Free Retirement Plan

I am 30 years old and I have $18,000 or so in credit card debt. I started a small law practice a year ago and it’s going well, but I am scraping by. One major reason I am scraping by is because the interest rates on the $18,000 in debt went from 0% (when times were great) to now between 15% and 25%. My student loans total $145,000 and are eligible for a long-term, fairly low interest-rate payment plan. Only 1 group is currently in repayment and the remaining groups will be in repayment starting 12/15/09. HOWEVER, I also have $35,000 in a Roth IRA (down from only $40,000.00 at its peak). I am told I can take a distribution up to the total amount of principal without paying a tax on it and without a penalty. The principal amount is $23,000.00. My questions are 1) should I withdrawal enough funds to pay off my credit card debt from the Roth IRA? and 2) if I get into trouble paying off the student loan next spring, shoud I dip into the Roth IRA for that too? My thinking is that I’m paying OUT way more in interest on the debt I’m carrying than I’m MAKING on the money in my Roth IRA, I’m young and have plenty of time to rebuilt it prior to retirement, and the lack of debt will improve my credit score and thus my ability to obtain mroe favorable car loan terms, student loan consolidation terms, mortgage, etc. Please HELP me decide what to do here. Thanks

You have this all wrong. You are stealing from retirement to pay current lifestyle. You are cashing in assets at a low. With all the debt you have you’re talking about taking on more with a car loan. You should be basic transportation that you can pay cash for. You say you are young and have plenty of time to save for your retirement. Which means you don’t understand the basic concept of compound interest. A dollar saved at 30 will accumulate into a much larger amount than a dollar saved at 40 or 50. It sounds like you would like to live for today and let tomorrow take care of itself. We have a nation of people who believe and are living that way. Very dangerous. You need to learn to live within your means, spend less than you earn. And add to your savings, don’t take away from them.

I am almost at the mandatory required age to take distribution from my 457 Deferred Compensation Plan (city government retirement plan) otherwise I have to pay a penalty. What is the best way to take it to preserve my asset and pass it down to my children after my death, and not create a tax problem (meaning Uncle Sam gets a big chunk instead of my children at my death). Thank you all.
Jimmy

Jimmy, go see a financial planner, lawyer, or CPA who specializes in estate planning. You need more information and expertise than you’re likely to find here. Besides, without knowing a lot of personal information that you shouldn’t disclose here, nobody here will be able to give you good, solid advice that you can trust and act upon.

http://www.cakefinancial.com

Most of us spend so much time putting money into a 401(k) plan we forget about the fun part—how you take money out of your 401(k) plan.

Generally speaking, you can start taking distributions from your 401(k) plan when you reach age 59?. You can take a little at a time, or all the money at once. Or, you can keep the money in the plan and let it grow.

When you reach age 70?, however, you have to start taking distributions. There is one exception: If you’re working at the same company that offers your 401(k) plan, you may be able to keep the money in the plan.

Now, let’s say you’re a big saver and you want to retire early, before age 59?. Provided that you’re no longer working, you can start taking distributions as early as age 55.

Finally, regardless of when you take distributions, they’re are subject to federal, state and local income taxes.

Keep in mind that these are the rules for regular distributions. If you take withdrawals earlier than allowed, the consequences can be serious.

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for "HOW LONG SHOULD IT TAKE AFTER ALL LEGAL ISSUES HAVE BEEN FINALIZED, FOR A PERSON TO RECEIVE A LUMP SUM DISTRIBUTION FROM A TERMINATED I.R.A. ACCOUNT.(After 5 yrs. of no contribution, activity, money and time repoted to the Union I used to belong to a person is eligible to apply for distribution, which must be approved by a Board of Trustees , all provisions of the plan were satisfied 2 yrs ago except for a Q.D.R.O. meeting definition of ERISA Sec.414(p) as amended by the Retirement Equity Act of 1984, Sec.204 (b) this was approved by attorney for the plan in April of this year 2007 the matter was heard and resolved at Orange County Superior Court on July 11, 2007 signed sealed and delivered to the Pension Representative a hard copy by July 13,2007 I personally spoke with the man on July 13, 2007 I asked him if there were any papers I would nedd to sign so this would not be delayed. He told me no everything was done I would have the money in 2 weeks. On that date I called him, the retirement group Company and have continued calling them 2 to 3 times a week since . The company would tell me they had all the relavent info on monday but by wednesday they were waiting for info , friday it will be done in 3 days this has gone on for 15 weeks. I have asked these people why someone has not contacted this incompetent representative. I have screamed at supervisors at both ends back and forth. Can someone tell me what the true performance time period is under the right communication process one would believe professionals should perform. please dont tell me this is because of red tape, i have talk to both partys to many times. So

Contact the Orange County Superior Court and let them know that the pension fund is not complying with the court order, and now you want the order modified to include a penalty of $100 a day for every day they are not in compliance.

The court probably won’t award you the penalty money, but they probably will hold a hearing to determine why you haven’t been paid after all this time.

Tel the court you want interest on the money they’ve been withholding.

H.R. 1424 Emergency Economic Stabilization Act of 2008 http://thomas.loc.gov/cgi-bin/query/C?c110:./temp/~c110JIik9X section 7701(a)(37) of such Code), in a distribution described in section 408(d)(3) of such Code, and (II) in the case of any other eligible retirement plan, in an eligible rollover distribution (as defined under section 402(f)(2) of such Code), and (ii) as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution, (C) section 408(d)(3)(B) of the Internal Revenue Code of 1986 shall not apply with respect to amounts treated as a rollover under this paragraph, and (D) section 408A(c)(3)(B) of the Internal Revenue Code of 1986 shall not apply with respect to amounts contributed to

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A time line will help in solving it. Your friend is celebrating her 29th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $100,000 from her savings account on each birthday for 15 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 10 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))

A) if she starts making these deposits on her 30th birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), she must deposit $ _______ annually to be able to make the desired withdrawals at retirement.

B)Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump sum payment on her 29th birthday to cover her retirement needs. This deposit will have to be in the amount of $_______

C)Suppose your friend’s employer will contribute $800 to the account every year as part of the company’s profit-sharing plan. In addition, your friend expects a $38,000 distribution from a family trust fund on her 55th birthday, which she will also put into the retirement account. She must deposit $__________ annually now to be able to make the desired withdrawals at retirement.

First step is to google:
Retirement calculator.
Schwab and Fidelity have good ones.
Sorry, this is going to take all day to figure out, and I’m not getting paid for it.
Hope you use an Exell spreadsheet.
My guess is she will need about 2.5 million at retirement age.
/

- I am inheriting around $30k from my Mom’s IRA. I intend to roll it into a Roth IRA.
- I am a professional trader (yeah call it day trading, but that’s not the point of the question, please). I intend to shelter the gains on those trades in the IRA, so I don’t have to pay the tax right now.
- I plan to take some distributions in a few years, well before retirement age.

Does this make sense?As I understand it – If I took the inheritance as a lump sum distribution I would get the 10% tax hit now, plus have to pay capital gains on each trade I make. Whereas if I roll it into a Roth IRA, I can trade without capital gains, until I take the distributions in years to come, probably at the same 10% tax rate in the future – no EXTRA penalty, right?

Ok Wayne is correct. Only a spouse can roll the money.

http://www.schwab.com/public/schwab/investment_products/retirement/inherited_iras/faq?cmsid=P-2008538&lvl1=investment_products&lvl2=retirement

Thanks for the answers anyway.
Thanks, if I had time to read TWO books on the subject I wouldn’t be posting my question here. If you have actually read the books perhaps you could share your knowledge?

You should read "The Retirement Savings Time Bomb" and "Parlay Your IRA into a Family Fortune" by Ed Slott and consult with a CFA (Certified Financial Planner) before you "take possession" of the IRA. Doing that could save you thousands in unnecessary taxes.

this is the situation…. my father passed away and left me his pension (I with drew all monies)and on the tax form it asks me where is this distribution from and these are the choices…

Select the source of this distribution and enter any other Michigan information. Explain This

1)Qualified government, public, military pension

2)Current year conversion from a traditional IRA to a Roth IRA

3)Pension/IRA distributions received before retirement age

4)*Other qualified IRA distributions
(Explain This)* – IRA distributions received after age 59 1/2

– Benefits from a qualified plan received due to a disability, or as a surviving spouse if the decedent qualified for the subtraction at the time of death

– Benefits paid to someone age 65 or older from a lifetime retirement annuity policy

5)Qualified private-source pension

6)None of the above
this form is a 1099-R distribution code- death. This money is taxable because I am not his spouse.
he worked for a university
no taxes were withheld I had them take 12% only on federal and 0 for state
its a 401B from the university

Because none of the options are inheritance, I would probably say None of the above. Inheritances are generally not taxable unless they are close to a million $$

my husband filed our 2008 tax return,,i had just received my 1099r form for a loan i had taken from my retirement plan,,,what should i do??,,,the amount shown on the form is 1007.11,,how much would we have to pay,,and can we file this separately now that we had already filed our taxes,,please help

If you just took a loan and are paying it back on schedule, then you shouldn’t have gotten a 1099-R. But if it ended up being a withdrawal because it’s not being paid back on schedule, then you’ll have to file an amended 2008 return, you can’t just file it separately. You’ll owe income tax at whatever your rate is, plus a 10% penalty for early withdrawal if you are under 59-1/2. So you’ll probably owe $250 or so, or more if your tax bracket is over 15%

The redistribution of wealth is not the plan of Jesus. Listen as The Honorable James David Manning teaches why. This message was preached on 23 August 2008.

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