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401(k)s & IRAs For Dummies

1. Aufl.

von: Ted Benna, Brenda Watson Newmann
19,99 €
Verlag:	Wiley
Format:	EPUB
Veröffentl.:	27.09.2021
ISBN/EAN:	9781119817260
Sprache:	englisch
Anzahl Seiten:	352

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Beschreibungen

Titelbeschreibung

From the basics down to investing, get the most out of your 401(k) and IRA in any economic environment When you’re ready to start setting aside (or withdrawing) money for your retirement—whenever that might be—401(k)s & IRAs For Dummies is here for you! It covers both types of retirement plans because they each have valuable tax benefits, and you may be able to contribute to both at the same time. With the practical advice in this book, you learn how to manage your accounts, minimize your investment risk, and maximize your returns. Sounds like a win-win, no matter your situation or where you’re at in life. Written by a well-known expert and ‘father of the 401 (k)’ , Ted Benna, 401(k)s & IRAs For Dummies helps you keep up with the ever-changing rules surrounding both retirement plans—including the rules from the SECURE and CARES Acts—and avoid the mistakes that can lead to higher taxes and penalties. Additional topics include: <ul> <li>Tax strategies before and after retirement </li> <li>Required distributions and how much you need to take </li> <li>Penalties for taking money out early and how to avoid them </li> <li>What happens to your or your spouse’s retirement plan after death or divorce </li> <li>The rules for taking money out of an inherited plan </li> <li>Methods for calculating required minimum distributions </li> <li>Special tax benefits for conversions to Roth IRAs </li> <li>How to recharacterize IRA or Roth contributions </li> <li>Why IRA based plans are a better options for many small employers</li> <li>Helping solo entrepreneurs and other small businesses pick the right type of plan</li> </ul> Whether you’re just starting to think about a retirement plan, planning when to retire, or you’re facing retirement, you’ll find useful and practical guidance in 401(k)s & IRAs For Dummies. Get your copy today!

Inhaltsverzeichnis

Introduction 1 About This Book 1 Foolish Assumptions 3 Icons Used in This Book 4 Beyond the Book 4 Where to Go from Here 4 Part 1: The ABCs of 401(k)s and IRAs 7 Chapter 1: Explaining IRAs and 401(k)s 9 Exploring the Basics of Retirement Savings Plans 9 Getting down to 401(k) basics 10 Introducing IRAs 12 Comparing and Contrasting IRAs and 401(k)s 14 Accentuating the Positive 16 Saving up 16 Getting employer contributions 16 Chapter 2: Taxing Issues 19 Realizing the Reasons for Tax Breaks 19 What the government gains 20 What you gain 20 Talking Tax Terms 21 Earning your income 22 Combining your income 22 Adjusting your income with AGI 22 Figuring your marginal tax rate 23 Getting Credit for Contributions 24 Deducting IRA contributions 24 Paying attention if your spouse has a plan 25 Earning extra credit according to income 27 Taxing Income at Retirement 28 Staying Alert to Changes in Tax Law 31 Chapter 3: Naming Beneficiaries and Planning for the Future 33 Deciding Who Gets Your Savings When You’re Gone 34 Detailing the Distribution 35 Talking Timing and Taxes 36 Passing along Company Stock 37 Starting the Roth Clock 39 Qualifying Your Charitable Giving 39 Giving a good QCD 40 Linking RMDs and QCDs (and minding your Ps and Qs) 40 Giving tax free 41 Being a Beneficiary 42 Deciding — or being told — what to do with the money 42 Saying no to the money 43 Stretching an inherited IRA 43 Part 2: 401(k) Basics 45 Chapter 4: Checking the Benefits of a 401(k) 47 Realizing What a 401(k) Does for You 48 Lowers how much tax you pay 49 Gets you matching funds from your employer 53 Makes room for a little something extra: Employer non-matching contribution 55 Allows you to save without tears 56 Vesting: When Your Employer’s Contribution is Yours to Keep 57 Vesting of employer contributions 57 Making exceptions (You knew this was coming, right?) 58 Letting the Pros Work for You 59 Protecting Your Money 60 Meeting minimum standards 60 Avoiding losses in bankruptcy 61 Watching Out for Potential Pitfalls 62 Earning more may mean contributing less 62 Being at the mercy of your plan 62 Chapter 5: Signing Up for a 401(k) 63 Exploring Your Eligibility 63 Sometimes you play a waiting game 64 Sometimes you can’t join at all 65 Sometimes you’re automatically in 66 Making Your Entry Date 66 Deciding How to Invest Your Money 67 Chapter 6: Paying Attention to Administrative Issues 69 Figuring on the Fees 69 Finding the fees 70 Understanding the fees 71 Paying the fees 72 Paying extra for extra services 74 Checking on small business challenges 74 Considering Funding Issues 76 Making a mutual decision 76 Unwrapping wrap fees 77 Prospecting in the prospectus 78 Knowing What You Can Know 79 Working to Improve Your Plan 79 Upgrading investment performance 80 Searching out information 82 Questioning investment strategy 83 Chapter 7: Weighing Your Options When You Leave Your Employer 87 Taking Your Savings with You 88 A Rolling 401(k) Gathers No Taxes 88 Realizing that account size matters 89 Moving your money to your new employer’s plan 90 Waiting for the money to transfer 91 Leaving Money with Your Old Employer 91 Taking a Lump Sum 92 Taking Stock into Account 93 Part 3: Here Come the IRAs 95 Chapter 8: Investing in an IRA 97 Looking at the Basics of Your IRA 97 Staying traditional 98 Touching on Roth IRAs 99 Benefiting from a spousal IRA 100 Starting an IRA for a child 100 Setting Up Your IRA 101 Deciding where to invest your money 102 Opening your account 103 Maintaining Your IRA 104 Moving Your IRA 104 Chapter 9: To Roth or Not to Roth 107 Predicting Future Tax Rates 108 Calculating accurately 108 Talking tax breaks 109 The “Or Not to Roth” Section 110 Taking Money Out of Your Roth IRA 111 Converting to Roth 112 Chapter 10: Rolling Over an IRA 115 Rolling-Over Basics (How to Shake is Next) 115 Rolling through the Process 117 Rolling through a conduit 119 Rolling partially over 120 Rolling Roths with care 120 Calling a Roth Conversion: No, It’s Not a New Football Play 121 Paying 20 Percent 121 Part 4: Saving and Investing 123 Chapter 11: Setting Up Your Savings Plan 125 Targeting Your Retirement Date 126 Getting Your Hands on Your Money 127 Drawing on your Social Security 127 Tapping into other sources 131 Living the retirement life 133 Testing the waters in your gene pool 134 Developing Your Retirement Savings Plan 134 Cutting down on your expenses 134 Picturing your progress 136 Counting on compounding 140 Chapter 12: Determining How Much to Save 143 Improving Your Chances of an Ideal Retirement 143 Deciding How Much of Your Salary to Put Aside 144 Making use of your salary deferral agreement 144 Measuring your plan’s maximums 145 Being highly paid means different rules 146 Estimating what your budget can afford 148 Building Your Nest (Egg) 150 If you’re retiring in the near future 150 If your retirement is farther off 152 Using a retirement calculator 154 Chapter 13: Selecting Your Investments 155 Looking Over the Investment Menu 156 Money market funds: Show me the money 157 Keeping things reined in with stable value funds 159 Bonding your funds: Single portfolio seeks stable relationship 159 Deciding one and done: Balanced and TDF funds 160 Stock funds: A feather in your cap 160 Investing where you work: Company stock 164 Brokerage window: Don’t fence me in 165 Forging Your Own Investment Trail 167 Baking Your Asset Allocation Pie 168 Check your ingredients and avoid these common mistakes 170 Open the oven door once in a while to check your progress 174 Make sure that your pie complements the rest of the meal 174 Seeking Help from the Pros 175 Finding books and publications 175 Consulting a real live person 176 Going online for info 177 Going online for advice 178 Chapter 14: Taking Reasonable Investment Risks 179 Defining Some Investment Basics 180 Playing debt instruments and making equity investments 180 Taking a dip in the mutual fund pool 181 Watching the return of the mummy er money 182 Diversifying for fun and safety 183 Staying In It to Win It 185 Seizing the opportunity of a downturn 185 Buying more when prices are low 186 Classifying Different Types of Risk 187 Losing more than you can stand 187 Losing your entire investment 188 Owning too much company stock 189 Not having enough money to live on during your retirement 191 Understanding the Risk-Reward Relationship 191 Deciding How Much Risk You Can Stand 192 Part 5: Money In, Money Out 195 Chapter 15: Making Contributions 197 Checking Out How Much You Can Contribute 197 Gauging the limits of the law 198 Seeing what Uncle Sam allows (he’s extra generous if you’re 50 or older) 198 Paying attention to the percent-of-pay limit 199 Heeding limits on your personal IRA 200 Maxing Out Matching Contributions 200 Timing is Everything 201 Spreading out your 401(k) contributions 201 Spreading out your IRA contributions — or not 202 Chapter 16: Withdrawing Money Before You Retire 203 Taking Money from Your IRA 204 Accessing Your 401(k) Plan Money While Working 205 Facing Hardship with Your 401(k) at Your Side 206 Defining a hardship 206 Determining the amount 208 Calculating the tax you owe 209 Dipping into Your 401(k) Money to Buy Your First Home 210 Both a Borrower and a Lender Be 211 Giving one good reason 211 Figuring out how much you can borrow 212 Determining how much interest you pay 212 Paying the piper: Repayment rules 212 To Loan or Not to Loan (To Yourself, That Is) 213 Weighing a Hardship Withdrawal versus a Loan 214 Saying No to Yourself 215 Chapter 17: Managing Your Plans after Retirement 217 Looking Forward to Retirement 218 Decisions, Decisions: What to Do with Your 401(k) Money 218 Being older can save you money 220 Foiling the dreaded early withdrawal penalty 221 Leaving money with your former employer 222 Making Withdrawals from Your IRA 223 Paying Uncle Sam His Due: Required Withdrawals 224 Developing a Strategy to Deal with the Tax Man 227 Which comes first: Plucking the chicken or emptying the nest egg? 227 Dealing with that darned company stock 228 Managing Your Investments in Retirement 229 Live long and prosper 230 Stay practical 230 Managing Risk 231 Balancing investments 231 Buying an annuity 232 Consolidating Your Accounts 235 Tending to Your Nest Egg 236 Row, Row, Row Your Boat, Gently Down the Income Stream 237 Treating Your Home Like the Asset It is 239 Adding up the expenses 239 Making use of your equity 240 Part 6: Helping Small Employers 241 Chapter 18: Plans from a Small Employer’s Perspective 243 Putting in the Effort 243 Meeting Regular 401(k) Requirements is a Pain in the Pocketbook 244 Getting to know ERISA and her requirements 245 Dieting won’t help top heavy plans 245 Sticking up for the little guy: Nondiscrimination tests 247 Calculating the bottom line on employer contributions 249 Deciding on other bells and whistles 249 Comparing 401(k)s 250 Going it alone: The solo 401(k) 250 Choosing a safe harbor in a storm of requirements 251 Spelling out QACA 252 Finding Alternatives to a 401(k) Plan 253 Making it easy with payroll deductions 254 SIMPLE Simon met a pie man 256 Contributing the funds with a Simplified Employer Pension (SEP) 258 A Word about Cost 259 Chapter 19: Offering a 401(k) Plan 261 First Things First 262 Prioritizing employees: Being a fiduciary 263 Exploring the world of fees 264 Choosing a 401(k) Provider 267 Getting up close and personal — why you shouldn’t 268 Streamlining the process with outside help 268 Going to a third party (the second one was lame) 271 Choosing Investments and Advisors for Your 401(k) Plan 271 Small business seeking a 401(k) advisor 272 Selecting the investments 273 Figuring out what types of funds to offer 274 Wrapping Up a Package of 401(k) Plans 275 Joining Up: MEPs, PEPs, and PPPs 277 Seeking common ground: MEPs 277 Connecting PEPs and PPPs 278 A 401(k) is a Terrible Thing to Waste: Educating Employees 278 Chapter 20: Choosing a Plan for Your Business 279 Selecting a Plan That’s Right for You 279 Considering Real-Life Examples 282 Meeting a small business’s needs with a SEP 282 Reaching personal contribution goals with the SIMPLE plan 283 Adopting the standard 401(k) for a growing business 284 Attracting employees with a QACA 401(k) 285 Getting Credit to Set Up 286 Changing Service Providers 287 Part 7: The Part of Tens 291 Chapter 21: Ten + Two Ways to Save For Retirement 293 Join an Employer-Based Retirement Plan 293 Set Up Automatic Withdrawals 294 Start Young 294 Deposit Bonus Money in Your Retirement Account 294 Earmark $20 a Week for Your Retirement Fund 295 Deposit Your Tax Refund into Your Retirement Account 295 Cancel Subscriptions You No Longer Use 295 Refinance Your Mortgage 295 Shop for Better Insurance Rates 296 Resist Click Bait 296 Think Before You Spend 296 Reduce Your Transportation Costs 297 Chapter 22: Ten Questions about IRAs Answered 299 Where can I start an IRA? 299 Do I need to hire a broker or financial advisor to start an IRA? 300 How much can I contribute to my IRA? 300 What tax breaks do I get for having an IRA? 300 How do I take money out of my IRA? 300 How much tax do I have to pay when I withdraw money from my IRA? 301 What can I invest in through my IRA? 301 What’s the safest way to invest my IRA money? 301 Is my IRA insured? 302 Can I start an IRA for my spouse and/or children? 302 When do I have to start taking money out of my IRA? 303 Chapter 23: Ten Reasons to Participate in a 401(k) 305 You Can’t Afford Not To 305 The Stock Market Can Be Your Friend 306 You May Get Contributions from Your Employer 306 Your 401(k) Money is Placed Safely in a Trust 306 Any Plan is Better than No Plan 307 Your Account is Portable 307 You May Be Able to Take Out a Loan 307 Social Security Isn’t Enough 308 The Younger You Start, the More You Can Save 308 You Can Contribute More as You Get Older 309 Index 311

Autorenportrait

Ted Benna is commonly referred to as the “father of 401(k)” because he created and gained IRS approval of the first 401(k) savings plan. Brenda Watson Newmann began her career as an Associated Press foreign correspondent and later moved to Silicon Valley as Managing Editor at 401k Forum/mPower.

Back cover copy

Craft a solid retirement plan at any age One day, the fantasy will become a reality: Work will be a thing of the past. When that day comes, you’ll be ready, thanks to 401(k)s & IRAs For Dummies. This is the only guide you need to take advantage of these popular savings plans. Inside, you’ll find clear explanations of your available choices, easy-to-understand info that will cure your tax headache, and the latest on changing rules and regs. Do a little math now, with a lot of help from Dummies, and before you know it you’ll be kicking your feet back and watching the distributions roll in. Inside… <ul><li>Early-life saving strategies</li> <li>Ideas for a comfortable retirement</li> <li>Traditional and Roth IRAs</li> <li>Tax benefits and penalties, explained</li> <li>Mandatory withdrawal rules</li> <li>Tips for calculating distributions</li> <li>Inherited and joint plans</li> <li>Help with planning ahead</li></ul>