Brand New Employer Sponsored Plan Is A Hybrid Of A Traditional 401(K) And A Roth Ira-January 1st, 2006 Is Start Date For New Roth 401(K) Retirement Savings Plan
(ContentDesk) December 7, 2005 -- Income tax rates have been cut, the marriage penalty done away with, and the "death tax" is also on a path to no more.
All of this is a result of the Bush administration's Economic Growth and Tax Relief Reconciliation Act which was passed by a Republican congress in 2001.
Another provision of that act goes into effect on January 1st, 2006, a hybrid of a traditional 401(k) and a traditional Roth IRA called the Roth 401(k).
Yet another employer sponsored savings plan, the new Roth 401(k) works in almost the same way as a traditional 401(k) plan.
Workers invest a portion of their income into a fund along with contributions from their employer (if any).
The difference is that the traditional 401(k) is funded with "pre-tax" dollars and the Roth 401(k) plan uses "after-tax" dollars.
However, with the Roth 401(k), withdrawal of your money at retirement will be tax free like a Roth IRA.
The traditional 401(k) plan defers the tax owed during your career until retirement.Although it may sound like the best of both worlds, it is important to note that no employer is required to offer this new Roth 401(k) plan.
In fact, a recent survey by employee benefits consulting firm Hewitt and Associates found that only 31 % of employers currently offering the traditional 401(k) plan are considering implementing the new Roth 401(k).
Employees may now want to begin inquiring whether their employer will be offering the new retirement plan in 2006.
Contribution limits for the retirement plans are: in 2005, $14,000 for a 401(k) and $4,000 for an IRA, whether Roth or traditional.
In 2006, this amount will increase to $15,000 for both 401(k) and IRAs.For in depth answers to your retirement and investment questions visit http://www.HowMuchAnswers.com - providing simple and easy to understand information about 401(k) plans and IRA accounts..
Retirement Plans for Solo Entrepreneurs
Saving for retirement is even more important for solo-entrepreneurs because you don't have a company sponsored pension plan or matching 401K contributions to rely on.
There are many retirement plans available to self employed individuals and small businesses.
Which one is right for you?
Here is just a sample of the retirement plans available to solo-preneurs and small businesses:
Roth IRA ? although this is not just for solo-preneurs, this is the first place you should look to save if you are just starting to save for retirement (or resuming to save after starting a business).
Roth IRAs are low-cost, very flexible, and allow you to grow money tax-free as long as you follow the distribution rules.
Contributions can be made up to $4,000, and can be withdrawn at any time without tax or penalty (earnings withdrawn may be subject to penalty and tax if withdrawn before age 59 ? and certain other conditions are not met).
Ira > Retirement Plans for Solo Entrepreneurs
DISCOVER THE RETIREMENT BREAKTHROUGH ?THE ROTH IRA!
If you don't know what a Roth IRA is then stop everything, print this article and read it carefully as this will certainly be the most valuable information you read this year. This next retirement account is to your net worth what light bulb was to electricity. Let me tell you about this wonderful financial invention called a Roth IRA!The main difference between the Roth and traditional IRA is that with the Roth you pay taxes first and then make the contribution. This is absolutely fantastic if you make a lot of money in the stock market because you NEVER have to pay even a dime on the capital gains! There are a ton of other advantages to the Roth IRA. Unlike the traditional IRA you can be of any age and still contribute.
You can also make a contribution to a Roth IRA at any time for a particular calendar year up until the due date of your tax return for that year. This means that if you want to make a Roth IRA contribution for 2005, you could make it anytime between January 1,...
DISCOVER THE RETIREMENT BREAKTHROUGH ?THE ROTH IRA!
Ira > DISCOVER THE RETIREMENT BREAKTHROUGH ?THE ROTH IRA!
Retirement Savings Basics For a Secure Financial Future
The difference between an IRA and an ordinary investment account is that there are special tax advantages, but restrictions on the account apply. Individuals can only contribute up to $3000 per year to their IRA, or $3500 for people over fifty who want to jump start their retirement savings program. These limits are set to rise over the next few years, to $5000 in 2008, or $6000 for people over fifty. The contributions must be made from money which has been earned in the year the contribution is made. No tax is payable on the earnings from the investment as is grows, but the funds cannot be withdrawn until a certain age has been reached, usually fifty nine and six months, or penalties apply.A Roth IRA is a special type of account.
Contributions are not tax deductible, but investors can make tax free withdrawals after the age of fifty nine and six months, so long as the account has been established for more than five years. The basic difference between this type of account and...
Retirement Savings Basics For a Secure Financial Future
Ira > Retirement Savings Basics For a Secure Financial Future
SEP IRA - For Last Minute Tax Deductions
Virginia - February 24, 2003 - The SEP IRA is one of the few remaining methods for small business owners to cut their taxes for last year.
Employer contributions made to a Simplified Employee Pension-Individual Retirement Account, known as a SEP plan, before a company's tax filing deadline are deductible for 2002.
This holds true even if the SEP plan is set up and the contributions are made in 2003."A SEP-IRA allows small business owners and sole proprietors in a very simple manner to cut their tax liability by making retirement contributions for their eligible employees," says Daniel Lamaute, retirement plan specialist at InvestSafe.com and CEO of Lamaute Capital, Inc.The SEP-IRA has several main advantages for employers, says Lamaute.
"Employers get a tax deduction while the SEP-IRA contribution is not taxed as income to the employees.
The earnings within the SEP IRA are taxed deferred until the participant pulls money out, usually at retirement...
Ira > SEP IRA - For Last Minute Tax Deductions
Roth IRA Accounts
In order to understand Roth IRA Accounts, you first need to understand the concept of a Roth IRA. IRA is an acronym for individual retirement arrangements, wherein an earning person can contribute his money to a Roth IRA account. The advantage of this arrangement is that, though the contributions themselves are subject to tax deductions, withdrawals are not taxed. The advantage of this is that your income is allowed to grow tax-free.
This means while a contribution is made with after-tax money, there is no tax involved with the withdrawal, subject to certain conditions.
So in a way, the Roth IRA is a good way to convert income earned from dividends, interest, and capital gains etc. into tax-free money.
An individual cannot contribute more than $4,000 to the Roth IRA Account, though he may have a large number of such accounts. But the contribution limit to these accounts should not exceed $4,000.
A Roth IRA Account can be built from either contributions...
Ira > Roth IRA Accounts