Helpful tips for your 401(k) and Individual Retirement Accounts (IRAs)

12-28-2020Retirement

Do you have an employer 401(k) plan or other retirement plan assets? Should you consolidate accounts? Here are some ideas and recommendations to consider.

Benefits of Company 401(k) plans

  • If you leave your money in a company 401(k) plan rather than rolling it into an IRA) is no required minimum distributions (RMDs) if the account owner is still working.  Generally, account holders must start withdrawing from their retirement accounts at age 72. The RMDs at age 72 apply only to traditional IRA accounts and not to Roth IRA accounts.
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CARES Act Retirement Plan Relief Provisions

04-24-2020Retirement

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020.

For those seeking access to their retirement funds, these include special provisions for coronavirus-related distributions and loans. For those seeking to preserve their retirement funds, certain required minimum distributions from retirement funds have been suspended.

Coronavirus-related distributions

A 10% penalty tax generally applies to distributions from an employer retirement plan or individual retirement account (IRA) before age 59½ unless an exception applies. Due to the coronavirus pandemic, the penalty tax will not apply to up to $100,000 of coronavirus-related distributions to an individual during 2020. Additionally, income resulting from a coronavirus-related distribution is spread over a three-year period for tax purposes unless an individual elects otherwise. Coronavirus-related distributions can also be paid back to an eligible retirement plan within three years of the day after the distribution was received.

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How much is enough (to retire)? 

09-24-2018Retirement

Fidelity Investments, the nation’s largest retirement plan provider, recently released some statistics related to its customers that save for retirement. The number of Fidelity 401(k) accounts with a balance of $1 million or more recently hit a record of 168,000, up 41% from last year.

To give you an idea of how your retirement savings stack up against your peers, check out the average 401(k) balances in Fidelity accounts, as of the second quarter of 2018, broken down by age.

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When do I start drawing Social Security?

09-01-2018Retirement

Many Americans work with dreams of a comfortable retirement. We pay 6.2% of our wages into the Social Security system and our employers match another 6.2%. So when do we start reaping our rewards?

You can start receiving retirement benefits on your 62nd birthday. However, every year you delay your Social Security benefit payment, you will get an 8% increase in benefits up until age 70.

There are some questions you need to ask yourself and your financial and tax advisor. There are good arguments that support early receipt and good arguments that support waiting until age 70.

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Social Security and Retirement changes announced for 2018

10-24-2017Retirement

The Social Security Administration (SSA) announced last week that the maximum amount of wages in subject to the 6.2% Social Security tax will rise from $127,200 in 2017 to $128,700 in 2018. The SSA also announced that Social Security beneficiaries will get a 2% increase in benefits in 2018. The average retiree will receive an increase of $27 a month.

  2017 2018
Social Security Wage Maximum $127,200 $128,700
Maximum Social Security tax $7,886.40 $7,979.40
     
401(k) elective deferral $18,000 $18,500
401(k) catch up $6,000 $6,000
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How To Avoid The 10% Penalty On IRA Distributions

12-07-2015Retirement

If you take money out of a retirement account (IRA, 401(k), 403(b), etc.) before reaching the age of 59½, you typically must pay income taxes on the withdrawal plus an additional 10% early withdrawal tax unless an exception applies.

If they apply, these exceptions may save you the 10% penalty if you have to tap into your retirement accounts early.

  1. Death or Disability- If someone in your family becomes permanently disabled, your retirement may be the last place that you want to draw funds.  There are options to get money out of your IRA penalty free should disability or death happen in your family.
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Retirement Plan Changes for 2016

11-21-2015Retirement

Here are some of the important ways retirement benefits will change in 2016.

IRA and 401(k) Limits – The 2016 contribution limits for 2016 for IRAs (Traditional pre-tax of after-tax Roth IRAs) increases to $18,000 with a $6,000 catch-up contribution for individuals aged 50 and over.

Saver’s credit.  The adjusted gross income (AGI) limit increases to $30,750 for individuals and to $61,500 for married couples. This tax credit is available to low and moderate income families that save for retirement.  It can be worth 10%-50% of your retirement contribution up to $2,000 for individuals and $4,000 for couples. 

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A little savings today will set you apart from others in retirement

05-29-2015Retirement

Yesterday, the Federal Reserve's 2014 Survey of Household Economics and Decision Making found many Americans are not financially prepared for retirement.

  • 38% percent have either no intention to retire or plan to keep working for as long as possible.
  • 31% of non-retirees have no retirement savings or pension, including nearly a quarter of those older than 45
  • 55% of those making less than $40,000 per year plan to keep working as long as possible or never plan to retire
  • 53% could cover a hypothetical emergency expense costing $400 without selling something or borrowing money.
  • 31% went without some form of medical care in the past year because they could not afford it
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How much of my nest egg should I take out in retirement?

04-24-2015Retirement

A generic rule of thumb financial advisors have used for retirees is to withdraw 4% of their account balance each year in order to not out live your money.

However, interest rates have been at historic lows the last nine years, so conservative investors may need to accumulate more funds if they wish to use the 4% withdrawal rate.

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7 habits of highly effective retirement savers

04-03-2015Retirement

As a Steven Covey advocate, Tom Anderson’s personal finance article on the CNBC website Monday caught my interest — 7 habits of highly effective retirement savers. You can read the entire article at www.cnbc.com/id/102545493 but here are your keys to success:

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