We received numerous e-mails last week asking the same Roth IRA question.  "Can I withdraw money from my Roth account?".   It's a common question-the IRA is a great long term savings account that does allow you to make distributions.  

The Roth IRA allows you to take out  your contributions at any time.   Your earnings or growth on the account will be taxed and penalized if you take monies out before 591/2.   Your IRA custodian or trustee generally tracks the amount that you contribute each year.   So, if you don't have an emergency fund your Roth IRA could be a very valuable account! 

We've been very interested in the presidential candidates views on Social Security, Medicare and retirement.  As we pointed out several weeks ago-most of our candidates have been fairly quiet on these issues. 

Yesterday, John Edwards did propose new "Universal Retirement Accounts", a special tax credit to help retirement savers and a government annuity.

Create Universal Retirement Accounts: Edwards will require employers to offer a new universal retirement account to all workers without another pension. Businesses will be encouraged to automatically enroll workers in a 401(k)-type portable retirement account, with automatic paycheck deductions and employer contributions. Workers will be able to build up these savings accounts over the course of their careers, regardless of how many times they change jobs. Worker contributions will be matched up to dollar for dollar on the first $500 by a new Get Ahead tax credit, which will be far more valuable than the 10 percent or 15 percent tax deduction that many workers get on retirement savings today. Edwards will also create opportunities for workers to convert their savings into government-sponsored annuities, offering fixed monthly payments for the rest of their lives and ensuring that retirees do not outlive their savings. The new annuity fund will charge minimal fees and be operated by the existing federal retirement savings plan or the Social Security Administration at no cost to the government.

Your 401k plan will probably have an "auto-enrollment" feature soon.  The Department of Labor will have new rules in effect in about 60 days.

In addition to the automatic enrollment,  the employer plans will also include similar investment choices including target date funds (lifecycle), balanced funds and managed accounts.   These funds will be used as the default investments rather than money markets or stable-value funds. 

Here's a wonderful video featuring James Brown and Pavarotti.  Okay, whats this got to do with retirement?  Well the "Godfather of Soul" and other celebrities are a reminder we all need to do some basic estate planning.  Wills, trusts and even checking beneficiaries on our IRA and 401k plans should be a financial priority.

InvestmentNews.com looks at the James Brown estate.

The way his terrible estate plan is unraveling, if the late James Brown, the “Godfather of Soul,” could see from wherever he is, he wouldn’t be screaming his most-famous three words: “I feel good.”

Most likely he would be lamenting, “I’ve really messed things up, because papa had a great big bag, and no one can figure out who gets it.”

Social Security benefits for nearly 50 million Americans are going up 2.3%, the smallest increase in four years. It will mean an extra $24 per month in the average check, the government announced Wednesday.

The cost of living adjustment means that the monthly benefit for the typical retired worker in 2008 will go from $1,055 currently to $1,079 next year.

USAToday.com provides an update on Social Security benefits for 2008.

The Social Security Administration on Monday had a ceremony to highlight the opening wave of baby boomer retirements, a generation of 78 million people born from 1946 to 1964. The first of those boomers will turn 62 next year, making them eligible for Social Security benefits.

An estimated 10,000 people a day will become eligible for Social Security benefits over the next two decades, putting a severe strain on the pension program.

Consult your tax advisor on this one.  If you're taking your MRD out before year end and thinking of gifting to charity, the IRS will provide a tax break for "qualified charitable distributions" (QCD).  This will expire December 31st.  WSJ.com explains charitable contributions from IRA accounts.

Here's a look at the rules and how you can benefit:

To be eligible, you must be at least 70½ years old on the date the money is transferred. You are allowed to donate as much as $100,000 to a charity (or charities).

You won't be taxed on the distribution, and the money you donate counts toward the required minimum distribution that IRA holders in this age group must withdraw from their accounts each year.

The distribution must be made to a "qualified" nonprofit group; a donor-advised fund, for instance, doesn't count. The money must come from an IRA; 401(k)s and SIMPLE and SEP plans aren't eligible.

Your IRA custodian must send the funds directly to the charity. (You can't withdraw the money yourself and write a check.) You can't take a tax deduction for the donation -- but again, you won't be taxed on the withdrawal.

Most of the presidential candidates have not mentioned Social Security, Medicare, or other retirement issues.   Odd as millions of baby boomers will turn 62 next year and start drawing benefits.  Hillary Clinton did take the first step today in announcing a new type of retirement plan.

Americans would be allowed to contribute as much as $5,000 in tax-deferred funds each year to the ``American Retirement Accounts,'' Clinton said. Depending on household income levels, the government would then offer tax credits of as much as $1,000.

Couples who make $60,000 or less a year would be eligible for a dollar-to-dollar match on the first $1,000 they put into the retirement account, Clinton said. Couples making between $60,000 and $100,000 a year would be eligible for a 50 percent match, or $500 on the first $1,000 deposited.

Clinton, 59, said she would encourage employers to offer a direct-deposit option into the new accounts.

The former first lady also spoke about Social Security today, saying she has a ``fundamental commitment'' to the program. ``We've got to fight and finally bury the idea of privatizing Social Security,'' she said.

I watched this show last week and highly recommend anyone needing to start generating income from their IRA or 401k tune in.   WealthTrack's host Consuelo Mack had Jonathan Clements and several other financial planners discuss annuity and distribution strategies.  They have the show and transcript available on their site.

Retirement Income Special on WealthTrack. (WealthTrack is on Friday night.  Check your local listing)

76 million baby boomers will retire over the next two decades, and many of them will be facing a new financial challenge- how to fill what is being called the "guaranteed income gap." Guaranteed income is income you cannot outlive, like social security and traditional pensions. But those pensions, or defined benefit plans, are becoming rarer. In 1979, 84% of American workers were covered by a traditional pension. By 2005, that figure was down to 37% and dropping fast. That means that most Americans must face some complicated decisions about how to invest and distribute their life savings to provide an income stream for the rest of their lives.