Archive for the ‘Retirement’ Category
Everything you want to know about retirement plans
Posted: March 12, 2012 at 7:26 am
Retirement Fundamentals Of Retirement Plans
If you're among the lucky Americans whose employers offer a workplace retirement plan, it behooves you to take full advantage of it. True, some plans will automatically enroll you, so all you have to do is show up to work every day and do your job. If you don't want to join, you have to actively take steps to opt out of the plan.
It would be a mistake to opt out. In fact, it would be a mistake to allow yourself to be automatically enrolled without getting involved in the decisions pertaining to your plan. Otherwise, you may end up contributing just a paltry amount, and your money may go into a fund that's too conservative or too risky or too expensive for your taste.
In this package of stories, Bankrate covers the fundamentals of retirement plans -- everything you ever wanted to know about 401(k) plans, 403(b) plans and 457(b) plans -- plus a whole lot more.
For the uninitiated, 401(k) plans are found in the private sector, 403(b) plans in the nonprofit area and 457(b) plans are offered in state, county and municipal workplaces. All have their arcane sets of rules, and all provide a way for you to save money in a tax-deferred account. Some are stranger than others. Bankrate's story, "Shakeout in 403(b) plans affects teachers," uncovers the unusual situation in the education market and explains why teachers are dropping out of their 403(b) plans.
If you work for a small business that doesn't offer a plan -- and the majority do not -- then it's time to lobby the boss for change. Employers can pick from several different types of plans ranging from simple payroll deduction individual retirement accounts to complex defined benefit plans that require serious commitment. Bankrate's story, "Retirement plans for small biz," covers the nuts and bolts of 10 different retirement plans designed specifically for small businesses and self-employed individuals.
The government devised several different types of plans in order to entice people to save for retirement, even at the expense of federal tax revenue. Retirement savings in workplace plans keep money out of government coffers -- contributions made on a pretax basis are not counted as income, so you dodge the tax bullet on those funds until it's time to take the money out.
To find out if you have a first-class 401(k) plan or a mediocre one, check out "What makes a 401(k) plan great." Get ready for changes in your corporate retirement plan as well. This year, sponsors of 401(k) plans will be required to break out all costs to plan participants, as discussed in the story, "401(k) plan fees to be unveiled." This event will surely be an eye-opener for everyone.
Why should you contribute to your retirement plan? Because doing so affords you options you likely won't have otherwise. Once you sign up to contribute 10 percent or 15 percent of your paycheck into the plan, you won't miss the money. And it's a bonus if you get matching contributions. Over time, you will likely be surprised by how much you will have accumulated. It's your best chance to prepare for your golden years, so you can maintain your lifestyle long after you stop setting the alarm clock to get ready for work.
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Everything you want to know about retirement plans
The best retirement plan for your business
Posted: at 7:26 am
Do you work for a small business that offers no retirement plan? Are you self-employed and so busy that you're (regretfully) putting your retirement plans on the back burner? Do you own a small business and want to provide a retirement plan for your employees? You've come to the right place.
Retirement plans provide a tax-advantaged way to grow wealth for retirement. A well-designed retirement plan can help attract and retain talented employees and give the employer the satisfaction of knowing they've helped their employees -- as well as themselves -- toward a financially sound retirement.
There's a host of different plans available for businesses, and each comes with its own set of rules. Some are dead easy to implement; others are more complicated. Some are qualified plans and others are nonqualified plans. Qualified plans meet certain government requirements and offer tax benefits to both the employer and employee. Conversely, nonqualified plans are not eligible for tax-deferral benefits, and they're generally geared to the top brass.
We focus on qualified plans, of which there are two basic kinds -- defined benefit plans and defined contribution plans. Read on to learn about 10 types of retirement plans for small businesses.
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The best retirement plan for your business
Rahul Dravid Retirement Press Conference – Video
Posted: March 11, 2012 at 9:23 pm
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Rahul Dravid Retirement Press Conference - Video
Retirement plan fees in focus
Posted: at 1:22 pm
By CHRIS FREEMAN - cfreeman@shawmedia.com
By this summer, companies and employees will be able to find out more information on their employer-based retirement plans than ever before.
New regulations from the Department of Labor are going to require employers and retirement plan providers to determine whether the money paid to retirement plan servicers is reasonable and to disclose the feeds that are being charged by the servicer.
And that could provide transparency that the industry has not seen on a grand scale before, said Clear Financial Strategies Global Wealth Manager Allen Bronton.
[The new rules] say corporations must gather what the fees are for the retirement plan, and its their responsibility to do it, not the plan providers, Bronton said. Once they have the information, they have to be able to make a decision on what the participants are paying, and whether thats reasonable for the service they receive.
The final rule implementation has been pushed back by the Labor Department to July 1, and all companies must be in compliance with the regulations by that date.
The common-sense rule that we are finalizing today will shed light on the true costs of 401(k) accounts and ultimately reward those working hard and saving for retirement, Labor Secretary Hilda L. Solis said in a news release last month. This rule, and its companion participant-level fee disclosure rule, will greatly increase the level of transparency in retirement plans.
When businesses that sponsor retirement plans, and the workers who participate in those plans, get better information on associated fees and expenses, theyll be able to shop around and make informed decisions that will lead to cost savings and a larger nest egg at retirement.
The three most common fees that plans charge that generally are not announced, Bronton said, are the 12(b)-1 fee, the Shareholder Service fee, and the Sub-TA fee.
The 12(b)-1 fee covers cost for advertising, marketing, and distribution of the plan. For larger companies such as Fidelity or Morningstar, that would cover the cost of promoting the plan inside and outside the workplace.
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Retirement plan fees in focus
A retirement portfolio that makes sense
Posted: at 1:22 pm
For most Americans, building their retirement nest egg is one of their most important priorities -- and most difficult challenges.
A big factor to achieving that goal is constructing a well-designed portfolio. We can't predict the future, so no one knows what the ideal investment plan will turn out to be. However, we can construct a sensible one that is broadly diversified, low-cost, tax-efficient and consistent with your goals and investing temperament.
Such a portfolio will significantly improve your chances of reaching your retirement goals. Here are the key steps to developing an intelligent retirement investment plan:
* Clearly identify the goals for your portfolio. What do you want it to accomplish in the period leading up to retirement, during retirement and after you're gone? In addition to a secure retirement, are you planning to leave assets to family members or a charity? If so, how much do you plan to leave?
* Understand your risk tolerance. This is your willingness to accept short-term losses in exchange for expected, but uncertain, longer-term gains. If you can't sleep at night fearing that a severe drop in the market could cost you a significant portion of your assets, a portfolio that holds a high percentage of risky investments such as stocks may not be right for you. Your risk tolerance affects your portfolio design, so take the time to get this right.
* Determine your time horizon. For many investors, this will consist of
* Establish your asset allocation. The most important investment decision you will make is the portfolio's asset allocation, which is determining the portion of your investable assets you want in the three major asset classes -- stocks, bonds and cash. This decision will determine the majority of your portfolio's performance and risk. Different asset classes have different risk and return characteristics and can respond differently to economic and market forces. Therefore, you can balance a portfolio's risk and return by spreading your investments among different types of assets. This doesn't guarantee a profit or ensure against a loss, but it can help you manage the level and type of risks you face. A sensible asset allocation depends upon your investment objectives, time horizon, risk tolerance and other personal and financial circumstances.
* Diversify through sub-asset allocation and security selection. To further diversify your portfolio, you'll need to select the sub-asset classes and specific funds that offer you the exposure within the specific stock and bond categories you want.
* Determine your asset location. Different types of accounts, assets and gains are taxed differently. Therefore, choosing which assets to hold in which accounts can help improve after-tax returns. Generally, investors should hold tax-efficient investments such as broad-market index funds in taxable accounts, and tax-inefficient investments such as taxable bond funds in tax-advantaged accounts. However, factors such as short-term cash needs and estate-planning decisions can dictate exceptions to this strategy.
* Rebalance periodically. Asset classes perform differently during the year. In order to maintain your target asset allocation and manage your portfolio's risk, you should rebalance the portfolio periodically.
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A retirement portfolio that makes sense
Rahul Dravid to retire from Test cricket? – Video
Posted: at 1:49 am
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Rahul Dravid to retire from Test cricket? - Video
Rahul Dravid announces retirement from International Cricket – Video
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Rahul Dravid announces retirement from International Cricket - Video
Rahul Dravid announces retirement – Video
Posted: at 1:49 am
Senate Approves Retirement-Work Hybrid for Feds
Posted: March 10, 2012 at 8:50 am
The Senate passed an amendment on Thursday that allows retirement-eligible federal employees to work part-time -- a move designed to offset the costs of economic-development aid in rural counties.
The measure, proposed by Sen. Max Baucus, D-Mont., passed the Senate 82-16. It was put forward just hours before the vote as an amendment to the Surface Transportation Bill.
The American Federation of Government Employees feared that the amendment would result in additional, unneeded sacrifices by government workers in a congressional session that already has hit federal pay and benefits -- for instance with a pension contribution hike for newly hired federal employees passed in February as part of an extension of the payroll tax break.
While the change to federal retirement -- a phased, part-time retirement-employment concept -- may be acceptable to the federal-postal community after proper analysis and study, it is completely outrageous for federal and postal employees to be required, again, to serve as the automated teller machine for programs having nothing to do with deficit reduction, Beth Moten, AFGEs legislative and political director, said in a letter to senators on Thursday. She also complained that lawmakers had not made the text of the legislation available.
AFGE spokesman Tim Kauffman explained that the union was not necessarily opposed to phased retirement but took issue with the process of the legislation.What we really have a problem with is using the savings that would come from that proposal to fund yet another program thats unrelated to federal employees, Kauffman said.
Our opposition to the Baucus amendment is in how this assistance for rural schools is being paid for, Moten said. Federal employees have paid -- again and again and again.
National Treasury Employees Union President Colleen Kelley echoed those sentiments. NTEU supports a phased retirement program for federal employees on its merits, Kelley said in a statement Thursday. However, we do have serious objections to the use of the projected $450 million in savings from such a program for any use unrelated to federal employees. This includes the rural schools funding initiative.
The Office of Personnel Management included a similar proposal in its fiscal 2013 budget request. Easing older employees into retirement by offering a part-time work program would save the Obama administration $720 million during the next 10 years, the White House estimates.
Many federal employees are nearing retirement, so part-time work could pad federal agencies coffers if they did not have to replace these employees entirely. Under the proposal, part-time employees would receive partial annuities and could earn additional retirement benefits proportional to the amount of time they work. Older employees also would be required to mentor younger new hires and help preserve agency knowledge.
The Baucus amendments passage also stoked old AFGE fears of the Houses Transportation bill, H.R. 7. The most recent version of that bill includes a proposal to eliminate the Federal Retirement Employees Retirement System annuity supplement and changes the annuity calculation for new federal hires from one that uses an average of their three highest salaries to one that uses a high-five average.
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Senate Approves Retirement-Work Hybrid for Feds
Rahul Dravid Announces Retirement – Press Conference – Video
Posted: March 9, 2012 at 9:42 pm
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Rahul Dravid Announces Retirement - Press Conference - Video