Individual non-tax qualified annuities aren't within this structure.

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PostPosted: Fri May 09, 2008 8:24 pm   Post subject:   

OK, the only plans that accept "transferred" dollars are either to transfer into the new employer's 401k (if allowed by the plan, and not all plans do allow this) or into an IRA; self-directed or traditional. No non-qualified annuity will qualify for transfer dollars and keep the tax-structure of the 401k in place. Now, if the participant wants to roll the funds into anything else, remember- it's their money and they can do whatever they want with it. Again, just remember that they are gonna pay the piper with penalties prior to age 59 1/2 plus taxation on the entire amount withdrawn.



The only tax-qualified annuity that will accept transferred dollars, if I'm right (and I'll be the first to admit that I certainly don't know everything by any stretch of the imagination), would be a 403b tax-sheltered annuity. This, under current rule (they change in 2009) is only available for employers that file under sections 501 (c) (3) of the Internal Revenue Code. This is for non-profit employers only.



If anyone has anything further (tcope???) please respond!



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PostPosted: Fri May 09, 2008 8:59 pm   Post subject:   

Quote:
No non-qualified annuity will qualify for transfer dollars and keep the tax-structure of the 401k in place.




Agreed.



Quote:
The only tax-qualified annuity that will accept transferred dollars, if I'm right (and I'll be the first to admit that I certainly don't know everything by any stretch of the imagination), would be a 403b tax-sheltered annuity.




No, Teach. Most traditional tax deferred annuites or equity indexed annuities can be qualified plans and will accept qualified rollovers.



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PostPosted: Mon May 12, 2008 2:06 am   Post subject:   

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No, Teach. Most traditional tax deferred annuites or equity indexed annuities can be qualified plans and will accept qualified rollovers.




But only if they're installed within a qualified plan, agreed? Individual non-tax qualified annuities aren't within this structure.



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PostPosted: Mon May 12, 2008 2:15 am   Post subject: 401(k)  

Not all plans allow for withdrawls.... check the plan documents. It's up to the employer and how he/she set the plan up.


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PostPosted: Mon May 12, 2008 2:43 am   Post subject: insurance  

Ok...........yep, alittle 'insurance stupid', again. IRA VS. 401 (K). Whats' the 'benefit' difference? What amount do you need to start EACH one?

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PostPosted: Mon May 12, 2008 10:16 am   Post subject:   

I don't think you need a certain amount to 'start' either...But there is (I think) a limit to how much you can put into both per year...(I contribute plenty, but husband handles all of that ! Rolling Eyes boring money saving/investing stuff Wink )



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PostPosted: Mon May 12, 2008 10:59 am   Post subject: insurance  

Do you ( any one in general) think it's a good idea to start a 401 (K) instead of 'rugular' Life Insurance? Are the benefits the same ( ie..Cash Value, death Benefits, etc?) Can I put it in BOTH mine and my son's name ( Godforbid anything happens to him).

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PostPosted: Mon May 12, 2008 11:08 am   Post subject:   

Quote:
Do you ( any one in general) think it's a good idea to start a 401 (K)
I personally think that most 401k's are an excellent way to put money away...
Quote:
instead of 'rugular' Life Insurance?
NO, you should have atleast some life policy....
Quote:
Are the benefits the same ( ie..Cash Value, death Benefits, etc?)
No 401k's are not a life policy they are an investment/savings plan...no death benefit except they are paid to a beneficiary, but only what is in the account, not a death benefit persay...
Quote:
Can I put it in BOTH mine and my son's name ( Godforbid anything happens to him).
You can make him the beneficiary of your 401k....meaning it goes to him if you die...kind of like your savings account would...think of it like that...NOT as a life policy.


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PostPosted: Mon May 12, 2008 4:36 pm   Post subject:   

Quote:
But only if they're installed within a qualified plan, agreed? Individual non-tax qualified annuities aren't within this structure.




Yes, InsTeacher, but I think most people misunderstand annuities and how they work and this is why they usually get a bad reputation.



Non-Qualified Annuity

This is a "tax-deferred" annuity that is purchased with "after-tax" dollars and would not be part of a qualified retirement plan, like an IRA.



Qualified Annuity

This type of "tax-deferred" annuity would be purchased with "before-tax" dollars and could be used to fund an IRA. This would be an appropriate vehicle in which to transfer 401(k) monies left with a previous employer.

This would be an "individual" purchase, not part of any company sponsored retirement plan. So, in the senario we have been using, the employee would have an individual IRA containing his old 401(k) money, then he would begin making contributions to the 401(k) plan at his new place of employment.



Tax-Sheltered Annuity

This type of "tax-deferred" annuity is only available to employees of schools, non-profit hospitals, and other tax-exempt organizations, known as a 403(b) plan.



There are many variations of annuities, like "single premium" or "flexible premium" and within these payment arrangements, they could be "fixed", "variable", "deferred" or "immediate". Many companies that convert a retiring employee's retirement account to income, buy an "annuity".



Quote:
Ok...........yep, alittle 'insurance stupid', again. IRA VS. 401 (K). Whats' the 'benefit' difference? What amount do you need to start EACH one?




The first thing to do is separate the word "insurance" from "IRA". Insurance should never be purchased as an "investment" or for cash accumulation only.



Most people think of "IRA" as "Individual Retirement Account", and it is, but it also "Individual Retirement Arrangement", which I think is clearer.



A person can set up an IRA with a brokerage firm, a bank or other financial institultion, or with an insurance company (annuity).



The amount needed to start an "IRA" can range from "0" to thousands of dollars, depending the "Arrangement". Most banks have "minimum" deposits to open accounts, like IRAs. IRAs funded by the purchase of an annuity may require a minimum, like "$50, more if it is a single premium.

This is where a good financial advisor is very important. There are so many different ways to properly prepare for a comfortable retirement that most of us just need professional help.



Quote:
Do you ( any one in general) think it's a good idea to start a 401 (K) instead of 'rugular' Life Insurance? Are the benefits the same ( ie..Cash Value, death Benefits, etc?) Can I put it in BOTH mine and my son's name ( Godforbid anything happens to him).




Again, please don't confuse "investments" with "life insurance". They are two very distinct parts of your financial plan. 401(k) plans are normally sponsored by an employer, even though they can be established by a sole proprietor small business.



You could set up an IRA and contribute up to $5,000 or 100% of your taxable compensation (whichever is smaller).



Before you decide, I think you should get some professional advice.



Maze


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PostPosted: Tue May 13, 2008 10:36 am   Post subject: insurance  

I appriciate ALL of the advice, on this issue. Thanks SOOO much!! I know people with BOTH an IRA and 401 (K). I know some with just one OR the other. (Here comes the 'stupidity again..) I guess I din't realize a 401 (K) was some kind of 'investment'. MMMM.

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PostPosted: Tue May 13, 2008 11:12 am   Post subject:   

Quote:
Here comes the 'stupidity again..)
In the words of the Great Forrest Gump, ''Stupid is as Stupid does''...no (genuine) questions are stupid.. Wink


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PostPosted: Tue May 13, 2008 11:25 am   Post subject: insurance  

I LIKE Forrest Gump, too! FYI.......kinda funny you said something about Forrest Gump. In 'our' community paper, I saw a picture of a soldier, who returned from Iraq. Guess who the picture was?!...........I can't remember his REAL name, but, it was the boy who played Forrest Gump, at the beginning of the movie. BOY...that was exciting to see!! Anyway...back to the 'insurance thing'.....................I suppose in each Insurance 'catagory', there are 'sub-catagories'. ....can get confusing sometimes.

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PostPosted: Tue May 13, 2008 8:16 pm   Post subject:   

Yes, insurance can be very complex and, if for no other reason, I just can't imagine buying it over the internet, like a toaster or something.



Many people get in difficult situations because they know just enough about insurance to be dangerous to themselves and their families or business.



That's why we have insurance agents.



Maze



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