The contribution limits are increased over time with cost-of-living adjustments. 403(b) contribution limits are currently the same as 401(k) limits, and are adjusted for inflation at the same rate. As of 2016, if you are under age 50, you may contribute up to $18,000. If you’re over 50, you can also make a catch-up contribution of up to $6,000, for a total of $24,000 for the year. 403(b)s also allow an additional form a catch-up for employees who have been at the job for over 15 years and whose contributions in the past average out to less than $5,000 per year. These catch-ups are called Fifteen Year Cap Expansion Option or just service-based catch-ups. Continue reading...
Employer contributions to SIMPLEs are immediately vested to the employee. The employer’s contributions into SIMPLE IRAs do not have any vesting restrictions. In other words, the contribution belongs to you immediately after it has been made, notwithstanding standard IRS rules for withdrawals from retirement accounts. SIMPLEs do have some restrictions during the first two years, however, that are known as the ‘Two Year Rule.’ Continue reading...
Chapter 15 bankruptcy is a newer type of bankruptcy filing that has only been around since 2005. It allows foreign companies access to the US bankruptcy court system in certain circumstances. This is part of the US’s compliance with international trade laws. Part of the aim of bankruptcy law is to preserve employment and protect investment. In an increasingly globalized economy it is understandable that the US could offer hearings to corporations which straddle national borders but are not based in the US. Continue reading...
SIMPLE IRAs have the same withdrawal rules as Traditional IRAs, with one notable exception. SIMPLE IRA contributions and earnings may be withdrawn at any time, but there are certain penalties that apply. If you are under the age of 59½, you must pay a 10% penalty fee in addition to income taxes on your withdrawal. If the early withdrawal occurs within two years of receiving your first employer contribution, the 10% penalty is increased to 25%. Continue reading...
Generally SEPs can be set up and funded by the tax filing deadline. If an employer chooses to make an annual contribution into a SEP IRA on behalf of all of his employees, it must be made by the same due date as his Federal Income Taxes. In most cases, this is April15th, but if an extension has been filed, the SEP does not have to be set up until October 15th. Because SEPs do not require continuous annual contributions, and because contributions can be added after January 1, they are very flexible and attractive to small businesses. Employees are even able to make traditional IRA contributions as part of a SEP arrangement. Continue reading...
Distributions taken from a Roth during retirement are not subject any income taxes. Interestingly, the “cost basis” or contributions made to a Roth can be taken out at any time, including before age 59 ½, without tax or penalty. Contributions are recorded on IRS form 5498 and a copy is mailed to you, but you need to keep up with your contributions if you might want to tap into your Roth early. The earnings that accumulate must satisfy the 59 ½ requirement and the five year rule, or be used for first-time homebuyers expense, to avoid the 10% penalty and taxation. The five year rule says that the earnings in a Roth may be taxable if the Roth account is under 5 years old. Continue reading...
SEP IRAs do not have to be established until taxes are filed for the year, and it can be done quickly. SEP IRAs require very little paperwork or trouble to establish. One form will notify the IRS that SEP contributions are being made for the year, and the amount. The only other documentation needed is a plan document, which establishes and outlines the eligibility rules for a particular plan, but this document only has to be kept on file at the business, and does not have to be submitted to the IRS or any regulatory authority. Continue reading...
Bear markets are loosely defined as periods when markets experience declines in magnitude of 20% or more. More specifically, bear markets are a period in which a major index like the S&P 500, for example, declines by 20% or more, with this decline sustained for a period over two months or so. Consequently, many investors become “bearish” – they lose confidence in the market, sell off their securities they do not believe will recover soon, and sit on the sidelines. There have been 25 bear markets since 1929, for an average of one every 3.4 years. Continue reading...
Investors who were bearish on a stock may have chosen to short-sell shares in the hopes that they could cover at a lower price. Short selling is when a broker facilitates the actions of an investor who wishes to take on the risk of replacing sold shares of a particular stock because he or she believes the price will be lower when he or she replaces the inventory. The broker passes the proceeds of the sale (minus a fee) along to the investor who is taking the risk of replacing the shares, and charges the investor interest or fees as long as the shares are outstanding. Investors need to cover the short before prices go up and it results in a loss for them. Continue reading...
Individual 401(k)s will have the same withdrawal rules as regular 401(k)s. The withdrawal rules for a Self-Employed 401(k) are identical to the rules for a traditional 401(k). If you want to avoid a 10% early withdrawal penalty, you’ll need to keep the money in your account until you reach age 59½, but if you separate from service after 55 you may be able to make withdrawals penalty-free. If you really need the money early, certain exceptions for disability, medical expenses, 72(t) annuitized distributions, and plan loans can allow you to sidestep the penalty. Withdrawals for any other reason, including hardships, are still subject to the penalty. Continue reading...
403(b)s are essentially the same as 401(k)s but there are a few notable differences. A 403(b) is extremely similar to a 401(k); the main difference is the type of employer than can offer each. 403(b)s are offered by public educational institutions, non-profit hospitals, non-profit organizations, religious groups and some government organizations. Due to the negotiating powers of many of those institutions, and their non-profit status, the administrative fees are smaller and they are not subject to some of the administrative oversight imposed on 401(k)s. Most 403(b)s are not subject to ERISA, which means they don’t have to satisfy as many auditing and reporting requirements. Continue reading...
In general, this won’t even be an option for many. Cash balance plans do not permit partial withdrawals. If you have separated from service at the employer, you can take your entire vested amount with you. You can cash out your balance and pay income taxes on it, as well as a 10% IRS penalty if you’re younger than 59 ½. This penalty may also be avoided if you separated a from service after age 55; these rules are the same for 401(k)s and other qualified plans. Continue reading...
Usually such withdrawals will be in the form of income payments, but there may be other options. If the plan administrator allows it, you can make non-recurring (one-time) withdrawals from a pension fund. This is usually not allowed, however. The regular qualified plan distribution rules will apply as far as the IRS is concerned, and they may charge a 10% penalty if the withdrawals are taken before age 59½. After you retire, you’ll typically have two options: a fixed monthly payment for the rest of your life (also known as a Life Annuity), or a lump-sum payment. Continue reading...
A plus tick is a transaction which occurs at a price higher than the transaction before it, also called an uptick, but often used in relation to a zero plus tick, which is explained below. A plus tick is an indication that the security in question is not declining at a given moment in time. In other words, the most recent traded price of a security is higher than the price it traded at prior. The term ‘uptick’ refers to the same thing, but "plus tick" is used in reference to the first part of a zero plus tick event: an uptick occurs in which the price traded is higher than the previous price, and then a trade occurs in which the price remains the same. Continue reading...
Employees are not able to control investments in a Pension Fund, but you can control a few variables. You cannot direct investments in your pension. Since a pension is a type of Defined Benefit Plan provided by your employer, the company worries about the investments, and you will receive a fixed monthly payment that is calculated based on your age, salary, and number of years worked for the company. Continue reading...
Earnings season describes not one, but four times in a year, when corporations release their quarterly earnings reports. Investors look forward to this time because they are able to get an update about how the year is going, compared to projections. After each fiscal quarter ends, there are a few weeks in which companies file their quarterly reports with the SEC and announce their current earnings and sales numbers. Each of these periods is known as earnings season. Continue reading...
Most pensions will not allow in-service withdrawals but some will allow loans. While you are working for your employer, you typically may not withdraw money from your Defined Benefit Plan. The IRS permits plan loans if the plan administrator permits it. In-service withdrawals are possible after age 62, meaning money can get taken out before separation from service. If you leave your employer before retirement, the funds are usually kept in a Trust until you reach retirement age (or until a specified age at which you can start to receive the benefits). Continue reading...
An uptick is an incremental increase in the trading price of a security. Uptick is a slight increase in the trading price of a security. The word comes from the "ticker price" of a stock, which used to be printed out on ticker tape from a printer connected to telecommunication lines which reported updates in trading information throughout the day. Now tickers run electronically across the bottom of television screens and so on. Continue reading...
Markets are said to experience cycles of various length and magnitude. Cycles tend to be defined in retrospect and it is not always evident what part of a cycle the market is in. Cycles can be of various length and magnitude, with current cycles existing as minor subtexts of the larger cycles. In Elliott Wave Theory, for instance, cycles of various levels exist simultaneously, with the longer cycles exhibiting “self-similar” patterns to the shorter-term cycles, as in naturally occurring fractals in nature (since Elliott’s theory is that the market is a natural phenomenon, just like the breeding cycles of rabbits). Continue reading...
The total United States national debt is $19.3 trillion as of fiscal year (FY) 2016. Total debt is near what the U.S. produces in annual GDP, and a majority of our national debt is public debt — money owed to those who have Treasury obligations. The U.S. also owes a large amount of money to foreign countries (foreign debt), but a majority of U.S. debt is held domestically. As of June 2012, the three countries who hold the most of our national debt are: Continue reading...