Did you know its National Nurses Week?  May 6-12

These outstanding people are doing a great job preparing for retirement.  Here's a recent Fidelity study provided by 401khelpcenter.com.

Nurses reported higher savings levels in 401k and 403b plans than their peers across the tax-exempt (e.g., hospitals, non-profits, religious and higher education institutions) and corporate sectors.

On average, nurses have $64,000 in their workplace savings plans, compared to average balances of $48,000 among all workers in tax-exempt sector plans and $62,500 among all workers in corporate sector plans. The combination of higher earnings and higher deferral rates into workplace savings plans (9% deferral rate for nurses vs. 6.9% for most Americans) is likely driving the higher balances.

Senate Bill 362 increases the retirement age and employee contribution rate in the Kansas Public Employees Retirement System for employees hired after July 1, 2009.

Currently, KPERS members can retire under the 85-point rule, when their age plus years of service equal 85. For those hired after July 1, 2009, that rule is removed and the normal retirement age will be 60 with 30 years of service, or 65 with five years of service.

KPERS has assets of more than $12 billion, but the gap between its value and future obligations — called the unfunded liability — has grown to $5.1 billion. KPERS includes state employees, teachers and many local government workers.

The AARP Location Scout factors in some of your climate, recreation, job and education preferences and suggest cities for you to consider.   Answer a few questions and figure out where to reinvent your life!

Most 401k plans offer a limited menu of funds.  On average, most plans offer from 10-20 investment choices.  The GM plan has been extensive- over 70 different funds and will be steamlined this summer.

Preston Crabill, director of employee benefits and human resource operations at GM, noted recent academic research that indicated having too many investment choices in a 401(k) plan can lead some participants to pick the most conservative investment option and discourage others from participating at all.

“We do believe that by reducing the fund lineup, we should see an increase in participation, an increase in the savings rate and also a better diversified portfolio on the part of our participants,” Crabill said.

Starting June 29, GM’s plan for salaried employees will offer 39 choices, down from 73, and the plan for hourly employees will offer 38 choices, down from 71.

At the end of 2006, GM’s 401(k) assets totaled $20.2 billion.

The Bush administration said Tuesday that it will look into ways to help people get information about fees and expenses assessed on 401(k) plans, which can drain hard-earned money from workers' retirement savings.

The Labor Department's Employee Benefits Security Administration will start soliciting ideas Wednesday from the public, industry and other interested parties aimed at improving the disclosure of these charges to millions of people with 401(k) retirement savings plans

Most of the focus on pension problems has been on big corporations-get ready for the next wave.  Many state and local governments will have these same problems and American taxpayers could be forced to pay higher taxes and reduced services to fund retiree costs.  Here's a look at some of the California pension issues.

Santa Clara County needs $5 billion to cover the retirement years of its employees. It's short by almost $1 billion.

And similar red flags are popping up all over California.

San Mateo County's unfunded liability dangles past half a billion dollars. Alameda County's pension fund is short by $766 million. San Diego County, dubbed "Enron by the Sea" for its long-running pension problems and other financial scandals, is $1.4 billion in pension deficit. The price tag for the state of California? Around $40 billion.

I'll probably log in and view my retirement accounts tomorrow!

A contribution to an IRA will be deductible if:

• You have earned income.
• You're not covered by a retirement plan at work.
• You're covered by a plan at work but your modified adjusted gross income (AGI) is $50,000 or less ($75,000 for married couples filing jointly). That qualifies you to deduct your full contribution. You may take a partial deduction if your modified AGI is more than $50,000 but less than $60,000 (or more than $75,000 and less than $85,000 for married couples).
• You're not covered by a plan but your spouse is and your modified AGI is $150,000 or less. that qualifies you for the full deduction. But you may take a partial deduction if it's more than $150,000 and less than $160,000.

 

Your 401k or 403b provider is required to do a 20% withholding if you do a distribution from your retirement plan.  Often they will encourage you to do a "direct rollover" into an IRA to avoid the tax withholding. Here's why- any distribution from an IRA is taxed at 10% and you even have the option of instructing your custodian not to withhold taxes.  It's your decision. 

The folks at TurboTax explain the 20% withholding rule.

Folks appear to be under the impression that once they've had taxes withheld on distributions from their 401(k)s or retirement plans, they've "already paid taxes" on the withdrawals and don't need to report the withdrawal or the income tax on their tax returns... "I've already paid the tax on this; why do I have to pay it again?"

Here's the straight talk on this situation: in general, when a 401(k) or 403(b) plan pays a distribution to you, the federal government requires that 20% of the distribution is withheld from the distribution for income taxes. This is just like the federal income tax withheld from your W-2... it's kind of an "advance payment" on the income taxes that will be due on the taxable income you're getting as a result of the withdrawal. There are certain exceptions from this withholding rule, like when you receive payments over time or when it's a distribution due to hardship.

You have until Tuesday April 17 to make your contribution or establish an IRA for 2006.  Most IRA accounts can be funded by sending in a check or linking to a bank account.  Call your IRA custodian this week!

I like this approach!  As a matter of fact I've been doing this for years-I thought it was called procrastination. 

Bankrate.com's 7-day tax-filing plan.

Day 2: Reduce taxable income
Welcome back. Day two probably will be the fullest of our tax-filing plan, but it's worth it. Today we start slashing your tax bill.

Pull together all your exemption, deduction and tax credit info. These items will help you whittle down your income to the actual amount that the Internal Revenue Service will tax.

You get to take $3,300 off the top for each person you claim as an exemption on your return. That's generally a pretty easy determination: you, your spouse and any dependents, which generally means your kids. But did you care for a parent, even one who didn't live in your home? You may be able to claim an exemption for that person, too.

Next, there are some expenses that any taxpayer can take without bothering with extra paperwork. These include certain IRA contributions, student loan interest, alimony payments or moving costs. Collect the backup for these nonitemizing expenses first.

Now check the standard deduction allowed for your filing status. Most taxpayers use this rather than bothering with tracking every expense to itemize. If the standard amount works for you, great! You may be through today in less than an hour.

But if you find itemizing will help cut your taxes, you've got a bit more work to do.

Ben Stein really is one of our hero's concerning investing and retirement planning.  His advice is simple and straightforward.  We have one more of his books to give away this month-so send us an e-mail!

Here's his recent Yahoo finance column: Six Key Principles of Saving for Retirement

Remember the Basics

These are basic principles to be sure, but they're vital. The three most important to remember are: 1) Start saving for retirement when you're young; 2) Save as much as you can; and 3) Maximize your returns by using index funds with low costs and high diversification. (Diversification and time are probably the investor's best friends.)

It may sound simple, but it isn't easy. If you're diligent, though, you'll be well on your way to that house on the fairway.