Retirement Account

Frequently Asked Questions

1. QUESTION:
   Retirement account?
   You are now 30 years old and would like to accumulate ,000,000 in your retirement account at age 65. You currently have ,000 saved in the retirement account. How much must you set aside at the end of each year over the next 35 years to attain your retirement goal if the account earns 6.5 percent per year? How much would you have to set aside each year if you currently have a zero balance in the retirement account?

   • ANSWER:
     Let $p be the annual payment, and a be 1.06.

     Then;
     (5 * 10^4)a^35 + p(a^34 + a^33 + … + 1) = 2 * 10^6
     (5 * 10^4)a^35 + p(a^35 – 1) / (a – 1) = 2 * 10^6

     (5 * 10^4)(1.06)^35 + 111.4348p = 2 * 10^6
     384304 + 111.4348p = 2 * 10^6
     p = ,499.03.

     p(a^34 + a^33 + … + 1) = 2 * 10^6
     111.4348p = 2 * 10^6
     p = ,947.72.

2. QUESTION:
   Retirement Account?
   Ok, I’m 20 still in college, but I do have a decent income and a healthy saving. I want to invest it in a mutual fund for retirement. One of my professor told me to start early.

   Which Mutual Fund do you guys recommend?

   How do it get started? Online or Walk into a bank.

   Also I’m planning to invest about 0-0 monthly, and maybe up to 00 to initialize it.

   • ANSWER:
     Good For You. There is no substitute for the magic of compound interest over many years. – I would stay away from brokers in banks for the moment. – Pay attention to fees and hidden fees. Even if a Mutual fund is “No Load” – meaning no up front commissions – there will be fees. Remember that if that if the Mutual fund has expenses of 1% per year and yields 4% , that’s 25% of the income. Few people can outguess the stock market – and fees eat up much of the advantage of people who call themselves experts – I would start by checking out the Vanguard Total Market Index Fund – It has super low fees – and if you invest in it or a fund like it , you will do as well as the market over the long term and you will keep your costs down. Since this fund deals only in U.S. stocks, you may also wish to consider checking out an index fund that deals in European or other foreign index stocks – Such funds can give you some protection if the value of the dollar continues to decline, which many people consider to be likely. Vanguard has a number foreign stock index funds.

     Investing a fixed amount monthly at the same time is a good idea. If you do a google search on the term “dollar cost averaging” you will understand why.

     In general, younger people who are far from retirement should be prepared to accept more risk than older people, because they don’t have to worry about the market taking a dive just as they ready to retire and need the money. -The way to accept risk is to put most of the money that you won’t need for a long time into stocks or stock mutual funds. You should expect the market to fluctuate over time – but the market tends to reward people who accept the risk of changing market prices over a long period of time. – An older person- close to retirement would probably want to put a larger percent of his assets in fixed income securities such as bonds or money market funds.

     One you get a substantial sum invested in the total stock market – you can branch out and pick a few individual stocks if you find stock market investing interesting – but this should be a small part of your strategy – and just for fun until you really feel you know what you are doing. Be prepared to do worse than the total market.

3. QUESTION:
   Can my retirement account invest in real estate that I purchase for leasing to unrelated tenants?
   If I have a retirement account, say a 401k or an IRA, can I use those funds – not to borrow – but as an investment in a mutli-tenant residential apartment complex that I will be leasing to unrelated tenants to derive income? How is this done? Who do I talk to about the details?

   • ANSWER:
     If you can find an IRA trustee to do it, it is allowed. But with strict limitations, including: Your IRA must own the real estate strictly as an investment, which means no use by you or certain family members. The IRA trustee must also hold legal title to the property. And finally, your IRA must have sufficient liquid assets (either from other investments in the account or from your annual contributions) to cover any costs associated with owning the real estate.

     My guess is that the trustee, if you could find one that will do it, will charge a large annual fee to handle it.

4. QUESTION:
   What is the best source for starting a retirement account?
   Im in my early twenties and I just started working after finishing school, but I do want to start a retirement account. What source or foundation should I use for a retirement account?

   Im pretty dumb in this area. Is a savings account through a company like ING Direct bad for a retirement account?

   • ANSWER:
     If you are in your early 20′s and just started working the first thing I would suggest for starting your retirement account is your 401k at work. If they offer one, make sure you are taking full advantage of it and any company match you are entitled to. Company matches are like free money with no risk. If your 401k offers good investment choices then I would recomend that you max that out (currently 15,000) before you look anywhere else. After that you should look at a Roth IRA if you qualify. It gives you no immediate tax deduction, but you don’t have to pay taxes on the growth in the account and when you withdraw the money in retirment you don’t have to pay any taxes on the withdrawals either. If your 401k offers a Roth 401k option it is also a good idea to split your contributions between the Roth and traditional 401k plans so that you have different pools of money in retirment that you can access with different tax situations.
     As for how to invest. Since you are so young you have the time frame to be a little more aggressive if you want. I still wouldn’t recommend 100% stocks to you but somewhere around 80% stocks and 20% bonds will let you take advantage of market run ups, but still have some protection in market downturns (especially if you do automatic rebalancing in your 401k). In the stocks (or stock mutual funds) you should look for a good cross section of us and international companies…probably about 20-25% international depending upon your comfort level to risk and volatility…and you should also have a good mix of large, mid, and small US companies….somewhere around 30 large, 10 mid, 5 small…..those are just vague figures….kind of a rule of thumb starting point….every situation is unique and you should really talk to a financial advisor about your situation, time frame, goals ….etc…this is a good general retirement plan, but you need to make sure that it works along with all of your other financial needs

5. QUESTION:
   how does a retirement account work? how how does my money grow by investing in a retirement account?
   I know that once I invest money in a retirement account I can’t touch it unless it’s for emergencies but I would like to know how does my money grow in this type of account and how soon can I see results?

   • ANSWER:
     When you are investing, you have to invest for the long term to see any results. In the beginning years, you may be quite emotional to the market fluctuations. If market went down, the value of your portfolio went down. Your natural response would be, “I lost money.” But the fact is you haven’t lost or gain any money because you didn’t touch your money. How your portfolio performs depends on these factors:
     1) What is your average price per share compare to current price per share?
     2) How long have you had the investment?
     3) Dividends and capital gains payout (if any)
     4) Type of investment. Are you invested in conservative funds or large growth funds? If you want higher growth, you need to be willing to accept higher risks.
     5) How disciplined are you? Are you going to pull out when the stock market is down or are you going to stay in and continue to invest?

6. QUESTION:
   How do you start a retirement account when your employer does not offer one?
   I am 24 years old and plan on retiring when I am 65 years old.

   Questions:
   - Do I go to my bank or somewhere else to get started? Any suggestions?
   - How do I know how much to put in each month?
   - Once I start an account, is it a required bill, what if I have an emergency and can’t afford to put in that month?
   - What about the economy, you hear about people losing everything in their retirement accounts right now, how do I protect myself from that happening?

   Thank You.

   • ANSWER:
     Bank would be able to help as well as your nearest State Farm insurance agent.

7. QUESTION:
   What are the checking and retirement account limits allowed to qualify for medi-cal?
   I’m assuming medicaid and medi-cal have similar rules. I just applied for medi-cal. I am on SSDI so I am eligible. I was honest on my application. I have 00 in my checking account and 000 in retirement accounts. Am I excluded?

   • ANSWER:
     Medi-Cal is California’s separate program, known as Enhanced Medicaid. In California you can have only 00 total assets for one person excluding your home that you reside in and your car. You are definitely excluded by your assets after what I read in your question. Medi-Cal is almost broke and has been cutting back benefits for years, and you expect someone with K in assets should get free government paid health care?

     What sometimes happens is that they will approve your application based on your monthly income which you did not mention, and then your Share of Cost will be so enormous it does not help to use Medi-Cal with a share of cost that is high.

     My income is 00 a month and my share of cost is 0 and I dont qualify for Free Medi-Cal. A share of cost means for any given month I want medical services, I have a deductible of 0 before Medi-Cal kicks in.

     I am a senior on Medicare so I use that for medical services and I have to pay for Part B from my Social Security check. Being on SSDI does not automatically mean you qualify for Medi-Cal anyway. It depends on your monthly income. And you also didnt mention if you have income from other sources. Medi-Cal looks back 3 years to see if you disposed of any assets in order to qualify.

8. QUESTION:
   Will putting money into a retirement account lower my adjusted gross income?
   The monthly payment on my student loans is based on my agi. The lower my agi, the less I have to pay on my loans each month. Does putting money into a retirement account at my job lower my agi?
   My loan will be forgiven after 10 years, so the less I pay each month, the more money I can keep for myself.

   • ANSWER:
     Under most circumstances it won’t be included on your W-2 as salary/wages, so yes it would decrease your AGI.

9. QUESTION:
   How and where do I start a retirement account.?
   I am 21 , going to school, and living with my parents. I plan to put 0 to start a retirement account and then add roughly a month to make it ,000 a year for the next few years till I get a better paying job.

   My question is can I open an online retirement account? Right now my bank is bank of america. I also wanted to know if I started a 401k with my current employer how does that transfer to future employers. I do NOT plan on staying at this job much longer.

   Until I learn more about stocks and other investment tools I just want to focus on retirement accounts.

   • ANSWER:
     You can start an IRA (Independent Retirement Account) with any on-line brokerage, my recommendation (based on nothing except I like them!) would be BuyAndHold.com, whose IRA stuff is here:

     https://www.buyandhold.com/Buy?request=reg.newReg

     Don’t get too big a head, but you are WAAAY smarter than almost every other 21-year-old in the country to be thinking about this now. The market has historically returned 10-12% a year on average, long-term, and will continue to do so unless the world “goes out of business”, LOL. If you invest 0 now, and add a month, by the time you retire at, say, 61, you will have over .1 million, even if you never increase the amount you are saving above a month! Behold the miracle of compound interest!

     (If you wait until 70 to retire, and can achieve 13%, you’ll have about M!)

     Since you are so young, you probably want to opt for a Roth IRA (which you would fund with money you already paid income taxes on), especially if an employer allows you to participate a pre-tax 401(k) plan.

     Well done on being so smart!

     Have a great life!

10. QUESTION:
    Should I pay off student loans or start a retirement account?
    I just graduated from college and will start to have to pay student loans within the next 5 months (about k) . I am also very interested in starting out a retirement account soon. I have been told that I can open an IRA for as little as a month. Should I start to pay off the debt or start a retirement account? What is the best place to invest? I am 23 years old.

    • ANSWER:
      Start your IRA. Student loan interest is soo low, and doesn’t really affect your credit.

11. QUESTION:
    when rolling over individual retirement account is it better to have the funds transferred or get the check ?
    I have heard that the institution issuing the check will withhold taxes, but if you have the funds transfered, this will not happen in the case of rolling over your IRA, or individual retirement account, you will get a 1099 for tax purposes. To explain better this is when you have an IRA account with a bank or a certain institution, and you are planning to take your account to another institution, within 60 days, and put it in another IRA account.

    • ANSWER:
      I work at a bank, you definately want to transfer the funds so you don’t receive any penalties and don’t become tempted to spend the money before retirement. You will need all the money you can get when you become old cuz all us young’uns are pretty much screwed out of social security.

12. QUESTION:
    What is the average retirement account balance of a 27 year old?
    I want to know if I am above or below the average person of my age in the amount I have in my retirement account.

    • ANSWER:
      I’m 27 and I have ,000 my husband is 32 and has ,000. If you start saving now and put as little as 0 a paycheck into an IRA you will be suprised how fast it grows.

13. QUESTION:
    Can I have both a traditional retirement account at work and a roth ira i personally set up outside of work?
    I am a part of OPERS (Ohio Public Employees Retirement System), and am wondering if its legal to setup a Roth IRA through a separate company like Sharebuilder. I’ve not read that it is legal, nor have I read that it is illegal, to have more than one retirement account.

    • ANSWER:
      yes, you can have both an retirement account through your employer and a ROTH IRA, as long as you meet the income requirements.

14. QUESTION:
    Can I use my IRA retirement account money for surgery?
    I am planning on having surgery out of the country, since the surgery in US is too expensive, I am thinking to use the money I had saved in my retirement account( IRA) .
    Can I use this money without paying a penalty?
    Since is for health reasons.
    Does it matter that the surgery will be performed in another country?

    • ANSWER:
      Sort of.

      The ira withdrawal will add to your AGI.
      Take 7.5% of the AGI. The IRA money used to pay medical expenses OVER this amount won’t be subject to penalty.

      The requirement is that the surgery is for medical, not cosmetic reasons. The IRS is pretty picky about this.

15. QUESTION:
    How can I withdraw money from a retirement account with no penalty?
    I’m trying to withdraw ,000 from my retirement account for my son to borrow. He will have it paid back in 6-8 years. Is there anyway to withdraw it with no penalty or at least a very limited penalty. Is there any way to limit the penalties if it’s paid back to the account within like 5 years?

    • ANSWER:
      Depends on the type of retirement account:

      Under certain criteria any and all prior contributions (not earnings) to a Roth Type account may be withdrawn at any time without penalty or taxes.

      Withdrawals from Regular IRA Type accounts can be free of penalty (but not taxes) under certain criteria one being that the withdrawals are in somewhat periodic equal amounts.

      Neither is a situation that allows ‘borrowing’ but that doesn’t mean you can’t reinvest into new accounts (subject to some possible limits) when you have the funds available again.

      Employer retirement account/plan rules will be specific to your employer’s plan.

      Check www.irs.gov/publications/p590 and I also strongly suggest you check with a professional tax preparer, accountant, or financial advisor. Please do not base any financial decisions entirely on what posters may say on this or any other site.

      ‘_’

16. QUESTION:
    How do we open a retirement account?
    My husband has a great retirement account with the union, but work is slow and he’s only worked 1.5 months total this whole year. He is looking into going to police academy and possibly getting as job as a sheriff.

    We would like to open our own retirement account and contribute when we can to it. Hopefully when work is more stable, make steady contributions to it.

    We know nothing about this topic, so we wanted to know where we could turn to learn more and what is the right path for us.

    • ANSWER:
      Check with your local banker – you can set up an IRA at just about any bank. A good financial adviser can help you with the type of IRA to open (Roth or traditional) and where to keep your investments.

      Also note that many if not most, police/sheriff departments have a pension plan and if your husband does get on the force, return to your adviser about factoring the plan into your retirement funds as the form of the pension plan may change the investment strategy. Also, have your adviser discuss how to re-balance your IRA and be prepared to take a risk assessment test – the adviser does not ask you to take the risk assessment test, you need to find a new adviser.

17. QUESTION:
    is it better to have stock or taxable bonds in a retirement account?
    I have a tax class where one of the questions is is it better to have only stock in a retirement account or only taxable bonds? any ideas??? At this point i think the taxable bonds should go in the retirement account because the coupon interest that is received twice a year is usually taxed at ordinary income tax rates and stock dividends would be at more favorable rates if they were not part of a retirement account. am i correct on this? any help would be great. thnx.

    • ANSWER:
      Neither, actually. Any gain in a retirement account accrues tax-deferred until withdrawal at which time all monies distributed are taxed as ordinary income. How the gains are characterized within the account is irrelevant.

      SOME stock dividends are taxed at a lower rate but not all dividends do. Qualified dividends are taxed at the more favorable long-term CG rate but ordinary dividends are taxed as ordinary income. There’s no guarantee that any dividend will be treated as qualified dividends up front, and a company’s dividend payment history is no guarantee of what they will do in the future.

      Furhtermore, the principal reason that you’d hold stocks is for capital gains, not dividends. Some companies rarely pay dividends. Even though long term CG rates are lower than the rate on bond interest, the overall growth potential of stocks over time is considerably greater than with bonds which offsets any differences in tax in the long term.

      Most financial planners recommend a mix of investments in a retirement account, including stocks and bonds. Within those classifications you should have a further mix of higher yield, higher risk investments as well as lower yield, lower risk investments. As you age you should reallocate your investments towards lower risk in order to preserve capital. While you are younger you can tolerate higher risk in exchange for higher yield since time is on your side and will reduce the overall risk.

      The one thing that you do NOT want in a tax-deferred account is tax-free or tax-deferred investments such as municipal bonds or annuities. That would convert tax free or deferred gain into taxed, a foolish choice.

18. QUESTION:
    Help me with picking a retirement account to do want I need to do?
    I am curious if anyone would know what retirement account I could use to invest in a private company? I met guy and trust him and he is offering private lending to help his business because the bank limited his credit, and offering a very good return, secured by real estate. Will an self directed IRA let me do this as long as I dont take any money out?

    • ANSWER:
      The only funds to use are Vanguard Funds. All others are scams

19. QUESTION:
    How much must you deposit in your retirement account starting now and continuing each year through year 9?
    How much must you deposit in your retirement account starting now and continuing each year through year 9 (i.e., 10 deposits) if you want to be able to withdraw ,000 per year forever beginning 30 years from now?Assume the account earns interest at 10% per year.

    • ANSWER:
      This is a three stage question.

      First, you need to find out the present value of a payment of ,000 per year, discounted using a 10% rate, and compounded forever (I used 999 years). That value comes out to 0,000. That tells you that at the end of the 30 years, you need to have saved up 0,000.

      Second, you need to determine how much you need to start with to have 0,000 in 20 years, if the starting value compounds at a 10% factor. That number calculates out to 8,914.90. This tells you that you need 8,914.90 in the account at the end of the initial 9 year period.

      Finally, you need to calculate the annual amount that needs to be paid into an account so it adds up to 0,914.90 at the end of 10 years, with a compounding rate of 10%. But this calculation needs to be done assuming the payments come at the beginning of each year, and not the end of the year. That number comes out to ,783.06.

      I used Excel’s PV function to calculate the first two, and the PMT function to calculate the last.

      But any financial calculator will give you the same answer, or you can use the Present Value tables in your textbook.

20. QUESTION:
    Can I withdraw money from my retirement account to invest in my new business and avoid the 10% penalty?
    I am recently unemployed and want to start my own business. Can I withdraw money from my retirement account and avoid the 10% penalty? Where do I find the IRS rules on this kind of withdrawal?

    • ANSWER:
      no – and don’t forget you also have to pay income taxes on the full amount of teh withdrawal also, not just the 10% penalty – so you would need to put aside probably -35% of the money for taxes to be safe

21. QUESTION:
    How much will tom have in his retirement account when he retires?
    Tom contributes 0 per month into his 401k (i.e. retirement) plan and his boss matches this contribution. The expected yield on the retirement account is 9.6% (compounded monthly) and Tom plans to retire in forty-five years. How much will Tom have in his retirement account when he retires?

    • ANSWER:

22. QUESTION:
    What’s the best company to go with for opening a retirement account?
    I want to open a retirement account, but I don’t really know how to get started. What should I consider, or be aware of before choosing a service? Company names would be helpful, and if you could tell me why you chose the service that you use. Thank You.

    • ANSWER:
      Hi –

      Many of the responses said what broker (scott trade, etrade, etc) to go with to open an account. But In my personal opinion you should either open an account with an individual mutual fund family directly, or work with a financial advisor to open one up for you.
      The reason is this: Say you have American Funds Growth Fund of America, but would like to sell it to get Fidelity Contrafund. You would be subject to sales charges. But if you stay in the same mutual fund family American Funds Growth Fund of America for American Funds AMCAP you would NOT be subject to sales charges. These charges can be around 5% for A class shares. Imagine people who switch between fund families constantly….. it really eats into your growth.

      As far as Mutual Fund Familes. I am partial to American Funds and Franklin Templeton

      hope this helps

23. QUESTION:
    Should I open an additional retirement account?
    I am a teacher in Texas and have a TRS (Teacher Retirement System) account. Should I also open a separate retirement account, or this one is good enough. I really don’t understand this TRS account.

    • ANSWER:

24. QUESTION:
    What kind of retirement account should I open?
    I am self employed and wondering what kind of retirement account I should open for myself with the greatest benefit.

    • ANSWER:
      I would open an IRA with one of the large mutual fund companies. Give Vanguard, Fidelity and/or TR Price a call. They should help you set one of these up. They may also have further ideas about your particular situation.

25. QUESTION:
    how do i find an old retirement account?
    When i joined the Army in 1997, I opened a retirement account with an outside company. I can’t remember the name of the company and i’m trying to find out if the account still exists and whether or not i can close it out. Can anyone help me?

    • ANSWER:
      Do an address change from the old address you had then, and a statement should come to you. It probably is being sent to your old address. Check the state list of people who have forfeited funds.

      In a perfect world, this company has changed hands over and over again.

26. QUESTION:
    When a retirement account goes from mil to 0 where does the money go?
    So many of us lost hundreds of thousands in the market, so for example if a retirement account was worth mil and a few months later it is suddenly worth nothing, where did that mil go?

    • ANSWER:
      I always find it interesting that I’ve probably heard this question at least a dozen times. The interesting thing is that when an account goes from 0 to 1MM, no one asks where that money “comes from”…

      The answer is that it didn’t “go” anywhere, because in reality it never existed.

      Consider what the money in your retirement account really is. For simplification, I’ll speak only about stocks, since that’s what people are familiar with.

      The stock market value of a company is (or at least should be) the projected value of all money the company will make in the future, plus any cash payments to you, the stock holder (called dividends), discounted back for time and divided by the number of shares. In other words, the price of your stock is a reflection of how much money the company will make in the future.

      The fact that these stocks are priced lower does not mean the money (wealth) went anywhere. The market price of a company is really just a reflection of the optimism for future earning power. When people are in a bad mood, they think future earnings are worth less, and not willing to pay as much for the company.

      It’s important to realize, no one “ran off” with the trillions of dollars that were lost, any more than an up market is paid for by some generous benefactor. The prices are a reflection of the mood of the market and the market’s projection for future earnings.

      Historically speaking, up until recently we have had an overpriced market since… off the top of my head… a couple decades – until recently. At this time, US stocks are priced cheap relative to the past.

      (I’ll also note that government bonds are massively OVERPRICED relative to their historic norms… you CAN lose money on government guaranteed bonds. If you sold your stocks and put the money into government bonds, reconsider, and talk to your financial adviser)

27. QUESTION:
    what is the penalty for cashing in stocks as opposed to rolling them over to a retirement account?
    I have a company contributed stock option that is being closed and distributed to employees. I can roll this over to a retirement account, however, since I never had the money to begin with, would it be worth cashing it out, paying the penalties and getting rid of bills that I am now paying interest on?

    • ANSWER:
      That depends. It sounds like the stock were part of your compensation and you probably did not pay income tax on these earnings.
      If you cash it our you will end up paying income tax on the funds plus possibly a penalty (amount depends on type of program).
      This may be better than the loans you have however it may not be as you will likely need this plus much more in your retirement account. Do the math on both options and possibly contact the fund management company and talk to the manager. I hate debt however paying tax + penalty may be worst.

28. QUESTION:
    Can you transfer stocks from a non-retirement account with E*trade to a Fidelity Roth IRA?
    I have two stocks that I have been holding in a non-retirement E*trade brokerage account. I want to move these two stocks (without selling them) into my existing Roth IRA with Fidelity.

    Is it possible to make this kind of transfer between accounts?
    If so, will I be restricted by the ,000 yearly contribution limit?

    Thanks!

    • ANSWER:
      You must sell your equities and allow the funds to settle completely before transferring to another brokerage.
      You can make an annual contribution to your ROTH – 5K limit
      .

29. QUESTION:
    How can I open up a retirement account (tax deferred) for my toddler?
    My research has taught me that I can’t open an IRA for my toddler because it needs to be opened with earned income (of course a toddler does not earn income). Further, I can’t simply open a Mutual Fund in his name b/c come college time, that amount will count against him if he needs loans (plus taxes and fees will eat at a regular mutual fund – that’s why we don’t use them for retirement savings outside of a retirement account that shields us from taxes). So, is there a vehicle out there we can put some money into for my toddler’s retirement? An annuity perhaps? Thanks.

    • ANSWER:
      Great question!

      You can open a Coverdell ESA at Scottrade for tax free gains for education (up to 00 per year can be deposited but deposits are not tax deferred).

      You can open a UTMA account (up to ,000 per year) for gains that are taxed at the child’s tax rate, if someone other than a parent is the custodian of the account. But I heard that loophole might be closing, if it hasn’t already.

      You can purchase up to ,000 per year in EE or I series US Savings bonds for your toddler for tax deferred gains. http://www.treasurydirect.gov.

      Tax Free Municipal Bonds (or a Vanguard Muni Bond fund for your area) would be good also.

      I use Scottrade for my kids, and UMREX has been my good fund to date, but make sure you only get no-load, no transaction fee funds.

      Oh, and there are no fees for IRAs or Coverdell accounts at Scottrade, Not sure about the UTMAs there but my guess is no fees.

30. QUESTION:
    Is there anyway I can withdraw the money from my AIG retirement account?
    I am about to undergo invitrofertilization and would like to withdraw the money from my retirement account to do this. Can I close my account or do a surrender and get my money? They are giving me the run around.

    • ANSWER:
      This is a bad idea on so many fronts. Apparently you cannot afford the procedure. On top of that, you will be increasing your expenses by having a child which it sounds you may not be able to afford. You are doing this by robbing from your retirement. You will pay taxes on any funds you withdraw. You will also pay a penalty on any funds withdrawn before you are 59 1/2. There is not one positive aspect to what you are thinking of doing.

31. QUESTION:
    Employer refuses to pay out retirement account?
    I have become disabled from 911 and serving in Iraq while on military leave from my employer. I am 100 %vested in my retirement account. They refuse to pay out on this account. What federal or state agency handles this inquiry mediation, or is it a law suit? NYC is the location

    • ANSWER:
      Get a written copy of your plan agreement by making your request in writing. Study the document to make sure you are allowed to take a distribution.

      If you are still employed, you cannot take distributions from your 401k even if you are fully vested. There are many more situations, but that is the one that strikes me as possibly applicable. Also, if you are in a defined benefit plan, rather than a 401k, there are restrictions on distributions that you may not be aware of.

      If you determine that you are eligible for a distribution and the plan refuses to pay, I would contact a labor attorney.

32. QUESTION:
    Is there anyway to check how much money is in a retirement account?
    Im not vested and I just wanted to know how much is in my retirement account? Is there a website or a phone number I can check? Because I resign from my job and ask for it to be payed out.
    Thank you all for your help

    • ANSWER:
      contact your HR dept

33. QUESTION:
    I have a government 457 retirement account, do I need another account, like a ROTH IRA?
    As a city government employee I’m eligible to make contributions to an optional pretax retirement account, an IRS 457 account. I’m in my late twenties and have so far been contributing the maximum ,000 pre tax per year and my employer does not offer any matching options. Are there any savings or retirement options available to me that might offer additional benefits to me?

    • ANSWER:
      ROTH will not have savings today. It’s investing after tax dollars, but then you withdraw with no taxes when you retire. This is a very good option for many people. Traditional IRA gives a tax deduction today, but you pay taxes when you withdraw. It’s also a good option. If you are paying taxes now, you may want to look into a Traditional. The limit is 00 per year. Then go with a Roth after that.

34. QUESTION:
    Can I use multiple bank statements and retirement account for UK visa (Tier 2) application?
    To apply a UK visa (Tier 2), I just noticed that I need to keep the balance not just for me but for my three dependents. The balance has slightly fallen from that on one bank account, and wonder if it’s OK to show more than two bank statements for the last three months. I also wonder if anyone has used the balance of retirement account for this purpose. I’d truly appreciate for your input, many many thanks in advance.

    • ANSWER:
      Very much so, the more you can give them the better your chances.

35. QUESTION:
    Whether to take distribution from retirement account or loan against them?
    I have a great opportunity to invest in real estate properties but not enough cash to pay for it. What I have is enough savings in my retirement account. I am wondering wheter it makes a better sense to take the distribution from my retirement accounts, after all it is just an investment from one form to another. Another option is to take a loan against my retirement account which will reduce my future contribution as well as I will be paying interest on it. Can’t decide which is better.

    • ANSWER:
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36. QUESTION:
    IS a Bank CD IRA a good retirement account? Do you know which Banks offer the best rates for Bank IRAs?
    I am looking into investing in a second IRA, a CD Bank IRA, my question is this a good investment, will I make good returns from this, I dont think the rates are good for Bank IRAs but I can be sure I wont lose any money.
    Note: I already have another retirement account through my employer.

    • ANSWER:
      CD’s are one of the worst places for retirement investing. You’ll lose on the purchasing power of each dollar, over time, because of inflation & the taxes you’ll pay when you pull the money out (at over ager 59.5).

      Stay away from banks & insurance companies for retirement products. Here’s some good mutual fund families that can be helpful;
      T. Rowe Price
      Dodge & Cox
      Vanguard

      Good luck!

37. QUESTION:
    What should the ratio of equities to fixed income be for the retirement account of a person age 30? and age 60?
    I’d like to clarify the wording I used in my question. When I say equities, I’m basically saying stocks. When I say fixed income, I’m basically saying bonds. If it’s not that simple, let me know!

    Also, for the purposes of this question, please assume that the equities in the retirement account are very well-diversified.

    Thanks!

    • ANSWER:
      100 minus your age in equities. At 30, have 70% in equities

38. QUESTION:
    Which should I give priority to for allocations-a Roth IRA or my pretax employment retirement account?
    I’m a government employee and have access to a pretax retirement account. I’m currently the maxing out the allowable K in annual contributions to my pretax retirement account. However, I just opened up a Roth IRA account, but have no money funded. Should I reduce my employment retirement account contributions, so that I may begin contributing money to my ROTH IRA? I currently make about K annually.

    Which should I give priority to?

    • ANSWER:
      I would lower my contributions to my employer’s retirement plan and make contributions to my own Roth IRA. Its more likely that your employer’s retirement plan probably has some crappy investments in it and some good investments in it.

      With a Roth IRA, you can pick a variety of mutual funds that matches your investment objective. I don’t know how old you are, but the younger you are, the more aggressive investor you should be. The older you get, the more conservative you should be. So, if you want best of both worlds, I would diversify the IRA that contains aggressive growth fund and income and growth funds. You want to stick with the same fund family so that later on you can get sales discount.

      If you leave your job, you can rollover your employer’s retirement plan into a traditional IRA. If you leave the job after 2010, you can roll it over into a Roth IRA.

39. QUESTION:
    Which one would a better option for a retirement investment account ?
    Hi, I am a 30 year old single male, I am a computer software architect and earn around 0,000 per/yr. My company does not have a 401(k) plan. I also have to send a chunk of my money out of this USA to support and maintain my ailing old parents for which I cannot get a tax deduction as I cannot claim my parents as dependent. I have also crossed limit to put money in Roth IRA. What would be my best option for opening a retirement account?

    • ANSWER:
      I would talk to the human resource department and president until they offer 401ks. If you were self employed you would have other options (SEP) but I’m not sure what you can do if your company doesn’t offer one. Obviously contribute the maximum to IRAs as you have been doing, although at your income, you might want to get a traditional IRA and take the deduction now. You can buy treasuries for a tax break.

40. QUESTION:
    Safe to open up a retirement account during these times?
    I am gonna open up a Roth IRA with Vanguard online and they basically give you an option to set up your funds in a money market account or in investments. I read them stories of people losing dam near half of their retirement savings due to the recession but was that mainly because they had their money lumped up in similar sectors or what?

    • ANSWER:
      That was because the “perfect storm” left every area of the American and international economies in freefall. Hopefully that was a once in a lifetime event. And many investments that were down even 50% are back up to nearly where they were 2 years ago.

      If you are young, you have plenty of time for your assets to grow. If you don’t know what to invest in, put it in the money market until you can read and educate yourself about investments. There’s nothing wrong with cash. Read Money magazine or Kiplingers every month for a year until you understand how investments work. Diversify your assets into different classes of cash, stocks, bonds, and alternative investments so everything doesn’t go down at once and you can wait out recessions.

      As an alternative, if you don’t want to study investments, ask Vanguard about their “fund of funds”: their own mutual funds that are made up of a diversified portfolio of mutual funds, some growth, some bonds, some domestic, some international. They will do the work of diversifying for you. Or try a “target” fund. You say when you want to retire, say, 2035, and they will put some of your money in stocks and some in bonds etc, and rebalance periodically. The closer to your “target” year, the fewer stocks and more bonds there will be. No brainer for you, they do all the work.

      You will need to accumulate LOTS of money to be able to retire, so get started! Good luck!

41. QUESTION:
    What tax forms are needed after a retirement account rollover?
    In 2009 I rolled over two retirement. accounts. One was a 401k to an IRA and the other was a roth IRA to new a roth IRA. What tax forms do I need from each of my accounts to file my taxes?

    • ANSWER:
      these would be input on the 1040 on the ‘PENSION’ line but since they were rolled over, and this must have been within the 60 day period, you actually don’t have a reportable distribution
      if this is your only income, you may not need to file at all

42. QUESTION:
    Why can’t I empty out my retirement account, without penalty, to pay off student loans?
    The retirement account (TIAA-CREF) is losing money. The student loans are at 9%. Why can’t I just empty out one for the other without penalty?

    I still have 30 years till retirement anyway.
    But the money would be going to a federal loan — shouldn’t there be an exemption in that case?

    • ANSWER:
      Any time you sock away tax exempt funds, when you withdraw those funds, you have to pay tax on them, regardless of whether you withdraw when you retire or withdraw now.

      Basically, your retirement is an escrow account to keep you from dipping into funds that you will need when you retire (since Social Security will be dried up by the time we get there), so you don’t have to depend on the government, so they give you the sharp sting of “penalty for early withdrawal” to keep your fingers out of your own future.

      Unfortunately, in these economic times, saving for retirement just doesn’t seem as realistic as paying off student loans.

      Figure out what it will cost you in retirement penalties to pay off the student loans and see if the venture is worth the penalty.

      If not, just concentrate on paying off the student loans, or even take out a second mortgage or home equity loan (at a lower interest rate) and then you can deduct the interest on the equity.

43. QUESTION:
    A former state employee, I have an unvested retirement account. Should I roll it over to my TSP or my Roth?
    I’m now a federal employee and I have no plans on returning to my old state job.

    The state retirement is a defined benefit plan and the account is earning about 5% a year. I think I could do better than that in my Roth IRA but I don’t want to pay any kind of tax penalty in the rollover, so if that is the consequence, I would probably go with the TSP.

    • ANSWER:
      If it was tax deferred you roll it into a non tax deferred you will pay taxes on it ..

44. QUESTION:
    My husband borrowed from his retirement account, but paid it back before leaving the employer for a new job.?
    Although it was paid back, he received a 1099 R and it looks like we have to claim the $ borrowed and paid back into his retirement account as “earned income”. Is this correct?

    • ANSWER:
      You say he paid the money back, restoring the account to it’s full balance.

      Then he left. What is he doing with the 401K? Did he take the money (taxable) or did he roll it over to an IRA (not taxable, but needs to be reported)?

      What distribution code is on the 1099-R.

      The retirement money is not earned income, but ordinary income.

45. QUESTION:
    Can Collection Agency Garnish my Personal Retirement Account?
    If a collection agency sues and wins a judgement, can my personal retirement (not affliated with employer) be garnished?
    I do not have a social security account. I have no other retirement accounts but this one.The money I have saved is from an injury lawsuit. I have been unemployed for 6 years.
    I live in the USA. I am moving to WA state from OR.

    The IRA balance will come from one deposit…not monthly deposits. Does that make a difference?

    • ANSWER:
      You did not say what country you are from. But an IRA is protected from creditors. That is why an IRA cannot be used as collateral for a loan.

46. QUESTION:
    Should I have C Shares in my Retirement Account?
    I am 32 years old.
    I opened my retirement accounts with my financial adviser about 5 years ago and all of the mutual funds in my retirement accounts were purchased as C Shares.
    I also see that a 529 account for my 3 year old daughter is also in the C Share status.

    Should I convert everything to A Shares since it will be about 15 years before I start drawing from the 529 and 20-30 years on the retirement accounts? Why would he have me in the C Shares? Any advantage to me?

    • ANSWER:
      I suppose the advantage to the C shares, is there is no upfront load. The (big) disadvantage is the high expense ratio. And to get out, there is a deferred load. If you do convert to the A shares ask/demand that the load be waived.

      By the way, there are many excellent no load funds out there at Vanguard, Fidelity and/or TRowe Price. I don’t like load funds.

47. QUESTION:
    How do I move my 2 annuities with ING into another Retirement Account like an IRA?
    I am 55, and have 2 variable annuity accounts, one a 403 B from my last job, another, a regular annuity, and a roll over IRA that is a variable annuity.
    The funds have not grown as much as I would like and are my only source of retirement.
    I would like to shelter and see some growth.

    HOW do I do this with the least amount of loss.

    • ANSWER:
      You need to talk to a financial adviser at a company such as Charles Schwab or Fidelity. You set up an ira and they arrange the rollover of your ing annuities. They will also discuss your choice of investment options.

48. QUESTION:
    What Retirement Account is Best for me?
    I am 23 I graduated from college a year ago. I have student loan payments and have been employed where I am for a little over a month. I make 550 a week after taxes am a contract employee through a staffing agency that doesn’t offer a 401k plan. I live with my parents and my dog. I just want to know which type of retirement savings account is the best choice for me.

    • ANSWER:
      No 401k, so your options are limited. Open an IRA at Vanguard, Fidelity and/or TR Price.

49. QUESTION:
    Best account for a retirement vacation home?
    I am employed full time. I have an retirement account through my employer which I contribute to bi-monthly. I also will be receiving a pension of 50% of my salary. My retirement plan is to not have to work again and lay around on some beach in some other country. What would be the best type of account to put away an extra couple hundreds buck each month to save up for a vacation home? I have sixteen years until retirement. Thanks

    • ANSWER:

50. QUESTION:
    The way the economy is going today, is it still better to leave my investments in a retirement account?
    It may take many years for the economy to recover. Should I leave my money in my retirement account or would I be better paying off the rest of my house note? There is ,000 left to go and I have 10 yrs. left to pay on it. If I pay the note off, I will replenish the account with money I spend on mortgage payments each month.

    • ANSWER:
      The economy IS recovering. DON”T MISS IT!! NOW is the time to INVEST!

      If you pay off your mortg, you give up the capital gains you’d make and lose the interest tax credit; lose, lose.