Category Archives: Retirement

Figuring Out What To Do With Your 401k

Posted by on September 29, 2010 Comments Off

Perhaps the time has come when you are ready to leave your employer.  You are embarking on a new adventure with a new company or perhaps starting your own business.  It is an exciting and thrilling time in your life and one that you want to get started on right away.  Before you jump right in to this new adventure you want to make sure you tie up any lose ends with your employer. It is not just about saying goodbye to former co-workers or cleaning up your work desk. It’s about getting your financial things taken care of and that means your retirement funds.

Figuring out what to do with your retirement investments can seem daunting and even confusing, but you really only have 4 options.  Perform a 401k rollover into a new employers 401k plan, a 401k rollover to IRA, leave it with your previous employer or cash it out. Now, if you are starting your own business venture then you clearly do not have a new employer to rollover to and so you will either send it to an IRA, leave it where it is or cash it out.  Cashing out is the last thing you want to do unless you are in dire need of money.  And by dire i mean an emergency. Investigate the 401k rollover to IRA option to see if this makes sense for you.

The earlier you get started on figuring out what you are going to do with your retirement funds the better.  Since this is your choice you have some time to think about it and do your homework. Make the best educated decision for your situation.  Especially if you are starting your own business. That alone may very well require  that you sit down with a financial advisor and get a more experienced opinion.  You will have a lot more at risk. So whatever you choose, choose wisely.

Roth IRAs and 401ks

Posted by on September 16, 2010 Comments Off

A Roth IRA and a Roth 401k are to distinct retirement plans each with their own unique characteristics that are ideal channels for individuals to use in order to start preparing for their eventual retirement. The earlier you can prepare for your retirement, the better it would be. Understanding the difference between a Roth IRA vs 401k is an excellent first step to take. Getting the basic facts about Roth 401k and IRA qualifications as well as Roth 401k and Roth IRA withdrawal rules will help you make an informative choice as to which of the two will be the best plan for you.

Roth IRA and Roth 401k contributions are counted as post tax money. Roth 401k and Roth IRA withdrawal rules have stipulations that can enable tax free and penalty free withdrawals provided requirement for a qualified disbursement are met. Major differences between a Roth IRA vs 401k are very distinctive. A Roth 401k has no set income limits enabling anybody to contribute to a Roth 401k regardless of what income bracket fall on. In comparison, a Roth IRA inhibits individuals from a higher income bracket to contribute to a Roth IRA. In a Roth IRA, only single filers with a gross income of up to $105,000 only can fully to a Roth IRA and partial contributions if their income is more than $105,000 but only up to $120,000. Forced distribution stipulations are another major distinction with a Roth 401k and a Roth IRA. A Roth 401k requires an individual to start withdrawing their earnings as soon as they reach the age of 70 1/2 years old. A Roth IRA on the other hand has none of these stipulation. Individuals can decide on not withdrawing their earnings and just keep them in the IRA until their death and bequeath it to their heirs as part of their estate.

Take Your 401k With You When You Quit

Posted by on September 8, 2010 Comments Off

Leaving your old employer for a new job is an extremely exciting moment in your life. It is one filled with meeting new people, gaining new knowledge and experiences and all the potential that a new career can offer.  Before you are done with your old job it is crucial that you tie up any lose ends that you have and that includes making sure your retirement funds are taken care of by performing a rollover.

A 401k rollover is what you do with the money in your current account and you transfer it into a new account. This account could be with your new employer if they allow such a transfer, or it could also be with another financial institution that handles retirement plans such as IRA’s.  The only option you do not want to partake in is cashing out your current 401k because you will get a nice hefty tax bill from Uncle Sam and you will be hit with penalties.  It is like throwing money away, and a lot of it

When you are taking care of the rollover process you will also want to make sure you ask about any loans against your 401k, should you have them.  You need to ask what the process is since you are leaving your employer. Are there any penalties? Do you have to pay it back in full before the transfer?  Little things like this can come back to haunt you later on as they are usually often forgot about.

It is critical that you follow all the steps when it comes your rollover 401k.  The only true advocate you have for your money is you and so you need to follow the process all the way through.  Make phone calls if necessary to get updates or ask questions if you are confused.  Being on top of this now will be beneficial to you down the road.