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For over 20 years, tax advisor Ed Slott, CPA, has been on a mission to educate Americans about protecting their retirement savings. With an estimated $16 trillion in tax-deferred savings, Americans need to have a plan in place to avoid being taxed as much as 90% on their investments. In his first public television special, STAY RICH FOREVER & EVER WITH ED SLOTT, the IRA expert shares strategies viewers can implement right now to safeguard more of their retirement savings—for themselves and their beneficiaries. Using personal stories to illustrate the impact the IRS can have on the distribution of tax-deferred savings, Slott outlines benefits in the tax code that people can cash in on, literally, to ensure their financial future.

A nationally recognized IRA distribution expert and personal finance columnist, Slott is the author of Your Complete Retirement Planning Road Map (Random House; 2007), Parlay Your IRA Into a Family Fortune (Viking; 2005), The Retirement Savings Time Bomb and How to Defuse it (Viking; 2003) and “Ed Slott’s IRA Advisor,” a monthly IRA newsletter. Based in Rockville Centre, NY, Slott regularly presents continuing professional education seminars on IRA distribution planning and estate planning.

For more details, visit www.wmfe.org!

Duration : 0:0:32

I have a 401k with Nordstrom. I was employed there over the summer. Now they told me I have 30 days to do something with my funds it or I would receive a distribution of the funds (I think). The reason they are doing this is because the amount is so little, it’s $175. So my question is should I just take the money and pay the penalties or should I do a rollover into a completely new account that I would set up and what sort of account would be recommended?
I have another account with the Teacher Retirement System of Texas. Again, I don’t have a lot of money invested here, but I do have some. Also, I am no longer employed with them and I am now working for a company with no retirement plan. I guess it’s more complicated than I thought.
Help?
Oh, one more thing, I have a mutual fund (Captial growth, I think) account with Franklin-Templeton with quite a bit of money invested here. Can I invest it in this? I spoke with them about setting up an IRA, but they mentioned yearly fees.

I normally tell people never take money out of a 401(k). However in your case if the total funds in the 401(k) is $175.00 I’d prob just pay the 10% penalty (not 20%) (assuming your under 59 1/2), and the full amount would be added to your income for the year in which it was taken out.

http://www.irs.gov/faqs/faq-kw7.html

If you roll it over into a Roth IRA, the ENTIRE amount would be subject to the same ordinary income and the 10% penalty. Roth IRA does not avoid the tax on the 401(k) money.

If you really want to tax defer the $175.00, then you will have to open a "Standard Rollover IRA." If there are any fees on the account, it just wouldn’t justify the move.

I would open a Roth IRA, and contribute after tax cash, then invest your other funds or better yet, have an S&P 500 Index fund for a long term investment strategy.

http://en.wikipedia.org/wiki/S&P_500

Look for a no fee IRA or Roth IRA account for your other monies.

Here is one:

http://personal.fidelity.com/products/retirement/getstart/open_nofee_ira.shtml.cvsr

401k withdrawals

401k withdrawals

401K withdrawals explained

http://www.cakefinancial.com

401K withdrawals can be a tricky proposition.

Generally speaking, you can start taking distributions from your 401(k) plan when you reach age 59 1/2;but what if you want to take withdrawals earlier?

Uncle Sam is waiting to tax your money, and when he does, your nest egg may not be quite so plump. Twenty percent of your savings will be withheld immediately to pay federal income taxes, and you will have to pay any remaining federal taxes, as well as state and local taxes, when you file your taxes return. If you are under age 591/2 and still working, you may also be subject to a 10 percent early-withdrawal penalty. This is why 401K withdrawals can be tricky.

Sometimes, however, you may have an emergency and need some extra cash. To help you in these times, 401(k) regulations allow for early withdrawals in a number of ways.

First, if your plan allows it, you can take a loan from your 401(k) account. There are limits as to how much you can borrow and how long you have to pay back the money, and you still have to pay interest,but at least you pay interest to yourself, not to a bank.

Second, you may be able to take what is called a hardship withdrawal from your 401(k) plan, depending on your plan rules. Hardship means you need the money due to an immediate and severe financial need, to pay medical expenses, for example, or prevent foreclosure on your home. The bad news is, hardship withdrawals can be costly. At minimum, you will have to pay taxes on the withdrawal at your current income tax rate. In some cases, you may also have to pay an additional 10 percent penalty. Taking premature 401k withdrawals should be a last resort. There are better options than taking 401k withdrawals.

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Duration : 0:1:57

Take the time to understand the ramifications of 401k withdrawals.

401K withdrawals

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%

I’m 40 years old and have a 401K. I have read I can avoid paying the 10% penalty by doing regular, lifetime distributions from the plan. Is this true and am I missing any gotcha’s? (I’ll be leaving the USA and regular withdrawls will finance very early retirement)

This is not true. You have to roll over your 401K to a Roth IRA and cannot start distributions before 59 1/2.

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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Duration : 0:1:23

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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