I have a feeling a lot of people will be checking their 401k and IRA account balances this weekend.  The stock market index's dropped dramatically this week after China's sell-off on Tuesday.  

Here's an article on the Thrift Savings Plan (TSP) performance for February and a reminder for diversification in a portfolio.   Ralph Smith of FedSmith.com provides the update.

 After the dust settled, the damage is not all that bad.

Here are the monthly results for your TSP funds in February. After looking at this chart closely, you may want to put away your stomach acid medicine, take a deep breath, and take the time to check your TSP balance. It may make you feel better. Despite the dramatic ups and downs of the market, the changes for February are not bad--and actually some welcome good news for F fund bond investors who have not fared all that well in the past year or so.

The pension changes include:

• freezing the current salaried defined benefit pension plans as of December 31, 2008;
• replacing the defined benefit pension plans with enhanced 401(k) savings accounts with varying levels of company contributions for current associates beginning Jan. 1, 2009; and,
• introducing company-matching contributions for the salaried 401(k) savings plan at 50 percent of the first 4 percent of annual pay beginning January 1, 2009.

Goodyear Freeze Information

Under the new program, employees who participate in a pension plan will begin accruing future benefits under a cash balance formula, effective June 1, 2008. Any benefits already accrued under the old formula will be capped May 31, 2008, and will be paid monthly at retirement. These changes will not affect the benefits of current retirees.   Details on the FedEx pension plan.

For its 401(k) plans, FedEx will increase its matching contributions for most employees and will provide additional investment options. The new federal law allows FedEx to automatically enroll employees and increase their saving contributions each year.

I've mentioned that turning 50 seems to generate a lot of mailings from AARP and numerous insurance companies selling long term care insurance. I keep thinking how health care costs could easily deplete my 401k and 403b savings. 

The Sunday Wall Street Journal has an article (and podcast) about a younger couple facing the long term care decision.

They might be right. But insurance is an emotional buy -- you're buying peace of mind -- and here are the facts that shaped our emotions:

I haven't done my taxes yet...but, if you have and you're getting a refund this year, maybe it's time to check your withholding.   I just noticed the withholding calculator tool on Kiplinger.com.  Check it out.

If you have an older annuity- you may want to get familiar with a 1035 exchange. 

The 1035 exchange refers to the section of tax code that allows investors the flexibility to exchange one annuity for another without incurring any immediate tax liabilities.  It makes sense if you have annuities with high fees or poor investment choices/interest rates. 

CNNMoney provides some basics on "non-qualified" annuities.

You do not want to cash out your existing annuity and then reinvest in a new one. That would trigger tax payments and a 10 percent tax penalty if you do so before age 59 1/2. Instead, you want to do a "1035 tax-free exchange," which is the way to move your money directly from one annuity to another without creating a tax bill. The company you're getting your new annuity from can fill you in on how to do this maneuver.

One caveat, though: before you do a 1035 exchange, make sure the annuity you're going into doesn't have surrender charges that will make an early exit costly.

It's important to understand the difference between the Roth and Traditional IRA, and to understand deductible versus non-deductible contributions within the IRA account.  It can be a confusing topic and generates a lot of questions to our site especially during tax time.   We've added tools on our site that help determine which IRA is appropriate for you.  

Looks like Fidelity just introduced a tool on their web site.  Four simple questions to help guide your IRA decision.

Also, check out the January 30 posting- Vanguard podcast on IRA differences.

I've got a big stack of mail on my bookshelf right now.  Year-end statements, tax documents etc.   I'm just about ready, but before I fire up Turbo-Tax...I'll check out 10 tax essentials for 2006 from Forbes.com.

If you don't have the time or interest in researching mutual funds and building a diversified portfolio,  think about putting together a "lazy portfolio."  The Kirk Report website  presents several investment gurus and their simple approach using index funds and ETF's.

USAToday provided some basics on wills and living trusts this weekend.

One of the major features of the new Pension Protection Act allows a "non-spouse" beneficiary to roll over an inherited 401k or 403b plan into an IRA account.   This change to employer plans allows children, partners, (any non-spouse) to move money into an IRA and stretch-out deferrals over their life expectancy.  In the past they were generally required to take the money out within 5 years, (much sooner in some plans) exposing that inherited plan to a large tax bill.   Imagine working all your life and having your nest egg go to a child with immediate taxes- not very fair.

Just one small glitch.  Not every plan has adopted these new rules- so your 401k or 403b may not have this in place.  Apparently this non-spouse rollover provison is discretionary and many plans just have not adopted this.

Forbes provides an update on non-spouse rules.

There's another gotcha in the IRS guidance for non-spouses who inherited a 401(k) account before 2006. The wording of the new law led planners to believe, reasonably, that non-spouses who had inherited a 401(k) before Jan. 1, 2006, would be allowed to roll over any money left in the account after Jan. 1 and stretch out the payments. But the IRS saw things differently.

If the death occurred in 2002, nothing can be transferred into an IRA (because of arcane minimum distribution rules). If the death occurred in 2006 or later, the rollover with its stretched-out payments is available. Here's where the IRS's interpretation of the law gets really crazy. For taxpayers who inherited 401(k) accounts between 2003 and 2005, the new rules let them roll the money left in the 401(k) account into an IRA, but they then have to take all the cash out within five years of the original 401(k) owner's death.

Meanwhile, if you're leaving your 401(k) to anyone other than a spouse, call your company's personnel department to insist it amends the plan to allow non-spouse rollovers. And if you've got an old 401(k) sitting at an ex-employer, do your heirs a favor and roll it into an IRA before you die, to avoid any complications.

A lot of professional athletes now have retirement plans.   Here's at look at their pension and retirement benefits.

NATIONAL BASKETBALL ASSOCIATION

The NBA pension plan was established in 1965 and is a defined benefit program.

Based on a retirement age of 62, current players would receive $12,400 annually for each year of service with a maximum amount of $124,000 (10 years of service). Players must play three seasons to become vested.

Those who played before 1965 still receive $200 per month for each season they played.