401k

A 401k is an employer-sponsored, long-term savings plan that is intended to help you sock-away money for your retirement. A 401k offers significant tax breaks and has a few drawbacks. The money you put away now to be used later after 59 ½ years of age or at retirement is not taxed until it is distributed. Some companies match part of the dollars that you stash away. Your retirement savings are increased through these employer matching contributions. You can borrow against a portion of a 401K, as long as you pay it back plus the low interest. Otherwise, if you tap into your savings before 59 ½, you pay penalties for early withdrawal and the early distribution is also treated as regular income for tax purposes.

The Pitfalls of Using Group Annuities as a Wrapper for 401k Plans

A very good article in Forbes magazine discusses the many downsides of using group annuity contracts as a wrapper for 401k plans. This is not to be confused with 401k or defined contribution plans that offer an annuity option within their plans or an annuity option outside of the plans to participants who are retiring or leaving the company. In fact, most of the group annuity wrappers provide no ability to annuitize . The practice is especially common among 401k plans offered by smaller...

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Defined Contribution Plan

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Many Employers Modifying or Eliminating 401k Matching

A recent study from accounting and tax advisory firm Grant Thornton indicates that many employers are pulling back on 401k plans in light of the difficult economic climate. Grant Thornton surveyed 283 companies. Findings include: 29 percent have modified or intend to modify their 401k employer matching contribution. 20 percent of all respondents plan to eliminate the employer match entirely. Larger employers are more inclined to make changes to their 401k plans. Companies in the health care and...

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A Changing Variable Annuity Landscape -- What to Watch for in the Next Few Years

This is the second part of an interview with...

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Employers Cautious About Annuities in 401k Plans

Employers who offer 401k plans seem intrigued by the notion of providing an annuity option to employees who participate in the plans. Recent stock market volatility makes the prospect of stable, guaranteed income very attractive in theory: Given the stock market’s volatility, Silgan is one of a number of 401(k) plan sponsors seriously discussing adding an annuity option to their 401(k) plans. With most employees’ 401(k) accounts decimated, the idea of providing guaranteed post-...

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Retirement Planning Roadmap - Key Events

An outstanding layout of a retirement planning timeline from Emily Brandon at U.S. News and World Report. Key dates and ages are discussed for all manner of retirement planning milestones: 401k contributions and distributions. IRA contributions and distributions. Roth IRA contributions and distributions. Medicare. Social Security . Required minimum distributions. Source: U.S. News and World Report Full Story

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