401(k)s, IRAs, and Other Mysteries

Retirement Plans: 10 Things You Should Know

Presentation by Rudy Trebels

You’ve been carefully socking away the money for years, waiting,

patiently waiting, until you can take it out to buy that vintage Airstream

ad travel the back roads.

Before you withdraw, Here are 10 Things You Should Know About

Retirement Plans:

1. Hands off my money!

❖ Corporate retirement plans are exempt from greedy creditors, and the same is true for IRAs and Roth IRAs (in which case up to $1 million is exempt).

2. Check, please!

❖ Nearly half of American workers cash out their 401(k) savings when they change jobs instead of rolling it over into an IRA.

3. It’s not completely locked up.

❖ You’re not always penalized for taking money out of a 401(k) before age 59 and a half. If you retire after age 55 and take a distribution of some or all of your 401(k) funds, there’s no early distribution tax - though you still have to pay income tax on the amount withdrawn.

4. It goes the other way, too.

❖ Just because you have passed age 59 and a half doesn’t guarantee that you can take money out of your retirement plan. Many qualified plans do not permit distributions while you’re still working.

5. No penalty, but lots of paperwork.

❖ At any age, you can start taking out payments based on your life expectancy or that of you and your beneficiary. (The IRS rules for doing this are fiendishly complex, though.)

6. What’s a Roth 401 (k)?

❖ Contributions to traditional 401(k) plans are tax-deductible, but contributions to Roth 401(k) plans will not be. Instead, the tax benefits for Roth 401 (k)s will come when you take distributions, which will be tax-free as long as you meet certain requirements.

7. Keep on saving.

❖ Just because you are retired or semi-retired doesn’t mean that you can’t make tax-deductible contributions to retirement plans such as IRAs.

8. Consider your rollover.

❖ When you leave a job, it might be to your advantage not to roll over all of your employers stock into an IRA. Once you do this, all future distributions from the IRA will be taxed at ordinary rates - not capital gains rates.

9. It’s a hopeful bunch.

❖ Sixty-four percent of U.S. workers do not expect their standard of living to decline in retirement.

10. Some dreamers in there, too.

❖ Thirty-two percent of U.S. workers say they have not saved for their retirement.

Retirement Planning: Best Websites

www.401khelpcenter.com

The 401k Help Centerhas the most up-to-date information on 401(k) trends and news.

www.aarp.org

AARP

has a solid financial planning and retirement center with good IRA and 401(k) advice.

Click “Money” on the home page.

http://finance.yahoo.com/retirement

Yahoo Retirement and Planning Centeroffers unbiased information on all things related to retirement planning and financing.

www.ssa.gov

Social Security Onlinehas a lot of helpful retirement planning information as well as guidance in calculating benefits.

Source: Your little legal companion. (2006). Berkeley, CA: Nolo.

If you liked this piece, visit: RudyTrebels.us

❖ Rudy Trebels is the President and CEO of Wedgewood Investment Group. With over 35 years of experience in financial services, Rudy is known as a successful business leader and innovator in his industry. His company focuses on assisting middle market business growth and offers investment banking services and financing existing assets or construction of new assets. Rudy and his team are highly skilled and have worked with numerous investors and lenders across the country.