RETIREMENT PLANNING » IRA & ROTH Accounts

It is no secret that the current state of the economy is a bit off-kilter from its recent past. Almost every sector is experiencing economic downturns. Depending on how your 401k assets are allocated, you may be noticing a personal decrease of your own. Those who are fortunate enough to get the benefit of a 401k plan from their employer may want to consider choosing a 401k asset reallocation strategy during the difficult economy.

What is Asset Allocation?

When it comes to the 401k retirement fund, many people have questions about how it operates, how and when you can access it, and other matters. Since many people start their 401k‘s under the auspices of their employer, one question in particular that many people have concerns the status of their 401k retirement fund when they leave or switch jobs. In this scenario, many people choose to transition their employer-sponsored 401k fund into an IRA (individual retirement account). Switching a 401k over to an IRA is called an indirect rollover.

If you’re moving on to a new job, congratulations. When you leave your old company, you’re going to be faced with the question of what to do with your 401k fund. You could take a check for the full amount, but if you do that before you reach retirement you’re going to be severely taxed and penalized for early withdrawal, and you’ll lose a lot of your 401k savings. You could also leave your 401k with your soon-to-be previous employer, or do a rollover into your new employer’s 401k program. Many people, however, like to do an indirect rollover, that takes the money from their previous employer’s 401k program and puts it into an IRA. An individual retirement account offers people almost all of the same benefits as a 401k, as well as more investment option flexibility. If you decide to do a rollover or an indirect rollover of your 401k, be sure to have a trustee do it so that you don’t get penalized for taking control of your money.

Parents plan to raid retirement funds as a way to pay for their children’s college tuition, says a new study by Sallie Mae and the Gallup organization. According to the study, released on Tuesday, nearly a quarter of the nation’s parents who plan to pay for their children’s college education believe that pulling from their retirement accounts will be necessary to supplement their savings, but is this smart?

24 Percent Plan to Dip in 401(k)s

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.

Suze Orman is probably shooting out expletives at every turn with recent news that nearly half of unemployed Americans are withdrawing funds from their 401(k) plans. Experts spend a lot of time advising workers not to withdraw from 401(k)s because they take away from much needed retirement at the end of a career. But workers are doing it anyway, like it or not.

Why Are Unemployed Americans Withdrawing from their 401(k) Plans?

The goal of investing is to use the money you have to earn even more through returns. Whether you implement your investment strategy through stocks, bonds or mutual funds or a combination of securities, there are ways to increase your odds of gaining returns. When it comes to a 401(k), there are some simple steps you can take to help raise your chances of experiencing higher gains. You can also figure out how much your ideal nest egg should be with a retirement calculator and break down the return rate you’ll need to get there.

Steps to Improving Average 401(k) Return Rates

It doesn’t take a financially savvy person to know that taking advantage of an employer 401(k) plan is a must for building a future retirement portfolio. However, some would say it is difficult to choose between a Roth 401(k) plan and a traditional 401(k) plan.

In general, both accounts are similar to each other:

The 401(k) option of automatic enrollment offered by U.S. employers is helping young workers save enough for retirement, says Financial Engines, Inc. According to the California-based company, younger employees have better options available to help them save more responsibly and effectively for retirement.

Younger Workers Have Better Risk and Diversification Options

We all have financial milestones that we are likely to encounter as we move through life. How we handle these milestones depends on our individual situations, as well as our goals and financial priorities. No matter how you plan for them, though, these financial milestones are likely to be essential to your long-term financial stability. And, because they are big, they require a substantial amount of planning and saving. Here are some of the financial milestones you should be planning for:

1. Continuing Education

This post is written by Jason Topp. He tries to put readers on the right financial path at Redeeming Riches. Be sure to follow him on Twitter too!

Perhaps you’ve shared this experience: You’re on a two-lane road in the middle of nowhere traveling to a new destination, your GPS isn’t working (or you don’t have one!), you realize you are lost and you’re not sure which way to go. East seems West, North seems like it’s South. Fear and panic strike.