Retirement Financial Advisors Clovis NM
Banking Center Services: Change Order, Commercial Deposits, Night Deposits, Drive Up
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Santa Fe Capital Management
Santa Fe, NM
Women's Financial Planning Issues, Socially Responsible Investments, Planning Concerns for Corporate Executives, Financial Issues Between Generations, Divorce Planning, Advising Medical Professionals
NAPFA Registered Financial Advisor, CFP®
Stephen Madeyski Financial Planning
Retirement Planning & Distribution Rules, Helping Clients Identify & Achieve Goals, Hourly Financial Planning Services, Middle Income Client Needs, Women's Financial Planning Issues, Investment Advice without Ongoing Management
NAPFA Registered Financial Advisor, CFP®, MBA
Mon-Fri 09:00 AM-05:00 PM
Sat 09:00 AM-01:00 PM
Mon-Fri 08:00 AM-05:00 PM
Sat 09:00 AM-01:00 PM
Sage Future Financial, LLC
Retirement Plan Investment Advice, Ongoing Investment Management, Estate & Generational Planning Issues, College/Education Planning, High Net Worth Client Needs, Helping Clients Identify & Achieve Goals
NAPFA Registered Financial Advisor, CFP®, MBA
Certified Financial Strategies
Ongoing Investment Management, Retirement Planning & Distribution Rules, Tax Planning, Estate & Generational Planning Issues, Retirement Plan Investment Advice, Charitable Giving - Trusts & Foundations
NAPFA Registered Financial Advisor, CFP®, CPA/PFS
StanCorp Investment Advisers, Inc.
Advising Medical Professionals, High Net Worth Client Needs, Insurance Related Issues, including Annuities, Middle Income Client Needs, Ongoing Investment Management, Retirement Planning & Distribution Rules
NAPFA Registered Financial Advisor, AAMS, BA, CDFA, CFP®, CPA/PFS
Borrowing From Your Retirement Plan
By: Samuel Muriithi
It is indeed possible to source some much needed cash from your retirement plan. Many employers offer retirement plans which allow their employees to take out loans from their accounts. There are however, some IRS rules that must be observed with regards to the issue.
For plans that allow loans, repayment must be fully completed within five years except for instances where the loan was meant to facilitate the purchase of a home. For home loans there isn’t a specified time limit but the loan must facilitate sizeable amortizations with payments being made at least quarterly.
There also are dollar limits to contend with. Loans should generally not surpass the lesser of $50,000 or half the current value of an employee’s vested amount in the plan. Retirement plan loans that don’t meet these criteria are treated as distributions to borrowers. Those kinds of distributions are generally subject to taxation and an extra 10% penalty for those under 59½ years old, unless there is another applicable exception.
Prior to taking a loan from your retirement plan, you should seek the counsel of a credible financial planner who will either consent that this is the best option for you or object to it and advise you on alternative loan sources. The following pointers are some of the factors which must be considered:
- Purpose of the loan – The financial planner may approve of the use of a loan for purposes of paying off high-interest credit card debts. This is more so where the credit balances are much higher than the potential repayment amounts of the loan from your retirement plan loan. Using such a loan for leisure purposes is financially ill-advised.
- Cost of the loan – The advantage of borrowing from your retirement plan is that repaid loan interest amounts are remitted into your qualified loan account. That said, it is imperative for you to compare the interest rates set for a retirement plan loan and those set for financial institution loans to find out which is higher and if the difference is significant.
In terms of the disadvantage, assets that are taken away from your retirement plan as a loan become exempt from the gains of tax-deferred growth on earnings. Also, the monies used for loan repayment are obtained from after-tax assets, effectively meaning that taxes have already been paid on those amounts. These repayment amounts are therefore not tax deferred.
- Effects of taking the loan – If your 401k requires you to postpone elective-deferral contributions for a determined period after getting a loan, you will want to think about the consequence of this delayed opportunity to fund your retirement plan.
2Rules Governing Qual...
Choosing the Right IRA for You
Guide to IRAs for Young Professionals By: Samuel Muriithi
The abbreviation IRA stands for Individual Retirement Account and it represents one of the best avenues which young professionals can use to start saving for their retirement. It is prudent for a person to start saving up for his or her twilight years when it is still early since this increases the likelihood that the accumulated funds will be adequate to support one’s requirements comfortably.
This is of course taking into consideration that a number of dependents may come into the picture down the years. There are various IRAs of which young professionals in their 20s and 30s can take advantage. Read on to learn more:
1Financial Issues and Challenges Young Professionals Must Consider
Owing to the fact that young professionals are mostly intent on establishing their careers, it is often the case that earned incomes will tend to fluctuate. Such professionals who have yet to get married and have children, or are basically single, are subjected to the highest tax filing status and as such they surrender more to the taxman. Those who opt to settle down early are not so much better off because there are expenses to take care of including higher house rent amounts, childcare expenses, car maintenance costs, wedding expenses, etc. Both categories of young professionals are also expected to start paying back their college loans.
All these financial responsibilities need to be taken care of and it can become quite a juggling act especially with the aforementioned fluctuating incomes. A glimpse into the future will definitely reveal that one’s retirement age is impending and that "the hay needs to be made when the sun is still shining". The proverbial hay in this case refers to retirement savings and young professionals need to identify a means to save that will be advantageous in terms of expanded flexibilities and plenty of tax advantages. This is where an IRA comes in.
2The Definition of an IRA
As mentioned previously, IRA stands for Individual Retirement Account and there are two types of these: the Roth IRA and the traditional IRA. Both of these share an identical annual quota as determined by Congress. There are fundamental differences between the two as explained below:
For the traditional IRA a tax deduction for the money deposited into the account is made up front and no taxation is applied to the contributions and earnings until the same is distributed following retirement. This is referred to as tax deferment.
For the Roth IRA, money in the form of after-tax is put into the account as contributions. These contributions and earnings accumulate tax-free even after distribution following your retirement.
3Why the Roth IRA Makes Better Sense for Young Professionals
Young professionals and graduate students...