Build Wealth with the Right 401K Choices-

Register for this live call where I interview Christine Benz, who is the personal finance expert at Morningstar about Building Wealth 30 Minutes at a time.

Investment analysis doesn’t have to take all day. She is going to share some tips from her book (30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances) in this half hour call.

For more info and to register- Building Wealth

Make the most of what you have to make the most of your tomorrow. Your 401K contributions are your first investment dollars. Those dollars will grow more faster than any other investment because of the tax advantages that we discuss in detail here. Take advantage of the opportunity to contribute and put the maximum amount that you are allowed in the plan. Your future depends on it.

Listen to this interview I had with Curtis Smith CFP®, a fee-only Financial Advisor with Interactive  Capital Management
to find out how a Roth IRA works and if it is right for you.

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What you will learn:

• What is a Roth IRA and how it differs from a traditional IRA
• The basic strategy of a  conversion
• Who benefits from a Roth IRA and how

I am pleased to highlight fee-only financial planners who really know their stuff. Curtis is from Sugarland, Texas and a real charmer who is very sharp on retirement planning.  Remember, it is only a half hour long and has valuable information that you need to know now.

*Scared to open your 401K statement?

Financial Stress

*Don’t think you will ever recover from the losses?

*Too many investment choices and don’t know how to evaluate?

This ebook will help you open your statement, figure out your 401k contribution limits and gain confidence-knowing that your money is working for you- in your time frame, with your risk tolerance, and with the return you need to meet your goals.

You deserve to have confidence in choosing and maintaining the most valuable investment you own-your 401K plan.

Sign up  ( in the box to the right) for my e-newsletter filled with wealth building tips and to buy my eBook:
The 401K First Aid Kit: Stop Your Portfolio Bleeding and Get Back to Financial Health

You will also get:

* a $10 DISCOUNT off the retail price

* my most popular report to download now—THE 9 BIGGEST 401K MISTAKES YOU CAN MAKE

* Bonus report-How to do a Roth IRA Conversion for 2010

* Free Whole-Hearted-Way e-newsletter (written by Fern Alix LaRocca CFP® with over 25 years experience)

Many people were not allowed to convert their IRAs to a Roth IRA due to the income limitations. That has changed due to the Pension Protections Act of 2006. Now everyone is eligible to convert their 401ks to IRAs and then to a Roth IRA or from an IRA to a Roth IRA. But should you?

According to a Fidelity survey of 800 retirement plan holders with household income of $100,000 or more 83% who work with an advisor said they were unaware of the changes to the law and 54% said they didn’t know whether they would be eligible to convert. Many brokers and advisors are looking at this as an opportunity to talk to clients and get them to convert their money to a Roth that is managed by them, but is this a good deal for you?

What’s so attractive about the Roth IRA is that it allows tax free accumulation of earnings and you don’t have to pay tax when you withdraw the money.

For a thorough report on how to do a rollover from a 401k to an IRA and conversion to a Roth IRA, sign up in the box and you will get the free pdf download.

For more info listen to this teleseminar on Roth IRA Rules with Curtis Smith CFP®, a fee-only Financial Advisor with Interactive  Capital Management to find out how a Roth IRA works and if it is right for you.

RothIRA033010

I am pleased to highlight fee-only financial planners who really know their stuff. Curtis is from Sugarland, Texas and a real charmer who is very sharp on retirement planning.  Remember, it is only a half hour long and has valuable information that you need to know now.

2010 401K maximum contribution limits are $16,500 ($22,000 if age 50 and over) Surprised? Yes, you read right. They are the same as last year.

Usually the contribution limits increase with the rate of inflation. The formula is based on the inflation rate in the third quarter vs. the previous year’s quarter which would have made the limits go down. But since few Americans are actually saving the maximum allowable per year, the powers that be said to keep it the same.

401K contribution limits for 2010 are $16,500 for employees. Employer contributions are limited to 6% of the employee’s pre-tax compensation under the 401k rules.  If you are 50 and older, you can contribute an addition $5,500 for a total of $22,000.

For example, if you earned $100,000, you could contribute a maximum of $16,500 in 2010 before taxes and your employer could contribute up to another $6,000 for a total of $22,500 in money going into your 401K. Those are the 401K limits for people under 50.

Let’s assume that you are over the age of 50. You could contribute the maximum of $16,500 plus an additional $5,500 bringing the total of $22,000 contributed on a pre-tax basis according to the 401k rules.  If your employer also contributed the maximum of $6,000, you could have a total of $28,000 put into your account in one year. Those are the 401K limits for people over 50.

Check your 401K plan summary plan description for 401K rules about taking a distribution while you are working.Your employer can tell you the 401k contribution limits, when you vest, and how much you can take out. Of course 401k rules only let you do this if you are past age 59.5 or the 401K penalties are severe. But if you need to supplement a reduced paycheck due to less work hours, then take small monthly amounts out to help you. Be prepared to pay the income tax on those distributions too.

Watch out for the number of hours that you work. At some companies if your work hours fall below 1,000 hours per year, then some 401K plans will eliminate matching contributions or prevent you from participating in the 401K plan. Check the 401K rules concerning this in your 401K plan. Your employer can tell you the 401k contribution limits

Many people worry about contributing to their 401K.  Your employer can tell you when you vest and what your 401k contribution limits are. Many people think that can’t afford to contribute. They worry that they won’t be able to live on the lesser amount of income. What they don’t realize is that if they contribute say, for example, $10,000, and they make $50,000 a year: they only pay tax on $40,000 not $50,000. so the tax savings is giving you back some money to make up for that $10,000 contribution. How much? Well, that depends on your tax bracket. Obviously, the higher the tax bracket that you are in, the more advantage you get. As your earnings grow so does your 401K balance. To get the maximum 401K balance, add your bonuses and increased earnings to the amount you contribute.

Hint! Hint!- Don’t ever get a tax refund– that’s a interest free loan to the government. Have your tax preparer give you the extra monthly cash by changing your withholding exemptions to the proper amount to adjust for your 401K contributions.

Okay, it’s countdown to the end of the year, and you haven’t fully funded your 401k with the maximum amount of contributions.
What can you do? March down to your Benefits department or Human Resources and ask them if they will allow you to put in a lump sum contribution before year end to make up the maximum 401K contribution that you are allowed based on your salary.

Believe it or not, many employers will allow you to do so— but you gotta ask. So get down there and make the maximum 401K contribution that you can (and enjoy that extra in your tax refund amount).