Category: Retirement Planning

If your company has a qualified retirement plan or you have set one up in self-employment — such as a 401(k), profit-sharing, or Keogh plan — the participants might be allowed to borrow from their accounts. (This option is not available for traditional IRAs, Roth IRAs, SEPs, or SIMPLE-IRAs.) In the right circumstances, taking out a plan loan can be a smart financial move because a participant gains access (within limits) to his or her retirement account money without having… Read more ›

  If you own a small business, you may have set up a defined benefit pension plan for you and your employees that will provide a specific amount of retirement income based on salary history and years of service. For 2022, the maximum annual benefit of a defined pension plan is $245,000 (up from $230,000 in 2021). In future years, it will be subject to cost-of-living adjustments. But retirement tends to be a time when medical expenses grow. Those expenses… Read more ›

  For one reason or another, you may need to take some money out of an IRA before reaching retirement.* You can withdraw money from an IRA at any time and for any reason, but it’s important to keep in mind that most IRA withdrawals are at least partially taxable. In other words, you’ll owe regular income tax on the amount. In addition, the taxable portion of a withdrawal taken before age 59 1/2, which is called an “early withdrawal,”… Read more ›

  Beneficiary designations determine who will receive your assets, such as retirement plans, life insurance policies and, potentially, bank and brokerage accounts, when you die. Even if you’ve made an estate plan that includes a will or trust, you need to regularly update beneficiary designations because these assets typically don’t go through the probate process. Plan to review designations once a year or whenever you experience a major life change, such as a birth, death, marriage or divorce. Recognize Serious… Read more ›

When people are young, saving for retirement is often the last thing on their minds. But starting early and saving every month can translate into a huge difference in your net worth at retirement — all through the power of compounding. It’s a simple concept: Compounding allows you to earn profit on your profit, or interest on your interest. Over an extended period of time, you can earn far more than you thought possible, particularly if the annual rate of… Read more ›

Traditionally, 403(b) plans have been the qualified retirement plan of choice for not-for-profits. These plans were established for the exclusive benefit of tax-exempt organizations. However, a not-for-profit now have other options as well. Even if you continue to prefer a 403(b) plan, as many nonprofits still do, it pays to review and weigh the benefits of other types of accounts. Four Types A not-for-profit generally may choose from the following four plans: 1. 403(b). The 403(b) plan is comparable to… Read more ›

  For years, people have questioned the long-term viability of the Social Security system. While you can’t do much about that, you can start planning how to maximize your Social Security benefits when you’re eligible to claim them. People approaching retirement age often have questions about benefits they may be eligible to receive from the Social Security Administration (SSA). Here are eight of the most commonly asked queries: 1. How Soon Can I Start Collecting Retirement Benefits? If you want… Read more ›

  If your business is essentially a one-person operation, there’s an option to help you save more money for retirement: The Solo 401(k) plan. Ordinarily, traditional defined contribution retirement plans allow annual contributions that are limited to either 25% of salary if you’re employed by your own S or C corporation or 20% of self-employment income if you operate as a sole proprietor or single-member LLC. Also, traditional profit-sharing plans, Keogh or SEP plans are subject to a $61,000 cap… Read more ›

Payments made to liquidate a retired partner’s ownership interest in the partnership (other than payments for his or her share of certain partnership assets) are usually subject to the federal self-employment tax (also known as SE tax). That can amount to a large tax bite. Fortunately, there is a taxpayer-friendly exception. When it applies, this exception can exempt partner retirement payments from SE tax. If the retirement plan is properly structured, even large payments made in the years just after… Read more ›

Roth IRA and 401(k) accounts were created in 1998. Contributions to Roth accounts are taxed on the front end at ordinary tax rates when made. But withdrawals from these accounts are generally tax-free on the back end. If you began saving for your retirement before 1998, even if you subsequently started contributing to a Roth account, you’ve probably accumulated a significant nest egg in traditional (non-Roth) retirement savings vehicles. Unlike withdrawals from Roth accounts, most or all of the money… Read more ›