What is a “401k ROLLOVER into an IRA”?

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by Mike Rowan www.Erollover.com 2008

What is a “401k ROLLOVER into an IRA”?

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, if available, or into
a Rollover IRA.

Frequently, the choice is made to roll into an IRA because of the flexibility and vast array
of investment choices available. Once in an IRA, the owner is no longer restricted to the
investment choices offered by their employer plan, nor is the participant subject to any
potential future restrictions imposed by the new employer, if any.

Most retirement plans can be easily rolled into either a variety of mutual funds, stocks,
bonds within a roth IRA, rollover IRA, or existing contributory IRA account, provided that you have separated service with the company where the plan is held.

However, there may be some costs to do this, as well as other ongoing expenses that
should be considered as well. In addition, there may be surrender charges when you want to move
some or part of your money as well. Check with your Financial Advisor and read the
prospectus regarding any investments you might be considering to insure that you aren’t hit with any type of penalty or fee.

What are your OPTIONS when dealing with former 401k plans?

1. You can move/rollover, all or PART, of your 401k into a rollover IRA account.

2. You can move/rollover, all or PART, of your 401k into your next employer’s 401k or retirement plan.

3. You can move/rollover, all or PART, of your 401k into a Roth IRA if you are in an income bracket that will be able to let you do so.

4. You can leave the funds with your past employer’s plan.

5. You can do any of the above while taking a full or partial distribution from your plan. Please keep in mind that this will trigger a taxable event of your income tax bracket, plus a 10% early withdrawal penalty on the amount that is taken.

NOTE: Most 401k plan administrators do NOT allow partial rollovers. It’s all or nothing
in most cases. However, if you want to move your retirement money into more than one
place, please contact a qualified advisor to assist you with this transaction.

There are virtually unlimited numbers of possible combinations. It takes the
experience of a knowledgeable Financial Advisor to know what is best in each particular
scenario. Everyone is different and so are their needs and desires! Please log onto our site at www.erollover.com to find an advisor or service that can cater directly to your needs.

We also go further in depth on our blog and site with regard to the types of investments available, and which ones may suit you best. Please read the following article, Mutual Funds vs. Stocks, EFT’s, and Bonds, to get a better feel for these vehicles, and which may be best for your situation.

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

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How to save $$$ when Buying Life Insurance

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How to save $$$ when Buying Life Insurance

By Mike Rowan for www.Erollover.com 2008

Ways To Save When Buying Life Insurance
When it comes to shopping, savvy shoppers get the most for their money. This stays true not only when shopping for groceries or food, but for life insurance as well. So to help you get the most bang for your buck, eRollover.com has compiled a list of ways you can save the most when you’re in the market to buy a life insurance policy.

1. Is term life insurance for you? If most of your goals are short-term and you’re not as interested in saving for the long run, term life insurance is for you. Term life insurance typically offers you the most coverage for the least amount of money, and is set up based around spans of time. For example, you may get a term life insurance plan that is set to pay out after five, ten or 20 years.

If your main goal is to save money, and you don’t mind paying a higher premium, it would be wise to look into a whole life insurance policy. Whole life policies offer a “cash value” feature that helps you save money each time you make a payment on your premium. However, though you can withdraw funds from the cash value, your death benefit will decrease. If you take out a loan and it exceeds the amount you have already paid for on the premium of your whole life insurance policy, you will receive a tax bill. Also, it’s good to note that as time moves on, the cost of insuring you will go up, and your cash value will begin to decrease.

2. If you’re healthy, stay away from guaranteed issue policies. Guaranteed issue policies, also know as “simplified” or “quick” policies, may sound too good to be true, because they really are. They do not require a medical exam, making them seemingly ideal, but ultimately much riskier for the insurer. If you are healthy, you will get much better rates by buying a life insurance policy that requires a medical test.

However, the problem for those who buy into guaranteed issue policies is that many may end up paying more in premiums than their beneficiaries receive from their death benefits. The National Association of Insurance Commissioner (NAIC) is trying to find a solution or way to put an end to this. Regulation of rates is not something they plan on doing, but a disclosure statement warning consumers is in the works.

3. Check online. When shopping around for any kind of insurance, looking online is a great way to compare prices and see what different companies have to offer. The more information you give, the more accurate your insurance quote will be. Quotes and comparisons can be run at www.erollover.com/life

4. Make a change for the better. If you are overweight, are a smoker, have heart disease, high blood pressure or diabetes, finding affordable life insurance may be difficult. This is because the better your health is, the easier and more affordable it will be for you to buy life insurance. Insurance companies will issue lower premiums if the policyholder is in good health standing. The less things that may give you a risk of dying sooner, the more affordable your life insurance policy will be. Also, if you do have an outstanding medical condition, you are a smoker or overweight, and you are trying to better your health, be sure to document it. By showing the insurance company your medical files and that you have been trying to improve your health, you may save yourself some money in the long run.

Many life insurance companies have different categories for medical conditions or combinations of medical conditions, when it comes to issuing you a policy. They also have different tests and medical exams you may need to go through before they will issue you a policy. This may have a major impact if you’re a smoker. Even if you quit the day you apply, you will still be considered a smoker, because to be completely “nicotine free,” you would have had to quit smoking for two to five years prior. Smokers do generally pay at least three times more than nonsmokers for a life insurance policy, so by quitting, you’re not just saving money from not buying tobacco, but also by bettering your standing.

Being overweight is another reason you may have a higher life insurance premium. Though you may not be obese, once your weigh reaches a certain level, you become more of a death-risk. So by taking the steps to lose weight and get healthier, you are not only helping yourself live longer and feel better, but also helping to get more affordable life insurance rates.

5. Buy what you need. It’s not a good idea to under-buy insurance, nor is it beneficial to over-buy, so when you’re in the market for insurance, be sure to evaluate what your exact needs are and go from there. A good way of doing that is in the form of an equation: Short-term needs + long-term needs - resources = how much life insurance you will need.

6. Buy early. Instead of waiting until there is a real problem with your health, buy life insurance early in life. As you age, the price of your life insurance will increase, so the younger you start, the more you will save. To keep your premium low, you may want to inquire about a “level premium” policy. Which keeps your premium rates the same for a set amount of time.

7. Fractional premiums. Some insurance agencies charge less depending on how you schedule your payments. By paying fractional payments-those are fewer payments over the year-you may pay less over all. For some life insurance companies the same also goes for electronic funds transfer (EFT), which is when they take out the amount of the premium directly from your checking account.

8. Being responsible saves you money. This goes along with making a change for the better. If you are in an expensive rate class due to high cholesterol (for example), but make a point of going to your doctor regularly and establish a history of lowering your cholesterol, your life insurance company may be willing to lower your premium.

If you are interested in finding out more about life insurance, or getting a life insurance quote, log on eRollover.com/lifeinsurance. Here you will be able to evaluate multiple rates from best-in-class life insurance providers - helping you find the best life insurance coverage that benefits you, as well as your beneficiaries, while still being within your budget. We can be reached at 888-243-9990 or at mike@erollover.com for further information about applying.

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Five professional tools to see how the funds in your 401(k) measure up

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www.Erollover.com 2008

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Five professional tools to see how the funds in your 401(k) measure up
By Jonathan Burton, CBSMarketWatch

How good are the mutual funds in your 401(k)?
It would be nice if there were a scorecard. But rating the investments you hope will glitter in your golden years can be confusing. That’s one reason why so many investors have embraced so-called target-date or life-cycle funds, which take care of the guesswork.
Those who still want to pick their own 401(k) investment lineup often don’t know how, or where, to start. So they wind up defaulting to funds with the best track records.

That’s not strategy, it’s performance chasing — buying high and selling low — and it leads investors nowhere, says David B. Armstrong, managing director at Monument Wealth Management in Alexandria, Va.
“They’re picking mutual funds that have been doing very well and not giving proper consideration to the appropriate allocation,” he says.
To tell which stock funds in your retirement account are right for you, look beyond performance. Take a page from the methods investment experts likely used for your own company’s 401(k) plan. Here are five things to keep in mind:

Watch the Video Here!!!

1. Expenses
In many cases, 401(k) plans offer one actively managed fund and one indexed alternative. Since indexed management is usually cheaper, make sure you’re getting your money’s worth from an actively run choice.
Costs matter. An index fund that charges one-tenth of a percentage point in yearly management fees, for example, has a full percentage point head-start over a fund that takes 1.1%. Accordingly, the manager of the more expensive portfolio has a steep hurdle in order to deliver above-average returns over time. Don’t pay top dollar for mediocre results.

2. Risk-adjusted return
You can’t judge a fund by its advertised performance.
Understand the risks a manager took to generate those returns. Maybe the fund loaded up on a hot stock or market sector, or the manager traded frequently, playing the market’s momentum.
Otherwise, you run a risk too — that you’ll fork over good money to a fund that exposed you to more volatility that you can comfortably handle.
“Big stakes in any one sector is good reason to dig deeper,” says Christine Benz, director of personal finance at investment researcher Morningstar Inc. “How does that fit with the manager’s strategy, and how has that played out for the fund?”
One key measure of a fund’s risk-adjusted return is a technical term called standard deviation. It shows how much a fund’s performance varies, or deviates, from its expected normal return.
You won’t need a slide rule. Web sites such as Morningstar.com do the math for you. Click on “Risk Measures”: The bigger the number, the more risky the fund.
So if Fund A gained 11% with a standard deviation of 18, and Fund B rose 10% with a standard deviation of 12, then Fund B achieved almost the same results with two-thirds of the volatility and would have a better risk-adjusted return.
“Standard deviation can help you see which fund has had higher volatility and has probably been taking more risks,”

3. Results versus peers
You also want to look at a fund’s performance relative to its category. Investors frequently make the mistake of comparing funds to “the market,” which usually means the benchmark Standard & Poor’s 500 Index (SPX:
S&P 500 Index
But the S&P 500 is a large-company U.S. stock index. The only funds to rate against it are large-cap U.S. stock funds; anything else is simply misplaced. A small-cap stock fund may look great compared to the S&P 500, but it may have underperformed the more fitting Russell 2000 Index benchmark. Similarly, an international small-cap stock fund has no business in the same pool as its U.S. small-cap counterpart.
Again, Morningstar.com makes this information readily available. Click on “Total Returns” to see how a fund stacks up in its category.
Be sure that all of your fund choices are related, says Armstrong, the Virginia financial adviser. If they’re not, “you really can’t determine if the portfolio manager is doing a good job” or if you should just buy an index fund.

4. Portfolio yield
Performance-chasing is bad enough, but investors also reach for yield — the dividend income that can provide a cushion in difficult markets.
“I’ve seen clients get stars in their eyes over a high yield,” Armstrong says. They forget there’s a reason for this excess payout — and not always a good one.
Beware of a fund with a yield that’s out of synch with its peers. Maybe the high yield comes from a heavy dose of financial-services stocks or lower-quality investments. In that case, not only is the yield shaky — some banks have cut or eliminated their dividends, for example — but even the most generous dividend won’t offset major declines.

5. Manager tenure
The big consulting firms that cobble 401(k) plans together grow cautious when a fund switches managers, and you should too.
Fund companies will protest to the contrary, but new managers are game-changers. While the fund’s investment style might not be drastically altered — and if it is you have another problem — you can bet the portfolio itself will get a makeover.
If a fund manager has been on the job for only a year, then the fund’s three- and five-year performance belong mostly to someone else. You can be more charitable when a new manager is a veteran who has experienced bull and bear market cycles. On the other hand, if a longtime manager is retiring soon, find out when the junior managers joined the fund.
Says Lou Stanasolovich, president of Legend Financial Advisors in Pittsburgh.: “If a manager changes, you’re in effect starting a new fund.”

Jonathan Burton is an assistant personal finance editor for MarketWatch, based in San Francisco.

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Great 401k Help!

www.Erollover.com 2008

401(k) Help

By: Jo Ann Brown

People are saving more in their 401(k) plan as a result of the automated enrollment efforts initiated by their employer. Workers under thirty continue missing out on the free money given away by their employers. People are investing solely in their company's stock. Today, these stories make headlines and continue to prove that employees need help.

Studies have shown investors, when asked whether their company's stock or the S&P 500 is more risky, consistently point to the S&P 500. One of the reasons people have a lot of company stock is when you're looking at ten investment options, none of which you recognize, but you work for the company, familiarity makes it feel safer. Lower salaried workers also tend to rely on company stock.

Other staggering results show one-fourth of 401(k) participants closest to retirement (those sixty years old or older) invest more than half of their workplace retirement plan in their company stock. Some of those older workers take even bigger risks: 15 percent of sixty-year-old or older workers invest more than 80 percent of their portfolio in their company stock.

Real savers have budgets and have acquired good spending habits. Saving is a skill that has to be learned. People need to learn these skills and become better informed. Research articles on topics such as finding money to save and how to choose the right mutual fund.

It's obvious that people have issues and they need help with managing and investing money. People that know the value of saving are investing in the wrong products. Remember Enron? You should never invest more than 10 percent in your company stock. Follow these guidelines to help you gain control of your investments:

1. Contribute enough to get your employer's match.

2. If you're not sure of how to invest, consider a target fund that matches investments to your age or planned retirement date.

3. Read the article "What you need to know before you buy mutual funds."

4. Avoid taking hardship withdrawals or loans unless it's a dire emergency, such as bankruptcy.

5. Resist cashing out small accounts when you leave an employer. The money can be rolled into another employer's plan or an individual retirement account.

6. When rolling over accounts, try to get the money transferred from one trustee to another rather than taking a check. If you don't reinvest promptly in an IRA or another 401(k), you'll have to pay taxes on the money and you could pay a penalty as well.

You work hard for your money. Now make your money work hard for you. The companies no longer offer a pension plan and the 401(k) plan is the only option available in Corporate America to save for retirement.

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More about Jo Ann Brown

* I offer workshops and seminars. Email me at Jo Ann Brown - jb2brown@sbcglobal.net. My website address is www.jab401k.com I have the following blogs if you would like to see the articles I have written for various newspapers and magazines - 1. www.jabbooks.blogspot.com 2. www.joannbrown.blogspot.com 3. askjab.blog.com and 4. jab401k.blog.com You have to learn how to budget and manage money. It’s important to find the money to save as early as possible.