If a person with a 401(k) plan dies, the tax implications for the beneficiary depend on whether or not the beneficiary is a legal spouse. If the beneficiary is a legally married spouse, then he or she may roll over the total amount of the decedent’s account into an IRA with no tax implications except applicable estate taxes. No distribution must occur; the surviving spouse can maintain the funds in an IRA until April of the year following the year in which he or she turns 70 1/2—the age at which withdrawals from retirement accounts become mandatory. (more…)

Tax law changes also provide workers age 50 and older the opportunity to make additional “catch-up” contributions, above the maximum amounts listed above, to Roth and Traditional IRAs and to employer salary deferral plans. IRA catch-up contributions are $500 for 2003–2005 and $1,000 for 2006 and after. Catch-up contributions for employer plans are $2,000 in 2003, $3,000 in 2004, $4,000 in 2005, and $5,000 in 2006, with amounts adjusted for inflation in 2007 and after. Older workers who take full advantage of the increased contribution limits and catch-up contributions will save significantly more than those who invest in taxable accounts or limit their contributions to pre-2002 tax law limits. (more…)

One of the most important planning decisions you’ll make is how to best generate income for your retirement. Different sources of income have different characteristics and potentially different pension tax consequences. It’s very important to be wise in establishing and maintaining your post retirement cash flow. Here are the various types of income and their representative taxation: (more…)

If we look at defined benefit plans, it has a slumped down popularity among business owner in recent years. It is more like traditional pension plans where the plans are altogether financed by the employer. Annual contributions founded on actuarial computations involving employer’s years of service and salary are set aside for employees. (more…)

A 401k plan is a retirement account set up by an employer into which employee put aside some of his/her salary into the account. It is named defined contribution plan because the annual amount of money that can be given to each employee account is defined. This 401k plan program does not assure a defined retirement benefit when employees withdraw their money when it is mature. (more…)

401k retirement plans are one example of employee retirement plans that are sponsored by an employer. These employee retirement plans are a way for employees to be able to save and plan for their retirement.

401k retirement plans typically involve automatically taking a percentage of the employee’s paycheck and depositing it into the employee retirement plans. (more…)

You are eligible for your employer’s pension plan if you have worked there for one year and at least 1000 hours. Employers offer two basic types of retirement accounts—defined contribution plans or defined benefit plans.

Defined contribution plans are characterized by an annual contribution being made for each employee. (more…)