IRAs & 401(K) Savings Plans: Savings plans that your employer may match your contributions, and other savings plan types for self-employed.

401(K) SAVINGS PLAN

Two elements make the 401(k) a good retirement solution: one, many employers match contributions and two, your money has the ability to compound tax-deferred. When starting a 401(K) Plan, you will decide how much money to enter into the plan each payday. Some employers may match invested fund amount, meaning the employer puts in a percentage of what you add to your 401(k) plan. Since your lees likely to miss funds you never see, saving with automatic payroll deductions may help you save faster and easier.

RISKS

A typical 401(k) plan provides you with a variety of investment options, allowing you to be as conservative or as high-risk with your savings as you want to be. Please fill out our on-line form to find out more.

401(K) SAVINGS PLAN ROLLOVER

It used to be that an employee would work for the same company until retirement, but this is hard to find today. Most of us will work for several different employers during our employment years. And as your employment changes, so should your 401(K) retirement savings plan(s). Upon leaving your current employer, you have the option to “roll over” your invested 401(K) funds to continue your retirement saving’s plan. At this time, you have control over your money, and you need to make an informed decision. Decisions that will effect your savings account amount, due to taxes, penalties and fees.

If and when you decide to move your funds into your new employer’s plan, you’ll need to act quickly to avoid tax penalties. The IRS will assess a 10% penalty fee on funds that are not transferred within 60 days of new employment. Failure to meet the 60 day deadline may cost you income taxes on the full amount. So know your options and possible drawbacks of each option, talk with a financial planner NOW! Click Here!

401(K) SAVINGS PLAN ROLLOVER TYPES

Generally, there are two ways to roll over your 401(k):

A Direct Rollover is when your employer sends your vested 401(k) balance to the firm holding your Rollover IRA directly. By directly rolling over the full balance, this allows you to avoid the 20% mandatory withholding imposed by the IRS.

A 60-Day Rollover is when your employer sends your vested 401(k) balance to you minus 20% of your vested 401(k) balance for payment to the IRS. If you choose to deposit your funds into a Rollover plan, you will have 60 days to do so. You will also be required to make up the 20% that was withheld by your employer. Failure to rollover that 20%, may cause you to incur a 10% early withdrawal penalty if you are under age 59½.

PAPERWORK YOU’LL NEED TO:

START YOUR 401(K) SAVINGS PLAN

• Your Social Security number
• Social Security number(s) and birthday(s) for all beneficiaries
• Employer Company name
• Employer Company address
• Employer Company phone number

ROLLOVER YOUR 401(K) SAVINGS PLAN

• Recent 401(k) statement
• Account number
• Account Balance
• Plan Sponsor name
• Plan Sponsor address
• Plan Sponsor phone number

IRA SAVINGS PLAN

IRA stands for “Individual Retirement Account”. An Individual Retirement Account helps you save for retirement with tax-deferred or tax-free growth of most earnings.

TYPES OF IRAs

Traditional IRA
Individuals with earned income may invest up to $3,000 annually (in 2003 and 2004) and if you’re over 50, you may catch-up any contributions missed in the past. Contributions may be tax deductible, and any earnings grow tax-deferred.

Roth IRA
Created as an alternative to traditional IRAs, Roth contributions are not tax-deductible, although any earnings grow tax-free. This means paying taxes now to enjoy tax-free income in retirement. You must meet certain income limits to qualify.

Spousal IRA
What if your spouse doesn’t work, for example a stay-at-home mom. With a Spousal IRA you can both save for retirement by investing in a traditional or Roth IRA. As of this year, couples may invest up to $6,000 or if you’re both over the age of 50, you can invest up to $7,000, as long as the total IRA contribution is less than your total earned income.

Rollover IRA
When changing employers or retiring, and you want the same tax advantages as you had with an employer-sponsored plan like a 401(k) then a Rollover IRA could be just what you need. With an IRA savings plan, all of your funds in the 401(K) plan are simply “rolled over” to an IRA, tax-deferred.

SEP IRA
Is actually called a “Simplified Employee Pension“. This IRA is a tax-deferred retirement plan for self-employed individuals or small companies. SEP IRA contributions are made by the employer or by the self-employed individual.

FINDING A FINANCIAL ADVISOR
A financial advisor can ensure you’re saving enough to meet all your immediate and retirement needs. Find out what’s best for you and your retirement goals! Learn more about the different asset allocation types, explore the areas above and fill out our on-line form to find a certified financial advisor in your area.