Which is Better for Me – a Roth or Regular 401(k)?
Some 401(k)s give participants the ability to make after-tax contributions, which raises the question of which fits better into a person’s retirement plan. One advantage to Roth 401(k)s is that they do not have income limits which may have barred certain high earners from contributing to a Roth IRA in the past. Down the road in retirement, it may be advantageous for someone with significant savings to be able to take some withdrawals that do not increase his or her income tax bracket. Continue reading...
What is an Alternative Trading System (ATS)?
An ATS is a platform separate from an exchange where securities are traded. ATSs provide marketplaces for buyers and sellers to transact in securities, much like a stock exchange. However, they are not available to the entire investment public, and they do not necessarily provide public information on the best prices available to traders within their system. They also do not set rules governing the conduct of subscribers and they perform no self-regulation, while exchanges perform all of these functions. Continue reading...
What are Household Expenses?
Household expenses are sometimes also called a family budget. In some cases this can be limited to items purchased such as food and clothing, and services paid for such as utility bills, which only have to do with the livability of the home and the health of the family. This can be extended to included all out of pocket expenses for a family, from health insurance to school tuition. Household expenses are things that people feel that they must pay for to maintain their standard of living, for themselves and their family. You may not have to pay for natural gas to get heat and hot water, but you most likely do, and this is a household expense. The same goes for food and other necessities. Continue reading...
What is a Mortgagor?
The mortgagor is the borrower in a mortgagor/mortgagee relationship, where the mortgagee is the lending institution that makes the mortgage loan. Mortgages are used to purchase real property, usually single family homes. The purchase of a home with a mortgage and the payments on the mortgage are one of the largest financial decisions or obligations that a mortgagor will ever make. If a mortgagor is delinquent on payments, he or she might be categorized as a home debtor, and the loan would be subject to foreclosure. If there is a foreclosure, the bank or lender will reposes the house, evict the former owner, and sell the house as quickly as possible, sometimes through an auction. Continue reading...
What is Publication 504, Divorced and Separated individuals?
IRS Link to Publication — Found Here Divorce can be a hard thing on a personal level, and the tax returns can become more difficult to sort through as well. Publication 504 walks through the various choices available to those who are divorced or separated and who may need to adjust how their dependents are claimed, how property is divided up or sold, and who pays the taxes due at the time of divorce. Publication 504 gives detailed instructions concerning how to correctly report and file the proceeds of divorce. Continue reading...
What is IRS Publication 505, Tax Withholding and Estimated Tax?
IRS Link to Publication — Found Here This IRS guide gives taxpayers and businesses an idea of how to calculate the appropriate amount of withholding to do and how to continually estimate tax rate on an ongoing basis for an entire year. It is about 60 pages long and touches on many issues related to tax withholding. Tax withholding applies to payroll needs, self-employed reporting, as well as some retirement planning applications, among other things. Continue reading...
What is Inflation?
Inflation is the increase in the cost of goods and the decrease in the buying power of a denomination of currency. Inflation is measured in a few ways, and one is by the cost of a broad basket of consumer goods. Increases year to year are reflected as the rate of the Consumer Price Index (CPI), but be mindful that there are other indexes. Inflation is not only the effect of the cost of goods rising, but of the actual buying power of a currency decreasing. Continue reading...
Can I Take a Loan From My Pension Plan?
Generally this won’t be an option that your plan allows, but the IRS has approved it if the employer wants to. Generally speaking, you cannot. Hypothetically, if allowed in the plan document, and if the pension fund had enough of a surplus to handle such withdrawals, the IRS might find it permissible. The laws concerning such loans are the same for all qualified accounts, such as 401(k)s. An enrolled actuary would need to help you define when a loan might be allowable in particular deferred benefit plan. A Pension’s main goal is to pay out in retirement for the duration of the obligation, which may be your life and possibly the life of your spouse. Because of the massive liability they shoulder, pensions are inherently rigid and uncompromising when it comes to loans and withdrawals. Continue reading...
What is Market Value?
Market Value refers to the amount an asset can be sold for on the open market, at any given time. If you hold 100 shares of stock ABC that you can sell on the market for $50 apiece, your holdings have a market value of $5,000. Market value does not necessarily refer only to stocks. It can be any asset that can be bought or sold on the open market. Stocks tend to have greater levels of liquidity and broad-based market participation, so it is easier to disseminate a stocks market value at any point in time. Illiquid assets can be more difficult to value, such as real estate or works of art. Continue reading...
What is a Jumbo Loan?
A jumbo loan is a mortgage loan that exceeds the conforming loan limits set by the Office of Federal Enterprise Housing Oversight. For borrowers with low debt to income ratios and good credit scores, jumbo loans are often utilized for purchases of larger or luxury homes. Often times jumbo loans are too large in size to be guaranteed by Fannie Mae and Freddie Mac, and are securitized in other ways. Continue reading...