Rolling your 401k: Contributory IRA vs. Rollover IRA
In an ideal world you would start your working career with a great company in your early 20s, steadily climb the corporate ladder, retire at age 65, and draw a sufficient income from your accumulated 401k account to live happily ever after.Unfortunately, that's not how the real world works. If you are like most people, you will change careers, or at least companies, several times. Each time, you'll be faced with the question of what to do with your accumulated 401k benefits.You will likely have a few choices: keep your 401k with your old employer (sometimes possible), roll the proceeds into your new employer's 401k plan, or put them directly into a self-directed IRA at a brokerage firm of your choice.Since leaving your 401k with your ex-employer has no benefits whatsoever and most employers will prefer you transfer out anyway, that leaves only the last two as viable options:1. Roll your 401k proceeds into the new employer's 401k plan of (if allowed)This is the most painless solution and the one that does not require much decision making. While this is certainly acceptable, there is a bigger picture.The ultimate goal of having a 401k plan is to provide you with a comfortable retirement.
To accomplish this you really need a wide variety of investment choices and the opportunity to move among them in response to market variations. Most 401ks are limited to maybe 15 mutual fund choices which rarely change, even if market behavior dictates they should. Additionally, the canned advice provided through plan sponsors is generally not terribly useful.The only benefit to this type of rollover is that if your plan has a loan provision, you'll be able to borrow funds easily.2. Roll your 401k proceeds into a self directed IRAThis is the preferable solution for most people, and with it you again have two choices: roll your 401k into a "Contributory" or a "Rollover" IRA. Contributory IRA: Once you roll your proceeds into this type of IRA, you may still contribute annually if you qualify (check with your accountant).
However, the 401k portion can no longer be rolled back into another 401k with a new employer, should you ever want to do that. So you eliminate the possibility of using the loan provision with those funds. While it is possible to borrow against an IRA, it's more limited than borrowing against an employer 401k. Check with your tax preparer for details.Rollover IRA: This type of IRA allows you the most flexibility. You may roll the proceeds back into a 401k plan if you want to utilize a loan provision.
However, for tax reasons you should not make annual contributions to this IRA. If making annual contributions becomes important to you, simply open another contributory IRA.Since Rollover IRAs are usually set up at a brokerage firm, you'll have access to their entire universe of mutual funds. With this type of IRA, you can also employ an independent investment advisor to manage the account for you. (Yes there is a cost for that, but an effective advisor will more than make up for that in greater returns than you would get without him or her.)Most of my clients have found that the investment results we've obtained with their personal IRAs were far superior to those yielded by their employer 401k plans or their personal investing efforts. This has been mainly due to a combination of better choices and a methodical approach to investing which has kept my clients in the market during good times and out of it altogether during severe declines.Bottom line: Rollover IRAs offer opportunities to maximize benefits and provide flexibility not usually available with employer 401k plans..
Behind The Curve?
BEHIND THE CURVEMarket index funds like Vanguard's famous S&P500 fund and the SPY "Spyder" on the AMEX caught on in the late 90's, right when the long bull market turned into a crazy bubble with a blowoff top in 2000.There are very good reasons to use index funds ? low expenses, the failure of most active managers to beat the indexes consistently and the statistical trend that says stocks return an average of 11% per annum over long periods of time. A cheap route to a "sure" return in a world of unreliable fund managers and individual investors who couldn't time the market right if they had an Olympic chronometer and three judges - looks good, huh?Just invest, forget about it and spend your time thinking about a comfy retirement. The S&P500 returned an annualized 17% per year from mid-1982 to mid-2000. Easy money with only a couple of dips on the way.Except ? what happens to your portfolio if the market indexes go nowhere for years on end?The statistics say that over the decades, the...
Behind The Curve?
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Gershwin Heir's East Coast Premier of "Gershwin Sings Gershwin"
BOSTON, MA (ContentDesk) June 21, 2006 -- Alexis Gershwin has been singing the timeless classics of her uncles since she can remember, and while her shows have always incorporated her familys musical legacy, her newest creation, Gershwin Sings Gershwin, is a tribute of the most familial kind.
Gershwin Sings Gershwin starring Alexis Gershwin is a personal tribute to her uncles George and Ira Gershwin and celebrates their lives and their music.
The show features the Gershwin Singers and Orchestra and will premier on the East Coast at Stoneham Theatre July 27-30.
Stoneham Theatre is located at 395 Main Street in Stoneham, Massachusetts.???Ms. Gershwin has teamed with acclaimed musical director, Steven Applegate, producer/musical director for Shirley Jones, Lorna Luft, Maureen McGovern and many others.
The show includes all new arrangements of more than twenty Gershwin favorites.
Songs like A Foggy Day, Isnt it a Pity, They Cant Take...
Ira > Gershwin Heir's East Coast Premier of "Gershwin Sings Gershwin"
Control Health Care Costs and Save Taxes?
One of the most prominent issues being discussed in the media is the rising cost of health insurance. Employees are being asked to contribute an ever increasing amount of their pay to group insurance premiums. Employers face double digit increases health insurance premiums while dealing with customers who are not accepting price increases. Self?employed individuals and those who must purchase individual health insurance are feeling this same bite out of their own pocket. These are in addition to the cost concerns of medications and prescriptions.Health Savings Accounts may be a way to cut health insurance premiums, take control of health care costs and save money on taxes.Health Savings Accounts (HSA) were part of the Medicare Act Congress passed in December, 2003.
They are designed to help take control of health care expenses with a tax-favored savings account and a high deductible health insurance plan. Money in the savings account helps pay the deductible and health expenses...
Control Health Care Costs and Save Taxes?
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Don’t Blame the HSA
Lake Geneva, WI (ContentDesk)February 23, 2006--Long before there were Health Savings Accounts (HSAs), people were buying High Deductible Health Plans (HDHPs) to save on their health insurance premiums. High income people would buy the HDHP because they saved money up front and if they got sick they could afford to pay out the higher deductible. Low income people bought the HDHP because that was what they could afford to make sure they were covered with health insurance. Many Americans are now discovering they can refinance their health insurance to higher deductible insurance plans to save money on their premiums; offset the deductible with tax-deductible savings, and the benefits of an HSA. Whether youre a Republican or Democrat, any time you are getting a tax deduction to save money (in the case of the HSA for your health care expenses) it is a win, win situation.
Everyday there are so- called think tanks with reports why HSAs are bad. The California Insurance Commissioner...
Don’t Blame the HSA
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Funding Your Retirement: The 401K and 403B Way
Saving for your retirement doesn't have to be a nightmare as long as you are aware of your options. For now, we're focusing on 401K and 403B retirement plans. These two plans are essentially the same except that for-profit companies use 401Ks and non-profit companies, such as the government, use 403Bs.An employee contributes to a 401K plan with pretax salary. This means that this account appreciates without taxation until you retire or leave the company. So, 401K contributions are not included in your reported income.In essence, you receive an immediate tax deduction for your contribution.Many employees offer an automatic payroll deduction, so there isn't any extra effort involved for you.
Matching contributions or partial matching contributions are other incentives offered by employers. For instance, my employer matches every one of my dollars with a quarter. Sounds like small potatoes, but remember the beauty of compound interest.Of course, there are rules and regulations. You...
Funding Your Retirement: The 401K and 403B Way
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Budgeting For Prosperity
Budgeting For ProsperitySeven Steps to Follow To Achieve Financial FreedomWithout a sound financial plan, a business is doomed to failure - managing your personal finances is no different. A sound personal financial plan is crucial to both your financial and emotional well being.We have prepared a simple and easy to use budgeting process for you. This budgeting process will show you how to thoroughly develop a financial plan and lead you on the road to financial freedom.Make a complete list of your monthly income.The budgeting process always starts with a monthly income; one's income will show how much one has to spend each month.When developing your monthly income, make certain to include take home pay from your job, any bonuses that you receive, dividends and interest income from investments, tax refunds from the government, gifts from other family members, and any other type of income you may require during the particular month. If you would like a comprehensive income budgeting tool,...
Budgeting For Prosperity
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Did You Mount Your Cold Weather Tires Yet?
(NC)?Every year there is this dilemma: should you mount winter tires or should you stay with your all season tires? We always question is it going to snow a lot or is it just going to be cold and will our all- season tires be good enough. Well here is some news for you, winter tires are not only designed to work better in snow, slush and ice but also when it simply gets cold.Bruce Bridgman, National Marketing Manager Toyo Tire Canada Inc. says that among other things the tire's tread rubber needs...
cooper tires Ira
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Generators
Generators are used for the generation of electric power. There are basically two types of generators: standby generators and portable generators. Generators ensure that most of the essential appliances can be run whenever there is a power outage. Standby generators provide backup power in homes and offices and are permanently installed outside the house or office building. They are plugged into the electric circuits or home wiring.
Standby generators can automatically detect disruption...
power generator Ira Rolling your 401k: Contributory IRA vs. Rollover IRA Generators
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