eRollover: Planning 401k, 403b, IRA Rollovers amp; Retireme

eRollover: Planning 401k, 403b, IRA Rollovers amp; Retireme: "What is a 401k, 403b, or 457 Rollover to an IRA? By Scott Franklin, eRollover 2008 Generally, after a person leaves the employment of a company, they are given the option to roll their 401K or other plans into a new company’s plans, or, if available, or into a Rollover IRA. Frequently, the choice is made to roll into an IRA because of th"

Income Annuities: Creating Guaranteed Cash for Life

Retirement today requires more planning than in previous generations. Sources
of steady retirement income  have changed, as fewer and fewer workers are
covered by traditional employer-provided pensions that provide a lifetime benefit.
In addition, advances in medicine have resulted in increased longevity—today’s
retirees may spend 20, 30 or more years in retirement.

Given this landscape, workers nearing retirement face an imminent crisis:
how to generate a stream of income that is guaranteed to last throughout
retirement. Whether they have access to employment-based retirement plans
or not, achieving stable and secure income in retirement is a challenge for many
Americans.

With the decline of defined benefit plans and increased popularity of defined
contribution plans, such as 401(k)s, responsibility for managing retirement savings
has shifted from the employer to the individual. Unlike traditional pensions that
provide a stream of payments to retirees for life, defined contribution plans
typically offer a lump sum that retirees must then manage on their own.

Other than Social Security  and the defined benefit system, the only means to
create a guaranteed income stream in retirement is through an annuity . An annuity
is an insurance contract that offers an efficient solution to what otherwise could
be an overwhelming asset management task: creating a steady paycheck in
retirement that cannot be outlived. It helps to ensure retirees don’t overspend and
run out of money in retirement and that they don’t live too frugally either.

Individuals without access to workplace retirement savings plans have an even
greater challenge: to independently accumulate savings during their working years
and manage those savings to last throughout retirement. An annuity can address
both of those needs.

SCOPE OF THE PRODUCT

Annuities offer solutions to both sides of the retirement equation: They provide
ways to accumulate retirement savings and to turn savings into an income stream
that cannot be outlived.

The lifetime income option through annuitization allows retirees (and their
spouses) to maximize retirement income without having to worry about payments
stopping while they are alive. At the time of purchase, annuity owners are
guaranteed that if they choose to annuitize at a later date, they will receive
a benefit based on the purchase rates at the time the annuity was issued or
annuitized—whichever rate is more favorable to the annuity owner. Given the
changes that can occur over time with respect to the economy, longevity, or an
insurer’s costs, this is a valuable consumer benefit.

CURRENT TAX TREATMENT

By encouraging long-term savings during the working years and helping individuals
manage assets during retirement, the current tax treatment of annuities promotes
financial discipline.

For those who are years away from retirement, or are retired and have assets
that don’t need to produce income right away, a deferred annuity  allows savings
to build up, free of current federal income tax . When payments are received, the
portion that comes from earnings is taxed as ordinary income.

The current federal income tax treatment of annuities is reflective of sound public
policy that recognizes the annuity’s unique role in helping Americans accumulate
savings for retirement and guarantee a steady stream of income for life.

CONCLUSION

An annuity can help American workers meet the challenges of the changing
landscape of retirement. In fact, eight out of 10 individual annuity owners say
they will use their annuity savings for retirement income.3 With the shift from
defined benefit to defined contribution plans and increased longevity, the role of
the annuity in retirement has never been more important. Policy-makers should
explore ways to encourage more Americans to turn to annuities for long-term
savings and guaranteed lifetime income.

Please visit our site for more Retirement, 401k, and Insurance information:
www.erollover.com

Do you have old 401k plans?

Do you have old 401k plans?

Do you have old 401k plans that are “Left Behind” with old employers? Surprisingly enough, the overwhelming answer is usually yes!

One would think that 401 plans would be immune to the procrastination that we all exhibit in our lives, however even sometimes substantial sums of money fall under the category “Out of Sight, Out of Mind”.

Speaking personally, I generally try not to leave bankaccounts  with thousands of dollars behind when I change my checking or savings. It would be very disconcerting to have these account or accounts scattered over my former financial life, sometimes earning very little or no interest at all. Investment accounts  generally do not have the same stigma though. I truly believe since you don’t make a physical deposit in many of these 401k plans, the cash or investments just don’t carry the weight of a primary checking account that enable you to put food on the table, pay your bills, and take care of your family.

Please visit our site for more retirement details: www.erollover.com

Okay, you probably get my point by now. Now what are other reasons that you have not consolidated your retirement accounts?

Here are a few Old 401k Planning Excuses:

Complacency

Lack of a comprehensive roadmap to retirement

The thought that “They are doing okay where they are”

My firm belief is that you can do a much better job with most of your retirement in one self directed IRA instead of old 401k plans. Most 401k plans have limited investment options, while a self directed IRA  has more of the financial buffet approach. More simply put, would you rather have only one choice, or a buffet option when choosing your next meal?

Quite frankly, when you have an IRA, you have the opportunity of investing in over 10,000 mutual funds, stocks, bonds , or even commodities. Now that is quite the variety compared to the 10 or 20 funds dictated to you in a 401k plan. That way you or your advisor can go out there and get the funds that are considered the “Allstars” in their categories. This ultimately results in better planning and better results.

Please visit our site for more retirement details: www.erollover.com

Please keep in mind, you can make additional tax deductible contributions to your Self Directed or Roth IRA, while still investing in your current 401k plan

This gives you 2 pots of money that you can be adding to instead of just your current company’s plan. Be careful and weigh your options though. You do not want to start contributing to your IRA until you have exhausted the company match in your current plan.

Now you may be asking yourself……How do I go about making this change? The quick answer is that any old 401k plan or plans can be rolled over into a single self directed IRA. You can either do this yourself online with a company like TradeKing, or seek out a trusted advisor to help you in developing your retirement goals and planning. Please keep in mind though that this does not apply to your current 401k plan. You can only roll over plans from companies with which you have severed employment.

In closing, you will be better off most of the time by keeping your retirement under one umbrella, and sticking to a defined plan of attack. Take the initiative and you can help to secure your future! As always, please email us with ideas and suggestions at .

Please visit our site for more retirement details: www.erollover.com

Learn about Term Life Insurance Basics

Term Life Insurance Basics

Term Insurance 101

• Advantages
• When the Term Ends
• Return-of-Premium Option
• Key Policy Provisions
• Convertibility

As the name implies, term insurance provides protection for a specific period of time and generally pays a benefit only if you die during the “term.” Term periods typically range from one year to 30 years, with 20 years being the most common term.

Advantages of Term Life Insurance

One of the biggest advantages of term insurance is its lower initial cost in comparison to permanent insurance. Why is it cheaper when initially purchased? Because with term insurance, you’re generally just paying for the death benefit, the lump sum payment your beneficiaries will receive if you die during the term of the policy. With most permanent policies, your premiums help fund the death benefit and can accumulate cash value.

Term insurance is often a good choice for people in their family-formation years, especially if they’re on a tight budget, because it allows them to buy high levels of coverage when the need for protection is often greatest. Term insurance is also a good option for covering needs that will disappear in time. For instance, if paying for college is a major financial concern but you’re pretty sure that you won’t need life insurancecoverage after the kids graduate, then it might make sense to buy a term policy that’ll get you through the college years.

The Term Ends

But what happens if you buy a term policy only to realize at the end of the term that you still have a need for life insurance? Well, it’s sort of a good news, bad news story. The good news is that many policies will give you the option to renew your policy when you reach the end of the term. The bad news is that you’ll probably face much higher costs since age is one of key factors used to determine life insurancepremiums. To renew the policy, you also may have to present evidence of insurability (that’s insurance jargon meaning, “take another medical exam and answer a new round of questions about your lifestyle, health status and family health history”). If you’re still a fine specimen with healthy living habits, you might requalify at a reasonable rate. But if your health has deteriorated, you may find that it’s too expensive to renew your policy or you may not even requalify.

So if you’re considering a term policy, make sure you carefully consider how long you’ll need the coverage. If you’re pretty sure that your needs are temporary, then term insurance is probably the right choice for you. But if you think there’s a possibility that you might need the coverage for a long time, then remember that if you want to renew your term policy after it expires or buy a new term policy at that time, your age, health status or other factors may make coverage very expensive.
To better understand term insurance, consider this analogy. When you purchase term insurance, it’s sort of like renting a house. When you rent, you get the full and immediate use of the house and all that goes with it, but only for as long as you continue paying rent. As soon as your lease expires, you must leave. Even if you rented the house for 30 years, you have no “equity” or value that belongs to you.

Return-of-Premium Term Insurance Option

One exception to this rule is what’s called a return-of-premium term policy. With these policies, if you keep the policy in force for the entire term, say 20 years, the insurance company will refund the premium payments you made over that 20-year period. Of course, there is a price to be paid for this added benefit. The premiums for return-of-premium policies are considerably higher than premiums for standard term policies. The price difference can be 20%, 30% or more. Another factor to consider is that term insurance rates have dropped considerably over the past decade, mostly because people are living longer. If you own a standard term policy, there’s really no harm done in dropping that policy in favor of a newer and cheaper term policy. But if you own a return-of-premium policy, dropping the policy before the full term has expired means that you will have paid a high price for your term insurance coverage and the premiums you paid won’t be fully refunded. At best, you’ll get a partial refund of the money you put into your policy to that point.

Key Policy Provisions

When considering a term purchase, one thing to keep in mind is that not all term policies are the same. Some may include certain provisions as standard features, while others may require you to pay extra to add these features as “riders” to your policy. So if you’re comparing term policies, remember that price is not the only factor to consider.

Ask your agent about provisions such as:

• Accelerated death benefits - allows a terminally ill person to collect a significant portion of his or her policy’s death benefit while that person is still alive
• Disability waiver of premium - waives premiums when a policy owner suffers a long-term disability, typically one lasting six months or longer
• Accidental death benefits - doubles or triples the benefit in the case of death by accidental means

Convertibility

Another provision that is very important is something called convertibility. Some insurance contracts only allow “conversion” in the first few years of the policy, while others allow it at any point during the term. This valuable feature allows you to convert your term policy to a permanent policy (e.g., whole life insurance) without submitting evidence of insurability. Being able to convert to a permanent policy is a great option to have in the event that circumstances in your life change such as failing health or maybe just the realization that coverage is needed for a longer period of time than you originally anticipated.

That’s why when purchasing a term policy, it’s never a bad idea to find out what kind of permanent policies are offered by the company you are considering. Some companies may only have strong term insurance offerings, while others may have very competitive products in both categories.

Please visit our site for more Retirement, 401k, and Insurance information:
www.erollover.com

IRA Rollover Rules and Tax Implications

IRA Rollover Rules and Tax Implications

Understanding the short- and long-term tax implications of rollovers from employer-sponsored retirement plans is a critical component of retirement planning.

That’s because while employer-sponsored retirement plans and IRAs  are designed to help you to build a retirement  nest egg, not understanding rollover regulations can lead to unintended tax consequences that chip away at retirement savings.

Information on this site can answer basic rollover questions such as
• When are rollovers permitted from employer-sponsored plans
• How to properly manage eligible rollover distributions
• What are the rules covering rolling one IRA to another

Also available is more detailed information including
• IRA distribution  rules
• Dividends and capital gains tax rates
• Required minimum distribution regulations

Use this site to educate yourself about how you can effectively manage your rollover funds and contact your financial representative and tax accountant to talk about the IRA rollover  approach that suits your financial situation.

Frequently Asked Questions

What is an IRA Rollover?

An IRA Rollover is a tax-free transfer of funds from a tax-deferred plan, such as a 401(k) plan, to a traditional IRA. An IRA Rollover occurs when an employee changes jobs and is entitled to a distribution from the old employer’s 401(k) plan. By doing an IRA Rollover, the funds can be transferred tax-free to the employee’s own IRA. This means the funds can continue to grow on a tax-deferred basis inside the IRA. It also means that the funds are under the control of the employee with respect to investment decisions and future distributions.

The term “IRA Rollover” can also be applied to a transfer of funds from one IRA to another IRA. This too can be done on tax-free basis under a different set of rules that apply to IRA-to-IRA rollovers. Those rules are covered separately.

Please visit our site for more Retirement, 401k , and Insurance information:
www.erollover.com

IRA Rollovers from Employer-Sponsored Plans

When is an IRA Rollover permitted for distributions from an employer-sponsored plan?
An IRA Rollover is permitted for any “eligible rollover distribution” from an employer-sponsored plan. This includes distributions from 401(k) plans when an employee changes jobs or retires, but also includes eligible rollover distributions from other employer-sponsored plans, such a qualified pension and profit-sharing plans, defined benefit plans, 403(a) annuity plans, 403(b) annuity contracts and governmental 457 plans.

What is an “eligible rollover distribution” from an employer-sponsored plan?

Any distribution, whether all or less than all of the employee’s account, is an eligible rollover distribution, except for the following:
• Any distribution which is part of a series of substantially equal periodic payments;
• Any required minimum distributions;
• Any distribution which is made upon hardship of the employee;
• Certain returns of elective 401(k) contributions, corrective distributions, loans treated as distributions, and similar items.

When are distributions permitted to an employee from a 401(k) plan or other employer-sponsored plan?
Distributions from a 401(k) or other employer-sponsored plans are governed by IRS rules as well as the terms of the plan. In general, plan distributions require a triggering event, such as:

• Termination of employment
• Attainment of the plan’s normal retirement age
• Death

Check with the plan administrator to be sure that the employee is entitled to a distribution under IRS rules and the terms of the plan and to determine what procedures are used to request such a distribution.

How are IRA Rollovers from employer-sponsored plans accomplished?

The employee usually has a choice of two methods to accomplish the IRA Rollover - the direct rollover or the indirect rollover.

Direct Rollover

In a direct rollover, which is also sometimes called a “plan-to-plan transfer,” the eligible rollover distribution that is transferred directly by the employer-sponsored plan to the employee’s IRA. The funds are never actually transferred to the employee individually.

Indirect Rollover

Under the indirect rollover method, the employer-sponsored plan writes a distribution check to the employee, who then deposits the check in his or her own account. The employee then has 60 days to transfer all or a portion of the amount received in the distribution to an IRA. The distribution is not taxable to the employee if the transfer occurs within 60 days.

Please visit our site for more Retirement, 401k , and Insurance information:
www.erollover.com

Baby Boomers Turn to Safe Investing as Retirement Looms

Baby Boomers Turn to Safe Investing as They Near Retirement

One can definitely say with certainty that there are no safeinvestments  during this economic meltdown. However, we did find some interesting information about Baby Boomers, and the investments that they tended to collectively hold. Let’s take a quick look to see how the different classes of boomers stack up.

Late Boomers, the leading edge of the 76 million Baby Boomers, who are about to reach 60 and be eligible for some retirement  benefits, have invested their money in large-cap stocks. They have nearly 40 percent of their assets in these blue chip stocks , which are most often favored by conservative investors. They are a little more conservative than younger Boomers, according to a survey of how Boomer executives are investing their money.

When you analyze the portfolios of Boomers, certain trends start to stand out. Baby Boomers overwhelmingly favor large-cap stocks, with these funds comprising 36.9% of all assets measured. Moneymarkets  were a distant second at 13.2%, while fixed income  was a close third with 12.7% of total assets measured.

What are Large-Cap Stocks?

Stocks of the largest companies such as IBM or GE and other movers and shakers of the economy–are classified as large-cap stocks. These are large established companies (many are blue chips). They often keep large reserves of cash  to take advantage of new business opportunities. Together they make up over half of the value of American stock.

Because of their large size, large-cap stocks are not expected to grow as rapidly as a smaller capitalized company. Successful mid-caps and the small-caps tend to outperform them over time. Investors looking for dividends and preservation of capital with some growth potential choose them. Large-cap stocks pay relatively more in dividends  than small- and mid-cap stocks.

Investors who want their money to remain relatively safe over the long term are often attracted to large-cap stocks.
Source: Ameritrade

Please visit our site for more Retirement, 401k, and Insurance information:
www.erollover.com

While there were many consistencies in investment choices for all Baby Boomer executives, the report found some differences in investment strategies  or asset class choices based on age. The report looked at the executives in three different age categories: those born 1946-1951, those born 1952-1958 and the youngest of the Boomers born between 1959 and 1964.

Large-cap stocks were the most popular of assets measured. According to the report, the number two and three most popular asset classes varied by age group, but fixed income, small caps  and money markets were the favorites with Baby Boomers.

Typically, Baby Boomer executives certainly have more investment choices than their parents did. They have benefited greatly from the strong US economy over the last 60 years and are very comfortable withequities as a major portion of their retirement account.”

Late Boomers (born ’46 – ’51)

Large-cap stocks were the most popular of assets measured, with the oldest group placing nearly 40% of their assets in that class (39.5%). The second and third most popular asset classes were fixed income (14.1%) and small-caps (10.7%). For Middle Boomers (1952-1958), small caps were also third most popular, with 12.9% of assets measured. However, second-place money markets barely edged small caps (13.4%) by fewer than 60 basis points.

Middle Boomers (born ‘52 – ’58)

Middle Boomers allocated 35.9% of their assets to large-cap stocks, and the youngest group had 35.0% of their assets allocated to large-caps.

Young Boomers (born ’59 - ’64)

The youngest of the Boomers–those born between 1959 and 1964–differed from their elders; small-caps were not in their top three measured assets. Instead, they selected money markets (17.3%) and fixed income (11.2%).

The youngest group of Boomer executives allocated almost twice as much of their accounts to the ’safer’ investment of money market funds than did the eldest group with 17.3% and 9.6% respectively, even though it might be wise for them to take more risk. While boomers tend to presume that the closer one is to retirement age, the more conservative their investments will be, our report indicated otherwise.”

Please visit our site for more Retirement, 401k, and Insurance information:
www.erollover.com

The Latest Bailout Plans for GM, Ford, and Chrysler

The Latest Bailout Plans for GM, Ford, and Chrysler

American Automakers are next in line to receive federal money in the form of a bridge loan.

General Motors shares rose by 21%, while Ford Motor (F) shares climbed 24% on the news. Chrysler is private and majority-owned by private equity firm Cerberus Capital Management.

Congress, having worked through the weekend, delivered a bill on Monday, Dec. 8, to the White House that is designed to bail out the ailing U.S. auto industry with $15 billion in loans. Despite lingering objections by the Bush Administration and Congressional Republicans, it looks as though the aid package will pass.

President George W. Bush has questioned the ability of the wounded car giants to survive, but Democrats have said they remain confident a deal can be struck by the end of the week.
Under the proposal, similar to recent banks and insurance company  rescue plans, the government is expected to take non-voting shares in General Motors, Ford and Chrysler. Also expected is the appointment of a “Car Tsar” to oversee the money.

However, The White House wants greater assurances that the automakers would be able to reorganise and recover after they get the cash injection.

The rescue aims to avert the collapse of General Motors Corp and Chrysler LLC, saving more than 350,000 jobs and millions of others that depend on the industry.

“This is no blank check or blank hope,” Senate Majority Leader Harry Reid said.

GM, Ford and Chrysler submitted business plans to Congress last week along with a $34 billion bailout request.

The Bush administration hopes for a deal but insists that the companies be commercially viable.
“Viability means that all aspects of the companies need to be re-examined to make sure that they can survive in the long term,” Mr Bush said in an interview with ABC News’ “Nightline.”
Both GM and Chrysler have requested billions by month’s end to replenish dwindling cash reserves.

Will this be the solution to the problem, or just a short term fix? Once again, the taxpayors are having to step up to the plate to rescue these American icons. Hopefully, this will not be another case of throwing good money after bad. At least this time the auto executives used their own products, and drove from Detroit instead of flying their private jets.

Please visit our site for more Retirement, 401k , and Insurance information:
www.erollover.com