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What are the 403(b) Contribution Limits?

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...

What is a SIMPLE IRA?

SIMPLE IRAs are like safe-harbor 401(k)s for small businesses. A SIMPLE IRA is a type of retirement plan for small businesses. A business can only start a SIMPLE IRA if they have fewer than 100 employees who earned $5,000 or more in compensation for the year. As the name implies, a SIMPLE IRA provides an easier method for making contributions to both employees’ and the employers’ retirement accounts. Employees may choose to make salary reduction contributions to their SIMPLE IRA while employers are required to make either matching or non-elective contributions. Continue reading...

Can I Rollover My 401(k) into an IRA?

Yes, in fact this is what most people do. This is a very popular choice. Because Traditional IRAs receive the same kind of tax treatment as 401(k)s, with pretax contributions, tax-deferred growth, and taxable withdrawals, the IRS allows you to move funds over without creating a taxable event. Of course, you need to have an IRA account to do so, but it can be as easy as opening an account online and telling the custodian company the account information for your old 401(k). Continue reading...

What are the Withdrawal Rules for My Keogh Plan?

What are the Withdrawal Rules for My Keogh Plan?

Withdrawal rules for Keoghs will be essentially the same as rules for IRAs and 401(k)s. Once you are age 59½, you may begin to make penalty-free withdrawals and only pay income taxes on the amount you withdraw, similar to a traditional IRA. If you decide to withdraw money before age 59½, you may have to pay a 10% penalty fee in addition to income taxes on the amount of your withdrawal. Of course, there are exceptions. One exception for most qualified plans is for employees who separate from service at or after age 55: this is the early retirement exception, and the 10% penalty will not apply. Keoghs will technically use the early withdrawal rules for 401(k)s and not IRAs, which differ slightly. Continue reading...

What are Required Minimum Distributions?

RMDs are withdrawals that are mandatory for an individual to take from an IRA or 401(k) after the person has reached 70 ½. The government created laws that help and encourage people to save for their retirement by deferring taxes on the growth on certain qualified retirement investment accounts. On Traditional IRAs and 401(k) accounts, they are only waiting to get the tax revenue from distributions/withdrawals that are fully taxable as income. Continue reading...

How Does a 401(k) Work?

You may know that a 401(k) allows you to make payroll-deducted contributions to a retirement account before taxes are taken out, but how does it work? Employees can either become participants in a 401(k) by voluntary enrollment or by automatic enrollment with the ability to opt-out. Contributions go in before taxes are taken out, and this can reduce an individual’s taxable income or even income bracket for the year. Continue reading...

How Can I Establish a Keogh Plan?

A Keogh plan will primarily need a plan document and a way to invest. A Keogh plan can be established by any self-employed individual of a sole proprietorship, partnership, and Limited Liability Company (LLC). A plan document must be put together by the sponsor, or the standard plan document from a prototype plan at a broker-dealer or trustee institution can be used. It is not necessary to submit the document to the IRS, but if you have any employees, it is required that you use this document and any other printed information necessary to fully explain and disclose their rights in regards to the plan. Continue reading...

What are Hardship Withdrawals from my 401(k)?

The IRS Code allows for certain penalty-free withdrawals, and gives the plan administrator the freedom to define certain other hardship exemptions. Certain kinds of retirement plan withdrawals are excluded from the 10% early withdrawal penalty tax. These include medical expenses which exceed 7.5% or 10% of Adjusted Gross Income, distributions to the family members of active duty military personnel who have been called to active duty, and distributions needed if the participant becomes disabled. Continue reading...

What is a Keogh plan?

Keogh plans are any type of qualified plan at a sole proprietorship or partnership. Keogh plans come in various forms, and this is because they are actually quite a broad category. IRS Publication 560 (found here) divides workplace retirement plans into SIMPLE IRAs, SEP IRAs, and Qualified Plans. This last category, Qualified Plans, includes profit-sharing plans, 401(k)s, 403(b)s, money purchase plans, and defined benefit plans such as pensions and salary continuation plans. Continue reading...

Understanding 401(k) Reports: A Step-by-Step Guide to Utilizing Them Effectively

Understanding 401(k) Reports: A Step-by-Step Guide to Utilizing Them Effectively

The key difference between Portfolio Wizards and 401(k) Portfolios is that the latter contains reports. These reports are detailed descriptions of the performance of the existing portfolio. 401(k) Portfolios allow you to purchase existing portfolios, while the former can be used to create new portfolios or add existing ones to your files. The reports are crucial to the understanding of the way that the portfolios are chosen and ranked because they contain a page with a layout of the Diversification Analysis. Continue reading...

What are My 401(k) Investment Options?

What are My 401(k) Investment Options?

401(k)s can offer many options for investment, but they generally only offer 15 or fewer in each plan. Investment options in your 401(k) are completely determined by the agreement between your employer and the custodian. Therefore, you’re limited to the investment instruments selected for you. The majority of 401(k) plans will offer fewer than 15 investment options, which are generally part of prepackaged 401(k) products from major broker-dealers or mutual fund companies. Large companies will frequently also offer stock of their company within the 401(k) plan architecture. Continue reading...

What are the Withdrawal Rules From My Self-Employed 401(k)?

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...

Can I Make Early Withdrawals From My 401(k)?

Can I Make Early Withdrawals From My 401(k)?

It depends on the 401(k) plan, but in general the answer would be “yes,” if you’re willing to pay the penalty. It is generally a pretty bad idea to withdraw 401(k) money early. If you withdraw the money before age 59½, the money will be subject to a 10% penalty in addition to regular income taxes. There are exemptions from the penalty, but there fewer exemptions in a 401(k) than an IRA. In an IRA the penalty can be waived for first-time homebuyer’s expenses up to $10,000, or even for educational expenses, but in a 401(k) the 10% penalty will still be levied if withdrawals are made for these reasons — and a plan may not even permit such withdrawals. Continue reading...

How to Use Daily Portfolio Wizards for Short-Term and Long-Term Investment

How to Use Daily Portfolio Wizards for Short-Term and Long-Term Investment

The easiest way to start investing is with Tickeron's Portfolio Wizards. There are several ways of using this tool. Firstly, if you know how much money you have, our Wizard can build a diversified portfolio just in a few clicks. Secondly, if you already have a portfolio, our Wizard can verify if your portfolio is well diversified. Finally, if you have a portfolio in a 401(k) plan, we can provide you with the full diversification analysis of your company's plan menu. All you need to do is to follow the prompts, and within seconds, you will get all the answers. Continue reading...

What is the Difference Between a Thrift Savings Plan and Other Retirement Plans?

What is the Difference Between a Thrift Savings Plan and Other Retirement Plans?

The main difference is that the TSP is only for Federal employees. A Thrift Savings Plan is essentially a 401(k) for employees of the federal government. It functions in the same ways and is subject to the same limitations. The contribution limits and catch-up limits are the same, as well as the employer contribution limit. The plan actually has lower fees than most 401(k)s, so that’s one difference. The investment options are fairly limited, but not much more than regular 401(k)s. There are basically 5 index funds to choose from and then a series of target-date funds that blend the index funds. Continue reading...

What is Income?

Income is a stream, series, or lump sum of cash or cash equivalents that is paid to an individual or entity based on work performed, goods sold, ownership rights, or by being a creditor to whom interest is paid. It is received when a net result is positive, and is sometimes referred to as the “bottom line.” Income can be viewed from a itemized, current perspective or as a balance sheet item for an entire accounting period, such as a year. It also might be discussed as a gross (pre-tax) or net (post-tax) amount. Continue reading...

What is an Earnings Call?

An earnings call is when a company opens up a teleconference line or webcast that the public can join to hear the company management talk about how the company performed recently, their plans for the future, and the market forces that exist in the current environment. Most publicly traded companies today have adopted this practice. Earnings calls may take place once a year or during earnings seasons after the quarterly earnings have been announced in a press release. Companies often have one executive whose job is to interface with the shareholders in such settings, but various executives are often given a chance to present some thoughts. Continue reading...

What is Abandoned Property?

Most people think of an abandoned car or even a house when abandoned property is mentioned, but it also applies to investment accounts. If physical property such as a car is left for a long enough time in a public space or privately owned space such as a storage building, the property can be deemed abandoned and the person who discovers it can become the new owner. Through a process called escheatment, investment accounts, savings accounts, bank CDs, and employee 401(k) accounts can all become assets of the state if they are determined to be abandoned. Continue reading...

When Do I Have to Withdraw Money from My Roth IRA?

Roth IRAs are not subject to RMDs, which means you aren’t forced to make withdrawals. In most retirement accounts, Required Minimum Distributions will be mandatory once the account holder turns 70 ½ years old. This does not apply to Roth IRAs. They are basically the only tax-advantaged retirement account that does not have to take RMDs. This is partially because the IRS wants to make sure they get some of the taxes out of the money that was invested on a pretax basis. Continue reading...

Where do I Get Started in Saving for Retirement?

Your employer is usually the best place to start, but you can also open your own retirement account (an IRA or Roth IRA, for instance) at your bank or a major custodian (like Charles Schwab or Fidelity). In some cases, there are income limits for contributing to a retirement account, which a financial advisor can discuss with you. A smart idea is to set up an automatic contribution to your retirement account, such as 10% of your monthly income. That way you’re automatically saving, and saving regularly. Continue reading...