403 (B)
A 401(k) for public employees.
(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)
A 401(k) for public employees.
(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)
If the Traditional IRA is the good girl of the IRA family, the Roth IRA is the rebel of the family.
Fun Fact: Senator William V. Roth Jr. of Delaware led the legislative charge to create the Roth IRA in 1997.
Refresher: With Traditional IRAs, the tax man only cares about the $$ at the end when it is withdrawn. The perk is that I’ll be a lower tax bracket when I’m old, compared to when I originally contributed the money as a young money-making machine.
With Roth IRAs, the taxman wants to get his cut at the beginning, because he doesn’t know what will happen with the $$ and when it will be used.
Essentially, contributions to a Roth IRA are taxed initially and then never again taxed. The contribution can be withdrawn at anytime, without a tax or penalty. The rules get trickier with withdrawing earnings from investments. Time to talk to a professional!
As I understand it, the perk with Roth IRAs is that the contribution is initially taxed, can be withdrawn at any time tax-free, and earning—once past a certain age (as of now, 59 1/2)—are not taxed.
When money is in a Traditional IRA or a Roth IRA, the earnings of the investments are not taxed.
So the question becomes when picking between Traditional IRAs and Roth IRAs, do you want to pay the taxman later at a lower tax bracket (Traditional) or pay the taxman now and have my *fingers-crossed* tremendous investment growth untaxed (Roth)?
Watch this Khan Academy video and understand the math to answer this question.
Now that the confusion is cleared up, let’s save for retirement! Let the countdown to Boca begin!
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)
Babe has hit the 401(k) contribution limit for this year and is looking for another place to stash her retirement savings.
Other than throw some my way…I suggested an IRA.
An Individual retirement account is an excellent alternative to a 401(k).
Tax incentives, with no company necessary, are the defining features of an IRA.
Tax breaks differ with type of IRA— Traditional or Roth.
I suggested to Babe she open a Roth IRA. Taxed upon deposit, the money then grows tax free and can be withdrawn tax free at any time. Babe already has retirement savings locked up in her 401(k), so a Roth IRA will giver her flexibility if she absolutely needs $$.
For those without a retirement savings account set up yet, a tradition IRA and it’s withdrawal age requirements would be more appropriate.
Please, talk to an tax professional about doubling up retirement savings (i.e. contributing to both an IRA and 401(k)), as there’s some fine print contribution limits etc..
But it’s worth setting up, I’ve found it helpful to have tax penalty rules between me and my retirement $$.
Countdown till retirement—it’s on!
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)
A way to invest/save for retirement. All taxpayers welcome. Especially a great option for those who do not have a 401 (k) offered through work. Variations include the Traditional IRA and the Roth IRA.
(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)
A registered retirement savings plan (RRSP) is what Canadians need to set up if they want a become a snowbird in retirement. Can’t wait for my then-wrinkly skin to soak up le soleil!
(click on the bold-faced vocab words:))
RRSPs are so cool! My contributions reduce my taxable income. Yah, more $$ pour moi!
Plus, the $$ grows without the government taking a cut. Only upon withdrawal does the government get any of my $$.
Just like 401(k)s, unfortunately Porsche’s don’t count as an investment vehicle. Instead, I can fill my RRSP with stocks, bonds, GICs, shares of mutual funds.
RRSPs are available at banks. Single ladies, prepare yourself to check the “individual” box on the sign-up form. As usual, there are perks for those coupled up. And for those who like to be in control, there is a self-directed plan.
I’m planning to open a self-directed plan. No one else decides my ensembles, so why would I have someone else pick my investments?
I have a few more books to go before I take on the responsibility. My fave read so far has been The Wealthy Barber by Dave Chilton.
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)
Belle, my bestie north of the border in Montreal, was annoyed to see my 401(k) post without any mention of what she is to do about retirement savings.
She’s decided to join my fabulous & frugal journey!
Belle’s canadian-centric posts will be archived in the new category—O Canada—up top.
Welcome to my world, Belle!
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)
40-what?
I hadn’t finished my first day and human resources (HR) already brought up how it’s going to end. Not already! But eventually, I’ll be retired and living off my 401(k).
(click on the bold-faced vocab words:))
Once I set it up, my 401 (k) will be automatically filled with a cut of my paycheck and invested in the vehicle of my choice.
Porsche? No…investment vehicle options include bonds, stocks, mutual funds and etfs.
Each company’s plan is different, but perks can include:
Never thought I would have a desktop clock counting down the seconds till I turn 65.
Hope I look as fabulous as Iris then!
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)
RRSP. Canadian’s tax-friendly way to save for retirement.
(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)
I won’t be working when I’m a golden oldie, so I must put away $$ now.
(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)