Take Advantage of Higher IRA "Catch-up" Limits
by: John Bradford
If you fall into the Baby Boomer generation, having been born between 1946 and 1964, this 3rd stage of life, retirement,
is right in front of you. Keep in mind, that potentially, this is the longest stage of life, possibly lasting 20-30 years. Dont' fail to prepare for this very important transition into your retirement years.
The prospect of actually becoming a retiree looms larger as the years go by. Fortunately, it's just become a little easier to build savings for your retirement years. Why? Because, starting Jan. 1, you can put in $1,000 in "catch-up" contributions to your traditional or Roth IRA, up from $500 in 2005. So, given the $4,000 annual limit for regular contributions, you can put in a total of $5,000 to your IRA in 2006.
Fully funding your IRA should be one of your top investment priorities. Keep in mind that IRAs offer two major benefits:
Tax advantages - If you have a traditional IRA, your earnings have the potential to grow tax-deferred, so your money can grow faster than it would in an investment on which you paid taxes every year. (You will eventually have to pay taxes on your earnings, but, by then, you may be in a lower tax bracket.) Also, depending on your income level, your contributions may be tax-deductible. When you have a Roth IRA, you can withdraw your contributions at any time, free of taxes. You can also take out earnings, free of taxes, as long as you don't begin withdrawals until you are 59-1/2 and you've had your account for at least five years.
Variety of investment options - You can invest your IRA in virtually any security you choose - stocks, bonds, Treasury bills, certificates of deposit, etc. In fact, you're not confined to just one type of investment within your IRA; you can create a diversified portfolio containing a variety of holdings.
Given these tax advantages and this investment flexibility, it's almost certainly a good idea to "max out" on your IRA every single year. Of course, it's not always that easy to come up with $5,000 at one time, but you don't have to. You can fund your IRA over the course of a year by putting in about $416 per month. And, to make it even easier for you to completely fund your IRA, you could have that $416 moved automatically, via a bank authorization, from your checking or savings account to your IRA.
But however you do it - over 12 months or right away - put the full amount into your IRA. Along with your 401(k) or other employer-sponsored retirement plan, your IRA is one of the best retirement-savings vehicles you have available. And now that you are on the "plus" side of 50, you'll want to really focus your efforts on making sure you have the resources available to enjoy the retirement lifestyle you deserve.
About The Author
John Bradford is an investment professional and webmaster.
You are free to republish this article as long as the resource box stay intact.
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When to use Quicken for Mutual Fund Recordkeeping
When to use Quicken for Mutual Fund Recordkeeping
by: Stephen L. Nelson, CPA
While you might assume any mutual fund investor should use Quicken?s mutual fund record-keeping tools, that isn?t the case. Because investment record keeping, including mutual fund record keeping, requires significant work and involves complexity, you need to make sure the effort is worth it.
In general, you keep investment records for any of the following reasons:
Reason 1: You want to track interest and dividend income.
Reason 2: You want to track realized and unrealized capital gains and losses.
Reason 3: You want to measure or grade the profitability of an investment by calculating its annual return or yield.
Obviously, all three of the tasks in the preceding list sound worthwhile, but many investors won?t need to use Quicken?s record-keeping tools to get this sort of information.
Tracking Investment Income
If your investing is...
When to use Quicken for Mutual Fund Recordkeeping
Ira > When to use Quicken for Mutual Fund Recordkeeping
Changing Jobs? Don?t let your 401(k) slip away.
Changing Jobs?
Don?t let your 401(k) slip away.
by: Ken Morris
Changing Jobs?
Don?t let your 401(k) slip away.
Today?s job market is more transitory than ever. And, as more and more individuals switch jobs, they begin to wonder what they should do with the money they have accumulated in their employer-sponsored retirement plans such as their 401(k) plans. The good news for 401(k) plan participants is that your retirement plan assets are very portable so you may be able to keep your existing 401(k) plan assets in a tax-deferred environment.
The trick is to resist the urge to use the monies. After tucking money away in your 401(k) for quite some time, you may be tempted to use it to treat yourself to a new car or some other indulgence. Because it could literally take years to replace your existing 401(k) funds, you should think carefully before prematurely taking money from your retirement savings.
A hasty withdrawal...
Changing Jobs? Don?t let your 401(k) slip away.
Ira > Changing Jobs? Don?t let your 401(k) slip away.
Substantially Equal Payments Relief
Substantially Equal Payments Relief
by: Ken Morris
If you initiated early distributions from your Individual Retirement Account (IRA) in the last couple of years using a Substantially Equal Payment plan, your annual distribution amount may be more than your current account balance can bear.
You may think there is nothing you can do to alter your distribution amount and slow down the depletion of your IRA account.
This is not true.
The IRS now permits you to make a one-time, permanent reduction to your annual distribution amount.
The primary purpose of an IRA is to accumulate assets for retirement.
Therefore, distributions taken before age 59 ? are subject to a 10% premature distribution penalty, unless an exception applies.
One such exception is a Substantially Equal Payment plan, which as you know is subject to several requirements.
For example, your may not stop or otherwise modify...
Ira > Substantially Equal Payments Relief
Taking Full Advantage Of Your 401(k) ? How Well Do You Know Your Plan.
Taking Full Advantage Of Your 401(k) ? How Well Do You Know Your Plan.
by: Simon Fox
Taking full advantage of your 401(k) plan today can help you achieve financial goals sooner, and provide enough income for a comfortable retirement. For most working people, Social Security checks alone will not be enough to maintain the standard of living they are used to, once they are no longer working. If you are lucky, your employer offers a 401(k) plan which, if used wisely and to the fullest advantage, can provide you with additional income for your golden years.
401(k) plans differ greatly depending on the employer who sets the rules. The only way to get the most out of the plan is to get to know it and make educated choices.
Things you should know:
- What is the maximum percentage of your salary you are able to contribute (see also 401(k)contribution limits set by IRS)?
- Is your employer matching the contributions? If yes, what is...
Taking Full Advantage Of Your 401(k) ? How Well Do You Know Your Plan.
Ira > Taking Full Advantage Of Your 401(k) ? How Well Do You Know Your Plan.