Oct 30

New Podcast – The Trump Tax Plan and 401(k) Plan Retirement Accounts

In his latest podcast, IRA Financial Group’s Adam Bergman discusses the proposed tax plan from President Trump and the potential impact on 401(k) Plan retirement accounts and why the government thinks it needs to lower 401(k) Plan contribution limits.

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Dec 22

New Podcast – Understanding the 401(k) After-Tax Contribution Conversion Rules

IRA Financial Group’s Adam Bergman discusses how to understand the after-tax 401(k) contribution conversion rules.

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Dec 14

IRA Financial Group Introduces Advanced Solo 401(k) Annual Contribution Calculator Tool for 2015

Solo 401(k) Plan Contribution calculator will allow individuals to calculate their maximum solo 401(k) Plan annual capital contributions for 2015

IRA Financial Group, the leading provider of self-directed Solo 401(k) Plans, introduces new look online Solo 401(k) annual contribution calculator for 2015. The newly revamped online Solo 401(k) contribution calculator is a valuable tool that will allow an individual to calculate the maximum annual contribution to a solo 401(k) Plan, including employee deferrals and employer profit sharing contributions for 2015. The improved 401k online contribution calculator tool will allow a Solo 401(k) Plan participant the ability to calculate their maximum annual Solo 401(k) contribution based on ones age as well as the type of entity they have (i.e. sole proprietorship, LLC, partnership, or corporation) for the 2015 taxable year. “We are excited to introduce the newly designed Solo 401(k) Plan contribution calculator for individuals looking to determine their maximum 401(k) contribution amount for 2015,“ stated, Susan Glass, a 401(k) retirement specialist with the IRA Financial Group.

The annual Solo 401k contribution consists of two parts, an employee salary deferral contribution and an employer profit sharing contribution. In 2015 the total Solo 401(k) contribution limit is $53,000 or $59,000 if age 50 or older. The total allowable contribution limits are combined to get the maximum Solo 401k contribution limit. The Solo 401(k) contribution limit for 2016 will remain the same as 2015.

IRA Financial Group Introduces Advanced Solo 401(k) Annual Contribution Calculator Tool for 2015Up to $18,000 per year can be contributed by the participant through employee elective deferrals. An additional $6,000 can be contributed for persons over age 50. Through the role of employer, an additional contribution can be made to the plan in an amount up to 25% of the participant’s self- employment compensation (20% if one a Sole Proprietor or a Schedule C Tax Payer).

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market’s leading provider of self-directed Solo 401(k) plan. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please call 800-472-0646.

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Nov 19

New Podcast – Learn How To Defer All Your Income Into Your 401(k) Plan Up To $59,000

IRA Financial Group’s Adam Bergman discusses how to defer almost all of your income into 401(k) contributions if you make up to a certain amount of money.

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Feb 23

Myths Regarding the 401(k) Plan

In a recent article written by Rebecca Sheppard at Benzinga, she discusses five myths about 401(k) plans that should be ignored:

As with many things financial, myths surrounding retirement plans abound. In order to combat these sneaky, perpetuated falsities, it is primarily essential to understand how retirement plans work.

Saving for retirement involves much more than simply stashing away a few bucks every month into the savings account attached to your checking account. It can seem burdensome, but with proper cultivation, a designated retirement savings vehicle or two can make a huge impact on your later years.

Myth 1: 401(k)s Are The Same As IRAs

401(k) plans and Individual Retirement Accounts (IRAs) are both accounts that are set up to help an individual save for retirement. 401(k)s are offered by employers, while IRAs are opened by the participant.

  • Eligibility: Anyone with taxable income can set up an IRA. 401(k) plans are established through an employer and therefore cannot be set up outside of that environment.
  • Contributions: 401(k) contributions can be made by the participant and the employer, while IRA contributions are the responsibility of the account holder alone. Furthermore, IRA contributions are determined and limited by age and income.
  • Taxation: Depending on the type of IRA, the account may be tax-deferred (Traditional IRAs) or have tax-free growth (Roth IRAs). 401(k) plans are considered tax-deferred since contributions are made prior to taxes being taken out (from your salary) and then taxed upon withdrawal.
  • Withdrawals: Typically, once the account holder reaches retirement age, withdrawals from 401(k)s are penalty-free; they are, however, taxed. Before retirement, a penalty may be incurred for withdrawals. IRA withdrawal regulations depend on the type of IRA, but in general, withdrawals can be made at any point for qualified distributions penalty-free.

Myth 2: All 401(k) Plans Are The Same

While all 401(k) plans function similarly in that they are all retirement savings vehicles, not all plans follow the exact same formula. Some employers offer matching contributions for 401(k) plans; some offer a percentage match; some do not.

Insurance broker and W.H. Black & Company President William H. Black Jr. stated, “One of the biggest misconceptions in the 401(k) world is all plans are created equal. Nothing could be further from the truth. It is this misconception that is hurting plan sponsors and plan participants alike.”

Myth 3: If I Switch Jobs, My Old 401(k) Account Disappears

While 401(k) plans function as a dual investment between the participant (employee) and the offering party (employer), an employment change – either by termination or transfer to another job – does not eliminate the account or the accrued benefits. The account does not cease to exist once the offering party is no longer vested in the account.

That being said, the account cannot go on as it did before. After a job change or cease of offer (see Myth 4), the participant essentially has three options for how to proceed with the account.

  • Empty The Account: The participant can, with minimal penalties, withdraw all funds and close the account.
  • Transfer To A New Retirement Plan: If the participant switches jobs from one 401(k) provider to another, the account contents can be rolled over to the newly offered 401(k). If the participant does not wish to enroll in a new 401(k) or it is not offered, the savings can be rolled over into an Individual Retirement Account (IRA).
  • Leave It: Once the participant is 100 percent vested in the account, they can simply leave the account be and let it mature. A word of warning: This is not always feasible; depending on the amount in the account, the employer may have the option to automatically shift funds before they surrender their ownership percentage.

Myth 4: My Employer Offering The 401(k) Is Legally Bound To Keep Offering The Plan Once I Sign

Unfortunately, this is not the case. There are currently no federal or state regulations requiring employers to offer retirement plans of any sort, therefore employers can terminate their offered 401(k) plan. Furthermore, they can do this without your consent.

What is important to keep in mind, however, is that employees enrolled in 401(k) plans are protected by the virtue of how 401(k) plans are regulated. At termination, the employer must forfeit his percentage vested in all amassed benefits; the employee is then 100 percent vested in the account.

Myth 5: If I Contribute The Minimum Amount Annually, I Will Have Saved Enough For A Comfortable Retirement

Not necessarily. Many financial experts recommend upping your contributions annually. However, some annual contribution is better than none.

If you feel that you have not contributed enough over the years, there are resources to help restore balance and health to your retirement account. The IRS offers advice on how to avoid such mistakes and how to recover if oversights were made.

For more information, please contact one of our 401(k) Experts @ 800.472.0646 today!

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Jul 02

Things You Should Know About Your First 401k

If you just graduated from school, whether high school or college, you may be preparing yourself for the workforce for the first time.  An important factor in choosing a job should be the retirement plan offered.  Here are a few things you should know about your potential employer’s 401(k) plan.

Firstly, you should know when you are allowed to enroll in the plan.  Eligibility may be a deciding factor on what job offer to take.  Some employers will allow you to enroll the first day you start working while others may keep you waiting a full year before allowing you into the plan.  Nowadays, many employers offer auto-enrollment in the plan as soon as you are eligible.  Take note of how much is put aside for your retirement since oftentimes the default percentage is only around 3-5%.  Putting aside at least 10% is a good start for your nest egg.  Whatever the case, start contributing as soon as you can since the earlier you start, the more earning power your money will have.

Things You Should Know About Your First 401kNext, you should know whether your employer offers a matching contribution or not.  With recent gains in the market, many employers are re-instituting matches that were lost during the recession.  A match is generally done it one of two ways.  First, you may receive a 100% dollar for dollar match up to 3% of your annual salary.  Secondly (and most common) is a 50% match on your contributions up to 6% of your salary.  It’s recommended to contribute enough to your 401(k) to receive the full match since it’s the best return you’ll see on your money.

You should then find out if a Roth option is available to you.  Traditional 401(k) plans are funded with pre-tax money.  Earnings are tax-deferred and taxes only come due when you withdraw the funds during retirement.  Any contribution made will lessen the tax bite during those years.  On the other hand, a Roth 401(k) is funded with after-tax money.  You don’t see an immediate tax break, but all qualified distributions are tax-free!  This is a great option for those just starting out who will be earning less now than when they retire.  It’s good to invest in both traditional and Roth accounts for the best diversity.

Lastly, you should know what options you have to invest in.  Again, this differs from job to job since each employer has different options available to you.  Typically, you’ll see the same types of things: stocks, bonds and mutual funds.  The two biggest factors when deciding what to invest in is risk tolerance and fees.  The younger you are, the more you want to skew towards riskier stocks.  They generally see higher returns and the risk is lessened the more time you have until retirement.  High fees can eat away at your savings.  You might look towards index funds and exchange-traded funds (ETFs) which often carry lower maintenance fees.  Finally, if you are a “set it and forget it” type of person, look at target-date funds which will choose your investments based on the year you plan on retiring.  They provide more risk when you are younger and get more conservative as you near retirement.

Just because you are young and just getting started in the workforce doesn’t mean you should neglect saving for retirement.  The sooner you start (even if it’s just a little at first), the better you will be thanks to compounding.  If you have any questions, please contact a retirement specialist at the IRA Financial Group @ 800.472.0646 today!

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Apr 08

Six Steps for a Successful 401k

People are living longer and saving for retirement should be one of the top priories in your life.  If you aren’t already contributing to a 401k plan, get started…yesterday!  Medical technologies are making life spans longer, healthcare costs are on the rise, Social Security is in doubt and pensions are becoming extinct.  These are just a few reasons to save as much as you can for your golden years.  Here are six things you can do to maximize your savings.

1. Contribute as much as you can!  Every year you should contribute at least a percentage or two more, especially when your pay increases.  With a traditional plan, your contributions occur pre-tax, which lessens your earned income.  The lower your income, the lower your tax bill will be.

2. Diversify your contributions.  You should invest both in traditional (pre-tax) plans and Roth (after-tax) plans.  While traditional plans allow for tax-deferred earnings, the Roth plan gives you tax-free distributions.  Roth plans are funded with after-tax money but withdrawals are tax-free when taken during retirement.  Roth plans are ideal if you expect to be in a higher tax bracket later on in life.

3. Utilize a company match to the fullest.  About two-thirds of companies offer a match to your 401k contributions.  The average is usually a 50% match up to 6% of your annual salary.  For example, if you earn $50,000 per year the maximum match you would see is $3,000.  To get that full match, you would have to contribute $6,000 to the plan.  Come year end, your $6,000 contribution turns into $9,000 in your plan.  Do whatever it takes to receive the full match….it’s free money after all!

4. Catch up!  If you are at least age 50, the tax laws allow you to contribute more to your retirement plan.  If you’re under age 50, the maximum you can contribute to your 401k for 2013 is $17,500.  However, if you’re at least age 50, you can contribute another $5,500.  This is especially important if you haven’t contributed a lot (or anything) towards your retirement.

5. Don’t borrow!  Unless you are in dire straights, never borrow from your 401k (or other retirement) plan.  The major advantage of these plans is tax-free compounding.  Any money you borrow from it won’t be earning for you.  Further, you pay taxes on the loan with after-tax dollars, you’ll pay taxes again during retirement, interest is not tax deductible and loans become due immediately if you leave your job for any reason.

6. Think big picture.  Your retirement planning is a marathon, not a sprint.  You’ll never be able to predict the market, so don’t try!  Over the long haul, the markets earn money for you.  You should check your asset allocation annually.  Make sure you’re comfortable with the amount of risk you are taking.

The tax experts at the IRA Financial Group are here to advise you on all things concerning your retirement.  While they specialize in individuals and small businesses, no question is unimportant to them.  Give them a call at 800.472.0646 or visit their website to see how they can help you with your retirement planning.

Mar 07

Making Your 401k Work Harder for You

In a good article over at MarketWatch.com, they talk about four ways to make your 401k work harder for you.  Here we’ll briefly touch on each point.  Refer back to the article for a more detailed explanation.

First, contributor Paul Merriman says not to invest too much, if any, money into your 401k.  A 401k typically doesn’t offer the investment opportunities that an IRA does.  The one caveat is the employer match.  If your employer will match your 401k contributions, then you should make every effort to receive as much of the match as possible.  Afterall, that’s free money!  Let’s not forget the high fees associated with many 401k plans.

Next, he recommends the Roth options, either for your IRA or your 401k if your company offers the option.  A quick reminder about funding these accounts.  With traditional plans, you fund it with pre-tax earnings, therefore getting an immediate tax break.  You don’t pay taxes until distributions are made.  With the Roth option, you don’t get the immediate tax break.  You fund the account with already-taxed dollars, however distributions are tax-free.  If you can afford to pay the taxes now, you’ll have more money during retirement.  Income limits and conversions can get a bit tricky though.

Thirdly, there is the target date fund.  These are perfect for those who aren’t too financial savvy.  You don’t need to know a whole lot about the market to invest in these.  The investments are made by professionals based on your expectant retirement year.  The closer you get to it, the safer your investments become.  It’s not a perfect solution, but it will help the novice better save for retirement.  If you want to take more risks, set your target date later on and vice versa.  If you’re set to retire in 2040, then set your target date to 2050 for a more risky approach and to 2030 for the safer route.

Finally, if you have some financial knowledge and are willing to do some work, manage your own account.  Target date funds include bonds even for young investors which sap the potential growth of your retirement plan.  “When you manage your own account, you can dial in just the right level of bonds depending on your age and temperament. And on the all-important equity side of your portfolio, you can carefully choose asset classes that have long records of beating the Standard & Poor’s 500-stock Index with little or no extra risk,” adds Mr. Merriman.

These are great points and be sure to follow the link to read a bit more about each one.  If you have any questions related to retirement planning, contact the tax experts at the IRA Financial Group today.

Aug 29

What is Vesting?

Do you know if you’re vested at your current job?  If you’re not, you could be losing thousands of dollars if you decide to leave.  There are countless reasons to leave your current employer (salary, working conditions, better offer elsewhere, etc.), but if you’re not vested and participate in your company’s 401k, you’ll be losing money that you rightfully deserve if you leave.

So, what is vesting exactly?  This is the time period or monetary commitment that you must make until the matching donations in your 401(k) are wholly considered yours.  Therefore, if you’re company matches any of your 401k contributions, that money is not completely yours until you’ve either worked at your job for a certain number of years or have contributed a certain amount of money in your 401k.  Check out this page for an example of vesting.

From that same article, “The Employee Retirement Income Security Act (ERISA) says that no matter what company you work for, your contributions — and employer matching contributions — are fully vested after three years. This applies only to defined contribution plans and the contributions made to them after 2006 when the law was passed. Employers must either fully vest employees in all defined benefit plans after five years or have a gradual vestment that terminates with full vestment after seven years.”

In conclusion, make sure you’re vested if you’re considering leaving your current job.  If you’re not, it’s beneficial to stay there until you are so you don’t lose out on the money you deserve.

If you need advice or have a question about vesting, contact the ERISA experts at the IRA Financial Group today.