Category Archives: retirement savings

Saving for Retirement – 30 Years to Go

Posted on May 9, 2012 by admin

If you still have three decades to go before you stop working, then it may be tempting to put off saving for retirement for a while yet, especially since you have so many other expenses in your life right now, like a mortgage payment, car payments, childcare expenses and college education funding for your kids. And how you save for retirement at this point will depend to some extent on how much you were able to save in your twenties . If you were fortunate (or disciplined) enough to pack away $20,000 or more into your retirement savings, then you may be able to get away with easing off on your retirement contributions for a while in order to concentrate on other things. But if you have not yet started to save for retirement, then now is the time to do so. However, saving money in IRAs and employer plans may not be all you can do to prepare for your nonworking years. Start with Your Employer If your employer offers a retirement plan of any kind like a 401(k) plan or 403(b) plan, then this is probably a good place to start your retirement plan if you haven’t already, especially if they offer any kind of matching contributions. Be sure to contribute to the Roth portion of the plan if this is available, because it will allow you to take tax-free distributions from your account at retirement (although any matching contributions will still be taxable because they can only be made on a pretax basis). Otherwise you should open a Roth IRA with a mutual fund company or investment firm that will allow you to invest in stocks or stock mutual funds (a much better alternative if you’re not a sophisticated investor). But your money needs to be growing faster than inflation over time, and equities and real estate are the only two asset classes that have consistently outpaced inflation over the decades. You may want to allocate a small portion of your portfolio into bonds or cash just for the sake of diversification, but your primary focus in your retirement savings at this point should still be growth. Look at Your Debt Retirees who don’t have to make a mortgage payment can live on a great deal less than those who do , especially if they have their mortgages completely paid off before they stop working. It may be wise to refinance to a 15 year mortgage, especially if interest rates are low, as this will save you thousands of dollars in interest payments that you can use instead to pay for education or retirement expenses. For example, if you refinance a $150,000 mortgage from a 30-year loan at 6% to a 15-year loan at 4%, then you have just saved yourself nearly $125,000 in interest over the full life of the loan (obviously, the amount saved will probably be somewhat less depending upon the amount of your mortgage that you have already paid off). If you can’t afford the payment for a shorter loan, consider refinancing for the same term and then do a biweekly mortgage, where you make 26 half-payments per year. This will shave about 8 years off of a 30-year note and about 3 ½ years off of a 15-year note. Those who do this now may even be able to pay off their home loans by the time their kids get to college. Retirement of other debt such as student loan payments and car loans can also be wise moves, because this will free up cash flow for you in the future with no investment risk. For more information on saving for retirement in your 30s, consult your financial advisor. Continue reading →

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Saving for Retirement Using 401Ks, Traditional IRAs and Roth IRAs.

Posted on May 2, 2012 by admin

Most people will investment to help them save for retirement.  For much of the population retirement is still a long ways away.  For many people retirement may be further away than previously thought .  With a little planning now, and understanding which type of account to use, a person can make headway toward retiring when they want, with the lifestyle they desire. The most popular way to save for retirement is in a 401(k) plan.  These plans are offered by nearly all the major companies, and most people have the opportunity to invest in their company’s 401(k).  The setup process is quick and easy.  Many companies have even switched to automatic enrollment when a person starts working or becomes eligible (some companies require a minimum amount of service before allowing a person to enroll).  The employee can select how much they want to come out of each paycheck, either a dollar amount or a percentage (for 2012 a person can put in up to $17,000 with some special rules for those over 50 years old ).  The employer will often match a certain portion of what the employee decides to contribute.  The money to be invested will come out of the employee’s paycheck before taxes.  It will then grow in the plan only to be taxed when it is finally withdrawn.  As long as a person waits until after the age of 59.5 the withdrawals will only be subject to taxation at the participant’s current tax bracket.  These plans are subject to the required minimum distribution rules. While most companies will offer a 401(k) plan, there are some that offer different types of employer sponsored plans.  For those who are self-employed with no employees, the Simplified Employee Pension (SEP) IRA could be an option.  With this plan a person can put up to $50,000 (or 25% whichever is less) in 2012.  The rules are basically the same as a traditional IRA, with the catch that if there are any employees, the employer must put in the same percentage to each of the employees as he or she puts into his or her own plan.  For those with employees, a Savings Incentive Match Plan for Employees (SIMPLE) IRA may be a better choice.  With a SIMPLE IRA the employer must follow some rules for matching contributions , but otherwise the employee decides how much he or she wants to contribute, up to 100% of their salary or $11,500 whichever is less.  There are a few other more complicated employer sponsored plans out there (ESOPS, Profit Sharing Plans, Pensions, and Deferred Compensations) that are fundamentally the same: they will provide assets to be used in retirement. After a person has reached the contribution limits for their employer sponsored plan they can still set up an Individual Retirement Account (IRA).  The Roth IRA and the Traditional IRA both provide a great platform for investing money for retirement, and allow the investor tax benefits along the way. The downside of many of the retirement savings vehicles is that there are income limits or contribution limits.  For example: a married couple whose adjusted gross income is over $173,000 will not be eligible to contribute to a Roth IRA in 2012.  There are still options however.  An annuity can be utilized as a great place to store up money for retirement.  There are no income limits to open and fund an annuity, nor are there limits as to how much can be invested into one each year.  The gains in an annuity are tax deferred, and the account can either be taken in lump sums or it can be annuitized into an income stream later in life.  An annuity does not offer quite the tax benefits a qualified account offers, and the company issuing the annuity may place higher than usual fees on the investments, so any annuity contract should be entered into with caution. When it comes to saving for retirement a person will generally have either a 401k or an IRA plan, if not both, they can utilize.  But many people do not take advantage of the plans that are offered to them, and often it boils down to the fact that they simply do not understand them.  By taking just a few minutes to learn how a plan works, and realizing it is really quite simple to invest, anybody can take advantage of investing now in order to have the retirement of their dreams.  In the next article we will look at what accounts, how much, and how often a person should invest. Continue reading →

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Is Your Retirement Plan On Track?

Posted on April 23, 2012 by admin

Millions of Americans worry about whether they have enough saved to get them through their declining years. The economic turbulence of the past few years has only amplified this issue, particularly for those who are at or near retirement age. And a large percentage of those who are faithfully socking money away are still unsure of whether or not they are saving enough or investing what they have correctly. The answer to this is not always black and white, but examining a few key factors can give you a general idea of how prepared you will be for retirement. How Much Have I Saved? This is the obvious place to start when analyzing your retirement preparedness. The amount that you have saved should be proportionate with your age; if you are in your twenties, then you should have at least a small retirement account or plan in place and be contributing to it on a regular basis. If you’re in your thirties, your portfolio should be a bit larger (ideally equal to perhaps a couple of years of your annual salary or compensation). By the time you reach your forties, your retirement plan should probably be in the six-figure range if you have been contributing steadily to it and haven’t experienced any long periods of unemployment. If you’re in your fifties or sixties, then your retirement plan balance should be approaching the amount that you need in order to sustain you through your nonworking years. What Should I Be Investing In? Again the answer to this question will change as you get older, although your risk tolerance will also play a role in the asset allocation of your retirement portfolio. Those in their twenties and thirties should be investing either primarily or exclusively in stocks and/or stock mutual funds in most cases, because stocks are one of only two asset classes that have historically outpaced inflation over time (the other asset class being real estate). As you get closer to your retirement, you should probably start to reallocate your savings into more conservative holdings such as corporate or treasury bonds. However, most people should always probably keep at least a portion of their nest egg in equities in order to provide a hedge against inflation. But the exact mix of assets that is right for each person will vary according to their circumstances and investment objectives. Conclusion There are many variables that must be considered when evaluating how prepared you are for retirement. Your asset allocation should match your time horizon and risk tolerance in order to achieve your investment objectives. Make time to explore what kind of retirement planning makes sense for you.  There is no one-size-fits-all retirement plan.  Smart Money provides another example of a retirement planner for you to consider.  You may also want to consult your financial advisor. Continue reading →

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Debt During Retirement

Posted on April 19, 2012 by admin

Debt has become a way of life for the majority of Americans, who work every day to pay off student loans, car loans, credit cards, mortgages and other consumer obligations. And while some are fortunate enough to pay off their own expenses by the time they retire, many people must continue making payments on their homes, cars and other expenses for many, if not all of their nonworking years. Having a high level of debt after you stop working can put a damper on your lifestyle, especially if your income is lower than it used to be . Good Debt vs. Bad Debt Most financial planners will tell you that some types of debt are better to carry than others. Mortgages and student loan debt are generally considered to be “good” types of debt, because they were incurred to purchase something of lasting material value and because they are tax deductible. “Bad” types of debt include car loans, credit card balances and other installment debt. These debts often have high interest rates and the interest that you pay on them cannot be deducted on your tax return. Retirees who have both types of debts to repay are usually advised to pay off their nondeductible debt first if at all possible. Refinancing In some cases, it may make sense to do a cash-out refinance in order to consolidate your debts, especially if you have substantial high-interest debt from credit cards or consumer loans. Of course, you need to know exactly how much your new mortgage payment will be and whether you’ll be able to pay it for the duration of the loan. It may therefore be wise to refinance to a shorter-term loan, especially if interest rates are low. For example, if you have 22 years left on a 30-year note and need to get your hands on $20,000 in order to pay off your other debts, then a cash-out refinance may solve your problems, especially if you can swing the payment on a 15-year note. This could effectively resolve both your current and a possible future financial predicament, as your mortgage would be paid off 7 years sooner. Other Solutions Those who are saddled with substantial debt at retirement may be wise to keep working for a few more years in order to deal with this issue. 15 years of debt-free retirement may be far more enjoyable than 20 or 25 years of having to deal with mortgage and installment payments. Those who cannot stand to work their current jobs any longer may need to get at least a part-time job in a different arena for a while in order to get this under control, but being saddled with financial obligations that you are unable to repay when you are too old to work can be disastrous. The Bottom Line Those who are able to retire their debts before they stop working will enjoy a much more pleasant retirement than those whose obligations continue into their nonworking years. Those who are still working should have a clear plan to repay their debt either before or soon after they retire if at all possible . For more information on debt during retirement, visit the following links or consult your financial advisor. Continue reading →

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Saving For Retirement: What Are Nonqualified Plans?

Posted on April 10, 2012 by admin

In 1974, Congress recognized the need for Americans to save for their retirements by passing the Employee Retirement Income Security Act, which gave birth to employer-sponsored retirement savings plans that allow workers to defer a portion of their earnings into tax-deferred accounts. All retirement plans that fall under ERISA guidelines are referred to as “qualified” plans, and each type of plan must meet certain criteria pertaining to who is able to participate in these plans, how much they can contribute and the taxation of the monies that is placed inside them. But qualified plans cannot always meet the needs of every type of employee. Nature and Purpose of Nonqualified Plans Corporate executives and small business owners often want to defer amounts of money in excess of what they can contribute to qualified plans, and business owners also at times need to be able to reward key employees financially without surrendering control of their companies. Because they are not restricted by the regulations that govern qualified plans, they can be used to accomplish specialized objectives, such as substantial additional compensation that is not taxed until retirement or creating a financial incentive for an executive or employee to stay with a company for at least a certain period of time. Nonqualified plans are usually funded with cash value life insurance policies or annuity contracts. In most cases, the money that is contributed to these plans must be subject to a substantial risk of forfeiture by the employee, meaning that the funds could be attached by creditors in the event of lawsuit or insolvency. Types of Nonqualified Plans There are four main types of nonqualified plans: Deferred Compensation Plans – These plans allow corporate executives to defer large amounts of additional compensation that they are paid after they retire. The executive isn’t taxed on the income until it is actually paid. Split Dollar Life Insurance Policies – Under this arrangement, the employer and employee split both the cost and benefits of a cash value life insurance policy. The employer pays for a certain amount of the policy and then lets the employee pay the remainder. The employer then recoups its costs by taking a portion of the death benefit when it is paid out. Executive Bonus Plans – This type of plan allows employers to purchase cash value policies on employees that they can take with them after they leave the company. These policies often contain riders for critical illness, disability and long-term care, thus providing a package of benefits to the employee as well as retirement income from the cash value in the policy. Group Carve-Out Plans – These plans are layered on top of the $50,000 of term life insurance that companies can purchase for employees without the premiums being counted as taxable compensation to them. The company will then purchase additional cash value policies on a select group of employees (such as executives) that are counted as additional compensation to them. Nonqualified plans can be structured in many different ways and funded at different levels. Participants do not necessarily have to wait until age 59 ½ to begin taking distributions from them, and several different variables can govern how they are taxed. For more information on nonqualified plans, visit the IRS website at www.irs.gov or consult your financial adviser. Continue reading →

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How Much Will I Need to Retire?

Posted on April 7, 2012 by admin

Knowing how much money you will need to have after you stop working, either coming in as a stream of income or from your retirement savings is one of the most important financial questions of your life. Of course, estimating the amount of cash that you will realistically require in order to successfully navigate the final phase of your life can seem like a daunting and complex issue requiring hours of complex calculations and a great deal of research. But breaking down this equation is not quite as difficult as you may think; you just need to learn how to start translating dreams and ideas into dollars using some basic time-value-of-money calculations. What would it Cost to Retire Today? The first step in answering the question, “how much will I need to retire” is to find out what it would cost to live that dream today. If you’d like to travel the world when you retire, take an afternoon and do some research to find out what you would pay to do that now. Be sure to include the current cost of all other normal living expenses, such as the price of healthcare and insurance for a retiree with your level of health and rent or a mortgage payment for the kind of residence that you would like to live in when you retire (unless, of course, you intend to continue living in your current residence at that time.) Also remember to factor in retirement of debts, such as your current mortgage or car payment if they will expire during your retirement. Be as detailed as possible so that you can create a realistic hypothetical cash flow statement that represents the current expenses that you would pay if you were retired today. What will it Cost to Retire Tomorrow? Once you have some actual numbers to work with, it’s time to factor inflation into the equation. If you are going to retire in 15 years, then take the annual expenses that you computed in step 1 and multiply them by an annual rate of inflation, which has historically grown at about 3 percent per year. Therefore, if you will need $50,000 per year to live the lifestyle you want in retirement, then multiply that amount by 1.03 15 times (or use a financial calculator if possible) to find out the future cost of your lifestyle. In this example, the cost in 15 years would equal to about $77,900. Then get an estimate of your Social Security benefits and also any future guaranteed private pension benefits and then subtract them from your projected budget. Finally, multiply this number by the number of years that you estimate that you will live during retirement and this should give you a rough estimate of how much you will spend after you stop working. For example, if you will get $35,000 per year in Social Security income and another $10,000 per year from a defined benefit plan, then your unfunded expenses would come to $32,900 per year. Therefore, if you think that you will live for another 25 years after you retire, then you would spend a total of $822,500 that won’t be covered by your future guaranteed income during your nonworking years. So How Do I Pay for This? The final step in estimating how much you will need to retire is to determine the amount of money that you must have saved in order to cover the balance of your expenses during retirement. This amount will depend upon several factors, such as the rate of return that you earn on your nest egg both before and during retirement. If you have $500,000 saved when you retire, then in the example above, you would need to earn about 6.5% per year on your money in order to draw the additional $32,900 you will need annually to live out your retirement dream. If you wanted to fund your retirement in this manner, then you would obviously have to have a half million dollars saved by the time you stop working in 15 years. Computing the amount that you will have to accumulate each year until then would involve several variables, such as the amount that you have saved already plus the rate of growth of your portfolio. The Bottom Line The hypothetical cash flows used in this article are merely intended to show the general process for translating the cost of a future lifestyle into today’s dollars. There are obviously many factors that must be taken into account in these equations that were not covered here, such as income taxes and the possible need for long-term care. In most cases, it would be wise to seek professional assistance with making these computations from someone with a sophisticated retirement planning program that can account for all possible variables. For more information on retirement planning, consult your HR representative or financial advisor. Check out CNN’s simple retirement calculator or a more sophisticated calculator offered by the Index Funds Advisors . Continue reading →

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Catching Up on Saving for Retirement After Age 50

Posted on March 26, 2012 by admin

Most American workers view age 50 as the beginning of the final phase of their lives before retirement. Many workers’ careers-and living expenses-have peaked by that point and their children are either in college or about to enter, which can pose a major dilemma concerning where their savings dollars get spent. Then there are those who have yet to begin saving at this age, and there are a large number of people in this category. But all is not lost for them; they must simply take a somewhat different (and most likely more austere) path into their nonworking years. And even those with substantial retirement assets have some issues to consider at this point in their lives. If You’re Behind Those who have saved little or nothing for their retirements by age 50 will need to make some major changes in their budgets and lifestyles if they want to retire earlier than age 70. Although Social Security will likely still be there for them, they may not be able to live the kind of lives that they want in retirement if they don’t immediately begin an aggressive savings program. Those without any type of retirement savings should start by maxing out their employer-sponsored retirement plan contributions and probably also make the maximum possible contribution to a traditional or Roth IRA. They should also make the additional $1,000 catch-up contribution if at all possible. A 50 year old earning $60,000 a year who does both these things could accumulate a whopping $225,000 by age 65, plus any growth on the contributions. Lower and middle-class workers who haven’t started to save by age 50 can realistically expect to work at least another fifteen years, unless they earn a phenomenal rate of return on their retirement savings. College Funding vs. Retirement Parents of kids who are at or near college age must inevitably grapple with the dilemma of either funding their own retirement plans or paying for their kids’ college educations. Most financial experts will counsel parents not to forfeit their retirement savings to pay education expenses, because their kids will have the chance to pay off their own expenses themselves eventually. But the use of annuities and cash value life insurance can reduce the amount of assets that must be reported on the financial aid forms, which can increase the amount of financial aid available to pay for tuition and other expenses. For the Savers Those who have been saving diligently since they were young can pat themselves on the back for starting when they should, but it may be time to start adjusting the mix of assets in their retirement portfolios. Workers who are invested entirely in stocks may want to start thinking about reallocating at least some of their savings into more conservative asset classes such as bonds. Those who are invested in target-date funds will have this done automatically, but those who have constructed their own portfolios should make the preservation of their savings a growing factor in their investment decisions. Of course they should still preserve a growth element in their portfolios, but once they get within ten years of retirement they should probably start moving most of their savings from equities to fixed-income securities in an appropriate systematic fashion. For more information on saving for retirement after age 50, consult either IRS publication 590 for IRAs or your financial or retirement adviser. Continue reading →

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Deciding Between a Traditional IRA and a Roth IRA

Posted on March 18, 2012 by admin

In 1982, Congress introduced a revolutionary type of savings account to American taxpayers: the Individual Retirement Account, which allows Americans to save for their retirements on a tax-advantaged basis. Fifteen years later, Congress created another type of retirement savings account called a Roth IRA. This account is taxed somewhat differently than its traditional cousin, but is generally considered to be superior to traditional IRAs in most respects. But the question of which is better is not always as clear-cut as it may seem. Traditional IRAs The original type of IRA offers two main tax advantages. All money that is contributed to a traditional IRA is deductible on the participant’s tax return, with certain exceptions. The money that is placed into these accounts then grows on a tax-deferred basis until it is withdrawn at retirement. All normal distributions that are taken from traditional IRAs are taxed as ordinary income, meaning that they are taxed at the taxpayer’s top marginal tax bracket. Roth IRAs Roth IRAs are considered an improvement over traditional IRAs because distributions from these accounts are tax-free as long as the participant is at least age 59 ½ and has had a Roth account or retirement plan open for at least 5 years. But contributions to a Roth IRA are never deductible under any circumstances. Similarities and Differences All distributions that are taken from either type of IRA before the owner is age 59 ½ are subject to taxation and a 10% early withdrawal penalty. Even Roth money that would be withdrawn tax-free under normal circumstances will be taxed in this manner. However, all contributions made to a Roth IRA can be withdrawn at any time without tax or penalty, although they cannot be replaced. Which is Better? The question as to which type of IRA is better for someone can only be definitively answered on a case-by-case basis. But many financial planners and experts maintain that Roth IRAs are generally superior to traditional IRAs for most people. Although it’s nice to be able to take a deduction for your contributions into a traditional account, the tax ramifications can be quite ugly for those who take large lump-sum distributions from a traditional IRA. If you have to take $100,000 out of a traditional IRA in a single year, then you face a triple tax whammy. First, you will most likely ratchet yourself into a higher tax bracket. Then you will pay tax at that higher rate on the entire distribution. Finally, you will have to pay that higher rate on all other forms of your ordinary income, such as investment income, earned income and pension income. You will most likely pay more tax on your Social Security income as well. But those who take a small stream of income from their traditional IRAs may face little or no real tax consequences, depending upon their level of income and other factors. For more information on traditional and Roth IRAs, download Publication 590 from the IRS website at www.irs.gov or consult your tax or financial advisor. Continue reading →

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Control Your Finances With Percentage-Based Budgeting

Posted on March 10, 2012 by admin

Percentage-Based Budgeting Almost all financial experts advise that you have some type of budget in place in order to make sure you spend your money wisely. For many people, however, the drudgery of sitting down and creating a monthly budget is simply too much and it is too difficult to get motivated. For others, creating a budget is a hassle and they don’t end up sticking to it once they have made one. If you are one of the many people who struggle with the very idea of budgeting, using a simple percentage-based budget plan may be the best choice for you. A Percentage-Based Budget Plan A percentage-based budget plan is a plan in which you simply allocate a certain percentage of your money towards a specific category of spending. As long as you keep your cash within those percentages, you don’t have to worry about where each dollar is going or how you are spending within each category. A percentage-based budget is thus essentially a big-picture budget. You only worry about whether you are doing the right things with your money to achieve your financial goals and you don’t worry so much about your day-to-day use of your cash. The 60-40 Solution The 60 percent solution is one of the simplest methods of percentage based budgeting available. Those who use the 60 percent solution simply limit their total spending on committed expenses to 60 percent of their incomes. Committed expenses each month include household expenses (mortgage or rent, utilities and other required home costs); insurance premiums; food and clothing; charitable giving; taxes and all bills, including bills for things such as cell-phones and satellite or cable TV. The remaining 40 percent of the money is then divided up into four different categories: retirement savings, long-term savings, short term savings and fun money. Typically, fun money and short-term savings would be limited to 10 percent each, and the remaining 20 percent of your income would thus be saved. This is in line with most financial experts, who recommend saving a full 20 percent of your income. To ensure that you keep your percentages in place, you should set up automatic deductions for as many different categories as possible, including your bills and your savings. The Balanced Money Formula The balanced money formula is a similar concept to the 60 percent solution, in that you also work off of percentages and don’t have to account for every dollar. The basics of the balance money formula are that you allocate 50 percent of your after-tax income to your needs; 30 percent of your after-tax income to your wants and 20 percent of your after-tax income to your savings. Under this formula, needs are things you have to have, including housing and insurance. Wants are other things you would like to have, such as cell-phone service, designer or fancy clothing, meals out or other luxuries. Finally, savings should include retirement savings as well as other savings for the future. Choosing a Percentage-Based Budget The best thing about either of these percentage-based budgets is that you remove the stress from the budgeting process. Instead of worrying about whether to allocate $100 to entertainment and $50 to dining out or vice versa, you can spend on pretty much anything you want as long as you stick to only spending a percentage of your income. This gives you a great deal of flexibility as your needs and lifestyle change, but ensures that your overall financial picture remains on track. Continue reading →

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The ABCs of Required Minimum Distributions

Posted on December 29, 2011 by admin

Since the advent of qualified retirement plans in 1974 and traditional IRAs in 1982, these accounts have accumulated trillions of dollars that grow on a tax-deferred basis for the benefit of their owners and participants.  However, the IRS has set some limitations on the amount of time that these accounts can hold their funds. The Required minimum distribution (RMD) rules stipulate that anyone who holds a traditional IRA, 401(k) or 403(b) plan or annuity contract of any kind must start withdrawing a certain amount out of their plan or account each year starting on April 1 st of the year after the year in which they turn 70 ½.  For example, an IRA owner whose birthday is in May turns 70 in 2011.  This person will be 70 ½ in the fall of 2012, so she must start taking RMDs on April 1 of 2012.  Required minimum distributions are calculated by the IRS based upon a set of actuarial tables that they publish in Pub. 590 for IRAs and Pub. 575 for qualified plans and annuities list these respective tables in their pages. These tables are based upon the life expectancies for men, women and couples.  The balance in the account or accounts at the end of each year is recorded and then divided by the appropriate multiplier given in the table.  Investors who have several qualifying accounts from which RMDs must be taken can aggregate them and take a single distribution from one account of their choice.  Failure to take the RMD from an account will result in a 50% excise tax on the amount that should have been taken according to the IRS tables, unless the taxpayer can convince the IRS that the failure was the result of an honest mistake or oversight and is being corrected. Virtually all IRA and qualified plan custodians as well as annuity carriers track of this issue for their customers and then notify them of when they must begin taking this type of distribution. Most will then calculate and send the actual distribution out as well, either as a check or via direct deposit.  Required minimum distributions are usually taken either monthly, quarterly or annually at the discretion of the account holder.  There is one escape clause for those who wish to avoid taking this type of distribution, however.  Roth IRA owners are not required to begin taking distributions at any time from their accounts, regardless of their age or other factors.  Investors with other types of retirement savings plans or accounts who wish to avoid required minimum distributions can simply roll over or convert their accounts to a Roth IRA and then leave the money in the account for life if they so choose.  Of course, any amount converted must be reported as taxable income, unless it is being rolled over from a Roth 401(k) or 403(b).  For more information on required minimum distributions, consult your financial advisor, retirement plan custodian or annuity carrier. Continue reading →

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