Why Should You Convert Your IRA to Roth on January 1, 2010?

Change is on the horizon in the Roth IRA world. Currently Roth IRA conversions are limited in 2 ways

1. Taxes on pre-tax amounts
2. Income limits (these are quick generalizations see IRS pub 590 for more info.)

A. If single AGI, adjusted Gross income is 116K or more then you cannot contribute
B. If AGI is 159K+ as a couple you could not contribute to a Roth.

What is going to happen in 3 months is revolutionary!

Why you ask? One of the best things President Bush did in 2006 was sign a $70 tax cut that changed the rules. In case you wanted to know the actual bill was called the "Tax Increase Prevention and Reconciliation Act of 2005." it was signed into law May 17, 2006.

Why this is so extraordinary for you, the average American, and all my friends and family? Well it's because of the income limits have been lifted! If you convert Non Roth retirement accounts in 2010. The taxes due can be spread over 2 years. This applies to conversions done only in 2010. Keep reading for why this is such a big deal.

That law is notable for Roth IRA investors because starting January 1, 2010; anyone can convert an existing IRA into a Roth IRA. That means regardless of income level you can have a Roth IRA and reap the all benefits of it. Now every American can use this benefit to their advantage for their retirement. To make it an even better reason to do the conversion our Uncle Sam has allowed you to pay the taxes of the conversion in the 2 following years, 2011 and 2012. This is just for the 2010 year though. After 2010 you will have to pay the conversion taxes in the same year as the conversion. Certainly a more painful option if the sum you're converting is a large one. So if you have a large amount you want to convert into a Roth 2010 is the year to do it.

I hear some of you asking. How long will this last? The IRS says that the new Rules will be in effect and there is no deadline. However Uncle Sam seems to change his mind once in a while. I wouldn't count on absolutes from the IRS and take advantage of the conversion in 2010. Especially since the tax burden can be spread over 2 years. In reality if you do it on January 1 you'll gain an extra 3.5 months to give you a total of 27.5 months to earn money to pay the taxes of the conversion. That way you're not using the precious Roth IRA nest egg funds to pay it. Certainly due to the fact that this will cause tax revenues to increase it doesn't seem that the income limits would be imposed. However the government has done strange things in the past. Get my drift?

Are you asking yourself why would I want to do this? The biggest reason I can think of to do this in 2010 is allow your retirement money the longest time horizon possible to get the most out of the power of compounding. The longer you can have your money in a tax free environment, the more you will have in the end. Remember with the Roth IRA any distributions in retirement are 100% Tax Free! So why wouldn't you want more of your own money, the money you worked so hard to save?

Now, I know you, and all my friends, are going to do this conversion in January 2010. Please, please, do yourself a favor. Pay the dreaded conversion taxes to our beloved Uncle Sam outside of the Roth account, if at all possible. Not from your retirement funds. You will be accelerating the growth of your new fledgling Roth IRA by many years by doing so, thereby achieving your goals much faster than if you use your IRA money to pay those conversion taxes. Those Roth IRA nest eggs are precious.

One of you may be thinking "What if you don't already have a Roth account?" and you can open one under the current rules. Then run and do that today. Put in the max allowable amount. That is 5K if you're under 50 and 6k if over 50. In 2010 rollover as much as you can, depending on the length of time to retirement.

I'll bet one of you or my friends will say something like this. "I don't have a lot of time till retirement". I know this isn't for everyone however if your timeline to retirement is close say 5 years. You still might want to do this anyway, maybe not all your non Roth accounts but some.

Here's why I say that, I have a few ideas I'll share in later posts on my blog http://www.TheTaxFreeInvestor.com on how you can create a legal Tax Free income during retirement. Stay tuned for that.

Disclaimer: Before converting an existing retirement account, be sure to talk with your tax professional to make sure you have a clear understanding of how the tax rules would affect you. Be sure to talk with a professional before doing anything I suggest.

I'm an individual Self Directed Roth IRA investor. I'm blogging at http://www.TheTaxFreeInvestor.com about my adventures in using my Self Directed Roth IRA, how I'm Investing my Roth IRA retirement funds, in investments that I understand, and for maximum returns. I'll show you, all my friends and family, how I do this, and why. You can do this also to maximize your retirement or not, but come along for the journey no matter what. It'll be fun for sure.

Article Source: http://EzineArticles.com/?expert=W_Sugg

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What Are the Rules For 2010 401k Contribution Limits?

If you are looking to save for retirement, there are many options out there that are available to you. All things considered, most people want to be able to maintain their current lifestyle, if not a better one, when they retire. In order for this to happen though money has to be put back in a way that it will continue to grow. A 401k has tax exemptions that go along with it; but, there are certain stipulations that apply to 401k contribution limits as well.

A contribution is made when money is placed into an account from a paycheck or through other means. A traditional investment plan, such as a 401k, can be obtained through an employer, if offered by the company, or if you are self employed. The choice can also be made to have the funds withdrawn automatically from your pay every pay period in a specified amount. In some instances, employers will match the contributed amount.

For the upcoming tax year 2010, the 2010 401k contribution limits are $16, 500 for individuals under 50. For those over 50 the total is $22, 000. This limit applies to 401k and Roth 401k plans.

Taking too much money out of a 401k can increase your tax bracket. If you are at least 59 ? you can withdrawal money from this account just remember the chance you are taking.

Contributions made to 401k plans are tax free. Considering other investment plans, this is a major benefit of the 401k. The only time that taxes are withheld is if you make a withdrawal.

What is the benefit for you in investing in a 401k? In the long run, that the money that you put in the 401k is not taxable when it is invested. Your money has an opportunity to gain interest over time. When you withdrawal the money, it will be taxed.

Saving money over time can work to your advantage. With 401k plans, the money you invest earns interest. Due to the way these plans are setup, you earn interest on the interest, or compound interest. As stated previously, the contributions are not taxable.

When investing in a 401lk, the individual, in most cases, decides where the money is invested at. Bonds, stocks and mutual funds are the variety available. Since 401k plans offer a steady but slow growth, choosing a safe investment is the popular way to go.

There are different companies out there that can help you with your investment strategy. These companies normally offer advice and options for saving for retirement. In the end though, the choice is yours.

As mentioned before there is a 401k plan called a Roth 401k. With this plan, you can make additional after tax contributions and the gains from it can be withdrawn tax free.

The government has setup these tax breaks in an effort to help the consumers out. Do your best to contribute the maximum allowable amount to these plans. It is in your best interest to do so. Not to do it, is counterproductive for you.

For the latest 401k limit info, such as the latest 2010 401k contribution limits you can find a breakdown at the site. Similarly, you will find data on the lesser talked about Roth 401k, which comes with a number of advantages.

Article Source: http://EzineArticles.com/?expert=Frank_Rodriguez

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Roth IRAs Poised to Surge in 2010

Roth IRAs are about to experience a surge due to a long-awaited tax-law change that will finally take effect January 1, 2010. It is expected to open the floodgates for wealthy and upper-middle class taxpayers.

The allure of Roth IRAs is that distributions made out of a Roth IRA are never taxed. In effect, taxpayers become immune to future tax increases enacted by Congress. Roth IRA owners, thus have an effective tax rate on Roth IRA distributions equal to 0%, forever. The ability to contribute to a Roth IRA has always been limited if an individual taxpayer's adjusted gross income exceeds a specified amount, adjusted for inflation. Thus, wealthy taxpayers, without any other retirement plan, had to rely on making traditional IRA contributions, which impose no such income test. The upside for traditional IRAs is that contributions are tax deductible. The downside is that future distributions are subject to income tax at the rate in effect when the distribution is made.

Given the immense size of the federal deficit, almost every tax professional has been advising their tax clients that tax rates must go up in order to increase tax revenues to meet the future cost of government. In order to immunize their tax clients from the cost of future tax increases, tax professionals were advising their clients to convert as much of their traditional IRAs as possible. Some taxpayers were eligible to convert their traditional IRAs into Roth IRAs and pay the requisite tax on the accumulated earnings. However, many higher income taxpayers were unable to make the conversion due to an income limitation known as the $100,000 limitation. The $100,000 limitation prohibits taxpayers from converting their traditional IRAs into Roth IRAs if their adjusted gross income exceeds $100,000 in the year of conversion. So for many years, due to these two Roth IRA income limitations, wealthy individuals have been forced into making contributions to traditional IRAs in lieu of Roth IRAs, and were prohibited from converting their traditional IRAs into Roth IRAs.

But that is all about to change. Effective January 1, 2010, the $100,000 limitation is going away forever. Furthermore, any taxpayers who convert their traditional IRAs on January 1, 2010 to Roth IRAs will be able to defer the requisite tax on the accumulated earnings over two years beginning with tax year 2011. If a taxpayer converts a traditional IRA to a Roth IRA in 2010, he or she may elect to spread the tax hit over 2011 and 2012, with no tax payment required in 2010.

Call your tax professional today if you have traditional IRAs to evaluate if conversion to a Roth IRA is right for you.

Tom is a Certified Public Accountant, a Certified Financial Planner, CLTC (Certified Long-Term Care) and President of Cerefice & Company, the largest CPA firm in Rahway, New Jersey. Tom works with clients helping them manage their money, retirement planning, college savings, life insurance needs, IRAs and qualified plan rollovers with an eye towards maximizing tax benefits and minimizing taxes. Tom is founder of the Rich Habits Institute and author of "Rich Habits".

Article Source: http://EzineArticles.com/?expert=Thomas_Corley

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How to Roll Your 401K Into an IRA

If you are recently unemployed or your company has just changed ownership, you have the opportunity to convert the existing company 401K to an IRA, otherwise known as an individual retirement account. Many people are intimidated by the prospect of this conversion but in reality, it is quite simple and offers many benefits.

The best reason to transition from a 401K to an IRA is that the number of investment choices you will have in an IRA is almost unlimited, while the company sponsored 401K plan will only allow a handful of options. You can begin to choose stocks or mutual funds based on your own research and preference, which in turn can be fun and rewarding. IRA's can be opened at your local bank or an independent or online brokerage firm such as Scottrade. I prefer the latter because the fees associated with transactions are minimal.

Once you decide where you want to open your IRA, the chosen institution will provide an account number and form for which the 401K plan administrator can send the distribution check. This process can take several weeks or more. Once the money has been transferred, it will sit in a money market account. You can then begin researching stocks or mutual funds that you would like to allocate the money into. The allocations occur as a "buy order" that you place for your selected investment choice.

Great sources for researching investment options are Morningstar, MSN Money and Yahoo Finance. You can establish the rating on the stock or fund with Morningstar which uses a 1 to 5 star system based on the associated performance and risk of the investment. Another category to look at would be the percentage of return based on 1, 3, 5, 10 and 20 years. A third category to pay attention to are loads and expense ratios. These are the management fees associated with your particular investment. Just find a combination of these 3 categories that best balances risk, earnings and management fees to your liking.

An IRA allows your money to grow tax free until your retirement years similar to a 401K but with so many more investment choices. By taking charge of your investments through personal research and management, you will have greater control over the growth of your money and hopefully have a much larger nest egg for which to enjoy your retirement years.

For more Financial, Job and Career advice as well as salary postings by company and position, visit SalaryFor.com

Article Source: http://EzineArticles.com/?expert=Dave_Caruso

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401k Rollover is a Financial Tool For These Tough Times

With the economy being in the predicament that it is presently with many people that have a 401k are interested in going through with a 401k rollover. However, before you decide to take the initial steps to commence in the 401k rollover process it helps to know what the rollover consists of.

With the unemployment rate on the rise, many people that have a 401k plan with their present employees are interested in what will happen to the funds that they have invested. Well, the good thing is many employers are allowing new employees to commence in what is known as a 401k rollover.

There are of course both good as well as bad points in commencing in a 401k rollover plan. One of the major benefits of rolling over your 401k is it does not matter how much money you have in order to engage in the rollover since normally there are no minimum investments that you have to make.

However, in some cases you will need a minimum amount of $3, 000 in order to engage in the 401k rollover plan. If the amount of money that you currently have in your 401k account is below $5, 000 it may be difficult for you to rollover the funds that you had in your previous account with your other employer.

Aside from the benefits of 401k rollover there are a few things that many people feel are discouraging about engaging in the process. One of the first things is people feel as though they are losing an immense amount of flexibility when they commence in rolling over their fund.

A lot of 401k plans also have high fees so when you are commencing in the rollover process you need to take heed of the other company's fees that they are offering. A rollover can help you save the money that you presently have saved up in your retirement fund; however before you engage in the process of rolling your money over from one employer to the next it helps to read the fine print of your agreement.

For more information or to get free help with a 401k rollover or IRA rollover call P&G Financial Group, Inc. at: 1-888-701-3222 or visit: http://www.pngfinancialgroup.com.

Article Source: http://EzineArticles.com/?expert=Jason_Pollington

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401k Rollover Has Its Good and Bad Points

A lot of people that find themselves out of a job are interested to know what happens to their 401k after they have lost their current employer, a 401k rollover of your current 401k will ensure that you keep the amount of money that you have already invested in your future. But, before you decide to engage in rolling over your funds you need to have an understanding of how the process works.

A 401k rollover allows you the opportunity to take the 401k that you have with your prior employer and use the funds that you have already invested into a brand new fund with a new employer. Basically, you are simply taking the money back that you were paying into your retirement plan that you had with your previous employer.

With engaging in the 401k rollover there are a few good and bad things about the whole ordeal. A big benefit of the rollover is that regardless of how much money you have in your 401k many companies will still allow you to take the funds that you had invested.

In some cases companies may retort that you need at least a minimum amount of $3, 000 in your account before they can engage in rolling over your funds. Some people find it difficult to rollover their current 401k's when they have an amount in the fund that is under $5, 000.

There are a few things that detour people away from the rollover process. One thing that changes when you engage in a 401k rollover is the flexibility that you previously had with your fund.

Some plans also have higher fees depending on where you roll them over to. Before commencing in a 401k rollover you need to take heed of the fees that the company that you are currently working for charges for their 401k plans. A 401k rollover can be a good thing for people that have suddenly lost their main source of income for no apparent reason at all. It is a good rule of thumb to read all the fine print on the 401k rollover agreement to assure that you are getting everything that you need.

For more information on 401k and IRA rollovers contact P&G Financial Group, Inc. at: 1-888-701-3222 or visit: http://www.pngfinancialgroup.com.

Article Source: http://EzineArticles.com/?expert=Jason_Pollington

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2010 Roth IRA Conversion Rule Changes

A big change is scheduled to hit the retirement planning landscape in 2010.

On the face of it, the 2010 Roth IRA conversion rule changes seem relatively minor.

But as you'll soon see, a minor change can have enormous consequences. In fact, as a result of the 2010 rule changes, anyone (regardless of income) will be able to...

1) Convert to a Roth, and/or
2) Effectively contribute to a Roth

Currently, IRS restrictions on personal income hamper the ability of high income earners to convert to, or contribute to, a Roth IRA. But that's all about to change...

So what's this monumental rule change just over the horizon?

It's the elimination of the IRS income restriction on Roth conversions.

AGI Limit For Roth IRA Conversions

Under current law, you're only eligible for a conversion if your adjustable gross income (AGI) is $100,000 or less. If you happen to earn more than $100,000 per year, you can NOT perform a conversion.

However, starting in 2010, the $100,000 AGI limit disappears.

That's right. It simply disappears!

Now, keep in mind that Congress can change its mind and reinstitute the $100,000 AGI limit at any time. But as of this moment, it hasn't given any indication it will do so.

As a result, anyone (regardless of income) can perform a Roth conversion starting in January 2010.

For instance, let's say you have a Traditional IRA, and you earn $152,000 per year. In 2009, you can NOT convert your Traditional IRA because your AGI exceeds $100,000. But in 2010, you CAN convert your Traditional IRA to a Roth because the AGI limit goes away!

But the implications of the 2010 rule change go far beyond your ability to perform a simple conversion. The rule change actually impacts your ability to contribute to a Roth if you earn above the current limits for making a contribution...

Current Roth IRA Income Restrictions

Under current law, the IRS restricts Roth IRA contribution eligibility to those who have income that falls within a predetermined range.

For instance, in the year 2009, the IRS limits for making a Roth IRA contribution are...

* $176,000 if you're married filing a joint tax return.
* $10,000 if you're married filing a separate tax return and lived with your spouse for any part of the tax year.
* $120,000 if you're single, head of household, or married filing separately and did not live with your spouse for any part of the tax year.

Under current law, if you earn more than the limit established for an individual with your tax filing status, you're not eligible to contribute a single penny to your Roth.

And while the limits change from year to year, the Roth IRA income limit restricting who can or cannot contribute will NOT disappear in 2010.

However, in effect, the Roth IRA income contribution limits do disappear...

To find out how, read more about the 2010 Roth IRA conversion rules by visiting Britt Gillette's website, Your Roth IRA, a site focused exclusively on helping people with self-directed Roth IRAs.

Article Source: http://EzineArticles.com/?expert=Britt_Gillette

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Learn All About the Roth IRA Conversions

When a person retires, it is important to have money that is set aside, so that the person has options in regard to the things they can do later, as well as the things that they can purchase. There are eleven types of IRA's that exist. One of them is the Roth IRA. At some point, some may decide on a Roth IRA conversions for one reason or another.

Essentially an IRA is an Individual Retirement Arrangement, which most refer to as an Individual Retirement Account. Any person with taxable income may have an IRA, unless married and unemployed with a spouse that works. There is no minimum or requirement as to the amount that a person can contribute to their IRA, but their is a maximum, which goes according to their annual contribution and increases yearly.

In addition, a person is not taxed on the money accrued on their investment until they withdraw funds. This however may not apply in some cases with a Roth IRA. Although a person never has tax deductible contribution option, people tend to like IRA accounts, since they are not taxed on the money gained, as they are with a traditional IRA.

Additionally, Traditional IRA's have mandatory distributions, while Roth IRA's do not. This is the reason why some choose to have an Roth IRA conversion. In respect to this, there are some requirements; however some of these requirements are set to change in 2010.

Presently, one of the mandatory requirements is that a single individual or married couple living within the same home, make less than 100,000, however this limitation will no longer exist as of next year. Anyone who makes less than $100,000 now has the option for a Roth IRA conversion at this present time.

Anyone who decides to wait to 2010 has the option to defer claiming the conversion towards their income to the next two years. One half of the conversion amount is claimed in 2011 and the other half in 2012. With this option, the tax rate goes according to the rate for that year. In 2010, there is also to convert 401k plans, as well as other retirement plans into an IRA, in addition to the traditional IRA's. Basically, there is a bit of math involved in the determination of what will result in your taxable income within that year or two years if that is the option you go with.

For more information visit http://www.pngfinancialgroup.com/ group.com or call 1-888-701-3222

Article Source: http://EzineArticles.com/?expert=Jason_Pollington

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401k - Investing For Retirement

Years ago almost every employee in every company received a pension through a company paid pension plan. People stayed on one job for their entire career and companies felt it was their duty to provide this type of loyalty after retirement as well. The major benefit of having a pension was that the employee didn't need to contribute. It was a gift. Then life changed and so did corporate America. Companies still were willing to help you after retirement, but they looked for other vehicles to do it. And so came the 401k plan.

The 401k became the preferred method for most (non-union) companies to help employees invest for the future. The employer really has no responsibility other than selecting a financial institution, usually a brokerage house, to manage the plan. Even though many companies have a contribution plan where they provide an additional percentage of your own contribution, there is no law saying they need to. In today's financial climate most companies either don't contribute, or they contribute very little.

There is an annual threshold of $15, 000 per person, regardless of your salary. You are able to choose the funds in which to invest your money, but of course you are limited to funds available from the brokerage house managing the 401k employee plan.

Even though the concept of a 401k is attractive, not all plans are worth the investment. Many employees choose not to participate in their company's plan because after doing some research they may find that the funds (mutual funds) have not performed well.

When you do contribute to a 401k, you are using pre-tax dollars. If you need to make an early withdrawal (before age 59) you will be penalized and taxed at your regular rate.

If you should change jobs, don't forget about your 401k. Talk to a financial adviser to "roll it over" into a new 401k at your job, or roll into a Roth IRA.

For more information visit http://www.pngfinancialgroup.com/ group.com or call 1-888-701-3222.

Article Source: http://EzineArticles.com/?expert=Jason_Pollington

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Understanding Your 401k

A 401K is a retirement plan sponsored by your employer. It is a defined contribution plan where you contribute a certain portion of your income into the account. 401K accounts are popular because of two main reasons.

As a retirement investment, the 401K has both advantages and disadvantages:

Pros:

* Tax deferred until withdrawal.
* Possibility of additional contributions from employers

Cons:

* Withdrawal penalties of 10% with certain exceptions.
* Lack of liquidity if the contributor needs the money for another purpose.

Benefits of a 401K

First is is a tax deferred plan, as an example lets say you put $4,000 dollars into the account over a year and earned $54,000 that year, only $50,000 would have to be claimed as income. On the other hand, the benefits upon withdrawal once you've retired are taxed as income. Second, employers may offer a matching contribution giving you a strong incentive to deposit into the 401K account because of the increase in assets gained if employers match the deposit.

The tax deferment option can be advantageous because retirees generally require fewer expenses than during their career so can live off of a smaller yearly income. This drives them to a lower tax bracket so they have to pay less on the withdrawals from their 401K than they would have paid during their working years.

Although a 401K is an employer provided benefit, if you were to change employers and your new employer has a 401K plan, you can transfer your old 401K plan to the new employer. If your new employer does not offer a 401K plan, it can be transferred to an IRA at another institution or the old employer may charge a fee to keep the 401K managed through them.

The money deposited in a 401K is distributed among a variety of assets that could include stocks, bonds, mutual funds, money market funds and others. The options available are based on the specific plan your employer allows and the proportion of funds in each can be regulated by the contributor manually.

Deposit Limits

401K contributions are limited to a maximum of $16,500 a year in 2009. People age 50 or older are allowed an exception to this limit in the form of "catch-up" contributions. These catch up contributions are limited to $5,500 in 2009. These limits are also imposed if more than one 401K (such as a traditional and Roth) are owned by the same person, there can be no more than $16,500 contributed to both accounts combined. These limits are set by the IRS and can differ from the limits set by your employer's plan which may limit it based on a % of yearly income.

Withdrawing Funds from a 401K

The current age requirement to begin withdrawing funds from a 401K is set at 59 ½. At this point withdrawals can freely be made with no penalty, but an income tax must still be paid. If withdrawals are made before this point, there is a 10% tax added on to the income tax for the withdrawal.

There are a few exceptions to this rule. Some plans may allow the employee to take a loan out from their 401K plan. Loan conditions can vary greatly based on individual plans offered by employers but won't exceed 5 years and will be a reasonable income rate. The income is then paid back and added to the 401K account but does not get the tax deferred treatment that regular deposits get.

In addition to the available loan, 401K plans will not suffer the 10% withdrawal fee if the contributor dies, is disabled or cannot work any longer. If upon leaving the employer which holds the plan, the employee cannot find another plan to transfer the funds to such as an IRA or a new 401K, the funds can be distributed without penalty.

Types of 401K plans

All of the above information was in reference to a traditional 401K plan, the following is a list of non-traditional 401K plans available and how they differ from the traditional plan.

Roth 401K

A Roth 401K differs from a traditional 401K primarily in that it is does not have a tax-deferred contribution. This means that an income tax is paid on all income before the contribution is made but at the time of withdrawal, no income tax is paid. There are additional restrictions associated with a Roth 401K. The $16,500 limit is imposed on a combination of traditional and Roth 401K that an employee may have so they cannot invest $16,500 in two separate accounts.

SIMPLE 401K

This is a type of 401K plan available to companies with 100 or fewer employees. The employees eligible must have received at least $5,000 in pay from the company in the last year. Traditional 401K plans have a requirement for the employer to test whether the higher compensated employees in the company are being treated as equally as lower paid employees. The SIMPLE 401K eliminates those testing requirements so allows small businesses to provide retirement benefits to their employees without high costs. One difference is that the SIMPLE 401K has a lower limit of $11,500 contribution per year in contrast to the $16,400 limit in a traditional 401K.

401K plans are popular among employees and are the major source of retirement income for 44% of all workers. It is important when planning for retirement to understand the different options available and fitting them to your personal preferences. You can read more about how a 401K fits into saving for retirement and retirement investing.

You can find the original article here: Understanding Your 401k.

Finantage is independent of the financial services and banking industries. This allows us to provide honest and accurate information directly to you without forcing you to endure a sales pitch. We use this independence to give you a financial advantage whether you are buying your first home or you are setting up a retirement fund.

Article Source: http://EzineArticles.com/?expert=Edwin_Ivanauskas

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You Can Rollover Your 401(k) Within Minutes, But Be Careful!

When you change your job, your old employer usually expects that you will take the money in your 401(k) plan with you. Leaving the money with the old employer is a bad idea. Withdrawing that money for spending is even worst! The better option is to do a rollover.

The process of rollover is very simple. You should decide which investment company you want to put this money. There are many companies in the market like AmeriPrise Financial, Schwab or TD AmeriTrade. You can select one of them and contact them for 401(k) rollover. There is a small form which you need to fill up. This form is very easy as it contains your basic information and details of your 401(k). Once you send them this form, they will start working on it.

In the meantime you should contact your former employer and request him for a rollover. You will be again required to fill up a form for such request. Within two weeks of this paperwork you should receive a positive confirmation from both your former employer and the investment company where you are going to rollover the money. And that's all you need to do.

The process looks very simple but there are some hidden dangers behind.

Remember, there is a time limit for taking the rollover decision. In case of you delay, your former employer has two options - he may allow you to continue in the company plan on he may send you the balance by check to get rid of you.

Keeping the money with your former employer is not a good option. They may not offer a wide range of investments, so your choice is limited. The returns may not be lucrative in this option.

Receiving a check of your 401(k) balance is worst option. You should never deposit that check into bank. That money will be considered your income for that year and you will be paying of tax on that! Then you will start using that money here and there. This is your retirement money and you should not spend it just in the middle of your career for less important things. So the best option is - rollover that money to an investment company of your choice and take care of your retirement.

401(k) rollover is indeed the best option when you change your job. It will get you great flexibility and you may not be required to contribute big money to continue with it. The only condition is - you should act fast.

You change your job frequently, depending on your career prospects, opportunities and pay rise. It's absolutely fine, but what about your retirement benefits? Your 401(k) account needs a rollover. You need to do it quickly with some precautions. What are they? Chintamani Abhyankar explains.

Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.

Article Source: http://EzineArticles.com/?expert=Chintamani_Abhyankar

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Low-Risk, Inflation Beating Investments For Your 401(k)

As a result of the meltdown of many 401(k) plans since 2008, many 401(k) owners are looking for more stable, less riskier investments to include in their 401(k) investment plans. Stable-value funds may be the solution for such investors.

Stable-value funds offer low-risk returns that beat inflation and should be considered as a safe-haven for your 401(k) plan. Stable-value funds typically invest in medium-maturity bonds with maturity dates ranging from two to four years. The longer maturity of the debt held by stable-value funds allows them to deliver higher yields than money-market funds. But the longer maturities also increase risk and that is why stable-value funds have higher returns. To minimize risk, institutions use insurance "wrappers" from multiple insurers to cover the uninsured portion of the stable-value fund portfolio.

Although stable-value funds offer higher returns than money-market funds, they do come with certain restrictions. Retirement plans do not allow you to transfer money directly from a stable-value fund to a money market fund or to any short-term or intermediate-term bond fund. Instead, you must move money into a non-competing fund such as a stock fund, for at least ninety days.

Stable-value funds have a lot of pluses but one negative is that you will not get rich from them. They are more conservative investments than traditional mutual funds and more aggressive than traditional money market funds. Investors should earmark at least 20% of their 401(k) funds to stable-value funds with the balance invested more aggressively or in accordance with your risk tolerance investment style.

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Benefits of Fixed Rate IRAs

What are IRAs?

Individual Retirement Accounts, or IRAs, is a personal saving account for individuals to save for their retirement. One of the main reasons for opening an IRA is the income tax advantage provided to the individual while they are saving.

When money is deposited into an IRA, it is often called a contribution. During the same year that the contributions are made, an income tax deduction will be available. This deduction will vary based on the amount of the deductions and also the tax laws. Most laws state an upper limit of how much can be invested in the IRA. This limit is usually tied to the amount of income received by the individual that year.

As long as no withdrawals are made from the account, the money invested, plus any earnings made on it, will accrue tax free. Each year, income and gains will be generated on the contributions plus increases from previous years without having to pay any taxes. Each year, further contributions can be made to the IRA up to the allowable limit for that time frame. It is important to remember that IRAs are designed to save for retirement, so most have early withdrawal fees, often as high as 10%, particularly if the individual begins to draw before the age of 59 ½.

There are a number of different types of IRAs available, including a traditional IRA, education IRA, simplified employee pension (SEP) IRA, simple IRA and Roth IRA. SEP and simple IRAs are IRAs created by employers for employees. Traditional, education and Roth IRAs are accounts opened by individuals for their own benefit. As the name implies, education IRAs are used to save for paying for further education. This type of IRA can be withdrawn prior to age 59 ½ if it is used to fund education costs.

What are Fixed Rate IRAs?

As with most investment or borrowing accounts, individuals can choose between fixed or variable interest rates. The same is true of IRAs. Many financial institutions offer both fixed rate and variable rate traditional, and Roth IRAs, while some also offer the choice for education IRAs also. The circumstances of the individual and their savings plan will determine whether fixed rate or variable rate is the right plan for them.

The main differences between fixed and variable rate IRAs are how the deposits are made and interest paid. With a fixed rate IRA, the individual agrees to deposit a certain amount of money over a specific period of time. There is usually an opening deposit amount and deposits are set up at regular intervals. Because the individual has agreed to "lend" this amount of money to the financial institution for the stated period, the benefit is often higher returns and a fixed interest rate for the entire period.

Variable rate IRAs work much the same as other variable rate investments, like mutual funds. Contributions can be made whenever the individual likes and the money is not locked in for a certain period of time. As such, the interest rate is not locked either, so it will fluctuate with market conditions. For short term investing, variable rate IRAs may make more sense, but only if the market shares gain in value.

Benefits of Fixed Rate IRAs

As stated, individuals who decide to invest in fixed rate IRAs can benefit from higher returns due to higher interest rates. The longer the money is invested and the greater the amount, the higher the interest rate. Because the investment is in an IRA, the interest generated on the contributions remains untaxed until they begin withdrawals.

Fixed rate IRAs provide more security compared to variable rate IRAs. A guaranteed interest rate over the term of the contribution is provided for fixed rate IRAs. If the market is particularly volatile, a fixed rate IRA will remain stable, allowing for a better forecast of the final amount saved.

In the end, deciding between a fixed rate IRA and a variable rate IRA comes down to the amount of risk the individual is willing to take with their portfolio. For higher, short-term gains, a variable rate IRA may be more popular. For many, the guarantee of a set amount of future income is what makes fixed rate IRAs more attractive to many investors. For those who are looking at long term investments, fixed rate IRAs, where the contributions role over, are likely to be the better bet.

Debra Dragon is a freelance writer for DepositAccounts.com. She writes about how to make your money work better for you through various deposit accounts, including savings accounts, interest checking accounts, IRAs, and money market funds.

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Benefits of 2010 Roth IRA Conversion

As a way to encourage individuals to move their funds from traditional IRA accounts and covert to Roth IRA accounts the government has instituted the 2010 Roth IRA conversion. This conversion, when planned and completed properly will be a great opportunity for individuals who are planning their retirement.

The impetus of the 2010 Roth IRA conversion was the government's need to get money. Traditional IRA accounts are not taxed until the money is removed. Roth IRAs are taxed before the money goes in. So, the need of the government for tax dollars could be a great benefit to individuals who want to create a retirement income that will not be taxed.

When a person converts their traditional IRA to a Roth IRA they will have to pay taxes on the value of the contribution. This is calculated using several different methods which include income of the individual, tax bracket, etc. However, once this tax has been paid and it is in the Roth IRA there will not be a need to pay taxes on it when one retires. That money, and the growth that it sees during the time it is in the account are not taxable income.

In order to get more individuals to participate in the 2010 Roth IRA Conversion the government also lifted the limitation that disqualified people making over $100, 000 in adjust gross income. These individuals can now participate in this IRA. The phase out of the ROTH contributions continues to be in place so if an individual cannot contribute because of the phase out there has been no provision made for them to re-enter the program.

The benefits of a Roth are innumerable. One is that the money in the ROTH is pre-taxed so one does not have to worry about taxes when they begin to receive benefits from it. the drawback, of course, is that there is no IRA deduction with these IRAs. Certainly a worthwhile trade off.

The next benefit is in regards to the Required Minimum Distribution that tax deferred IRAs have. When a person turns 70. 5 they have to take money from their IRA and it is taxed. If they don't take the money out they are taxed and penalized. Since Roth's has already been taxed it does not fall into the Required Minimum Distribution trap.

If you feel the tax free nature of the Roth is worth forgoing the initial IRA deduction that the traditional IRA offers you may be interested in this product. The 2010 Roth IRA conversion provides a small window of opportunity if you have a higher income.

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Your 401k and the Retirement Savings Contribution Credit

If you earn relatively little, there's good news for your 401k: a federal tax credit. A tax credit is better than a deduction because it directly reduces the amount of taxes you owe, making it as good as cash. Unfortunately, the federal tax credit is limited.

Eligibility for Retirement Savings Contribution Credit (in 2008):
Single person with income less than $26,500 a year
Head of household with income less than $39,750
Joint return with income less than $53,000

These amounts change every year. Check out the IRS web site for the latest figures by searching IRS.gov for "Retirement Savings Contribution Credit."

The credit is not available to full time students and people claimed as a dependent on someone else's (like a parent's) tax return.

The tax credit runs on a sliding scale, starting at 50 percent for single filers with income under $15,500 and joint filers with incomes less than $31,000. The 50 percent tax credit means that for every dollar that you contribute to your 401k, your tax bill is reduced by 50 cents. As incomes rise, the tax credit falls, until it reaches ten percent for those just under the threshold of eligibility.

Think about what this means for the lowest income workers whose companies will match half of their contributions: putting money into the 401k is free! Half the contribution is matched by the company, and the other half offsets federal taxes. It's a great deal if you can tighten your belt a little to be able to make the contribution.

Keep in mind, however, that this is not a "refundable credit." If you have enough deductions that you owe no tax whatsoever, you will not get cash back from the government. You'll only benefit if you have a tax liability. (I'm NOT talking about whether you get a refund after you file your taxes; I'm talking about whether your tax return shows that you pay any tax at all.)

The Retirement Savings Contribution Credit is a very good help to lower income workers concerned about their retirement. Unfortunately, it does not apply to very many people. Those folks who are eligible often feel that they have very little discretionary income. Saving for retirement is hard for low-income workers, but it is possible. This tax credit will make the task a little easier.

"The ABCs of Your 401k" is a free, on-line course that elaborates on this and other aspects of your 401k, at http://www.abcinvesting.com The course was created by the author of this article, Dr. Bill Conerly, chief economist of abcInvesting.com, which provides accurate, basic, and clear investing information.
(C)2009 abcInvesting.com LLC

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International Term Life Insurance Vs Cash Value Insurance

There are two forms of life insurance policies available. The first is Domestic or International Term Life insurance, which is the most basic form of insurance. It offers insurance death benefit coverage and that's it. With a term policy, your premiums are applied 100% to the cost of the term insurance. As you age and retirement grows near, the need for any life insurance decreases. Your children will now be able to support themselves and your savings for retirement will begin to approximate a lump-sum insurance payment. At this time, it may be safe to cancel or sell your current Domestic or International Term Life insurance policy.

The second type of insurance is cash value insurance. There are many financial products that fall under this category. They can include universal life insurance, variable life insurance and whole life insurance. Cash value insurance combine regular term insurance with a tax-sheltered savings plan that is long-term. One of the most important things to know about cash value policies is that they must be held for life, but this does not mean that premiums need to be paid for life; it is possible you only need to pay premiums for 5 -7 years. In most cases, there will be some upfront costs that are associated with setting up the savings plan, paying a commission to the agent and investing the money. Despite these initial charges, this type of tax-sheltered savings can have huge advantages, however, be aware that it may take at least 10 years for those advantages to be a benefit. If you are thinking of purchasing a cash value policy, make sure you learn about every aspect of the policy.

Understanding how a general cash value policy works is essential. Your life insurance is paid by a portion of your regular premium payment. The balance is then applied to the savings account attached to the policy. In order to build savings, your advisor should request a minimum death benefit and fund the policy over at least 5-7 years. The premiums for a cash value policy are higher than that of a term life policy with the same death benefit, but you are not buying this policy for the death benefit, but rather for tax-free savings and tax free withdrawals. For this retirement strategy, you definitely want to get the minimum death benefit to maximize the cash value growth. While the premium may seem higher, savings is the ultimate goal. The savings from a cash value policy can provide you with income that will cover all life insurance payments upon retirement. If you die, the balance of the savings and the death benefit is then passed onto your named beneficiary, which ideally will be an irrevocable trust. Depending on the type of policy, the amount passed on will be a portion of the death benefit of the insurance or in addition to that death benefit.

If set up correctly, removing money from the plan will not result in income taxes which is one of the key benefits of the policy. There are strict rules regarding taking money from the savings in the plan, but a good advisor or Estate Street Partners will walk you through those details.

In the author's opinion, the best type of cash value life insurance is Indexed Equity Universal Life (EIUL) because it has an annual minimum return guarantee, but still allows the cash value to grow at market rates every year if the stock market has positive returns. These policies lock in the gains in up years and avoid losing money in the years the market goes negative. Usually these policies are tied to a stock index like the S&P 500.

The mechanics are simple: The insurance company does not invest in the stock market, rather they invest in bonds and some of the interest that is generated from the bonds goes to you to guarantee a minimum rate of return and some of the interest is used to buy call options on the index. When the stock market index goes up it pays off the policy at the same rate of return of the market.

There are many people who will buy a cash value policy and then cancel it. Cash value plans can provide great benefits, but you must keep that policy and not cancel it. If you think you may cancel a life insurance policy later, it may be better to purchase a term life policy instead. But there is really no need to cancel it, just stop paying the premiums and the cash value will continue to grow tax free. Unlike a Term life policy, one does not need to pay premiums for more than 5 years unless they want too.

If you are contemplating buying life insurance, make sure the agent breaks it all down. You want to know the exact benefits of each type of policy and what these benefits entail. Many agents will recommend you to buy cash value because of the savings plan attached to it. While this may be a good option for most, it may not benefit everyone in the same way; it depends on each individual's situation. Each person has their own needs when it comes to life insurance, so make sure you get all the information needed before making a decision.

Best IRA Rescue provides services on your Roth IRA, IRA investments & traditional IRA and will help you reduce your inherited and beneficiary independent retirement account taxes in your estate assets. Roth on ROID™ is your advanced Roth IRA retirement planning strategy. It is Cash Value Life Insurance and one of the best IRA tax-savings strategies with benefits of a guaranteed death benefit, guaranteed principal, tax-free growth, and tax-free distributions from policy loans. Traditional IRAs and ROTH IRAs cannot invest in life insurance. Please contact us if you have any questions. Rocco Beatrice, CPA, MST, MBA

International Term Life
Term vs Cash Life Insurance
Boston, MA: 71 Commercial Street #150 Boston, MA 02109
Costa Mesa, CA: 543 Victoria Ste. J, Costa Mesa, CA 92627
toll-free: 888-93ULTRA (888-938-5872) tel: +1.508.429.0011 fax: +1.508.429.3034

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High Yield Roth IRA

For many years, people invested in high yield savings accounts to increase their earnings on their balance. Since the interest rates have been so low through banks, these same investors are finding that the once called high yield accounts do not really exist anymore. While this may be a cause for panic in some people, others are learning that there are other ways to save money while still getting the benefits of a high yield account. How do they do this? The answer is a Roth IRA which high returns.

Generally, people start saving for retirement by opening an IRA account. Most people choose either a traditional IRA account or a Roth IRA. Now, we all know there are major differences between the two. Generally speaking, the Roth IRA seems to be the popular choice. With a Roth IRA, the contributions that are made to the account cannot be deducted when taxes are filed. Some of the high yield investments approved by the IRA and IRS rules include real estate, real estate mortgages, foreign currencies, oil and gas, gold bullion, life settlements, and structured settlements. Due to these opportunities, this type of IRA can earn a higher yield than a traditional bank account because of its tax free growth characteristics. While it is not classified as so, the account can actually be considered a high yield Roth IRA.

When this type of account is opened, it is like every other Roth IRA. The main benefits are the same. This means that no matter what, it will have the same rules. It will have no age limit, the same contribution limit, withdrawal and transfer rules etc. So, you may ask, how do I create these high return investments? The answer can be as simple or as complicated as you make it. As an investor and an owner of a Roth IRA account, you will have various choices regarding how you wish to invest your money in the account. In most cases, people will invest in the typical investments, such as stocks, bonds and mutual funds. However, these are not the only avenues you can travel with.

In order to receive high yields, you must know what types of investments are allowed and approved by the IRA as well as the IRS. As mentioned previously, these investments can include real estate, real estate mortgages, foreign currencies, oil and gas, gold bullion, life settlements, and structured settlements.

So, let's say you already have a Roth IRA retirement account and you have been making regular contributions. With the state of the stock market, the account has not done well growth wise, meaning that the stock market is not yielding a high return. So you decide to look into other types of investments to build your account and strengthen your portfolio. The key to having a high yield Roth IRA is placing your money in investments that have high yield returns. This sounds attractive and simple, but as an investor, it is a risk. Most investments are also high risk. This means it could go either way. You could lose more than you invest, or on the other hand, you could get enormous returns.

In closing, if you do decide to turn your account into a high yield Roth IRA, it is highly recommended that you have an experienced financial advisor to manage these investments. High yield investments can be difficult to understand, so it is always best to allow an advisor to handle your portfolio. They will also make sure that all Roth IRA rules are followed and that the investments are approved by the IRS.

Best IRA Rescue provides services on your Roth IRA, IRA investments & traditional IRA and will help you reduce your inherited and beneficiary independent retirement account taxes in your estate assets. Roth on ROID™ is your advanced Roth IRA retirement planning strategy. It is Cash Value Life Insurance and one of the best IRA tax-savings strategies with benefits of a guaranteed death benefit, guaranteed principal, tax-free growth, and tax-free distributions from policy loans. Traditional IRAs and ROTH IRAs cannot invest in life insurance. Please contact us if you have any questions. Rocco Beatrice, CPA, MST, MBA

Best IRA
High Yield Roth IRA
Boston, MA: 71 Commercial Street #150 Boston, MA 02109
Costa Mesa, CA: 543 Victoria Ste. J, Costa Mesa, CA 92627
toll-free: 888-93ULTRA (888-938-5872) tel: +1.508.429.0011 fax: +1.508.429.3034

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Understanding Your IRA

Similar to an employer sponsored 401k, an IRA is a tax deductible defined contribution retirement account. It does not require an employer to be a sponsor and one can be opened at a variety of financial institutions.

As a retirement investment, an Individual Retirement Account (IRA) has multiple advantages and disadvantages:

* Pros:
o Tax deferred until withdrawal.
o Individual, customized control of investments.

* Cons:
o Very low yearly contribution allowance of $5,000.
o 10% withdrawal penalty.
o Lack of liquidity if the contributor needs the money for another purpose.

Benefits of an Individual Retirement Account (IRA)

The most significant advantage of an IRA is that it's a tax deferred plan similar to a 401k. For example, if you are making $50,000 a year and opt to put the maximum of $5,000 a year into your IRA, your income rate for taxes will be considered $45,000. This tax deferment also means that when you withdraw the funds upon retirement, the withdrawn amount is taxed as income.

Owners of the account have a variety of investments that can be funded with their IRA account. These generally include a variety of stocks, bonds and mutual funds. Investments such as real estate have further limits set in place by the individual retirement account (IRA) administrator. Collectibles and life insurance are not permitted to be held in individual retirement accounts (IRA).

The tax deferment feature of an individual retirement account (IRA) is generally popular because individuals expect to have lower yearly income in their retirement years than in their working years. In this case, being taxed at their lower income rate during retirement can save money over being taxed at the higher income rate received during their working years.

Deposit Limits of an Individual Retirement Account (IRA)

The yearly deposit limit for an IRA is $5,000 in 2008 and 2009. There is an additional "catch-up" allowance of $1,000 a year for individuals 50 or older. There is a restriction on this catch-up contribution in that the owner must have already made the maximum contribution to their Individual Retirement Account (IRA) and an employer sponsored 401k. These deposit limits are also in place for a Roth IRA and the total deposit between two separate accounts can't exceed the limits listed above.

Withdrawing funds from an Individual Retirement Account (IRA)

As with a 401k, there is an early withdrawal limit on individual retirement accounts (IRA) if the money is distributed outside of the allowable exceptions. The IRA is open to withdrawal once the owner reaches the ages of 59 ½. At the age of 70 ½ the owner is required to withdraw the minimum amount which is calculated as a combination of life expectancy of the owner, their spouse, and any beneficiaries.

Other exceptions to the penalty include:

* Medical expenses that exceed 7.5% of the owners adjusted gross income.
* Withdrawal in order to buy a first home.
* Inability to work any longer (disability).
* Costs of medical insurance while unemployed.
* Distributions to a beneficiary if the owner dies.
* Higher education expenses of the owner, their children or their grandchildren.

Types of Individual Retirement Accounts (IRA) Available

The above information is all in reference to a traditional individual retirement account (IRA). The following is a list of non-tradition IRAs available and how they differ from the traditional plan.

Roth IRA

The primary difference is that a Roth IRA is not tax deductible and the owner pays taxes on the money before it is deposited into the account. On the other hand, the money is not taxable once the owner begins to withdraw funds. Additionally, any capital gains, dividends, and interest earned in the account are not taxable. The Roth IRA also does not have a requirement to begin withdrawals by age 70 ½. There is a maximum yearly income allowed to be eligible to contribute to a Roth individual retirement account (Roth IRA). For full contributions this limit is $105,000 for single filers and $166,000 for those filing jointly.

SEP IRA

The Simplified Employee Pension Individual Retirement Account (SEP IRA) is an IRA account specifically meant for self-employed individuals and their employees. The account is shared among all members involved and uses a profit-sharing model. The contribution limits for an SEP IRA are the lesser of 25% of income or $49,000 in 2009. All members of the SEP IRA are required to make the same contribution.

Individual Retirement Accounts (IRAs) are popular among individuals who are looking to plan out their retirement. It is important when planning for retirement to understand the different options available and how to fit them into your personal preferences. You can read more about how an individual retirement account (IRA) fits into saving for retirement and retirement investing here.

You can find the original article here: Understanding Your 401k.

Finantage is independent of the financial services and banking industries. This allows us to provide honest and accurate information directly to you without forcing you to endure a sales pitch. We use this independence to give you a financial advantage whether you are buying your first home or you are setting up a retirement fund.

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The Self Employed Investment Vehicle - Solo 401K

There is a common misconception that the only real retirement option for self employed individuals is a SEP-IRA. A lot of advisers aren't too familiar with the Solo 401(k) and especially the solo(k) with a Roth option.

What is the difference?

Here is a general breakdown of the two: SEP IRA's allow for tax-deductible contributions as well as deferred growth. The contribution limits for the SEP IRA is 25% of your compensation with a cap of $44k. The only issue with this is that the IRS only allows you to contribute 25% of you net profit. This is where one of the major advantages come into play for a solo(k).

A Solo(k) has the same contribution limits however you can not only contribute 25% of profit sharing you can also contribute tax-deductible salary deferrals of up to $15k per year. Basically you can make very little self employed income and defer it all. This gives you an added advantage if your self employed income is your secondary income and you are looking to maximize your tax advantages. Best of all there is no UBIT on leveraged real estate or investments, and you have the ability to borrow against the plan.

You can also add your spouse to the plan and your total annual contributions can total $109k for joint filers over the age of 50!! Another key advantage is that you can separate your Solo(k) into four Sub-Accounts or ''buckets":

1) Two Salary Deferral Buckets: Allocate up to $16.5k or $22k (if over age 50) to either:
• Roth Sub-Account (No restriction on AGI)
• Traditional Tax Deferred Sub-Acount

2) Profit Sharing Bucket: Lessor of:
• A) $49k (minus $16.5k from salary-deferral)
• B) 25% of your ''compensation'' or ''earned income''

3) Rollover Bucket: All Rollovers go here, both funds are not permitted

4) A TPA is required. Pre-established relationship with Pension Benefits Consultants (PBC) In summary you can win big being self-employed and having a Solo(k).

Faisal is the Co-Founder of Brooklyn Troy, a real estate land acquisition and self-directed IRA company. He graduated with honors from University of California San Diego with a BS in Management Science and a minor in Spanish. In 2003 he co-founded La Jolla Wealth Management, a real estate finance and private equity company. He has assisted in the acquisition and management of over $45 million dollars in assets.

http://www.brooklyntroy.com

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401k Maximum Contribution

The 401k maximum contribution limit changes every year, so if you are looking to contribute as much as possible and take advantage of your retirement plan you'll want to keep up to date with the new limits.

As of 2009 you can invest up to $16,500 if you are under the age of 50. If you are between 50 and 59 years and 6 months of age then you have an additional $5,000 catch-up investment you can make to prepare for your retirement.

If you are looking at this amount and thinking you'd like to add more to it than that, or you would like to diversify the money you are currently saving, you may want to look into a Roth IRA option.

With a traditional employer sponsored 401K plan money is taken from your checks before taxes are taken out and the money is deposited into your retirement plan. When you reach 59 and 1/2 years old and are able to start making withdrawals from the account you will then pay taxes on this money. If you have to pay the taxes eventually, why would you want to invest before taxes? The tax money that you smartly invested will grow and help you earn returns, giving you a healthier nest egg.

While the 401k maximum contribution is much higher than the Roth IRA option, and as I've mentioned above the 401K has many advantages, you may want to look at the IRAs as well.

A Roth IRA works a little differently, however. The first big difference is that an IRA, or independent retirement account, is set up by you, independently. You have more control of the account and pick your investments completely on your own, or with the guidance of the company you select to handle the account. A Roth account has the added difference that the money you invest is after taxes, which means that in retirement you won't have to pay taxes on your withdrawals.

With a mix of the two investments you'll be able to diversify your tax obligations and experience the best of both investment options.

As mentioned above the 401K maximum contribution is at $16,500 with a catch up limit of $5,000 for those over 50 years of age. Independent retirement accounts, as of 2009, have a limit of $5,000 with a $1,000 catch up.

Visit my site for more about your 401K balance, contribution limits, cashing out, and all of your 401K and IRA options.

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401k IRA Rollover

A 401K IRA rollover is actually a very simple process, but you need to make sure the simple steps are taken exactly right or you will end up losing a huge portion of your savings to an early withdrawal penalty and taxes.

When you cash out a retirement plan before you turn 59 and 1/2 years old you have to pay a 10% early withdrawal penalty, state taxes, and federal taxes on the money. Your income bracket and state tax percentage rate will vary the exact amounts this will all amount to, but this can easily add up to thirty to forty percent of your retirement fund. When you go to transfer things you want to make sure that you don't accidentally end up cashing out so that you don't lose any of your savings.

The first thing you need to know about doing this is that it can't be done at anytime. You are free to do whatever you want with your plan after you turn 59 years and 6 months old, and the only other time you have the opportunity to move funds is immediately after leaving a job. When you leave a job you can move your plan to your new employers plan, you can leave the money where it is, you can cash out (with penalties), or you can do a 401k IRA rollover.

When you go to do the transfer you need to make sure the money goes directly to the independent retirement account and does not come to you in the form of a check. This happens often, and can easily end up looking to the government as though you cashed out your account. You'll want to select a company to handle your IRA first, and then set things up with them and your former employer to handle the direct transfer.

Another important fact to note is to make sure that if you have a traditional 401K plan that you set up a traditional IRA instead of a Roth account. Traditional accounts invest from your pretax income, where as Roth accounts use money that's already been taxed. This means that with a traditional account you will pay your taxes when you withdraw, whereas with a Roth account you pay your taxes before putting the money in.

In summary, to have a smooth 401K IRA rollover you simply need to make sure things are transferred smoothly and avoid withdrawing any funds.

Visit 401K to IRA for all the information you need, including more about the 401K penalty for early withdrawal.

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401k Deduction

The 401k deduction for taxes that is often discussed is not actually a tax deduction, it actually just puts a hold on paying taxes on the money you invest until you withdraw during retirement. This is a helpful tactic though, and one that will help you grow your retirement savings considerably.

A traditional plan is done through your employer. The money you invest is taken from your checks before taxes are taken out of your income. The money you invest will earn returns and grow a great deal over the years.

When you withdraw money in retirement the money you invested will be taxed, though the profit earned on the investments is exempted.

When you originally put money into your plan the money that is taken before taxes is not considered taxable income until retirement. This means that the money you put into your plan gives you a 401K deduction for that year, hopefully lowering your income bracket and then lowering the percentage of taxes you have to pay that year.

While this isn't a real tax deduction, because you will still have to pay the taxes when you withdraw in retirement, it does put off paying taxes on that income until then, and allow you to invest that money and help you grow your retirement savings.

The maximum amount of money you are allowed to invest in your traditional pre-tax plan changes every year. The government changes this amount based on the annual inflation rate and other factors. As of 2009 you are allowed to contribute up to $16,500 with a $5,000 catch-up contribution for those over the age of 50.

Even if you aren't contributing to the maximum to your plan every bit you do contribute helps, and depending on your income bracket you may be able to lower your tax level without having to contribute that much. Before making any investment plans based on your tax needs it is recommended that you speak with your tax professional about your specific income needs, they can help you plan not just for your current tax requirements, but for your obligations in retirement as well.

As a strategy for lowering your income bracket, and raising your retirement savings in more ways than one, the 401k deduction is definitely information that more people should be made aware of, and discuss with their financial professionals.

Knowledge is power, especially in finances. Learn more about your 401K balance, contribution limits, cashing out, and all of your 401K and IRA options.

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No Benefit From a Roth IRA Conversion

A follow up to my previous article: Roth Conversion in 2010, Don't Do It.

I see your still getting conflicting opinions about converting a traditional IRA to a Roth in 2010 when there are no IRS income restrictions. And, it is still not a good financial decision.

There is actually a very easy way to decide. Ask yourself this question "would I do it if I am 701/2 years old? You probably would not. If that is your answer, then why would you consider doing it at any other age?

A 701/2 year old has a traditional IRA worth $200,000 and is in the 28% tax bracket. This individual has a choice to make: pay the tax now on a conversion to a Roth or pay it over the next 50 years - which is how long you get to pay the deferred taxes on a traditional IRA.

By converting to a Roth IRA the individual would have to come up with $56,000 to pay the tax now. Instead, put this same $56,000 into its own traditional IRA as cash - earning nothing. The individual has to take required minimum distributions as prescribed by law. The first withdrawal is 3.77% of the account balance. Amortize the $56,000 balance according to the official RMD schedule and the account would be depleted at age 120. Think about how much this account would accumulate if you could earn a return higher than 3.77%.

Lets go younger. You are 30 years old with a $30,000 traditional IRA. The Roth conversion tax is $8,400 at the 28% tax rate. If that amount stayed invested in the IRA earning 7%, it would grow tax deferred to $126,000 at age 70 ½. Put that amount in its own IRA and amortize it just like in the example above.

It seems to me that if I owed someone money, like the Government for taxes way into the future and there are no financing charges, why would I pay it off all at once now? I know there are many other Ezine articles that advocate converting to a Roth due to the tax free appeal, but most do not address the time value of money of the lump sum payment versus installment payments.

Thomas Warren is a Certified Financial Planner(R) practitioner. He resides in Oceanside, N.Y.

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Using Your Self-Directed IRA to Obtain Non-Recourse Loans

There are a countless number of ways to utilize your 401k and diversify your portfolio. An option that most people don't often utilize are non-recourse loans for self-directed IRA's. The IRS requires a non-recourse loan for all real estate purchases that use leverage with a self-directed IRA, which means that if the loan were to default the lender can only take the property and can not come after the borrower or their IRA account.

Non-recourse loans are more often used for investors who want to acquire property using their self-directed IRA but don't have enough capital to purchase the property, and don't want to use their hard earned IRA as collateral. Non-recourse loans allow clients to purchase and use the property and only the property as collateral for a loan. That means that credit/fico scores are often not used in the underwriting decision on these loans because the borrower is not the guarantor for the loan. This does however require the properties being lent on being cash flow positive. Most of the time non recourse lenders will even lend up to 70% loan to value.

For example lets say investor Bob has $90k in his 401k IRA that he is looking to invest but really doesn't want to use it all on one property. While searching for the right investment he finds an amazing property that is going for $100k, that he knows is way under valued and can cash flow positively even in the current market. Bob knows he can do a 401k rollover into a self-directed IRA for $30k and then obtain a non-recourse loan for $70k in order to complete the purchase.

Assuming that the property is cash flow positive, which is extremely common in this market, Bob can now use the remaining funds within his IRA account and purchase several properties instead of just one. This not only diversifies his portfolio but reduces his exposure to any potential down turn in the market, or unexpected vacancy. Now with the $90k Bob had ready to purchase an investment property he now has 3 properties that are all cash flow positive and each month the rental checks go right back into his self-directed IRA account.

Here are some basic guidelines for IRA financing:
Requirements for IRA Debt Financing:

1. Purchase transactions for investment properties only
2. IRA assets to be managed by a custodian in a self-directed IRA or SEP.
3. IRA assets must be verified for purchase and reserves. IRA reserve requirement may be up to 20% of the loan amount, to be available in the event of insufficient cash flow to pay operating expenses and mortgage payments.
4. No employment or income verification

Documentation Require for Loan Approval:

1. Completed loan application
2. Current detailed Rent Roll or copies of signed leases.
3. Most recent asset statement verifying IRA assets for purchase and reserves.
4. Purchase/Sale contract, signed by the IRA account holder and the custodian. The contract must show the buyer to be in the name of IRA.
5. Appraisal fee required at the time of loan application for 1-4 family.

Obviously each deal is different and some restrictions may apply, but this is another tool that can be used to help your IRA account grow and to diversify the assets held within it.

Faisal is the Co-Founder of Brooklyn Troy, a real estate land acquisition and self-directed IRA company. He graduated with honors from University of California San Diego with a BS in Management Science and a minor in Spanish.In 2003 he co-founded La Jolla Wealth Management, a real estate finance and private equity company. He has assisted in the acquisition and management of over $45 million dollars in assets. http://www.brooklyntroy.com

Article Source: http://EzineArticles.com/?expert=Faisal_Sublaban

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The Truth About Roth IRA's

Roth IRA's are beneficial to a traditional IRA because the guidelines allow you to withdrawal money tax free before you officially reach retirement age. If you're saving only for retirement, you can start making tax free withdrawals after you reach 59. 5 years old. If you choose to withdrawal before this age, you have to meet certain criteria. One way is to become officially disabled. Another option is to use the withdrawal toward your first home, or the first home for your children or grandchildren. These withdrawals are still tax free.

While this type of account does make it much easier to access your money before you reach the age of retirement, there are also some restrictions on the amount of money you can put into the account each year. The ultimate amount is determined by how much money you earn in a year and your age. Anyone over 50 years old will be able to contribute more.

The 2009 IRA contribution limits are unchanged. In both 2008 and 2009, the limit you may contribute is $5,000. However, if you will be 50 or older by the end of the year, you can contribute an extra $1,000, for a $6,000 total contribution limit. These limits apply to both regular and Roth IRAs. Although you may be eligible to contribute to both plans, your combined contribution to both accounts cannot exceed your above limit ($5,000 or $6,000).

There is also a cap on income earned, which means you have to earn less than a certain amount in order to qualify as a Roth IRA contributor for the year. In 2009, the cap is $105, 000 for anyone who files as a single taxpayer. For anyone filing jointly or as a married couple, the cap is currently at $166,000.

There are some disadvantages with Roth IRA accounts.

You have to pay the taxes today for the contributions. How is this a disadvantage?

Let's say you make $80,000 this year on taxable income, making you in the high tax bracket. If you contribute $4000 to your Roth IRA, you are taxed on that $4000 at the high tax rate. You are better off making Roth IRA contributions when your income is low (to avoid paying big taxes today) and not when your income is high. For instance, if one contributes $1000 to a traditional IRA while in a high tax bracket, you can receive a substantial tax deduction thereby reducing the initial cost of contributions. This is not the case with Roth IRA. If during retirement one ends up in a lower income bracket than today, one will wind up with less usable cash by choosing a Roth IRA over a Traditional IRA. Please note that money in a traditional IRA is taxed once it is withdrawn at retirement.

Another major disadvantage of Roth IRA is heavy penalty for early withdrawals. Withdrawals up to the total of contributions + conversions are tax-free. However, an unqualified withdrawal of earnings will result in federal income tax plus a ten-percent penalty on the amount. Though there are exceptions to it like buying a first home and paying qualified educational expenses, you need to be careful.

Faisal is the Co-Founder of Brooklyn Troy, a real estate land acquisition and self-directed IRA company. He graduated with honors from University of California San Diego with a BS in Management Science and a minor in Spanish.In 2003 he co-founded La Jolla Wealth Management, a real estate finance and private equity company. He has assisted in the acquisition and management of over $45 million dollars in assets. http://www.brooklyntroy.com

Article Source: http://EzineArticles.com/?expert=Faisal_Sublaban

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Self-Directed IRAs Are Buying Lots of Real Estate

While today's residential market is flooded with foreclosed properties, the resulting devaluations in many parts of the country are creating unique opportunities for long-term investment buyers. With many consumers increasingly concerned about liquidity as a result of the reeling economy, investors are turning to their retirement accounts to take advantage of an incredible buyer's market. Since the credit market is effectively in neutral, investors are scooping up properties in some areas for less than 50% of appraised value, with all cash purchases with their self-directed IRAs.

For example, on July 6, I heard from a real estate broker in Florida that he was able to purchase a 2,800 square ft. home on a golf course in a gated community (and needing no repair) for $100,000. It was listed by the bank that foreclosed on it at its appraised value of $200,000, and it sold two years ago for $440,000!

Although we may not yet have reached the bottom of the market for residential real estate, and the window of opportunity will likely stay open until the third or fourth quarter of 2010, the opportunities today have the dual potential for significant appreciation in the five to 10 year time frame and the production of positive cash flow during the holding period at today's prices.

Experienced real estate investors, brokers and realtors are taking action now, recognizing that more foreclosures will follow early next year as adjustable rate mortgages (ARM mortgages) sold in 2007 kick in with a vengeance in the first quarter of next year.

At PENSCO Trust, we have seen a 26% increase in IRA real estate purchases (to $26 million) between the first and second quarters of this year. Most of this increase was associated with foreclosures in the residential market, however, we have also seen quite a few real estate syndicators buying up unimproved land (undeveloped lots), with the idea of conditioning it through entitlement in time for the next upswing in the real estate development sector. In some cases, they are buying at 10 cents on the dollar. These deals are not for the faint of heart and may require a longer holding period, so they are not suitable for anyone with liquidity needs.

Another avenue self-directed IRA investors are pursuing is to provide credit to others for the purpose of buying real estate. With traditional credit markets almost nonexistent, borrowers are getting needed funds from IRA investors looking to increase their investment yield on their retirement accounts. Such investors may offer the down payment, first mortgage or second mortgage or even become a co-tenant on a purchase when the buyer does not have the necessary funds.

For example, one investor may locate a great investment property, but not have sufficient funds to buy the property. By combining forces and funds with an IRA investor, who may participate through an equity investment or an extension of credit, they can acquire the property. It is important when investing in real estate with a self-directed IRA, that you choose a competent IRA custodian with a strong track record. Good custodians will help you to understand the rules and the process, easing your entry to self-direction.

In addition, it is very important that your custodian is geared to execute in a timely and accurate manner, as real estate transactions can close very quickly and earnest money deposits frequently have to be made from your IRA on the same day to secure the best opportunities. PENSCO Trust is proud of the fact that we generally get all real estate transactions funded on the same day they are authorized by our clients, and, in almost all cases, within 48 hours.

Certainly, investing today is more challenging than in a bull market, but some things are certain. Real estate values are down in most areas of the country, building has almost come to a screeching halt and demand will eventually catch up to supply, at which time prices will rise. How long that takes is anyone's guess, but some like those odds better than investing in the stock market. Choose your own poison, but eventually you have to take action to keep your wealth growing.

http://www.brooklyntroy.com

Faisal is the Co-Founder of Brooklyn Troy, a real estate land acquisition and self-directed IRA company. He graduated with honors from University of California San Diego with a BS in Management Science and a minor in Spanish.In 2003 he co-founded La Jolla Wealth Management, a real estate finance and private equity company. He has assisted in the acquisition and management of over $45 million dollars in assets. http://www.brooklyntroy.com

Article Source: http://EzineArticles.com/?expert=Faisal_Sublaban

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Difference Between 401k and IRA

The difference between 401k and IRA plans are both small and large. You'll find many small details that differ between the two, but for the most part, you can break it down to one main thing, your level of control.

401K plans are employer sponsored, which means you sign up for the plan through your employer and your account is handled through them. You are typically offered a few choice plans on how you will invest your money, which does take some of the control out of your investments, but some people like how this simplifies the process for them. The biggest advantage of one of these plans is that many employers will offer you a company match up to a certain percentage. So, for instance, if your company will match you up to 2%, then when you invest 2% of your income they will match that amount. This gives you more than just the money they match directly, this also gives you more money to invest and grow towards retirement, which can be a great help.

IRA, or, independent retirement accounts, are much more self directed. You go out on your own and find a company that you would like to handle your account, and you make all the decisions about how the account will be handled. While with an employer sponsored plan you are offered several plans to choose from that will decide how your savings are invested, with an independent retirement account you make all the individual decisions about how your money will be invested. You also always have the option to set up a traditional or Roth account, traditional accounts are before taxes (which means you will pay the taxes when you withdraw the funds in retirement) while Roth accounts are after taxes (which means you withdraw tax free in retirement).

So, basically, broken down, the main difference between 401k and IRA savings plans is the level of control you have, and of course, the employer match.

Retirement accounts don't have to be so confusing. At my site I try to simplify how to do everything you need to, like 401k balance questions, contribution limits, cashing out, and other 401k IRA options people need information about.

Article Source: http://EzineArticles.com/?expert=Jennifer_Quilter

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The 401k 20% Withholding Trap, and How to Avoid It!

With all of the complex rules surrounding your 401k or your company sponsored retirement plans it's no wonder people end up paying taxes and penalties they didn't think they would have to. You have probably heard of the 20% withholding requirement and most plans consider this to be a mandatory part of doing business. However this withholding could cause some serious problems and if you read on you will find out that it is not as mandatory as you thought.

Most company sponsored retirement plans require that every time you take money out you must withhold 20% for taxes. So if you take a $10,000 distribution you may only get a check for $8,000. The good news is that the $2,000 is not lost it has just been sent to the IRS on your behalf. The bad news is that you get less money now and you are withholding taxes when you may not even owe any. Think about this. If you are laid off or out of work for an extended time what tax bracket are you in? If you have been collecting unemployment for the last 12 months and now it has run dry might you be in a lower tax bracket? And what if you really need the full $10,000 now and figure you will be in a better position to pay the taxes by next April when they will be due? Or lastly what if you just don't like the idea of paying your tax ahead of time and would much rather use ALL or YOUR money now and pay your taxes ONLY when they are due and not one minute sooner?

I will tell you how to avoid this so called "mandatory" rule in a minute but first let me tell you one more problem it creates. Did you know that if you do a 60 day rollover of your 401k plan into an IRA and you let them take the mandatory 20% withholding you will owe FULL TAX AND PENALTY on that money? For example, if you take a $100,000 distribution from your company plan to reinvest into an IRA they will withhold $20,000. Because you can now only reinvest $80,000 into your new IRA you will be short $20,000 on your 60 day rollover and FULL TAX AND PENALTY will be due on that $20,000 they forced you to withhold. You are probably thinking that this is not fair. After all you are entitled to roll over the whole amount and pay no tax, and it was not even your idea to withhold any money. If there was a way to avoid this problem wouldn't you want to know how, than read on...

Fortunately there is a way around these problems but chances are your human resource person will never tell you about it, nor will the company holding on to your funds. What you will useually hear is that the withholding is mandatory and that there is nothing they can do. Well here is how you fix this. Instead of doing a 60day rollover or taking a distribution directly from your company plan you TRANSFER your company plan to an IRA first. The key word here is TRANSFER. What you want to do is technically called a "Trustee to Trustee Transfer" or sometimes a "Direct Transfer". Doing a TRANSFER instead of a 60 Day Rollover will avoid the 20% withholding problem and once you have your money in an IRA you will have much more freedom to do with your money what you wish.

Antonio Filippone is an author, speaker, and consultant. He has been published in the official journal of the IARFC as well as interviewed on the Radio about his unique financial strategies. For more information you can request one of his free booklets or contact him directly at http://www.tonyfilippone.com

Article Source: http://EzineArticles.com/?expert=Antonio_Filippone

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IRA Investment Options Should Be Considered at Every Age

One thing that most people usually start thinking about when nearing their retirement age is what their lives will look like after retiring. Expenditures on food, housing and other common expenses are just a few of the things to consider once you no longer have a full-time job to depend on. The fact of the matter is that the hope and assurance you have for your retirement years depends largely on the amount of preparation you put into place right now.

Considering the dizzying number of IRA investment options that are available to you, the ability to make an informed choice can be a daunting task. But since most company retirement pensions are gradually dying out, it is a critical task. This is why the need for retirement preparation and arrangement is very necessary - even if you are still in your thirties or forties.

The best way to approach this is by using IRA investment options that elicit specific tax features and benefits. This will allow you to save a lot more money over time. The IRS tax code in the United States gives you the option of investing a specific amount of money every year for the purpose of funding your retirement years. In 2008, for instance, you are allowed to contribute $5,000 into a traditional IRA - $6,000 if you are over the age of 50. It should be noted that this amount may be limited by how much you earned in a year and whether you participated in a company retirement plan. The best place to find the current IRA rules is at the IRS website.

If you are new to retirement investing, it is important to understand the benefits of using an IRA. The prime advantage of your savings in IRA's is that you not only will get a tax deduction for your IRA investment, but your money will earn for you tax-deferred. You won't have to pay taxes on these earnings until you actually withdraw them in retirement. At that time, you will generally be in a lower tax bracket and pay a much lower rate on your earnings. This will allow your IRA investments higher rates of return and more growth. Your invests will compound, especially if you have many years left before retirement.

The time to start planning for your retirement is right now, no matter what your current age. The longer your investments have time to compound, the more comfortable your retirement will be.

For more information on the best investments for IRA, please visit our IRA Reviews site.

Article Source: http://EzineArticles.com/?expert=Linda_J_Bruton

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IRAs, Roths, and 401ks With Taxed and Untaxed Minimum Required Distributions - MRDs

IRA and Roth IRAs are two examples of government-regulated retirement savings plans - called qualified plans. Both are generally personal plans you set up at banking-type institutions that you can contribute to and withdraw from yourself. Other examples of qualified plans associated with work are 401(k), 403(b) and their Roth versions- like Roth 401(k).

This article explains which qualified plans have minimum required distributions (MRDs) associated with them and some strategy.

Qualified plans such as 401(k)s, and IRAs were created with specific tax characteristics as an incentive for people to save for their retirement by contributions from their working income.

There are fundamentally two different qualified plan type tax characteristics. I'll call them

* Deductible Contributions then later taxed, and

* Nondeductible Contributions then never taxed

Taxation and Obligations for the owners (i.e. plan contributors) of the plans

The tax characteristics of the 'deductible contributions' type plans are represented by your 401(k) at work or your own IRA. Your yearly contributions to each plan are limited but deductible from your income in the year of contribution. But the income tax of both those contributions and all earnings they create are tax-deferred until you withdraw money from your plan.

Whenever you withdraw from these plans, the withdrawal amount in that year is added to your income to be taxed at your income tax rates. Since qualified plans are geared for retirement, you're penalized with a tax of 10% on your distribution in addition to whatever income tax is incurred if you're under 59 1/2.

Lastly, government-regulations obligate you to make at least a minimum required distribution (MRD) each year from your IRAs after you've turn 70 1/2.

The tax characteristics of the 'non-deductible contributions' type plans are represented by your Roth 401(k) at work, or your own Roth IRA. Your yearly contributions to these plans are limited, but they're not deductible from your income for taxation. So they're taxed. But the advantage now is that they and all their earnings and gains will grow each year tax-free - not just tax-deferred.

Additionally, when you withdraw from these Roth-type plans, the money comes out tax-free. But you must wait to withdraw your money until reach 59 1/2 or be penalized as above.

If you're the owner of a personal Roth IRA, you have no obligation to make any MRDs ever. If you leave your Roth IRA to your spouse, she also has not obligation to make MRDs either.

If you have a Roth 401(k)s, you must make the normal RMDs as those with non-deductible contribution types above, but - like all Roth plans - the money comes out tax free.

What about plan beneficiaries after you die?

All beneficiaries of plans -401(k)s, IRAs, Roth 401(k)s or Roth IRAs - must make MRDs except the spouse beneficiary of a Roth IRA if she chooses to be owner. But remember, RMDs or withdrawals from Roth plans always come out tax free.

How much money must come out in an RMD?

The MRD for a specific year is the value of your IRA (or total of all your IRAs if you have more than one) as of Dec. 31 of the previous year, divided by your life expectancy factor (from IRA table found in Appendix C of IRS publication 590 (online)) for that specific year. So, each year your MRD will change since the value of your IRA will change and your life expectancy will change. A new calculation must be done each year.

You can withdraw more than your MRD, but you're penalized if you withdraw less. You're penalty is a tax equal to 50% of that part of your MRD you didn't withdraw.

Reasons for converting to a Roth IRA Tax free growth and tax free withdrawals forever is hard to pass up. And that's for owners, spouse beneficiaries and nonspouse beneficiaries.

Only the nonspouse beneficiaries need to make RMDs - but they're still tax free ones. And those RMDs are based on the beneficiary life expectancy. So if their young, very little has to be taken out.

It makes good sense to convert any Roth 401(k) to your own Roth IRA for the freedom of not having to make RMDs by the owner or his spousal beneficiary. The conversion is tax free.

Conversion from a 'deductible contributions' plan to your Roth IRA requires you to pay income tax on amount you choose to convert. For 2010 and beyond there's not income limit prohibiting you from making the conversion - as there has been.

Holding money in a Roth IRA keeps it safe from future increases in income tax rates that plague holders of 'deductible contributions' plans.

Shane Flait gives you workable strategies to accomplish your goals in financial, legal, tax, retirement and protection issues. Get his FREE report on Managing Your Retirement http://www.easyretirementknowhow.com/FreeReportandSignUp.htm. Read his ebook: 'Wise Way to Financial Independence' http://www.easyretirementknowhow.com/WiseWayGate.htm.

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