AdvisorMarketing asked:

www.advisormarketingsuccess.com. Richard Emmons suggests financial advisors remember the impact of rising prices when creating retirement plans for their clients.

Mary D asked:


I’ve had a savings account with ING Direct for almost a year now and have always been very pleased with them. I just recently started looking into retirement planning and discovered that they also offer Roth IRAs with very low startup requirements. Has anyone heard anything about this service, good or bad? Does anyone use them for retirement planning? I hear it’s not always the best idea to do retirement planning through a bank because it’s not their real speciality.

Bala Gopalakrishnan asked:


I have a 401K that is vested for around 100000 US$ and I am allowed to take it after I leave the employer. I do plan to go back to India. Is it possible to take 15,000 $ per year and avoid paying federal and state taxes ( Since Iam out of country and not a resident + it falls with less income per annum). Is there a penalty that I have to pay while taking money out. I will have closed all my bank accounts except this IRA/401K account and so how would I pay the penalty and any taxes that might occur. Please advice.

Zully asked:


I’ve been with my French teacher for 4 years, and she is retiring this year. She was going to retire last year, but she decided to stay and see my class graduate. What would be a good retirement present to get her? Any ideas are appreciated! Thanks!

The 401K early withdrawal penalty is a heavy price to pay, that if at all possible, should be avoided.

This fee is paid when you cash out your account before turning 59 years and 6 months old. You can only do this when you’ve reached retirement age (in which case there is no fee) or when you’ve left your current employer. You have a very short amount of time to decide what to do, usually about thirty days. When you leave your job you can decide to leave the money in it’s current plan, rollover to your new employers plan, roll into an IRA (independent retirement account), or cash out.

When you cash out the 401K early withdrawal penalty takes a great deal of your accounts balance. There are three different parts that must be paid: federal taxes, state taxes, and a ten percent penalty. The federal tax percentage is determined by your tax bracket, which can be found on your last years tax papers. State tax varies state to state, but is typically somewhere between five to ten percent. When added all together these three parts can amount to thirty to forty percent of the amount you take from the account, plus the money the account would have accumulated up to the point of retirement.

If you need money now and see this account as your only option for funding, there are some circumstances where you can use this money and avoid the 401K early withdrawal penalty.

If you are in a situation of economic hardship, where you will lose your home or have medical bills, you can fill out economic hardship paperwork and apply to get take some money from the account. You do have to repay this money, though.

Some plans will allow you to do 401K loans. You are allowed to borrow from the account up to 50% of it’s balance, or $50,000 (whichever is less). You do have to repay this money and pay interest, but the interest rate is low, and the interest you pay is put right into your account, so it’s not really a loss. This money does have to be repaid within five years or else it is treated as though you originally cashed out and you have to pay the early withdrawal penalty.

With some plans you are also able to withdraw to use the money to pay for college courses if the classes will further your current career. You’ll want to check with your plan provider to see if this is available to you.

Because of these harsh fees, and the loss of your main retirement savings, it is important to avoid paying the 401K early withdrawal penalty.



By: Jennifer Quilter

About the Author:

The IRS has imposed certain limits on the amount that can be contributed to an individual?s 401(k) plan account in a year. The IRS also decides the maximum pre-tax amount that can be contributed to this plan. For the year 2005, a maximum limit of $14,000 pre-tax contributions made to employer sponsored plans were set up. The maximum pre-tax contribution limit is slated to be $15,000 in the year 2006. These contribution limits are the outcome of the Economic Growth and Tax Relief Reconciliation Act of 2001. The maximum pre-tax contribution limit, in post-2006 period, is indexed in $500 increments for inflation. Even if one works for more than one employer these is the IRS pre-tax limit for a particular year. The IRS has also fixed maximum limit for the aggregate sum that may be contributed to the 401(k) account by all the sources. This not only includes any employer matching or profit sharing contributions as well as any employee after-tax contributions.

As far as the catch-up contributions are concerned, if one is expected to reach age 50 or older the limit for additional catch up contributions $4000 in the year 2005, it is $5000 in 2006. After year 2006, these limits will be subject to cost of living adjustments commonly known as “COLA.” It is important to note here that at the end of the calendar year, if an employee’s your regular pre-tax contributions have not exceeded the Plan contribution limit or the IRS annual dollar limit, some or all of the employee’s catch-up contributions could be treated as regular pre-tax contributions. The contribution limits have been devised in such a way that the employers do not discriminate to favor the highly compensated employees.

By: Jason Gluckman

About the Author:

ESPN asked:

QB Kurt Warner talks with Trey Wingo about ending his career after 12 season

Retirement is a new chapter of adulthood as it transforms a person to a time of passion and purpose. Retirement is not the end of everything. It is just the beginning of a new and relaxed life which could turn out to be interesting and more productive if you plan well. So design your next phase well to lead a meaningful second adulthood.

Many people are uncertain about their pre-retirement planning. Are you confused about the right plan or selecting a career path after retirement? You should be, and more so if you are nearing your fifties as you have plenty of years to plan ahead and this question is the one that should lead you to the right path. Some people find pre-retirement planning very tedious and boring and they feel that they would need more money than they calculate. Many executives prefer leading stressful lives, as they don’t know how to start planning for their retirement. Some find themselves locked in a decent pay pack and they cannot think of anything else or any change over.

You should plan well for your retirement. Seek the help of a counselor who can create a plan for your retirement and help you set your goals or define your career path so as that you can lead a satisfying retired life. Retirement counseling is generally based on your needs and either the counselor guides you to a specialist or provides a referral. Retirement counselors are well versed to handle all your issues relating to relationship, financial management, life balance issues, stress and well as anxiety that accompanies when you near the retirement stage.

Retirement is very critical for some people and other than financial issues some also face restlessness. Experts are not satisfied with the currently available pre-retirement programs as they find them shallow. They suggest that a retirement counselor should give a holistic approach towards understanding:

Current financial resources and the future needs. Management of leisure time more meaningfully, either by pursuing hobbies or opting for some volunteer activities, or in reflection and contemplation. Obtainable property, or health and safety. Relationships.

Research shows that pre-retirement people often refuse to seek help from counselors. But slowly this trend is changing and many corporations now offer specific pre-retirement help. Retirement counselors play an important role in providing financial information with meaningful suggestions based on a special sensitivity to the fact that anxiety about retirement is often about aging.

Counseling baby boomers and elderly during the pre-retirement stage is a new and challenging field that promises a more satisfying, meaningful life for America’s older citizens. The little planning and initiative goes a long way.

By: Anna D. Banks

About the Author:

coyoteborder asked:


I read that immigrants that become permanent residents in Canada, and that enter the labor market at a mature age (30+, 40+), and that retire at the normal retirement age of 65 or 67, are entitle to a portion only of Canada’s retirement funds. The reasoning behind it is that because they have not contributed as long as a native Canadian or another immigrant that had entered the labor market at an earlier age, they cannot withdraw equal amount of funds. If it is so, is there a % of the “normal pension” that an immigrant would receive in retirement funds depending on his/her age at the time he started working in Canada? Are there investment options, like in the USA (mutual funds, 401K, IRA, etc), to make up for the difference of what a native Canadian could receive at a retirement age?