Retirement Planning

As the baby boom generation enters into retirement, retirement planning is suddenly a major topic of discussion among those at or nearing retirement and even those who are many years away from retirement.

Retirement planning poses different challenges to each of these groups. For baby boomers, a great deal of them will have already reached retirement age and will be living in retirement during the next ten years. Hence, there is very little retirement planning that can be done. Although this might sound too pessimistic but it is not really the case because Social security is still available and according to different studies, more than 75% of baby boomers are planning to work past age 60.

Although those two points might be considered positives for those who are about to retire, the reality is that more needs to be done for those that are a few years away from retirement because the luxury of social security may not be there a few years from now.

What needs to be done and should you hire a retirement planner?

Whether you hire a retirement planner or not depends on how comfortable are you with terms like IRA, 401k, investing and asset allocation. But regardless if you hire a retirement planner or not, most retirement planners agree that you should be taking the following steps regardless of how old are you:

1- Take advantage of employer retirement plans such as a 401k, or 403b and contribute the most you can. Many employers offer matching contributions and it is just a lost opportunity not to take advantage of these retirement plans.

2- If you have an employer provided 401k plan make sure the funds are invested in a diversified portfolio particularly if you have a large portion of it in company stock.

3- If you don’t have an employer provided retirement plan look into establishing an IRA or a Roth IRA. Saving for retirement in an IRA gives you tremendous tax advantages as your money grows tax deferred in an IRA, while it grows completely tax free in a Roth IRA.

4- Consolidate your plans: Many employees have changed jobs one or more time during their career. Many often leave their 401k at a previous employer and thus after a few jobs end up having several 401k plans at different places. One good move is to consolidate these former 401k plans into one rollover IRA that can be invested with your goals, objectives, and risk tolerance in mind.

5- Before taping an IRA or a 401k or other qualified retirement plan, make sure you seek expert advice regarding your distribution options. 401k Distribution options from retirement plans can be very complex, and making the wrong decision might mean hefty penalties and a large tax bill.

401k Withdrawal

401K Retirement Plan was created in order for those working individuals to have a good substantial amount to have with when they retire. Yes, you have set aside a part of your income in order for you to live a life you want to live when you reach the age of retirement or when you want to retire from working. However, what if you are into a financial emergency, you need a substantial amount to pay for your medical bills and other expenses, what you should do? It is suggested that you should only withdraw money from your 401K only when you do not have any option left. Remember, you are slashing money out from your future, and if you will always do this withdraw and withdraw money from your retirement plan you will be shocked, there is no money left for you when you retire. Be sure you know the 401K withdrawal rules before withdrawing the money. It is not as simple as withdrawing money from the atm machine.

You should be familiar with 401K withdrawal rules before you decide on withdrawing money from your retirement plan. Most likely, the retirement plans of which working individuals have will only allow withdrawal only if it is under the so-called term financial hardships. What are these? Most of the reasons that are classified under such term are: death of the workers spouse or a big medical bill.

Most of the employers set up 401K withdrawal rules based on the guidelines that the Internal Revenue setup. This means that when you are in dire need of cash immediately, then supported with a reason under financial hardship, you are eligible for such withdrawal.

Here are four reasons that under 401K withdrawal rules that would allow you to make a withdrawal:

1. When you incur a surmountable amount for medical bills either for your spouse, family or even you.

2. Preventing the foreclosure of your home.

3. Purchasing a house which will become your primary residence, this excludes paying your mortgage.

4. Paying for school fees either for post-secondary or university for your dependents, spouse and children.

One of the 401K withdrawal rules that you should remember is that when you withdraw money based on the reasons mentioned above you will be suspended from making any annual contributions for the period of 6 months. Remember, when you need cash that getting money out from your 401K retirement plan will affect your future. It should be your last resort.

401K Contribution Limit 2008

The IRS maximum contribution limits for defined contribution plans allow individuals and their employers to contribute more than ever before to a 401(k) plan. In addition to the opportunity to shelter from taxes a big portion of income, many 401(k) plans have a loan feature that can let its owners withdraw cash in times of need.

401(k) Contribution Limits for 2008
Salary Elective Deferral Limit $15,500
Maximum Employer + Employee Defined Contribution Plan Limit $46,000
Catch-Up Contribution Limit For Age 50+ $5,000

401(k) Contribution Limits for 2009
Salary Elective Deferral Limit $16,500
Maximum Employer + Employee Defined Contribution Plan Limit $49,000
Catch-Up Contribution Limit For Age 50+ $5,500

Source: www.irs.gov/retirement/article/0,,id=96461,00.html

401k Rollover

Let's face it. With the current economic situation, many investors have realized that they are going to have to retire later. So many people incurred big losses on their 401k plans and are wondering how they are going to recuperate all of the funds they have lost. There are big reasons to rollover a 401k to an IRA and they all have to do with maximizing your returns and getting back some of what you have lost.

Here are 5 of those reasons that you should take some time to ponder.

1. 401k plans are controlled by your employer so inevitably the investment venues chosen are going to benefit the company more than you. One of the biggest reasons to rollover a 401k to an IRA is to be able to choose your own investment venues in order to maximize your returns.

2. 401k plans cannot be truly self-directed. You may have heard that the best way to increase your returns is through self-directing your account and while self-directed 401k plans do exist, they are not nearly as flexible as self-directed IRAs. For example, employers commonly only allow a portion of a 401k plan to be self-directed. Furthermore, it's up to your employer to change plans or companies whenever they want and you are forced to bite the bullet if you don't agree with those changes.

3. One of the other big reasons to rollover a 401k to an IRA is to increase your investment options. With 401k plans you are limited to stocks and mutual funds chosen by your employer but when you self-direct your account you have a much wider range of options. You can invest in real estate, partnerships, franchises, gas and oil fields, private equity, tax liens, and more.

4. When you self-direct your account, you are ultimately in control of your investments. You will make the decisions that matter and not just have to wait for the quarterly reports to come in. That doesn't mean however that you alone will be solely responsible for the account. You will be helped every step of the way by an account custodian of your choosing.

5. The big reasons to rollover a 401k to an IRA mostly have to do with increasing returns. The hands down best way to maximize your investment returns is by investing in real estate. It's not smart for someone who is not versed in real estate investment to delve into it. That's why you need to find a company that can help you. There are companies out there that can help you get the most out of your retirement investments and guarantee to double your returns or pay the difference.

Your next step? Take this information and start looking for a company that will help you roll over your 401k to an IRA and invest in real estate.

As you may have gathered, there are big reasons to rollover a 401k to an IRA.

If you want to maximize the returns on your investment and build a financially secure retirement, your best bet will be to rollover to a self-directed IRA.

401k plans simply don't offer the necessary flexibility and options to help you achieve your financial goals.