IRA » Individual Retirement Account

There are quite a few financial deadlines to remember over the course of 12 months and it’s probable you’ve missed one or two in the past. Are you familiar with the sense of panic that accompanies waking up on April 15th and realizing you haven’t started your taxes? Did you forget to max out your retirement account contributions last year? If you need some assistance remembering all your important 2011 budget and planning dates, here’s a quarterly calendar to keep you on track.

Q1 2011 (January-March)

Retirement planning is important–there’s no debating that. Saving and investing in your 401(k) or IRA accounts is something all financial planners advise. However, for many people, allocating money to a retirement fund takes up a big chunk of a paycheck. If you’re maxing out your annual 401(k) and IRA contributions as you’re advised to do when possible, you might not have much money left over to fund other major milestones in life, like, for example, buying a home.

The 2010 limit for 401(k) contributions is $16,500 and the limit on IRAs is $5,000. That’s $1,350 and about $415 a month, respectively, of your gross income set aside just for retirement. As daunting as it may seem, financial planning for retirement shouldn’t be delayed or pushed aside unless there are very valid reasons.

If you’re afraid to look at your 401(k) statement this quarter, you’re not alone. The stock market nose-dive has taken its toll on the retirement savings of millions of Americans. What you might not know is that for most people, your average retirement account is not the most well-rounded portfolio you can get. In fact, there are five common problems with the average American’s 401(k) plan that might be leaking money from your retirement fund. Take a look at these and see if any of them sound familiar.

The Useless Tax Deduction

A stable-value fund is an excellent way for those approaching retirement age to diversify their portfolios. Stable-funds tend to offer higher returns than similar investments like money market accounts, but do involve slightly more risk.

Until recently, stable-value funds were an incentive only available through employer 401(k) benefit plans, but things have changed. Now individual investors can take advantage of this conservative type of investment through their IRA as well.

For years you have known not to touch the money in your 401k or IRA as substantial amounts of money would be lost in the shape of penalty fees and taxes. However, if the current turn of economic events is leaving you with no other option then to tap into the “forbidden zone” of your retirement assets, there are some steps you can take to help mitigate and lessen the damage you may cause by tapping into either your 401k or IRA for a pre-retirement withdrawal.

IRA Strategies

Do you have a 401(k)? If you do, chances are that your 401(k) is part of a program offered by your employer. If you are about to change employers, or if you’ve recently lost your job – a more common occurrence today – then you are probably wondering what to do with your 401(k) fund. If your employer allows you to participate in their 401(k) plan, and many employers will, you could always leave it where it is. You could also rollover your account into an Individual Retirement Account, or IRA as they are more typically referred to, but there are 401(k) rollover fees to consider. When you roll over your 401(k) into an IRA, you will enjoy greater flexibility and have more diverse investment options. You can also do a partial 401(k) rollover – ask your employer for more information about this type of transfer.

401(k) Rollover Information

Establishing and contributing to a prudent retirement strategy should be incorporated into a monthly budget. If your current employer offers the benefit of a traditional 401(k) and a Roth 401(k) plan, you may want to take advantage of the Roth 401(k) because of the advantages it offers.

A Roth 401(k) plan is another tool that can and should be used to plan and build your retirement portfolio. Unlike traditionally 401(k) plans, the monetary contributions made to the investment are done after taxes are taken out.

Investing in a Roth IRA account may be the wisest way you save for retirement. There are many different ways that you can plan for your retirement, but putting your money in a savings account may not be the best plan for your future however. Not all IRA accounts are the same and you may be better off with a Roth IRA than a traditional one. Finding the best performing Roth IRA will also require you spend some time researching.

Are you thinking about taking an early retirement? If so, you’re not alone. Many people want to “jump ship” from the daily grind and really live life while they’re younger than 65. Of course, retiring early means you have to have plenty of money saved up in order to do it comfortably – life costs a lot of money no matter how old you are. In fact, it might cost more on average when you’re older because you need more help with things. One way that many people plan for early retirement is through the very popular savings vehicle of a Roth IRA. Like the regular IRA and the 401k, the Roth IRA was created specifically for retirement savings.

With a Roth IRA, you can access the amount of money you’ve contributed to it at any time. So if, for example, you’ve been putting in $1,000 per month, you can access the total of your contributions at any age. Since a Roth IRA is an investment fund, the money you put into it should grow as the money is invested.

A Required Minimum Distribution (RMD) is a minimum withdrawal that a person with a retirement account must take when they reach 70 and 1/2 years of age. Think of it simply as a minimum amount you would have to withdraw from your retirement fund each year when you reach the retirement age. There are however, some rules you should be aware of.

RMD Rules & Calculating Required Minimum Distributions