Know How To Take Your Lumps
by: Ken Morris
If you are about to retire or change jobs, or if your employer is terminating the company retirement plan, you may be eligible to receive a "lump sum distribution" as defined in the Internal Revenue Code.
Such a distribution may be substantial and may represent the cornerstone of your retirement security.
So it is important to consider your options carefully before making a decision regarding distributions.
Basically, you are faced with two main options.
Should you take a direct distribution and pay your taxes now?
Or should you roll your distribution over into a traditional Individual Retirement Account (IRA)?
If you decide not to roll the distribution over into a traditional IRA, you must pay tax on the distribution in the year you receive it. You will, of course, be able to invest the remainder as you please.
The main benefit of paying taxes on your distribution now is that you may be eligible for special tax treatment. If you were born before 1936, you may be eligible for ten-year tax-averaging on your lump sum distribution. Or, if your distribution will include shares of your employer?s stock, a portion of your distribution may be eligible for the new lower capital gains tax treatment. If either of these situations exists, you may be able to pay a lower tax rate than usual on your distribution.
If not, your distribution may be taxed at your ordinary income tax rate so you may want to consider your second option.
Your second option is to roll the distribution over into a traditional IRA.
This alternative assures that assets will continue to enjoy tax-deferred growth to provide for your retirement.
Under current IRS regulations, you need not begin taking distributions from your traditional IRA until you reach age 70 1/2.
Here are some facts to keep in mind when faced with the distribution decision.
? Only 60 days are permitted between the receipt of your lump sum distribution and the date of the roll over.
? All contributions (pre- and after-tax) and earnings distributed from the employer's qualified plan may be rolled over.
? Regardless of whether it is deductible, it is still possible to make an annual $4,000 (for 2006) IRA contribution, plus a $1,000 catch-up for those who have attained age 50, to a traditional or Roth IRA account.
? Contributions to the IRA may only be made in cash; but, with a rollover transaction, if non-cash assets are received as part of the distribution, they may be rolled into the IRA (e.g. employer stock or mutual fund shares).
? Distributions may be made from a traditional IRA account at any time after age 59 1/2 free of penalty.
The traditional IRA account provides you with an opportunity to continue building assets during working years through continued tax-deferred compounding. There will be no tax implications until you begin to take distributions.
This continued tax-deferred growth could mean the difference between your living simply or living well during your "golden years."
Of course, before you decide which strategy best meets your objectives, it is a good idea to consult with your financial and tax advisors.
About The Author
Ken Morris, a fee based Investment Advisor Representative with Raymond James Financial Services, Inc., helps 401k participants get the most out of their corporate plans.
lindsay.brickner@raymondjames.com
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The 10 Rules for Successful Tax-Free Income Investing
The 10 Rules for Successful Tax-Free Income Investing
by: Ulli G. Niemann
Do you sometimes question the performance of your investment portfolio? If you are like most investors you have your income producing assets thrown in together with your equity portfolio. You look at the total mix of dividend paying stocks, bonds, mutual funds and equities, and you're confused as to why they're not producing enough income or growing your portfolio value sufficiently.
I have found that part of the reason is the nearly universal propensity of investors to ignore the long-term implications of their income investment decisions while they focus on short-term effects.
Because fixed income investing simply isn't regarded as being as exciting as other stock market investing, it has often been relegated to the "ho-hum" category by writers and not as much ink has been devoted to its ins and outs as has been expended on other types of investing. I think that's...
The 10 Rules for Successful Tax-Free Income Investing
Tax help > The 10 Rules for Successful Tax-Free Income Investing
Why Buy A Hybrid Car?
Why Buy A Hybrid Car?
by: Ron King
For anyone interested in saving money at the gas pump and helping the environment, the new hybrid cars are an excellent choice. Small and fuel-efficient, hybrids are now being made by more manufacturers than ever.
Although hybrids cost more, and can be hard to find due to high demand, it still pays to choose a hybrid. Consider the following reasons to buy a hybrid next time you are in the market for a new car.
Smaller, More Efficient Engines
The hybrid's fuel efficiency is increased by its small size and the use of lightweight materials. Periodic engine shut-off is another fuel saving feature of the hybrid. When it is stopped in traffic, the hybrid's engine temporarily shuts off. The engine restarts automatically when the car is put back in gear.
Hybrids are powered by the combination of an efficient gasoline engine backed by an electric motor for acceleration. The electric motor is powered...
Why Buy A Hybrid Car?
Tax help > Why Buy A Hybrid Car?
The Person With The Most Money Wins!
The Person With The Most Money Wins!
by: John Michael
The person with the most money wins! This phrase has been used repeatedly but not by the wealthy but by the poor "The have not's".
Money is not the only or even the most important thing in life.
You number one goals should be when it comes to life is:
- Good health
- Take care of Family
- Ability to enjoy life
- Happiness both for yourself and others around you
The above should be at the top of the list of any goal you have. However, wealth does make substantial improvements to each of the four areas of life listed above.
More money can mean better:
- Health Care
- Relaxing Vacations and Adventures
- Education for your children or yourself
- Better home than you have now
Best of all it can reduce stress from not having to worry about money!
Many of us have problems in life...
The Person With The Most Money Wins!
Tax help > The Person With The Most Money Wins!
Accounting Community Supports KPMG
Accounting Community Supports KPMG
by: Thomas Johansmeyer
With the US government?s case against KPMG settled, the battered firm can refocus its efforts on its core businesses.
Enabling this refocusing is a series of internal mandates that have rippled across Deloitte & Touche, Ernst & Young, and PricewaterhouseCoopers.
No poaching!
Leadership in each of these firms has instructed the respective partners not to take advantage of KPMG's weakened condition.
There does not appear to have been any collusion between the other members of the Big Four, and smaller accountancies have supported this position.
Deloitte & Touche, Ernst & Young, and PricewaterhouseCoopers agree on the importance of KPMG?s continued success.
The large accounting firms have received intense criticism since the implosion of Andersen as to the lack of competition and increased concentration of service providers.
The collapse of KPMG...
Accounting Community Supports KPMG
Tax help > Accounting Community Supports KPMG
Changing Jobs? Don?t let your 401(k) slip away.
Changing Jobs?
Don?t let your 401(k) slip away.
by: Ken Morris
Changing Jobs?
Don?t let your 401(k) slip away.
Today?s job market is more transitory than ever. And, as more and more individuals switch jobs, they begin to wonder what they should do with the money they have accumulated in their employer-sponsored retirement plans such as their 401(k) plans. The good news for 401(k) plan participants is that your retirement plan assets are very portable so you may be able to keep your existing 401(k) plan assets in a tax-deferred environment.
The trick is to resist the urge to use the monies. After tucking money away in your 401(k) for quite some time, you may be tempted to use it to treat yourself to a new car or some other indulgence. Because it could literally take years to replace your existing 401(k) funds, you should think carefully before prematurely taking money from your retirement savings.
A hasty withdrawal...
Changing Jobs? Don?t let your 401(k) slip away.
Tax help > Changing Jobs? Don?t let your 401(k) slip away.
A Publisher?s Rant ? Why I Hate Your Byline
A Publisher?s Rant ? Why I Hate Your Byline
by: Halstatt Pires
I?m a publisher for numerous sites. I HATE many of your articles. Here?s why I hate the byline of your article and what you can do about it.
Bylines
The byline of an article is your chance to pimp your site and yourself. I don?t really care what you write. There only time I would forgo using an article because of the byline would be if you?re one of those people that writes seven or eight lines of text. Please try to keep it to three lines or less.
Something To Consider
If you?re writing articles, you undoubtedly know it is a great way to build the link count for a site. Assume you put two links in the byline of an article. Assume further that 60 sites publish your article. You have effectively generated 120 links for your site, a number that would take forever if you were pursuing reciprocal link trades.
Article links are also valued highly by search engines...
A Publisher?s Rant ? Why I Hate Your Byline
Tax help > A Publisher?s Rant ? Why I Hate Your Byline
Camping In A RV For Fun And Pleasure
Camping In A RV For Fun And Pleasure
by: Sintilia Miecevole
Camping for most people means a tent and sleeping on a mat on the ground. If that doesn't really appeal to you, then camping in an RV is what you need. It is the ultimate camping adventure.
RV's come in many sizes and shapes. They start with campers that fit in the back of a pickup truck. These can have full kitchens, beds, a shower and toilet in them.
Next there are van conversions called...
Know How To Take Your Lumps
Tax help > Camping In A RV For Fun And Pleasure
Know How To Take Your Lumps Tax help
Dog Aggression Training
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Why do so many dogs get euthanized when there owners could have taught them not to bite?
When it comes to dog aggressiveness, there are laws that state the dog?s owner can be charged and the dog put down if the dog bites someone. Of course, with some serious dog training, dogs can be taught to enjoy people and not be aggressive.
There are a number of reasons why dogs become aggressive. The dog may feel his territory...
potty training Know How To Take Your Lumps Tax help Dog Aggression Training
Tax help > Dog Aggression Training
Jazz Up Your Scrapbooks with Embellishments
Jazz Up Your Scrapbooks with Embellishments
by: Wilfred Luecht
Do you want to learn to create lasting and memorable keepsakes that show your unique and personal artistic skill? Scrapbooking is a fantastic craft that allows your creative side to go wild. You can do so much more than just placing photographs in an album. Not only do you have your one-of-a-kind photos to work with, but also you can assemble your scrapbooks with virtually an unlimited array of embellishments...
Know How To Take Your Lumps
Tax help > Jazz Up Your Scrapbooks with Embellishments