Define 401k

Frequently Asked Questions

1. QUESTION:
   What resourses are available to figure how much of a 401k contribution it would take to replace a pension plan
   What resourses are available to figure how much of a 401k contribution from the company it would take to replace a defined benefit pension plan ?

   • ANSWER:
     In other words, you want to know how much is the stream of payments worth today in a lump sum. This is a really simple calculator that can tell you what that stream of payments is worth as a lump sum.

     http://www.deseretfirstcu.org/calc/pvannuity.asp

     The two main variables are, what interest rate is the company using and how long is the stream of payments? If the stream of payments was going to be for lifetime, you would have to know what age their actuarials came up with for their calculation.

     I hope this helps. Good luck.

2. QUESTION:
   Can I do a rollover/direct distribution of 401k into a traditional IRA while still employed?
   I’m not satisfied with investment choices at the current 401k investment management company and would like to move my vested funds to another one. I found the following on the fund administrator’s site: “You may withdraw Company Matching Contributions when you terminate employment with Company. To withdraw pre-tax Employee Contributions, you must also terminate employment or have a qualifying hardship as defined in the Savings Plan and IRS regulations.” Shouldn’t there be a law protecting ME? If I can find a better manager for MY MONEY, should I not be able to do so without quitting my job? TIA.
   Clarification for raidered81: I dont want to close the 401k, I want to keep it open (for future contributions and matching). I only want to take the current vested balance out.

   The match is nice, but that’s not the point. The point is that it’s my money and I can find a better investment for it.
   Clarification for Aria: after a hardship distribution, contributions and matches are not allowed for 1 year. I can’t create a hardship, and even if I could it would not be worthwhile for me.
   Clarification for Aria’s PS: that’s not a bad idea, except my goal is to get the funds out of this management company and into another. I think they would care because once I do a rollover from my 401k into an IRA under the same umbrella, I’ll then be able to rollover from the IRA into another IRA at a different company without the restrictions that apply to my 401k.
   Clarification for ryan c: I am already contributing the proper amount. And at this point in time I don’t believe in financial advisors. Thanks for the answer though.
   Clarification for Alfredia W: How do I do it given the quote from my administrator?

   • ANSWER:
     The IRS allows you to move your retirement money from a 401k to a traditional IRA at anytime. Unfortunately, 401k rules are set by your employer within IRS guidelines. Most 401k’s have a mandatory tax withholding of 20% if you leave them early – even if it’s to move into another plan.

     Basically what you need to do is ask your plan administrator if you can do a directed rollover with any penalty. Whatever their answer is will determine your next steps.

3. QUESTION:
   Can someone define what income level rich is?
   I always hear people say that they want to raise taxes on the rich, but no one ever defines what rich is. Can you in your own words define the users on Yahoo what the democrats mean by rich? In other words, what is the income level for poor, middle, rich? How much money are they supposed to have in savings as well?

   While I do well, I am far from what I consider rich and do not have a huge 401K or savings and like everyone, I have to watch my pennies as well.
   Before you answer, please review the IRS data at

   http://www.house.gov/jec/publications/109/2003taxshares.pdf

   Ron – can you define what middle and rich are? You did not answer the question completely.

   • ANSWER:
     The tough thing here is we have a lot of definitions of “middle class”, much less wealthy.

     Poor or low income=Under ,000
     Middle is somewhere between ,000 and ,000 but
     Upper Income is generally defined as over 0,000
     Wealthy are those that make over ,000,000 a year

     Formerly in the financial wealth management(financial planning) biz, I can tell you everyone uses different standards. But, in general, wealth is determined by a mix of net worth and annual income. (Someone making 0,000 yet has ,000,000 in assets or someone who makes 0,000 yet has only 0,000 in assets would both be potential clients-as yes, they both exist.

     I’ve also noted that the more money one makes, the more tax deductions and credits they can take advantage of-there are few deductions for most middle class excepting mortgage interest or child credits yet at 0,000 and up, believe me, there are many!
     I’ve seen a 0,000 income reduced to ,000 “taxable”. If you have a nice income, pay for a good tax attorney!

     As to the Democrats, the estate tax only benefits the “rich”-those with over ,000,000 in assets and will increase to 3.5 million so I believe that will be back on the table. I believe they will concentrate first on the obvious-the upper rates of 0,000 and above. We somehow have to pay for this debt we’ve accumulated from the lowering of taxes(revenue) and the cost of the war. It really matters not whether Republican or Democrat-when a business(or the government) loses a source of income and costs go up, you must find a way to pay! The US Govt has a lot better credit than most but sooner or later….so I’d personally be willing to give my tax break back-it wasn’t much at my ,000 a year income-and I hate to pass on the debt to my son.

     And a piece of advice-the 401k is one of the best savings vehicles ever-contribute all you can up to the limit but especially whatever your employer matches.A great deal for any income bracket!

4. QUESTION:
   Does the UK have a 401k like plan in place?
   A 401k in the US is an employer sponsored plan where contributions are paid by employee and sometimes by employer, into a fund whichinvested in financial assets. This is a form of a defined contribution plan. Withdrawals occur after age 60 at any time and amount.

   • ANSWER:
     In a way yes, but it’s not one plan or company that you pay into. We have two ways of paying into a pension in the UK:

     You can take out a private pension plan with a private company (and there are quite a few) that can be moved around no matter what company you work with and you pay a contribution and your employer pays a percentage into that and once you turn 60, you are paid every week or month from that fund.

     BUT on top of that we ALL pay National Insurance contributions and Income tax as standard through our wages every month and that National Insurance goes to pay for your *state funded* pension at 60 and also pays for welfare/benefits you or anyone else may need over their lifetime. ALL National Insurance and Income tax pays into ONE pot which pays for everything.

     When you get to 60, providing you have paid a standard number of years of National Insurance, you will get a state provided pension every week.

     You still have the option of paying into a private pension as well and many do because generally a state pension is not enough to live on or if it is, it’s a basic living. Most people here try to pay into a private pension as well but they will also get some state pension once they turn 60.

     If you have never paid into a private pension, you will still get a state pension from all the National insurance you have paid over your working life but it’s not a huge amount to live on. IF you have not worked much and have no got enough NI contributions your state pension will be at the very very low end and you will need to claim a state/welfare benefit to top up that income.

     So the more NI years you pay in the better the pension from the state, though of course value of that pension can go down because of inflation and higher living costs. More and more people in the UK are being urged to pay in as much as they can with a private pension plan due to uncertainty over state welfare for the future!

     Many pensioners who are now just getting their state pensions are finding it hard to live on, even if they have worked their whole adult lives hence why younger people are being urged to take on private pension funds.

     Some companies will not have a particular pension fund to pay into, which is why most people like to find their own one that they can move around if they move jobs!

     Does that answer your question?

5. QUESTION:
   Is income from a defined pension plan subject to social security taxes? What about distributions from a 401K?

   • ANSWER:
     When you paid into the 401k, you had Social Security taxes withheld from that money already. The employer’s payments into a pension plan or 401k are not subject to Social Security taxes. That means any money you receive from either plan is not taxable for Social Security purposes.

     I hope this helps.
     Gary

6. QUESTION:
   how much would i lose if i cash out my 401k?
   i have only had this 401k for a little over a year and recently changed jobs. my new job has a defined retirement instead of a 401k. i am wondering how much i would lose if i decided to cash out instead of rolling over to an IRA.
   my tax rate would be 15% i believe for ,000 a year. i only have ,250 in the 401k

   • ANSWER:
     What is your tax rate?
     Lets say it’s 25%.
     By taking out this money you will lose that 25% plus you will pay a 10% penalty.

     The company may not take these penalties out.
     If that is the case, save up 35% until next time in april 2011, you will have to pay then.

     Also you will only get what you are vested in.
     You may not get the company contributions.
     Don’t confuse the company not giving their match.
     Some people think since they got less than they thought that the company automatically took out the penalties.
     /

7. QUESTION:
   At what income level does the IRS define an employee as “highly compensated”?
   “Highly compensated” employees have a limit to how much they can contribute to a 401K that is a lower percentage of their eligible earnings than employees who are not “highly compensated.” What does eligible earnings encompass, and what is the dollar amount of these eligible earnings at which point an employee is considered by the IRS to be highly compensated?

   • ANSWER:
     From Publication 560: Retirement Plans for Small Business:

     A highly compensated employee is an individual who:

     * Owned more than 5% of the interest in your business at any
     time during the year or the preceding year, or

     * For the preceding year, received compensation from you of
     more than ,000 (if the preceding year is 2005, 0,000
     if the preceding year is 2006 or 2007) and, if you so
     choose, was in the top 20% of employees when ranked by
     compensation.

8. QUESTION:
   My dad died, and I’m being asked to claim his 401k. They want me to choose how I want it?
   They won’t tell me how much is in there and I’m worried about taxes. Also if they are in stocks, why can’t I just leave them in there? I have Bern googling nonstop but haven’t found a source of information for beneficiaries instead of plan members. I don’t even know if it’s a 401k, it’s just called ‘defined contribution funds’

   • ANSWER:
     The link below will give you some guidance. You really need to obtain a copy of the plan so you can understand your payment options. The plan administrator should be able to advise you on the amount you are to receive. Your Dad’s estate will have to include the account for the final estate tax filing so the administrator of his estate should be able to assist you as well. It also would be wise for you to get some tax assistance if this is a large amount.

     Sorry for your loss. Just take this a step at a time and you will work through it.

9. QUESTION:
   Does Participating in a Retirement Program Prevent You from Deducting an IRA Contribution?
   Years ago, a person who participated in a retirement program could not deduct an IRA contribution.

   Is that still the case? What kind of retirement program is relevant to this situation (defined benefit, defined contribution, 401k)?

   • ANSWER:
     Yes, this is still the case…

     Am I considered covered by an employer sponsored retirement plan for the year if I do not participate in the plan or if I did not work long enough to be vested?

     The answer to this question depends on your type of retirement plan. Generally, if your employer’s plan has a separate account for each employee, it is a defined contribution plan. If any amount was contributed or allocated by you or your employer to your account, you are considered covered. It does not matter if you have worked long enough to be vested.

     In the other type of plan, a defined benefit plan, the employer must make enough contributions (together with earnings) to provide the retirement benefit promised in the retirement plan. In this type of plan, if you meet the minimum age and years of service requirements to participate in your employer’s plan, you are considered covered. It does not matter if you are vested.

10. QUESTION:
    How much should I invest in 401k on a ,000 salary-l contribute 12.45% to a defined benefit retirement plan.

    • ANSWER:
      It depends how much you can afford to take out. If you’re married and have some financial support for your spouse that helps. If you can live with less than 30k, try and contribute as much as possible until you hit the limit where the company stops matching. As long as they match, that’s basically free money and you should try and take advantage of it.

11. QUESTION:
    401K withdraw at 55 early retirement for down payment?
    I am planning retirement from my current employer @ 55 with a defined pension. My 401K is small but big enough for a down payment on my retirement home after relocation. I will be starting employment with a new employer so I will be able to replenish my 401 with the new employer. As I understand it right now, if I “cash out” on my 401K, I will be subject to 10% penalty & 20% taxes. Is there anyway to avoid throwing 30% out the window?

    • ANSWER:
      One of the exceptions to the 10% penalty is being 55 and being separated from service.

      However, you would have to pay federal taxes (10%-35%) plus state taxes on the withdrawal. There is no way to avoid that.

12. QUESTION:
    What is 401K, 403B, savings account, and bond? PLEASE ANSWER?
    please just define them. it’s for a project. i’m 14, and have no idea. thanks!! <3

    • ANSWER:
      If you just Google those terms or try Wikipedia, you’ll find plenty of information.

13. QUESTION:
    what is 401K, 403B, savings account, and bond? PLEASE ANSWER?
    for my project i have to define them ^ i tried looking it up and had no luck. i’m only 14 so i have no idea. so, if you could please define those things it would be much appreciated <3 thanks!!
    no websites please.

    • ANSWER:
      Try www.investopedia.com

      Or look at fidelity.com or vanguard.com or just try Googling those terms. Lots of info will come up.

14. QUESTION:
    Is having a defined pension plan public sector better than working for a company relies only on a 401k?
    I work for a state government that has a defined pension plan. I have worked for places that have had 401k’s and have seen mine retirement investments grow a lot quicker on the stock market, this was before we had a major recession. Everyone says that now a days a defined pension plans is the way to go. But my father worked in the private sector for 34 years and did quite well with his 401k. In the long run which is better

    • ANSWER:
      What is nice about the public sector plan is that it is their money, not yours. The general rule of thumb is if you put 30-35 years in the 401k without catastrophe it will do better than a defined benefit plan. Most people do not put in the time and are much better off with the public sector plan. The great news is you can still put 00 a year of your money in a Roth IRA, so you can have the best of both worlds.

      Best of luck to you!

15. QUESTION:
    Is there a alternative to pension/401K ?
    We are trying to negotiate a new union contract and the Co. wants to freeze our defined benefit pension so they can get it off the books and they want to switch us to a 401K . Some people will loose large sums of money with this switch . Is there a alternative to this ?

    • ANSWER:
      First, no one will lose any money directly due to the switch. What you may lose is FUTURE earned money. In a retirement plan, what you have already earned as a contribution/benefit can’t be taken from you unless the plan terminates and the plan provides a higher level of benefit than the PBGC (govt entity that runs terminated plans) allows. Hate to say this but this is typically a union negotiated plan belonging to a company that went belly up. Unions are famous for negotiating rich pension plans for their membership…this is one of the unintended consequences.

      Next, is there an alternative plan? There are things called cash balance plans that provide for an annual contribution by the employer (based on compensation and years of service) that earns a specified amount of money per year. Instead of being back loaded like a pension it’s more front loaded like a 401k but it’s entirely employer paid. It doesn’t pay out based on age either….so employees hired close to retirement don’t get any more money than someone who is hired at 20.

      You didn’t ask but if I was on the negotiating team I’d hold out for the pension first and foremost…if that means a give-back on something else that’s what I would do. If that’s a non-negotiable item for the company then I’d work on the cash-balance plan option next. Item of last resort would be the 401k. They are trying to put the responsibility of your retirement entirely on the employees. There’s nothing wrong with that if your membership is young. But if they’ve been around for awhile they are relying on that pension to retire on. If you do give up the pension then make sure you ask for larger wage increase to compensate for it. Responsible members will take that wage increase and dump it in the 401k’s.

      Lastly, don’t let them fool you with talk of a lucrative match…one thing about matches is that they can EASILY be taken away from year to year. Look up recent news articles and see how many matches are being frozen next year.

16. 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

17. QUESTION:
    I am 29 and make appox K. I have the option to open a 401K, a 457, or a Roth. Which two should I open?
    I also have a generous defined benefit pension plan that I am fully vested in.

    • ANSWER:
      Better than all of them:

      Start buying rental properties. 4 units or more. Buy one every year for the next 10 years. They will outperform your 401(k) etc….

      Use the retirement programs from work only as a back up

18. QUESTION:
    Does your company offer a traditional pension plan?
    I work in the banking industry and it seems almost none of the companies provide a traditional pension plan anymore. Everyone has a 401K but no one has a defined benefit plan. Maybe Bank of America does. Does you company have a plan and if you are one of the few how good is the plan?

    • ANSWER:
      There’s your answer, I guess. Very few these days. I worked at Smith Barney(originally EF Hutton, then Shearson, etc, etc) and although they had a plan back then, it seemed iffy that they would continue. Last I heard, they were getting rid of it(gets more expensive as employees get older). It’s probably just as well-contribute to that 401k!-because the regulations have changed to allow companies to withdraw promised benefits anyway(United Airlines is just one). I also remember Travelers employees were promised free health insurance in retirement and that was taken away. it’s a different world these days…

19. QUESTION:
    Not retiring yet,but can i get money from my retirement plan?
    I’m 63 yrs old and I’m not ready to retire just yet. I have a defined pension from
    where i worked yrs ago.Now i have 401k plan where i work now and i work full time and will continue
    to keep working full time till i’m 66. My question is this can i get the money that is from my defined pension now with out with out retiring or reducing my hrs.and i would NOT retire or collect from my 401k or # SS till i’m 66. Hope i explained it right.

    • ANSWER:
      Yes, you can get the pension now.

      You can’t take out the 401K until you are no longer a contributing employee = you sound like you know this.

      You can start receiving SS anytime you wish up to age 70. If you want until then, you SS payments will be higherr.

20. QUESTION:
    Financial Planning versus Estate Planning, which is the higher priority?
    If you had an extra 00 and all things being equal, which is more important at this moment, meeting with a financial planner or getting your estate planning documents in order (trust-we have one child, will, durable power of attorney and HCPA/AMD) for my wife and I? The idea being that on average a good fee-only financial planner or attorney to do either thing will cost 0-0/hour (in the Washington DC area).

    As far as financial background, we have life insurance, we contribute monthly to a 401K and Roth IRA and I have a defined benefit pension (yes they still exist). We are paying down debt, but I still feel that we could use a good financial review (not to sure about our allocations in the Roth and IRA’s). We DO NOT HAVE A WILL or other estate planning documents… and this is beginning to concern me… should it???

    Any suggestions for finding a good family attorney in Northern Virginia will be very much welcome.

    Thanks for you help.
    FF

    • ANSWER:
      All the financial planning in the world isn’t going to be worth squat if you don’t have the legal power to protect it.
      You need a will, living will, power of attorney etc. If you are seriously hurt in a automobile accident and are not able to communicate, your spouse has very few choices without the power of attorney and the living will. You may end up as a “turnip” in a nursing home spending all that money you have worked to save, just to care for you.
      Or, if you and your spouse somehow are both killed, what will happen to the child? Think about your family and your spouses family and image that there could be conflicts over who should be in charge, and who will control the finances. Who will be the legal guardians? Who will help your child decide what happens to all the money you have amassed? Who will control that child’s future? Without a will, living will, and power of attorney, there will be problems.
      Take care of this planning. Once this is done, then continue your progress on financial planning.

21. QUESTION:
    Please Help Define ORS 18.385?
    I was just curious if anyone knew if ORS 18.385 refers to “net disposable income” meaning pre-tax deductions, including things like 401k, health care, and flexible spending accounts, or just strictly taxes?

    For example, if a debt collector garnished Joe and he’s making ,500 a month gross, and pays 0 in taxes, and submits an additional 0 for health insurance and 0 for 401k, what is the net disposable income? Is it 0 or 00, or other?

    • ANSWER:
      I would say 00, based on the FAQ

      4. What is disposable income?

      Disposable income is defined as the part of an individual’s income remaining after the deduction of any amounts required to be withheld by law. In Oregon mandatory deductions are: federal, state and local income tax, social security, medicare, workers’ compensation and any statutory retirement payments.

22. QUESTION:
    Can anyone give me this career info for a lawyer?
    This is for a school project and I really need help with it. I have to fill in the information (not define the words). Even if you know some please help me. I need all the help I can get.

    What are the:

    1) Benefits (401k, pension, health card)
    2) Requirements
    3) Education
    4) College/Tech School
    5) Uniform/Tools

    • ANSWER:
      2.Completion of a Baccalaureate Degree Program: All aspiring lawyers must complete an undergraduate degree at a college or university before going on to law school. Many future lawyers earn bachelor’s degrees in subjects such as English, communications or rhetoric. During this stage, building a strong undergraduate record is important in order to boost one’s chances for admission to law school
      3.Fundamental requirements to become a lawyer

      Prior to a law school, you will need to get a degree in law. Part of being a lawyer is the great deal of research work that goes into every case being dealt with, and this will provide the necessary knowledge.

      If it’s a non-law course, it is required to take a conversion course that usually lasts a year thus providing the necessary academic exemptions to go on to the next phase.

      Once you have done your degree, you will need to go to a law school.

      Choosing a law school

      Choose a good law school. This is self-explanatory. Part of being successful after you become a lawyer is the quality of your education.

      Prior to attending a law school, you will need to attain high marks in the law school admission test (LSAT).

      * A law school that’s accredited by the American Bar Association (ABA). This would provide you with highly recognised law education. However, ABA accredited laws schools tend to charge fees that are substantially greater than non-accredited law schools.

      * If you do your education at a non-accredited school, you will then need to pass you will need to an examination prior to starting your course.
      4.Brooklyn law school

23. QUESTION:
    Has your retirement plan taken a big hit?
    Mine has. My defined benefit plan and 401k plans are down big time.

    I’m 23 though so I have a while, but it’s sure scary to look.

    What about you? Have you taken a hit or did you see it all coming?

    What are you doing about it?

    Thanks!

    • ANSWER:
      We have lost about 40% of our 401k and IRA. Actually wife’s account my retirement is much less valuable but is a military retirement so as she puts it safe. Got hit this way (actually worse) when the Y2K panic hit, she works in software design so her stock was very heavily tech stock, more diverse now but still a big hit. She can retire in two years and probably still will but we will not be able to do some of the things we had hoped too. Right now the loss is mainly things we would like to do and some want to do but we would still have the means to support ourselves for about thirty five years. Yes living under your means and saving a lot more then minimum actually works.

24. QUESTION:
    Can I take an IRA hardship withdrawal without penalty if I lost my job due to foreign competition?
    I lost my job. So I rolled over my 401k to an IRA. I took a withdrawal to pay off some debts and now have to pay taxes on it. But am I exempt from the 10% early distribution penalty if I lost my job due to foreign competition? (as defined in Trade Assistance Act)

    • ANSWER:
      no.

      However, if you were paying for health insurance then that is one of the items that is exempt. Get with your tax preparer and go down the full list of exempt expenses.

25. QUESTION:
    Did the 401k mark the end of ‘Golden Years’ for most Americans?
    Is the transfer of responsibility (risk) from our ‘benevolent’ corporate masters to individuals, known as the ‘401k’, serving us well?

    Before the 1950s it was something only the wealthy could afford to do. Everyone else needed an income, and most folks struggled to get by in the industrial economy as their faculties deteriorated. Then came ‘Retirement’ for the masses.

    The social reformist dream became reality with the 1935 Social Security Act, the spread of the corporate defined benefit pension plan and Medicare in 1965. For most workers the last stage of life became a time of leisure, recreation and enjoyment. Is that now disappearing?

    The Age of Retirement was one of America’s most successful social reforms ever. But that era seems to be over. A new vision of old age is emerging from the trauma of the credit crunch and the Great Recession: Forget retirement. Keep working. The key question is no longer “How early can I retire?” For many it has become “How can I retire?”

    Of course, like all tectonic social and economic shifts, the trend isn’t new. It has been building for the past three decades with the move away from traditional pensions, with their involuntary contributions and steady payout, in trade for 401k-type plans, with their voluntary contributions and uncertain returns.

    For workers nearing their retirement years, the median balance on 401k’s and IRAs combined – a mere ,000 in 2007. And the stock market reached its all-time peak that year! But the Great Recession has devastated portfolios since then, a stark reminder to millions of near-retirees that they haven’t saved enough to fund a good retirement. For many, Social Security has now become the prime, rather than supplemental, source of retirement income.

    Indeed, taking into account the declines in financial assets and housing, the National Retirement Risk Index as of mid-2009 signals that 51% of households are at risk at age 65 of not having enough retirement income to maintain their pre-retirement standard of living. That’s up from 44% in 2007 and 43% in 2004, according to the index’s creator, the Center for Retirement Research at Boston College.

    Yet companies are far from eager to fill their ranks with an aging workforce. Combine that with a contention for resources (jobs) from the younger, more educated, more ‘energetic’ members of society and a stage is set for some ‘interesting’ conflicts/experiments in our social evolution. This will also introduce some ‘dramatic skewing’ in market demographics, especially for some industries.

    The same energy and marketing savvy that created mass tourism and leisure will need to be expanded on building satisfying careers and job opportunities for a highly experienced but graying and less robust work force. For workers burning the midnight oil in a tough economy – they’re bone tired from working. Health problems are wearing them down. And, as the astute social commentator H.L. Mencken noted back in 1922, occupation matters:

    If he got no reward whatever, the artist would go on working just the same; his actual reward, in fact, is often so little that he almost starves. But suppose a garment worker got nothing for his labor: Would he go on working just the same? Can one imagine his submitting voluntarily to hardship and sore want that he might express his soul in 200 more pairs of ladies’ pants?

    The transition to the new world of the older worker brought about by the 401k in lieu of the corporate retirement plans our parents enjoyed, will be difficult. But Americans can afford to grow old. They will grow old gracefully – and on the job.

    So, how’s that 401k working for ya? As good as Pop’s corporate funded retirement – or not? Interested in opinions. In any event, it sure is cheaper for our rich benefactors. That much would appear to be clear. The greatest game ever – and it sold/sells itself? Not hard to sell choice, and profitable if you set it up right?
    The 401k replaced the corporate pension plan, not Social Security.

    • ANSWER:
      Wow, finally a well thought out argument against one of the pillars of our economy. I will start by mentioning a few companies, Bethlehem Steel, United Airlines, Pan Am, and Lucent. What do these companies have in common? They are either not in existence, filed bankruptcy or are on bankruptcy watch because of Defined Benefit Plans. Even the government got rid of the Defined Benefit plan they had for their employees because of the cost, they have gone to a 401K like plan called the TSP.

      The problem with the 401k is that they don’t allow for large enough contributions and people do not fund them enough. Furthermore, most people do not take enough risk in their plans leading to returns that don’t outpace inflation. The problem with our father’s Defined Benefit Plan is that it destroys the companies that offer it. This will ultimately wreck the economy.

      The 401k has not marked the end of ‘Golden Years’ for most Americans. I think it is one of the greatest innovations of the last century. Since when is taking responsibility for your own retirement a bad thing. The days of being taking care of are over. Used properly the 401K is better than any Defined Benefit Plan and it is cheaper.

26. QUESTION:
    401K Question. Please explain this?
    I’m trying to figure how much to contribute to my company’s 401k plan. They have a regular and a Roth option. I’m 28 and have no money in the accounts yet. See language below from our website. It looks like they will make a 10% match on what I pay in but only on 6% of that. So if I contribute 20% of each pay, they will only match 6%. My understanding also is that they’ve usually made the additional 15% contribution.

    If you have completed one year of service (defined as 365 days) with the Entities and are employed on the last day of the Plan Year in which your service anniversary occurs, a matching contribution will be made equal to 10% of your Before-Tax Contributions, up to 6% of your pay contributed for the year. The Entities may also make a supplemental matching contribution of up to 15% of your Before-Tax Contributions, up to 6% of your pay contributed for the year. The matching and supplemental matching contributions are determined as of the last day of the Plan Year (i.e., the Saturday closest to April 30).

    • ANSWER:

27. QUESTION:
    401K Question. Please help explain how this works?
    I’m trying to figure how much to contribute to my company’s 401k plan. They have a regular and a Roth option. I’m 28 and have no money in the accounts yet. See language below from our website. It looks like they will make a 10% match on what I pay in but only on 6% of that. So if I contribute 20% of each pay, they will only match 6%. My understanding also is that they’ve usually made the additional 15% contribution.

    If you have completed one year of service (defined as 365 days) with the Entities and are employed on the last day of the Plan Year in which your service anniversary occurs, a matching contribution will be made equal to 10% of your Before-Tax Contributions, up to 6% of your pay contributed for the year. The Entities may also make a supplemental matching contribution of up to 15% of your Before-Tax Contributions, up to 6% of your pay contributed for the year. The matching and supplemental matching contributions are determined as of the last day of the Plan Year (i.e., the Saturday closest to April 30).

    • ANSWER:
      On the first 6% of your contributions, the Company will make these other contributions for your benefit as well:

      - An additional 10% (i.e. 0.6% maximum) guaranteed
      - An optional amount up to an additional 15% (i.e., 0.9% maximum)

      So, if you contribute 6%, the Company might contribute 1.5% for a total amount of 7.5%

      CONTRIBUTE

28. QUESTION:
    how to define alimoney continued….?
    I apologize, but I could not figure out how to respond to the answers directly, so I think I’m writing this as a new question (please tell me how I can respond to questions)

    The CONSENT PENDENDTE LITE ORDER says:
    Ordered, that the defendant…(ex husband) shall continue to pay mortgage, int., prop. taxes, for the jointly titled property … He shall also continue to pay for electricity, gas..etc…..and it is furter

    Ordered, that the following agreement shall be without prejudice to either party’s claims regarding alimony, alimony arrearages, counsel fees, and suit money and said issues are reserved pending a final hearing in this matter.

    Pendente lite order was in place for 5 mos. When the divorce was finalized, i did not get alimony. I kept the house and took a small portion of his 401K.

    So, are the mortgage + utilities he paid under the pendente lite order for 5 mos. considered alimony?many thanks in advance.

    • ANSWER:
      no that is not alimony, he just had to pay the bills until it was final.

29. QUESTION:
    i can’t take money out of my 401K?
    OK I know the first answer will be don’t touch it, but here is what the deal is. I have a retirement account in my name that has several hundred thousand, that is my main retirement. I have a 401K, however with around 25K that I want to transfer out of my employer’s and into a new roth ira on my own. My employers choices of investments are horrible and have done worse and worse each year. However, they tell me that I can only recieve MY money if if either quit, or am being forclosed on my home, or other defined urgent need. Can they really do this? Can they, or the rules that govern 401K’s restrict my access to my money?

    • ANSWER:
      If there is no provision in the plan for in-service distributions or loans, then yes, your only options are to terminate your employment or get qualified for a hardship distribution.

      If you don’t like the investment options, stop contributing. Or just use the money market option.

30. QUESTION:
    How long will it be before the government takes over our 401K’s?
    Based on what I’m reading here, this is something that is very probable and quite alarming:

    http://www.carolinajournal.com/articles/display_story.html?id=5081

    And there is this part as well:

    Currently, 401(k) plans allow Americans to invest pretax money and their employers match up to a defined percentage, which not only increases workers’ retirement savings but also reduces their annual income tax. The balances are fully inheritable, subject to income tax, meaning workers pass on their wealth to their heirs, unlike Social Security. Even when they leave an employer and go to one that doesn’t offer a 401(k) or pension, workers can transfer their balances to a qualified IRA.

    However, under the new plan, that would end. Should your spouse pass away, you would only inherit 1/2 of that 401K.

    Do you feel it is fair and just for the government to take over your 401K?

    • ANSWER:
      Barack and the Democrats want to control all aspects of our lives so they can retain their power. It’s not about what is good for America anymore…it’s about them.

      They want to take over 401(k)s, we have to fight that. It’s our money!

      **Pelosi and Company want to bail out the auto industry…most of their problems are caused by unions and pensions. Pelosi wants to take our money to pay the pensions of retired GM union workers while we get less. Unions vote Democrat…

31. QUESTION:
    Which would b better retirement? 82.5% defined after 30 years or 22% of salary per yr into a 401K. Im 30 y/o.?
    I am a fireman. Have the potential to go to a higher paying job but leaving a defined pension to go to a 401b. If I stay, I get 82.5% of my highest 3 years salary with not much of a raise in pay after 30 years. If I go to the higher paying job, if I put 5% of my salary, then they put in 17%.These #’s are too much for me to figure out. Thanks.
    Sorry about the details. I put in about 40 bucks a month. 1.5% of my pay. It is well funded and very stable. I have been a fireman for 8 years. Partially vested after 6. I am only guaranteed 3% raises every year at current. I can draw what I have vested at 65 if I leave now. I can retire at 51 with the current probably drawing 82.5% of around 65-70k. My new job starts at 53K and I think I would have to work till a certain age or take a penalty right? I would go from working very hard for a little pay to no work for a big raise. Question is will it pay off in the end. I want to be able to enjoy what I have coming to me and not be worn out!
    ok sorry last detail. The city would give 12% to a 401a then match up to 5% on my 457(Defered Compensation) for a total of 22% of my salary every year. That is the new job details. Thanks guys for helping me

    • ANSWER:
      There is a lot of figuring to do here and you haven’t provided enough information to do it. How long have you worked as a fireman? How much do you make? What is your assumed increases in wage there? What will the alternative job pay? What is your assumed wage increases there? How long do you plan on working? A financial advisor may have calculators for this.

32. 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.

33. QUESTION:
    how can I save more for retirement?
    I have a roth Ira and a defined benefit plan at work. I need to save more. My employer does not have a 401k so where can I put more retirement savings that will have the best result?

    • ANSWER:
      First, I would get rif of the “retirement” word and substitute it with financial freedom. Nobody I know of want to be a senior before that day arrives.

      Second. once you max out retirement plans (tax-favored plans) then you should 1) eliminate all debt, if any, and 2) invest in equities like stocks, ETFs and mutual funds.

      You have a defined benefit plan…. I’m guessing, you work for the government.

34. QUESTION:
    I Need Help Defining These Investment Terms!?
    I REALLY need help bad with this. I don’t understand anything that has to do with money, and this is my math homework for the week. This is my last semester of math forever, and I’m ecstatic, but I do need to pass, so please help!

    I need to define, explain, and list advantages and disadvantages of each-

    savings bonds
    CDs
    traditional IRA’s
    Roth IRA’s
    401K
    403 (b)
    stocks
    mutual funds
    pension
    annuities

    Any and all help is GREATLY appreciated!
    Thanks so much!

    • ANSWER:
      Investopedia.com is a good resource

      http://investopedia.com/dictionary/

      also

      http://en.wikipedia.org/wiki/Main_Page

35. QUESTION:
    I’m a former employee of Citibank. Does anyone know how to contact them regarding the defined retirement plan?
    I left prior to them switching to a 401k only option. Any help would be great, TY!!

    • ANSWER:
      NO!

36. QUESTION:
    Shouldn’t Social Security be secure with 12.2 of our pay going into the fund daily using present value of mone?
    Why do they always hit social security? That is all I have and at 10,000 a year, do they think that is a paradise to live on. Why not CUT the Federal Employees Entitlements. Why aren’t they discuss, hell make them live on a deferred 401k only, with no defined pension or health care LIKE THE REST OF US PEASANTS..

    • ANSWER:
      Social Security in an effort to buy votes for the Democrats began expanding the program to those who never paid into it. They also increased the pay out to those people who wanted some form of cost of living adjustment. This return has been much better than alternative returns. Regretfully, that means your contribution will be forked over to pay for the sluggo that hasn’t worked in the last 40 years so he can enjoy his retirement. In other words, it is a transfer not a “savings” program.

      Politicians vote themselves pay increases. Wouldn’t you if you had the power to do so? Look at CEO pay which now equals thousands of times the annual pay out to the average worker. When given the opportunity everyone votes for a pay raise. Look at Michigan where the Governor is trying to dish out pay cuts. All sorts of turmoil.

      If you think a government job is so great…enlist.

37. 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

38. QUESTION:
    How should I allocate my 401K retirement plan?
    Or who else would be able to help me with this? I’m 27 years old and it’s through Vanguard. Thanks. These are the choices…

    Allocation for DEFINED CONTRIB MATCH PROGRAM

    Balanced Funds (Stocks and Bonds):
    Vanguard LifeStrategy Consrv Grwth VSCGX0724
    Vanguard LifeStrategy Growth Fund VASGX0122
    Vanguard LifeStrategy Income Fund VASIX0723
    Vanguard LifeStrategy Mod Growth VSMGX0914

    Other plan investments

    Short-Term Reserves:
    Stable Income Fund – 4248

    Bond Funds:
    Vanguard Total Bond Mkt Index Inst VBTIX0222

    Balanced Funds (Stocks and Bonds):
    Vanguard Wellington Fund Inv VWELX0021

    Domestic Stock Funds:
    Alger Capital Appreciation Instl I ALARX3117
    Marsico Growth Equity Fnd —2486
    Vanguard Explorer Fund Investor VEXPX0024
    Vanguard FTSE Social Index Inst VFTNX0223
    Vanguard PRIMECAP Fund Investor VPMCX0059
    Vanguard Total Stock Mkt Idx Inst VITSX0855
    Vanguard Value Index Fund Inst VIVIX0867

    International Stock Funds:
    AllianceBern Global Growth Adv ABZYX7642
    T. Rowe Price International Discovery PRIDX1603
    Vanguard International Growth Inv VWIGX0081

    Values must total 100%

    • ANSWER:
      It is great that you are already thinking about investing and your 401k plan has excellent choices.

      I tend to be somewhat conservative. You should try to figure out how much risk you want to take and then allocate your money between stocks, bonds and cash. At 27 you can take some risk but as you get closer to retirement you want to get less risky.

      If you want to do a “set it and forget it” for the next 20 years – try the LifeStrategy Moderate Growth (about 60% stocks) then when you get to around 50 go to LifeStrategy Conserative Growth (about 40% stock) and at Retirement go for the LifeStrategy Income (about 22% stock). Actually, when you retire roll over the 401k to Vanguard and put it into the Retirement Income – it has slightly better investments. For these choices the portfolio manager keeps the allocation close to the target without your involvement.

      If you don’t mind doing some of the allocation yourself I would recommend 40% Vanguard Total Stock Market, 15% Vanguard International Growth, 30% Vanguard Total Bond Market and 15% Stable Income. Each year check the percentages and do some exchanges or adjust future contributions to bring the allocation back to these percentages. This is emotionally hard to do. If Total Stock Market fund is up and the Total Bond Fund is down you will not like selling a winner to buy a loser. But that is what “buy low and sell high” is all about.

      There is no perfect allocation so don’t over sweat the details. I suggest reading The Boglehead’s Guide to Investing. It is written in layman’s terms and provides excellent background. Investing is relatively simple and should be boring. Ignore the hype don’t try to beat the market or time the market – keep expenses low and keep to the allocation that supports your tolerance for risk.

      Good Luck

39. QUESTION:
    Workplace Savings Plan Question?
    Which would be better – having the deductions pre-tax or after tax? I know that the taxes when I retire would be higher if I were to have the deductions pre-tax now, but I don’t know which option is best in the end.

    While I’m at it, what defines a 401k? I think what I have is one, but I’m so horrible with these things and the phrasing they use is so confusing =(

    • ANSWER:
      First, schedule a meeting with HR and tell them that you want to better understand the retirement plan/options. Ask for a full hour, because it sounds like you could use the help (no offense meant – we all need help when we don’t understand things). If you still don’t get it, schedule a meeting each week until you DO get it.

      Depending on the size of your company, HR may be able to set you up with a seminar or something – most large companies hold HUGE retirement seminars at least twice a year, at no cost to employees (the time off probably won’t even be taken out). Now that companies are starting to take on fresh college grads, there’s probably a LOT of training and help available.

      A 401(k) is a tax-advantages retirement account offered by your employer. Ask about the plans that your company offers. Specifically, ask them if they offer a “Roth 401(k)” – a new kind of 401k that lets you contribute after-tax dollars.

      No matter what, you should definitely invest however much you need to in your 401k to get the full match. After that, fund an IRA as much as you can (up to k this year if you aren’t old enough for the match). If you still can afford to invest after that, pile in more and more money into your 401k.

      The decision about whether you should take pre-tax or after-tax dollars really depends on your age more than anything. If you’re in your 50s, you should probably make a pre-tax contribution, and get the tax write off this year. If you’re in your 20s or 30s, it’s definitely worth it to use after-tax dollars. If you really like the tax write-off, but want to let your money grow tax-free, too, then do a combination of traditional (pre-tax) and Roth (after-tax). But check into the income restrictions on the Roth accounts – if you make too much money, this may be a moot point.

40. QUESTION:
    Qualified Retirement Plan and employer contributions question..?
    So two people courtney and bill maintain a qualified retirement plan which allows them to contribute up to 8% of their gross wages into a defined contribution 401k plan. bill contributes 2% and courtney contributes 8%… the employer matches 50% of the employees contribution. courtney and bill each have ,000 wages. How much money will get deposited into each 401k plan including the employer match for that year? I came up with ,500 for bill and ,000 for courtney but I am not sure if i did it right.

    • ANSWER:
      I got the same answer that you did: 00 for Bill and ,000 for Courtney.

41. QUESTION:
    I would like a list of companies that still offer a defined-benefit pension plan?
    I was hoping someone could point me in the right direction for what I seek. I would like to have a list of companies in NYC that offer a defined-benefit pension plan.
    It has become clear to me that a pension is crucial for a secure retirement.

    A 401k is a finite amount of money that can’t be budgeted efficiently because there is no way of knowing how long you will need it. The 401k versus a defined pension plan is in no way, shape or form comparable when on a scale that measures security. For instance if I sacrifice 15% of my yearly salary of 0M to my 401k then I put away M a year. Most companies aren’t matching contributions these days but let’s say they match 10% or ,500. After 20 years I would have a whopping grand total of 0M. Sounds like a lot right? Not really. If I retire when I’m 65 and budget say 50M a year then I get a measly 6 years out of it before I have zero left. If I cut that M in half to say M a year (living out of a trailer) then I might get 12 years out of it. That means at 77 years old I will have zero. What if I live till 90?
    Here is the point. Depending on a 401k for retirement is ridiculous but we will all eventually have no choice. I’m quite aware that it’s supplemented by SS but SS is so little that it simply doesn’t mean anything.
    Personally I am now going to make it a priority to find a list of companies that still offer a defined-benefit plan and find a position within one of those companies before it’s too late. I can be trained for anything or do whatever it takes to get a job with a company that still offers a defined pension plan. To me it is absolutely crucial or I will suffer the fate of an uncertain future. Would you happen to know where I could possibly find a list of companies that still offer this type of pension in NYC?
    Thanks,
    Robert Cohan
    Heather says “Rather than looking only for a company that has a pension plan, you should find a job and save money in a 401k, ira, etc.” Hello? Read my question again and open your eyes. A 401k and saving money does not equal a secure retirement. Far from it. If there are no companies left that offer a defined pension plan then the only other choice for a secure retirement is to work for the government as they do in fact offer a defined pension plan. But before that action I will continue to search for a company in the private sectore that does offer this cruial retirement option.

    • ANSWER:

42. QUESTION:
    Divorce: City Retirement plans and Social Security valuation?
    My soon to be ex husband was a police officer and participated in a mandatory private retirement plan (worth about 90k) instead of putting into social security. I worked for a private high tech company and contributed to social security. His plan is a defined contribution plan and he can take hardship withdrawals from it. My social security isn’t accessible to me and not sure it will be when I’m 65 they way things are going. He also has a defined benefit retirement plan worth 64k. I have an ESPP worth 64k and 401k worth 61k. We live in WA if that helps. Can he say that my social security and his city plan equal out each other? How do I put a value on my Social security if so?

    • ANSWER:
      Are you sure that he didn’t pay Soc. Sec. as well as his retirement plan? I’ve never heard of someone being able to opt out of paying Soc Sec.

      I got divorced in WA and my lawyer said that my ex would owe me half of his retirement savings plan amount that he had put into. So I would think it would be the same for you. I’m pretty sure his retirement plan would not cancel out your Soc Sec. Check with a lawyer for sure.
      Good Luck!

43. QUESTION:
    Why does the US Federal Employees have better pensions and health care than the private sector?
    Why can’t all the United States citizens be under the same health care plan, why should they be better. Why do they still have a defined pension plans and 401k when the private sector just has a 401k and has to pay for most of its health care. Some can retire after 25 years of work. Private sector has to work until 67 almost 2x more. Why are our public servants laying on the golden egg. Maybe the job 100 years ago was paid less but come on, now your eating the cake and the icing too. Why all this??

    • ANSWER:
      Traditionally, govt. jobs have more job security and some other benefits, and this is to make up for them not paying as well. So you have a choice between the security of a govt. job, vs more opportunity in the private sector.

      And the higher up you go, the more the difference is. A top investment banker, for instance, makes maybe 50 times as much as the Sec’y of the Treasury.

      But I agree with you. ALL workers should have decent pensions, affordable access to health care, etc. I think the biggest reason public servants get treated better is that wages and benefits for workers affect profits, and profits are seen as the most important thing, while public workers don’t cost profits.

44. QUESTION:
    What is a 412-i plan?
    What is a 412-i defined benefit retirement plan? My employer just notified me that the plan is finished and it will be closed out. I had no idea i was a participant and never saw anything about it on my pay stubs or my 401k statements. I have been with my company for 7 years. Will i get money from this? Can i roll it into another retirement plan?

    • ANSWER:
      A 412(i) is a defined benefit plan that uses a life insurance annuity table and assumptions. This plan provides a substantially higher tax deduction with a much simpler method of calculating contributions and benefits by using a different actuarial funding strategy.
      You will need to speak with your employer to determine if there is any cash. No way I can know that

45. QUESTION:
    What kind of investment should I do?
    I am trying to help my mother with an investment. She recently learned that she had funds available in a “defined benefit plan” from a job she had 20 years ago. She is approaching retirement age (she is currently 57) and has only a 401k with very little saved, somewhere in the neighborhood of k. The amount she has available to rollover is about k. What is the best option for rolling over the money? Is there any advantage to a ROTH IRA at her age and retirement stage? She plans on working until age 67. The plan she has the money to roll over from is defined below…

    Defined Benefit Plan providing retirees with a predetermined monthly retirement benefit upon reaching a specific age. The retirement benefit paid to a retiree is typically calculated using a formula which often employs years of credited service under the plan and salary information. The retirement benefit is typically payable to the employee upon attainment of their normal retirement age for the remainder of his/her lifetime. Benefits under this type of plan are often referred to as accrued benefits. This type of plan does not maintain individual accounts for employees.

    It is important to remember that under this type of plan, the Alternate Payee is typically not awarded a lump sum cash payment from the Plan. It is usually a requirement of the Plan that the amount awarded to the Alternate Payee be expressed in terms of a monthly benefit payable for either the lifetime of the Participant or the Alternate Payee.

    • ANSWER:

46. QUESTION:
    calculating ratio analysis?
    10 points for best answer

    Estimated defined benefit income @ retirement?
    estimated defined benifit income @ retirement?
    Estimated interest & dividend income?
    Cash flow from real estate @ retirement?
    total guaranteed annual income?
    Shortfall Retire Inc. = Desired – Guaranteed?
    Ilifetime earnings (SS benefits)?
    Total assets?
    Net worth (total assets – total debt)?
    Home’s market value?
    Home Mortgages?
    Home’s equity (market value – mortgages)?
    net-worth – home equity?
    Total Federal & State income taxes paid last year?
    Credit card interest paid?
    Annual disability income coverage?
    Life insurance death benefit: Him?
    Life insurance death benefit: Her?
    Ratio Analysis Worksheets
    Information Needed
    Total Guaranteed Annual Income
    Your Name:
    Dollar Amounts
    Amount saved last 12 mo. (see Savings Stmt.)
    Real Income (from Real Income statement)
    Life time earnings (SS benefits statement)
    Total debt (includes all mortgages)

    data is below:

    Jack is a 43-year old corporate employee who earned ,000 last year. His W-2 form shows that he paid ,000 in Federal taxes, ,500 in State taxes, and ,160 in Medicare taxes. His W-2 form also shows that he made contributions to an employer sponsored retirement account in the amount of ,000.

    Jill is a 41-year old self-employed psychologist who earned ,000 last year. During last year she incurred the following business expenses: ,000 for advertising, ,000 for the rent of her office, ,000 for utilities, and ,000 for travel expenses. In addition, she used one of her vehicles for business only and during the past year she drove the vehicle for 9,000 miles.

    Jack and Jill have 3 children: an 18 year old son, a 10 year old daughter, and another 5 year old son. Last year they paid ,000 in child care expenses for their 5 year old son and ,000 in college tuition for their 18 year old son.

    Jack and Jill own a house that has a market value of 0,000 for which they took a 0,000, 30-year mortgage at 6% interest. They have 25 years left on their mortgage. Last year they paid ,250 in property taxes. They also own a duplex that has a market value of 0,000 for which they took a 0,000 30-year mortgage at 5.5%. They have 28 years left on their duplex mortgage. They have rented out the duplex and last year they earned ,000 in rental income. During the past year they incurred the following expenses for their rental property: 0 for advertising, 0 for insurance, ,000 for repairs, ,500 for property taxes, and ,000 for utilities. They also incurred a major expense when they had to replace the roof of their rental property, an expenditure that cost them ,000.

    In addition, last year Jack and Jill sold some stocks for which they earned a capital gain of ,000. Their current portfolio includes 100 shares in each of the following stocks: IBM, Apple, and Ford. The couple’s liquid assets consist of ,000 currently held in money market

    Project 6: Income Taxes (cont.)

    accounts for which they earned ,000 in interest income last year. They also incurred ,000 in Investment Advisor Fees. Jill is planning to make a ,000 contribution to her IRA account before April 15. Her IRA has a current value of ,000 and is held in a money market fund.

    Jack has a 401K plan with a value of 0,000 that is invested in the Fidelity Contra Fund and the Fidelity Magellan Fund.

    If you need to estimate how much Social Security tax was withheld from Jack’s salary. Go to www.ssa.gov to find an estimate.

    Keep a copy of the case study as you will need it to complete future projects.

    Print a copy of Jack and Jill’s tax return and bring it to class on the due date.

    Jack and Jill’s Retirement Goals:

    1.Retire when Jack turns 65 years old.
    2.Retire with an income of 0,000.
    3.Maintain the purchasing power of their income thru retirement.
    4.Leave a legacy to their children equal to the value of their home.

    • ANSWER:
      Here is a good resource.

47. QUESTION:
    What is the most profitable means of selling THE FUTURE in THE PRESENT [and/or THE PAST]?
    .

    By:

    [Note: We're talking "mostly/technically legal" stuff here, of course]

    1- Selling Psychic abilities (Though I’m still not sure why they cannot hit the winning lottery numbers, or at least come close dangit! lol)

    2- Dabbling in Fundamental and/or Technical Analysis of the Financial Markets

    3- Becoming a market speculator by dealing in Market Trends, Futures, Options, Forex, etc. (Quants, Economic Forecasters, etc., all included here)

    4- Becoming a History Professor (LMAO!)

    5- Predicting the Weather (All the weather-forecasting-related vocations)

    6- Working for Oprah (preferably becoming her! LMAO!)

    7- Working as a CIA (etc.) Analyst (<--- 007 wow that was a pure coincidence, BTW. Yeah Right! lol)

    8- Running for Political Office (promise the world, but never deliver $h!t)

    9- Becoming a Futurist in one of those GOOFY Washington-based "Think Tanks" that cannot predict the annual blooming of the flowers, if their lives depended on it

    10- Becoming a Corporate Visionary [strong Filth-immunity required!]

    11- Inventing a WORKING Time-Machine

    12- Writing a Software for predicting / "re"defining the Future

    13- Selling Dream Instruments in person, on paper, in DVD, etc. (e.g. Inspirational Speaking, Investment Banking, Mortgage Underwriting, etc.)

    14- Becoming a professional Gambler (or is that the same as investing in a 401K and/or the stock market?)

    15- Creating/Inventing your own Future-Present through Marketing/Advertising campaigns (usually requires substantial out-of-pocket investments)

    16- Selling tickets out of an eventual Black Hole doomsday fate (hey don't mock it; didn't Pope Julius II sell passports to future/eternal life in Heaven to the highest bidders?)

    17- Becoming a clergy/evangelical preacher of a sort

    18- Using your military might to dictate the Future [i.e. promoting a Proactive, NOT a Reactive attitude towards the Future]

    19- I have my own suggestion(s) [Please elaborate!]

    .

    • ANSWER:
      17. It is the oldest fortune telling/future predicting profession. People have been making money off of it since prehistory. Just look at how wealthy the catholic church is, and all those TV evangelists. Virtually ALL of their predictions have failed and yet the people keep asking for more. And in times of financial recession, or any sort of disaster, the business picks up! I should have gone to bible college.

48. QUESTION:
    Anyone succeed with a custody modifications? How bad does it have to get?
    Several times the Y!A community, as well as several other friends and neighbors and even the police have suggested that I go to back to court and get a custody modification for my 6 yr old son. Yet after going to 4 different attorney’s now in 3 years time I am gathering that custody modifications are difficult to obtain. That’s good to hear, and bad to hear. Good to hear, becuase from day one me ex petitioned for a 50/50 custody arrangement – in which I knew and know for a fact he could never meet while he works for UPS (super long hours, many work schedule changes, days then nights, then days again, tranfers to other cities and states at a moments notice for weeks to months at a time). It is more than clear to everyone that he only wanted 50/50 so he would not have to pay child support to yet another ex for yet another child. It’s also more than apparent that he marries so the wife can take care of the children, not him, not his job. He’s on his 4th marriage now and no longer honors the Right to 1st Refusal, fought to have his new wife defined by his latest attorney to not be included in the Right To 1st Refusal stipulation that if the child is not with the FATHER for a period of 3 hours the FATHER must notify the MOTHER and offer me the time that he will not be with our child to me. So now, me ex doesn’t need to be present during his scheduled visitation times ! My attorney said the ex is wrong, that he is not honoring the Right to 1st Refusal, but doubts the judge will get all up in arms about it and to let it go. Ex won that round and immediately stopped paying our agreed upon daycare becuase he no longer needs daycare svcs – our child can stay @ home with his wife while he works (uh, I work too!) My attorney said he can’t do that either – but I would have to pay all of the daycare fees whether my child is present or not, then go back to court to get him to reimburse me. The difficulty for a modification change is bad to hear becuz the ex is a pathological liar and is now calling my son a liar practically to his face when he is in fact telling the truth, the ex is still 3 yrs. after the divorce so incredibly spiteful towards me (I did not cheat on him nor take half of his 401K, retirement and savings accts., I left him the house, etc.etc.etc.) that there is no co-parenting (he and his wife will raise my son any way they want and I don’t have anything to say about it and to get out of their lives, etc.), told my son’s pediatrician that he fears our child is suffering from FAS (oh dear God) and went behind my back to my childs teachers and had them fill out medical questionaiire forms (for ADD since the pediatrician knew it was not FAS) all without my knowledge, forgets to give my son rx’s constantly (pink eye drops, rx decongestant, antbiotics, etc.) and just recently started to give my son soda to drink (son never liked soda, he prefers water or milk anyday) immediately after the dentist discovered 3 more cavities (totally 5 now) in 1 years time and referred my child to a specialist becuase thats too many too quickly (SM gives all the kids a bedtime snack, I seriouslly suspect none brush their teeth afterwards) and now my son who never liked soda tells me he drinks it all the time at _____’s (SM) – son no longer even refers to the house as ‘Dad’s'! Ex won’t drop my son off at my house Sun. & Mon. nights now that we don’t have a daycare yet he’s started 1st grade – tells me he doesn’t want to give up his nights with his son so he’ll bring him to my house @ 6:30 a.m. so I can get him to the bus stop at 8 a.m. SM lost my child while vacationing in Florida – but never told me, when I found out Ex blamed our 5 yr old child at the time, the SM blamed me! Niether respect me as the child’s mother. My son IS effected by all of this. When is enough ENOUGH in the court’s eyes? I feel a custody modification to where I have full legal custody, and he has only every other weekend and return the child to me on Sunday nights so as to not effect my son’s school routine, and if the child needs any prescriptions then I may refuse custoday visitation to be made up at a later time would be in my son’s best interests. Am I going to be told yet again by yet another attorney that there’s nothing I can do about it?

    • ANSWER:
      You need an attorney that is looking out for the best interest of the child, if they are unwilling to look into the case, you don’t want that attorney anyway. The easiest way for modification, is to try to come to an agreement with your ex outside of court.

49. QUESTION:
    Please help!! Need Retirement Advice! Pension plan vs.IRA?
    Okay…here is the deal..I am a RN who works at a hospital that has a defined benefit pension plan..I have put into this for 5 years now (I am fully vested now)..but I HATE my job..I am miserable..I have an option to go PRN (in the medical world that means work as needed more on part time basis)..I will get paid 20% more on my hourly pay but will no longer get any benefits (insurance,vaca, pension plan)..Insurance and Vacation time I am not concerned with because my husband has a good job with benefits..I am worried about retirement..my pension plan would provide a guaranteed retierment payment until death but as I said I really do not want to work full-time anymore. My question is can I do just as well putting money into an IRA or am I giving up to good of a thing with my pension..any advice would be appreciated. BTW my hubby is 41 and just started a 401K so I cannot depend on him..I am 34 in case that matters. thanks

    • ANSWER: