401k Definition

Frequently Asked Questions

1. QUESTION:
   do you know what eligible pay for for 401k calculations is?
   do you know the definition of this payroll question?

   • ANSWER:
     This depends on if you are talking about what your company or the IRS see as eligble pay.

     Your company may limit what they will match. Say your company matches 100% of your contribution. You make 00 gross every paycheck and you contribute 10% of that to your 401k. They would put an additional 0 along with your 0 contribution into the plan. If you work sales or gain bonuses a company may limit their match to purely salary and may not touch additional pay.

     The IRS sees eligible pay as mostly your gross income. They don’t necessarily care where you gain honest income from and do not exclude anything because there is a cap on how much and the percentage you are allowed to contribute to 401k’s that is set by the IRS.

2. QUESTION:
   What is the IRS’s definition of student? Please read details?
   I am 18. I was a high school student in 2008 (Jan-Jun). The IRS appears to define a student as someone “enrolled” (paying?) in a technical, trade or mechanical. I would assume this also means college.

   But does it mean a plain old high school student? I have to file this year and I may be eligible for a Retirement Savings Credit because of my 401K contributions. I need this answer.

   • ANSWER:
     Yes, high school is included.

     For the Retirement Savings Credit, a full-time student is:

     You are a full-time student if, during some part of each of 5 calendar months (not necessarily consecutive) during the calendar year, you are either:

     A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or

     A student taking a full-time, on-farm training course given by either a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or a state, county, or local government.

     You are a full-time student if you are enrolled for the number of hours or courses the school considers to be full-time.

3. QUESTION:
   I can not find definitions for terminology associated with 401k plans, the terms are asset allocation sign up?
   i need to define-asset allocation sign up sheet, stock indexed funds, equity index option, managed equity funds, front-end load, back-end load, defered sales charge, self directed funds, portable funds, & vested balance

   • ANSWER:
     he wants definition,not reccomendations

     www.investopedia.com or www.wikipedia.org both work well for that type of stuff

4. QUESTION:
   Need help understanding my 401k…Roth or Traditional?
   I have two options: go with the Roth (the Wells Fargo guy said would be better for younger people such as myself) or a Traditional 401k. I guess I’m not understanding the definitions of “pre-tax contributions” for Traditonal vs. the “after-tax contributions” of Roth 401k. Can someone explain?

   Basically I want to know is which one will keep more money in my paychecks now, but will be higher taxed when I begin to withdraw money at retirement?

   • ANSWER:

5. QUESTION:
   Is a pension plan the same as a retirement plan or is it a type of retirement plan?
   please give me the definition of a pension plan also what is a 401k plan?

   • ANSWER:
     Very simply, a pension plan means that when you retire the plan will pay you a certain amount of money every month. That is your pension. Pension plans are usually funded entirely by the employer.

     401K is a type of retirement plan in which you put money into a savings account or into the stock market etc, and it grows tax free until you take it out when you are old. The money you put in comes out your check before it is taxed, so that is good. Also, some employers will contribute to these as well. No guarantee how much you will have at the end. If you make good investments, lots of money, bad investments, not much money.

6. QUESTION:
   What is a “Matched 401k?”?
   Wouldn’t “Matched” mean that what ever you put in be equally placed in by the company? If a boxing coach placed in Mike Tyson, would he be matched if the other coach put in Barney Fife? By the companies definition, yes! They placed into the ring 15% of Mike Tyson.

   • ANSWER:
     A matched 401k is when your employer matches a certain percentage of your contributin to your individual 401k plan. To get your employer to contribute the maximum percentage, you also need to contribute the maximum (In most companies). I believe the most an employer can match legally is somewher between 50-60%, I would consult your HR Department for all of the particulars

7. QUESTION:
   Employer removing too much from 401k? Who owns the appreciation on the vesting portion that is forfeited?
   The company I recently left has a four year vesting schedule for their matching. Since I left in year three, the company is taking back 25% of their contributions (and a bit more). I backed into their calculations and figured out that they did not calculate the 25% based on what they contributed but based on what they contributed plus that appreciation. To illustrate, here are some example numbers:
   Company Contributions:
   ,000        Year 1 company matching contribution
   ,000        Year 2 company matching contribution

   ,000        total company matching contribution

   One would figure that with a 75% vesting, the company would deduct 0 (25% of ,000) that they contributed and I would rollover ,500 to my IRA.

   However, the company deducted 0 and only contributed ,400.

   I figured out the issue lies in the fact that the value of the original contribution rose from ,000 to ,400 via mutual fund stock appreciations. The company multiplied 25% times the ,400 to reach the 0. This does not seem right to me. The original promise was a defined contribution of ,500 given the vesting. However the company, only contributed ,400.

   Anyway, I guess this begs the question – Who owns the appreciation on the matching contribution that is not vested?

   It appears to me that company owes the amount promised at the time of contribution (,500) not a lesser amount because of appreciation (,400). Is ,500 not the definition of “defined contribution.”

   Anyway, has anyone run into this before?
   Am I thinking about this the wrong way?
   Is there an IRS ruling?

   Thanks

   PS I know this is not a large amount but I do find it disturbing that such trickery is played. It seems that investment prowess (or luck) is my returns, not a way to lower their original promise of contribution. I doubt if I lost money that I would have to pay less back.
   Actually I worked three years plus a few months, so 75% is the correct vesting percentage.

   • ANSWER:
     They aren’t going to do anything illegal – 401k plans are audited by the government

     maybe there is some kind of penalty deduction also

     you are arguing about 0???? give it up already

8. QUESTION:
   I am young–what are my investing options??
   I am 24 and would like to start putting my money some where so when i retire i can live comfortably– only thing is i do not have a huge lump sum to give someone i would like to start small real small and add a little bit each monh my definition of small is like 100 now and add maybe 25-50 a month it is not much but again i am young and hopefully some time down the road i will be able to put more $$ in monthly

   i looked up bonds but the return rate is pathetic along with savings i cant save cd’s need 500min it seems like so what is there 401k i am starting this but anything else?

   thanks

   • ANSWER:
     I’m 17 and Ive been putting my money in Cd’s since I was 10 I now have enough money to put myself through the first 2 years of college. You may not have the money right now to put in a CD now but if you put it in a savings account and keep adding until you have enough sooner than you think. Some Cd’s will even let you add on to them once their opened. Once you have a few Cd’s you should consider laddering them that way you always have access to some of your money.

9. QUESTION:
   Annuity help?
   I know the definition of an annuity and I comprehend what it is, but where do they come from? Like after you retire, does your 401k turn into an annuity?

   • ANSWER:
     They come from you having paid into them for many years. And no, your 401K does not turn into an annuity. You withdraw from your 401k as your needs/wants dictate.

10. QUESTION:
    Can some look over my compare & contrast essay?
    Can you please look it over and tell me if there is anything I need to correct or change? I am writing a persuasive essay on Social Security and why people should invest there money in other places. In this assignment we are

    Write three paragraphs, which combined will be at least 500 words, explaining why you will or will not use definitions and compare and contrast paragraphs in your final paper.

    I intend to use definitions in my final paper. I think that doing so will benefit my essay and its readers, allowing my readers to fully understand the papers true meaning with definitions. It helps the readers to understand what the essay is trying to say and what the main points are trying to convey.
    I have chosen to write an essay explaining why Americans should not to rely solely on social security as they retirement benefits. If my essay turns out to be successful, it will convince the readers to start investing in their own personal savings. To do this I will need to state why social security and its funds are slowly dwindling away in my essay. A definition essay will also supply much needed detail on examples that readers may not understand right away about the topic. Detail in an essay should be very important to any writer. Writers make sure that every essay they write includes plenty of detail instead of gloss. Sharp details pull the reader in and encourage them to read more; fine details also help build a stronger case for the point of view so including them in my essay will make my readers share my feelings toward social security. I hope to include resources from the Internet to back up my points further and fully explore options on finding other ways to start saving personal funds for retirement.
    Dealing with compare and contrast, I was not aware that I used them as often as I do. While reviewing my paper I did not think, I had compared and contrasted however; I soon found that I had at numerous times. When I was explaining why Social Security may not be around by the time many people retire, I made sure to include steps one can take to be proactive when finding alternative funding for retirement; in this instance, IRA, 401K, stock options, and employee pension plans. However, the disadvantages far outweigh these benefits. The whole point of comparing and contrasting is looking at both the good and bad and seeing which carries more weight.
    In the rough draft essay, it states why it may seem like a smart decision for people to put their future retirement funds into an investment besides social security. By maintaining the idea that your there money will recover, economic scandals in recent years have shaken the very idea of a safe investment. In my rough draft, it points out that a large number of people in recent years have diversified their investments, to avoid a substantial loss in the event of a company who invests into experiences a loss, such as bankruptcy. By indicating what they could do and highlighting the consequences, the draft draws out the short- term good and the long- term contrasting them. I think simply writing out comparisons can help the person create the bulk of his/her essay very quickly. Pre writing helped me to create my essay; by pre-writing I mean taking a piece of paper and writing down the advantages and disadvantages of depending on social security and alternate retirement plans. This will also help them to decide for yourself whether you can meet your needs rely remotely on social security when you retire or if you want to be proactive in finding funding options. In my case I am neither too young nor too old to consider looking into options for my retirement. One should much rather start investing money better to protect themselves in the future.

    • ANSWER:
      Well, 1st off, understand Social Security was never intended as a full retirement program. The purpose was to supplement your income at retirement. So the nature of the program has always been to save and/or invest in other private ventures, and use SS benefits as a supplement, to maintain an income to accommodate your lifestyle. Trying to live solely on SS, in most cases, leaves you at or below the poverty level.

      The problem is, most people do not have the time, or understanding to manage their investments, or learn how. They put money in a 401K/IRA, and let people they have never met, manage how to allocate the investments. Money managers have standard allocations, based on age, which is not the most efficient way or applicable to everyone in certain age groups.

      Unfortunately, few people understand how the federal government operates, how it borrows money, what role the SS trust fund plays http://www.publicdebt.treas.gov/

      Most people will tell you there is no SS trust fund, or the government stole from it. In truth, SS is funded by FICA taxes collected in payroll taxes. The revenue is used to pay current SS benefits. There has always been a surplus. The SS surplus, along with Medicare tax surplus, and road tax surplus, are placed is special GAS (Government Account Series) Treasure securities.

      The federal government borrows from that trust fund (called intragovernmental holdings) pays interest on it, and has always repaid the money. The SS/Medicare/road tax surpluses (intragovernmental holdings) make up about 1/3 of the national debt

      http://www.treasurydirect.gov/NP/BPDLogin?application=np

      http://www.treasurydirect.gov/govt/charts/principal/principal_govpub.htm

      http://www.davemanuel.com/investor-dictionary/intragovernmental-holdings/

      Another important key is few people understand how the Fed (Federal Reserve) operates, and how it’s monetary policies work. Watching what the Fed is doing, is essential to investment planning. The Fed doesn’t just set interest, nor does it simply print more money. it engages in expanding the money supply, with “quantitative easing”

      That involves buying and selling Treasury securities both directly from the Treasury Dept, and/or on the open market. It is extremely important to watch, because if their timing on removing the liquidity after an economic recovery is off, or the amount removed is too much or too little, you can set off a new round of inflation, or deflation.

      http://www.investopedia.com/terms/q/quantitative-easing.asp

      http://www.businessinsider.com/what-is-quantitative-easing-2010-8

      It shocks most people who believe China owns most of the U.S. debt to learn, the conservative investing in their retirement plan, you referred to a “safe investing” are actually in Treasury securities, and make up the largest portion of the national debt. That also works to actually strengthens the Dollar, as the value of the dollar is determined by how much debt (in Treasury securities) investors are willing to hold.

      The bottom line is if people will educate themselves, learn how to watch the Fed’s monetary, Treasury’s fiscal policy, study trends and learn how to react BEFORE bubbles occur and burst, learn commodity investing, they could do very well with private retirement plans. Otherwise, just save, and invest in Treasury securities. The money will not grow, but is is totally safe.

11. QUESTION:
    Personal Finance………..?
    1. Match the following words to its correct definition.
    A. General and progressive increase in prices
    B. Investment in which you are loaning money for a certain time period to the issuer
    C. Individual retirement account in which a person can set aside after-tax income up to a specified amount each year, earnings are tax-free, and tax free withdrawals may be made after age 59 1/2
    D. Distributions of profit a company pays you because you own stock in that corporation
    E. Supplemental retirement system in the United States
    F. Individual Retirement Account
    G. The amount of money you make on an investment in relation to the amount of time your money is invested stated as an annual percentage
    H. Quick and easy way to estimate how long it will take for you to double your money
    I. Type of tax-qualified deferred compensation plan in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pretax basis
    J. Retirement plan for certain employees of public schools, employees of certain tax-exempt organizations and certain ministers
    K. An exchange where security trading is conducted by professional stockbrokers
    L. The age at which someone stops working permanently
    M. Asset purchased for profit
    N. An arrangement to provide income to people when they are no longer earning income
    O. Collection of financial securities (stocks, bonds, cash) that is managed by a company or a person on behalf of many investors

    Rule of 72
    Dividend
    Mutual Fund
    Bond
    Stock Market
    Rate of Return
    Inflation
    Pension
    Retirement
    Social Security
    IRA
    Roth IRA
    401K
    403b
    Investment2.

    How do mutual funds reduce risk?
    A) They invest in stocks
    B) They provide investment diversification
    C) They use an investment manager
    D) None of the above

    3. Your grandpa is 62 and asks you if he is eligible to collect Social Security. What do you tell him?
    A) He could collect his full payment now.
    B) He could have started collecting at age 59 1/2.
    C) He can receive reduced payments now.
    D) None of the above.

    4. Which type of account is usually used when employees can have a matching contribution from their employer?
    A) Roth IRA
    B) Traditional IRA
    C) 401k
    D) 403b

    5. In the future, you and your friends plan to receive Social Security after you retire. At what age can you currently plan to receive full benefits?
    A) 59 1/2
    B) 62
    C) 65
    D) 67

    6. Which type of individual retirement account should you choose if you want your contributions to be tax deductible?
    A) Roth IRA
    B) Traditional IRA
    C) 401k
    D) 403b

    7. When you reinvest dividends,
    A) you will receive them by check
    B) you will receive them by direct deposit
    C) the dividends are deposited into a Certificate of Deposit
    D) the dividends are used to buy more shares of stock

    8. Bonds are known as
    A) fixed income investments
    B) equities
    C) dividends
    D) no load mutual funds

    9. When you purchase stock in a corporation
    A) you are loaning money to the corporation
    B) you are technically becoming a part owner of that corporation
    C) you do NOT earn the right to vote on the direction of the company
    D) you have to own the stock for at least one year before you are allowed to sell it.

    10. Which of the following is the oldest measure of the U.S. stock market and the most widely used indicator of stock market activity?
    A) The NASDAQ
    B) The S&P 500
    C) The Dow Jones Industrial Average
    D) The Russell 2000

    11. The total value of the securities a mutual fund owns divided by the number of shares outstanding is known as the mutual fund’s
    A) Face Value
    B) Net Asset Value
    C) Market Value
    D) Yield

    12. Mutual Funds called “load” funds charge a high flat fee whyou purchase the fund or sell the fund.
    A) True
    B) False

    13. TD Ameritrade is an example of a full-service brokerage company.
    A) True
    B) False

    14. Treasury bonds are considered to be more risky than owning stocks.
    A) True
    B) False

    15. A Roth IRA is beneficial because your withdrawls are tax-free.
    A) True
    B) False

    16. IRA stands for Important Retirement Assets
    A) True
    B) False

    • ANSWER:
      That’s a lot of questions. If you care to email me any particular ones you are having trouble with, I’d be glad to help you. Or, if you email me your answers, I’d be glad to check them over for you. Good luck.

12. QUESTION:
    Is diabetes considered a disability by the IRS?
    I’m a type 1 insulin dependent diabetic. From what I’m reading a diabetic is considered “disabled” under federal law in the USA. Which is fine. However, what about the IRS? Does diabetes fall under the IRS’s definition of “disabled”?

    Moving on, this is all brought up by the fact that I’m going to withdraw money from my 401k under a financial hardship. I noticed there are exception to having to pay the 10% penalty. One of which is being “permanently disabled”. Does diabetes fall into this classification?

    This is what I have found:

    There are some hardship withdrawals however that are not subject to the 10% penalty, they are:

    i) You stop working, get laid off, quit or retire in the year you turn 55 or after
    ii) Court orders you to give money to a divorced spouse or dependent
    iii) Unexpected medical debts that exceed 7.5% of your Adjusted Gross Income
    iv) Permanent disabilities
    v) You stop working and begin taking regular payments based on a schedule that will make equal payments for the rest of your expected life; this must last for 5 years or until you turn 59 and 1/2, whichever is longer.

    Can anyone shed some light on this for me? I don’t see a list of classified “permanent disabilities” on the irs.gov website.

    Any help would be great.

    Thanks,
    Brad

    • ANSWER:
      No. Diabetes ALONE is not considered a disability.

      ANd, for purposes of the IRS, you need a doctors “order” that you are disabled, and how much (10%, 30%, 75%, etc).

      Typically, only blindness or amputation counts as a disability when diabetes is concerned.

      The fact is, IF you are following your treatment exactly, you should NOT be suffering from any disability.

13. QUESTION:
    Benefits of being a 1099 employee: are there any?
    Here’s my situation: was in fortune 500 sales for last 10 years; laid off twice since 2009 (just my luck); want to return to sales but like security of working for company with >100 people (benefits, bonus checks, 401k match, etc.). until that time, though, a friend of mine started a medical distributorship company and wants me to market a product of his, of which I’ll collect 15% of the sale. I’ll be a “1099″ employee if/when I decide to do it.

    Here are my questions: 1) can I be a 1099 employee AND work a regular job (provided the time allows)… this doesn’t screw anything up when tax time rolls around, right? 2) are there any benefits to being a 1099 employee… like being able to write off lunches at client’s offices or trips to conventions for my customers or owning my own automobile?

    I don’t know the degree to which the tax benefits will help or hurt me. My wife is an accountant but much, MUCH more, intellectually gifted than me (we’re really night and day by most people’s standards, and this definition isn’t from her adoring husband, it’s based on her advanced schooling and those grades associated with such). Anywho, I zone out when she starts talking about taxes and stuff like that, mainly because she’s not on my “commoner” level. My hope is that I can get some down-to-earth guidance on what all is involved with 1099 stuff. PS, I don’t consider anyone who replies a “commoner,” as I’m about as common as a person can get. Any help appreciated… websites, discussion groups, personal experiences, etc.
    on online business mall is going to help me with 1099 information? wow! why waste anyone’s time like that? idiot.

    • ANSWER:
      There’s no such thing as a “1099 employee.” If you are in sales, you may be considered a “statutory employee” or a “statutory nonemployee.” If you are doing direct sales and the contract you signs states the same, you are not an employee for any federal tax purpose.

      Being paid on a 1099-Misc means that YOU are responsible for everything. That means you have to pay for insurance on your own, plan for any time you aren’t being paid (you can’t get unemployment while you are direct selling or when you stop direct selling) and expect 30% to go to taxes. 15% for income tax (though your rate may be higher) and 15.35 for SE tax.

14. QUESTION:
    What is the difference between deductible and non-deductible contribution to a traditional IRA?
    during 2008 I made few after-taxes contributions to a rollover IRA – I rolled my old jobs 401K into it to avoid getting fined. After a while I learned that the funds in rollover account can’t be invested if certain bottom is not reached. And so to reach the investment bottom line I made few after-tax contributions, until I realized that by definition when I get money out of the IRA it will be taxed. I stopped contributing but I still can’t figure out if I can get a break on the 2008 return for contributing to and IRA after taxes.
    Any suggestions?
    Thanks

    • ANSWER:
      A nondeductible traditional IRA doesn’t come with any current tax benefits because its being funded with after-tax dollars.

      A deductible IRA is funded with pre-tax dollars, and withdrawals are taxed at retirement or after age 59 1/2, whichever comes first.

15. QUESTION:
    Are all annuities in the US subject to penalties for “cashing out” before age 59-1/2?
    I invested an inheritance into an annuity (without really understanding it). The cash value has increased, and I have the opportunity of cashing out. My broker (who is uncomfortably young) and my tax guy are saying different things about taxes due on the growth. The broker says I will owe cap gains taxes; my accountant (who is unfamiliar with the specific annuity) says that annuities are, pretty much by definition, subject to income taxes PLUS a 10% penalty for cashing out before age 59-1/2. The annuity is NOT in any protected vehicle like a 401k or IRA. Who do we fire?
    I purchased the annuity with money I inherited. I paid taxes on the inheritance. After taxes, I had ,000 left. I purchased the annuity with these 90,000 after-tax dollars; as such, I believe it is a non-qualified annuity.

    Rather than taking periodic payments, I surrendered the annuity several years later, just before the maturity date, paying a surrender fee to the insurance company. (I had held the annuity for so long, and it was so close to the maturity date, that the surrender fee was minimal; I chose to surrender it since tax rates were scheduled to increase on Jan 1, and the surrender fee was much less than the potential increased tax liability.) I received 3,000 for surrendering the annuity.

    1) Do I owe income tax or cap gains on the ,000 profit? (My broker and the insurance company say cap gains; my tax guy says income tax.)
    2) Do I owe the IRS an extra 10% on top of this since I surrendered it before age 59-1/2?
    3) If I owe the IRS a 10% penalty, then WTF i

    • ANSWER:
      Looks like you could use some help here. Many of your well-intentioned responders got some of their facts wrong.

      Based on your information above, it appears you inherited some money that you subsequently invested in an annuity. Any earnings in your annuity will accumulate tax-deferred, until you withdraw them. In other words, as long as the money remains in the contract, no taxes are due, and there’s no reporting to IRS.

      When you withdraw the earnings (not your original investment), they’ll be taxed as ordinary income, and an additional 10% IRS early-withdrawal penalty will apply if you’re under age 59 1/2. Capital gains do not apply to annuities. Any taxes and penalties, of course, apply to your “gain” only, if any, not your original investment. The ordering rule for annuities, incidentally, is gains out first, then your investment.

      Your annuity will likely be subject to a declining redemption charge, as well, if you purchased it recently. You can get this info from the person who sold it to you.

      Looks like your accountant got it right.

      Hope that helps.

      PLEASE VOTE to avoid a TIE. On behalf of all of your responders, who take the time and effort to help questioners in this free Yahoo! community, THANK YOU in advance for taking the time to choose your “Best” Answer. We really appreciate it.

      DISCLAIMER: While the information in this response was obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. The opinion voiced in this answer is for general information only and it shall not be construed as tax, legal, or investment advice for any individual, nor shall it be considered a solicitation for business. Questioners are urged to consult with their professional advisers before making any decisions regarding their finances.

      Bradley Mann, CFP®, EA, BCE, CFS, AAMS
      Certified Financial Planner Practitioner
      Enrolled Agent | Admitted to Practice before the IRS
      Board Certified in Estate Planning

16. QUESTION:
    I am young–what are my investing options??
    I am 24 and would like to start putting my money some where so when i retire i can live comfortably– only thing is i do not have a huge lump sum to give someone i would like to start small real small and add a little bit each monh my definition of small is like 100 now and add maybe 25-50 a month it is not much but again i am young and hopefully some time down the road i will be able to put more $$ in monthly

    i looked up bonds but the return rate is pathetic along with savings i cant save cd’s need 500min it seems like so what is there 401k i am starting this but anything else?

    thanks

    • ANSWER:
      Check into a Roth IRA. I don’t believe you have to come up with a large lump sum to open one and you can add to it throughout the year until you reach the maximum.

17. QUESTION:
    I am young–what are my investing options??
    I am 24 and would like to start putting my money some where so when i retire i can live comfortably– only thing is i do not have a huge lump sum to give someone i would like to start small real small and add a little bit each monh my definition of small is like 100 now and add maybe 25-50 a month it is not much but again i am young and hopefully some time down the road i will be able to put more $$ in monthly

    i looked up bonds but the return rate is pathetic along with savings i cant save cd’s need 500min it seems like so what is there 401k i am starting this but anything else?

    thanks

    • ANSWER:
      look into saving with hsbc online.. they are easy to use and offer very good rates with no minimum balance requirements. start an ira (or a roth IRA, depending on how badly you need to avoid taxes) with etrade or scottstrade when you get about 500 dollars together and buy the best performing mutual fund you can find with a minimum investment that you would qualify for.. there are a few, but if i recall correctly, most are higher.
      also (and this is about the hardest thing for me to do..) try cutting one luxury out of your life.. cigarettes..gambling.. go drinking 1 night a week less.. something like that would save you 40 dollars weekly or 2080 a year extra.. just fyi

18. QUESTION:
    I am young–what are my investing options??
    I am 24 and would like to start putting my money some where so when i retire i can live comfortably– only thing is i do not have a huge lump sum to give someone i would like to start small real small and add a little bit each monh my definition of small is like 100 now and add maybe 25-50 a month it is not much but again i am young and hopefully some time down the road i will be able to put more $$ in monthly

    i looked up bonds but the return rate is pathetic along with savings i cant save cd’s need 500min it seems like so what is there 401k i am starting this but anything else?

    thanks

    • ANSWER:
      Since you need to have your money available to you in case of emergencies, I would consider a ROTH IRA. I’m in your position but older. I’ve read quite a bit about them and like the concept. You might want to read more about them at www.suzeorman.com. She also has several books that can help you build a strong financial basis on which to live now and retire later. I like that she tells it how it is and does not pull any punches. Check her out on CNN Saturday nights. Good luck, life is a crapshoot.