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Tag Archives: Roth IRA

How Job Hopping is Harmful to Your Retirement Savings

Job Hopping

While some people choose to stay at the same job for their entire career, others have a habit of changing jobs every year or two. This habit is known as job hopping. Job hopping may not be a bad thing if you are young and the positions you hop to are higher paying or with better benefits. However, there are times when job hopping can be harmful to your retirement savings. Cashing Out Should you choose to leave your job after only a year or two, you may think you should simply cash out your 401(k) when you leave. Think again. Cashing out your retirement plan early means you may only be able to receive a portion of it. The reason for this is because early withdrawal usually causes you to incur penalties and fees. A couple of better options would be to move it with you to your new employer, if they allow it, or to roll it into an IRA. Not Being Fully Vested When you are investing in a 401(k) plan, it usually takes three to five years before you are fully vested. If you choose to leave your current employer and go to work for a different company ...

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Ways to Save for Retirement When You Don’t Have an Employer Plan

choices for retirement plans

Last week we talked about having a retirement savings wake up call, which is a very important first step in preparing for the future. It’s pretty easy to save for retirement when you have access to an employer sponsored plan, but what about those who are self employed or work for a company that doesn’t offer retirement? Luckily, there are several smart and simple choices for setting up a retirement plan on your own. Can’t I Just Save Money Without a Plan? Of course, if you’re willing to save lots and lots of money. The beauty of having a tax deferred or tax advantaged retirement plan is the ability to save on taxes, now or in the future, plus growing money through the wonderful benefit of compound interest. Without those two things, you’ll need to save much more money to have enough for retirement after paying Uncle Sam up front and from later earnings. To see how much you’ll need to save, try out the free retirement calculator from Personal Capital. Traditional IRA Anyone can open a traditional IRA. If you or your spouse aren’t covered by a retirement plan at work, your entire contribution is tax deductible. If an ...

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The Last Day To Fund an IRA or Health Savings Account for 2014

find your IRA or HSA before April 15th

Next Wednesday is April 15th. All of us in the U.S know that’s tax day, but it’s also another very important date to remember. April 15th is the last day to fund an IRA or Health Savings Account for 2014. I was on the fence whether to put money into a Roth IRA or into my solo 401k, but we have the rest of the year to work on the 401k and only a few days left to add to our 2014 holdings, so that’s what I did. Sometimes It’s OK To Invest By Emotion I have no idea what the tax rates might be when I retire. I do know taxes are high right now because we are considered high earners. In theory, I should have put money into the 401k to defer income taxes, but I didn’t. I’ve always been drawn to Roth IRA’s because no matter how much they earn in interest over the years, you never have to pay another cent in taxes on any of this money. Yes, I know there are ways to roll money into Roth’s at a later date. Yes, I understand the math behind tax deferred accounts, but emotion made me ...

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Should I Contribute To A 401k, Roth IRA, Or Health Savings Account?

Investing with Betterment

This is not a post for someone who has never invested in anything. If that’s you, it’s time to start. Pick something easy like your work 401k or a Roth IRA. This post is for those who are trying to build wealth while minimizing taxes and fees.It also assumes that you have access to more than one type of retirement account and are eligible to have a health savings account. If that’s you, today I want to examine whether it’s better to invest in a 401k, Roth IRA, or HSA. While, ideally, we’d max out all those accounts ever year, realistically, many people have to choose where to put their money. All of that depends on your age, tax bracket, and how much you have to invest. 401k The 401k is maybe the easiest of the three. Generally, if you work for an employer who has a retirement plan, you’ll fill out enrollment forms, select which fund you want, and determine how much to contribute, up to $17,500 a year if you’re under age 50. People over 50 can add an additional $5500 per year in 2014. Even if you are self employed, you can still contribute to a solo ...

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Advice for a Beginning Investor

I had the pleasure of discussing investing with one of my friends recently. She and her husband hadn’t really started saving for retirement. They also had a baby last year and wanted to look into options for college funds. I am certainly no expert, but I’ve learned a thing or two over the years, and I love to talk about money. It’s just hard to find anyone to talk with most of the time! It turns out they had already met with a financial planner who gave some recommendations, but she was unsure about his advice. It turns out she had already done quite a bit of research and just needed to pull the trigger. I think lots of people are in the same boat and end up doing nothing because they are scared of making the wrong investment choices. There is never a better time than now to start investing, and you don’t necessarily need a financial planner to do so. Financial Planners, Friend or Foe? I have nothing against having a financial planner. I know there are some amazing ones. I just don’t think any of them live in my town. I met with one a few years ...

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