401K Options
August 14, 2006
Whether you’re switching jobs or retiring completely, chances are you have a 401K or other company sponsored retirement plan that you’ll need to make a decision about.
There are several options on how to handle your 401(k) money when you leave a job:
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Take the Money and run
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Leave the money in the 401(k) plan
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Transfer the funds directly to your new employer’s retirement plan
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Transfer the funds directly to an IRA account (direct rollover)
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Have the check made out to you, and then deposit the funds into an IRA account (indirect rollover)
To read the full article, click here.
Backdoor into Roth
July 24, 2006
You may have heard that the new tax law eliminates the $100,000 income limit for Roth conversions beginning in 2010. If you haven’t been able to contribute to a Roth IRA because your income is too high, you now have a back door into the Roth IRA.
You should start planning now to take full advantage of the new tax law. How? Contribute the maximum to a non-deductible IRA now (and every year up to 2010). The limit in 2006 is $4,000 ($5,000 if you are 50 or older).
In 2010, when the income limit for Roth conversions goes away, you can convert your traditional IRAs to Roth IRAs. Because you made non-deductible contributions, only your earnings will be subject to income tax.
Even better, taxes owed on conversions made in 2010 don’t have to be paid until 2011 and 2012, which allows you to spread the tax burden over several years.
What are the benefits of this strategy? Tax free income in retirement, no Required Minimum Distributions at age 70 1/2, and tax free income for your heirs.
Need help determining if this is the right strategy for you? Check out or Tax Review.
Dieting and Investing
June 9, 2006
I’m always telling clients to look at the "big picture" and to avoid looking at their stocks/mutual funds each day. It’s more important that your Net Worth increase each year and that you get closer to your financial goals. But, inevitably, they continue to check the performance of their individual investments each day.
Kim at Kimmunications explains this concept perfectly in her post called Focus on outcomes – not on numbers. Thanks Kim!