Sudoku answer to November Newsletter
Posted on 14. Dec, 2009 by admin in Blog, Newsletter, Sudoku Answers
Here is the Sudoku answer to our November Newsletter. If you havn’t signed up for our newsletter, give us a call at 425.558.3700
Sudoku Answer to October Newsletter
Posted on 16. Nov, 2009 by admin in Blog, Newsletter, Sudoku Answers
Here is the Sudoku answer to our October Newsletter. If you havn’t signed up for our newsletter, give us a call at 425.558.3700
Should I convert my Roth IRA to a Traditional IRA?
Posted on 20. Oct, 2009 by admin in Blog, Retirement Planning
When it comes to talking about IRA’s, one of the big topics of conversation today is whether a client with a traditional IRA should convert to a Roth IRA. In this Financial Strategy of the month we’ll investigate the differences between the two retirement accounts and the option to convert from one type of account to another.
Let’s begin by discussing the basic differences between the two accounts. Contributions to a traditional IRA are tax deductible, while contributions to a Roth IRA are not tax deductible. Roth IRAs require that your income must be below certain levels to qualify to make contributions. Traditional IRAs may not be fully tax deductible if your income is above certain levels.
While either type of retirement account will allow an investor to invest where he or she would like, the tax implications on the growth is dramatically different from the traditional IRA to the Roth IRA. Growth within a traditional IRA occurs on a tax deferred basis, while growth within a Roth IRA occurs on a tax free basis.
Then, at retirement, when funds are withdrawn from the retirement accounts, the differences are even more obvious. Withdrawals at retirement from a traditional retirement account are taxable while qualified withdrawals from a Roth account are completely tax free.
Here’s the interesting part. A client that has a traditional IRA may elect to convert their account from a traditional account status to a Roth account status. In order to convert, in addition to certain criteria being met, a client needs to pay the tax due on the traditional retirement account.
For example, if I’m eligible to convert from a traditional IRA to a Roth IRA, and my current traditional IRA account balance is $100,000, I’m required to pay tax on the entire $100,000 traditional IRA account balance.
However, once I pay that tax, the retirement account is converted from a traditional account to a Roth account, meaning that all future growth on the account is tax free rather than tax deferred, provided I follow all the rules relating to maintaining a Roth IRA.
A Roth IRA conversion can be a great alternative for many traditional IRA account holders. To learn more, attend one of our upcoming informational seminars or come to our office for a Roth conversion analysis. Please contact our offices for more information.
Special Note: With Traditional IRAs early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% tax penalty.
Investment advisory services offered through Absolute Return Solutions, a Registered Investment Advisor.
What will happen to my pension and health benefit if…?
Posted on 01. Sep, 2009 by admin in Absolute Returns, Blog, Retirement Planning
For those of us who are lucky enough to have a pension…
For those of us who are lucky enough to have a pension, here are some things to think about! In today’s tough economic climate, companies are cutting benefits and closing their doors!
If your former employer goes bankrupt what happens to your pension? The Pension Benefit Guarantee Corporation (PBGC) picks it up!
What is the PBGC?
The PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974 (ERISA). It currently protects the pensions of nearly 44 million American workers and retirees in 30,000 private single-employer and multiemployer defined benefit pension plans. The PBGC only becomes involved if a terminated pension plan does not have sufficient assets to cover all vested benefits.
What does the PBGC guarantee?
Generally, the PBGC guarantees most vested normal retirement benefits, early retirement benefits and certain survivors’ benefits at the level in effect on the date of a pension plan’s termination. However, the PBGC does not guarantee all types of benefits under covered plans. Also, the amount of benefit protection is subject to certain limitations so you might receive a monthly payment that is less than what you’re currently receiving.
If your former employer goes bankrupt what happens to your health benefit?
Your retiree health benefits may be terminated! ERISA law protects pensions, but not retiree health benefits. If your retiree health benefits are terminated, you need to find out what other health coverage is available to you as soon as possible.
If you are 65 or over, you are covered by Medicare
You should consider purchasing Medicare supplemental insurance to help you pay for prescriptions and expenses not covered under Medicare. (If you are under age 65, you are not yet covered by Medicare.)
Action Items
• Check if you are eligible for coverage under a spouse’s plan.
• Check out other health insurance options. Because group insurance plans usually cost less, see if any other group you belong to – such as a fraternal or professional organization– offers a group health plan.
• Check out Medicaid. If you are under 65 and disabled, with low income and few resources, you may be eligible for Medicaid. (Source AARP)