medical plans over the next several years. In the past, consumer directed plan designs have taken on many forms: Medical Savings Accounts (MSAs), Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs).Many experts consider HRAs and HSAs to be the first generation of viable consumer directed health care products.
HRAs are typically paired with a high-deductible health plan and are employer-funded Section 105 defined contribution plans. HSAs are the latest version of consumer directed health care plans. The core components of HSAs include a high deductible insurance product and a cash spending account. HSAs combine...
Consumer Directed Health Plans
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