February 2020
Retirement Articles This Week
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Entries in 401k Plans (24)
What Happens to your 401k or IRA in a divorce?...You'll Need to understand a QDRO
A QDRO is basically a document, drafted in a specific way, that recognizes an alternate payee for the assets within the account. In other words, it's a court order that guarantees that more than one person will benefit from the retirement savings.
A QRDO is a domestic relations order, meaning it is made by a judge or decree, and is as serious as child support, alimony, or any other property granted to a each spouse in a divorce. The state must enter a judgement or decree endorsing or approving the QDRO, and it must also be recognized by the federal government under ERISA.
Regardless of your age, money withdrawn through a QDRO is not subject to the typical 10 percent early withdrawal penalty....So if you receive your spouses IRA or 401k assets it may makes sense to withdraw money you may need and roll remaining funds over to your own IRA. Make sure to discuss with the plan custodian.
The Department of Labor provides frequently asked questions.
Courtesy of About.com
401k Loans
Active participants with 401k plans can generally borrow from their plans. If you have left the employer, loans are not available. According to InvestmentNews about 21% of participants have a loan balance. the median outstanding balance is about $7,400.
Fidelity 401k plan Average Balance
At Fidelity, the average 401(k) balance hit $91,300 by the end of 2014. While that’s up just 2% from 2013, it’s a jump of more than 30% from 2011’s average balance of $69,100, Fidelity reported.
The increase was due in part to the stock market, which saw the S&P 500 climb by more than 10%– its third year of double-digit gains. But a spike in worker contributions also played a significant role.
Workers and their employers contributed an average of $9,670 in 2014, up 4% from the year before.
401k contributions for 2015
Retirement savers will be able to sock away a little more in their 401(k)s and other retirement plans for 2015, according to plan contribution limits announced today by the Internal Revenue Service.
Next year the elective contribution limit for employees who participate in 401(k)s will increase to $18,000, from $17,500 for this year. That’s the amount that a saver can contribute annually on a tax-deferred basis, and it also applies to many plans offered by nonprofit and government employers. Boomers, take note: The catch-up contribution for employees aged 50 and over will also increase by $500, to $6,000, so someone in that age group could contribute a total of $24,000.
401k Balances are Increasing... A Third of Us are cashing out When We leave a Job
Fidelity Investments' latest report on 401(k)s has both good news and bad news about our preparedness for retirement.
The good: The average 401(k) balance managed by Fidelity reached a record $89,300 in the fourth quarter of 2013. That's a 15.5% increase from a year ago and almost double the low of $46,200 set in 2009.
The number is higher for pre-retirees 55 and older: $165,200.
The bad: More than one-third (35%) of all 401(k) participants cashed out their accounts when they left their jobs in 2013. That number is even higher among younger participants ages 20 to 39.
A look At 401k Balances
Fidelity Investments rececently reported the average balance of all the plans they administer rose to a new high of $84,300 at the end of the third quarter. Employees who were continuously active in their plans saw the average balance rise over 19% to $223,100 and pre-retiree age 55 or older who have been active in their plan for at least ten years, the average balance is now $269,500.
Most 401k plans utilize 20-30 funds and Fidelity found that 1 in 3 employees are using just one fund- a 'target- date" fund. Thes funds are ideal for a retirement saver who doesn't have time to follow the markets and choose funds.
Visit PBS Frontline...The Retirement Gamble
In The Retirement Gamble, FRONTLINE correspondent Martin Smith investigates what happened to retirement in America and the role that financial services companies may be playing in draining your savings, year after year.
Through interviews with Wall Street executives at the helm of the mutual fund industry and former financial advisers who may or may not have their clients’ best interests at heart,Smith traces the remarkable rise of the 401(k)—a product Americans buy without knowing its true cost.
Make sure to read the interview with John Bogle, founder of Vanguard Funds.
Fidelity Reports Their Average 401k Balance
The average account balance grew 12 percent last year, according to Fidelity Investments. The nation's largest 401(k) administrator said Thursday that the year-end average was $77,300, up from $69,100 a year earlier. In the fourth quarter, the average balance rose 2 percent.
Good news...The average balance among the 12 million 401(k) accounts that Fidelity administers is at the highest level since it began tracking the data in 2000.
401k Match...IBM Makes A Big Change
As of January 1, 2013, IBM will no longer give employees their 401(k) match with each pay cycle. Instead, the technology behemoth will make one large lump-sum payment to employee accounts on December 31 of each year.
When a company provides nearly $900 million in matching contributions to employee 401(k) plan accounts, that company might be forgiven from a financial perspective for wanting to hold onto that money as long as possible.
That certainly seems to the motivation behind IBM's recent announcement that it would no longer be matching employee 401(k) contributions each pay period. Instead, the company will be making a single annual match each December 31st starting next year. Moreover, employees who leave the company either voluntarily or involuntarily before December 15 of any given year will receive no match at all for that year.
Courtesy of Business Finance Magazine
401k Contribution Limit 2013
You can save more in your tax-qualified retirement accounts in 2013.
The IRS announced a $500 cost-of-living increase for the maximum tax-qualified contributions for 2013: $17,500 for 401(k) accounts and $5,500 for IRAs.
Most retirement savers are not contributing anywhere near those limits. Mutual fund company Vanguard reports that just 12 percent of participants in plans it administers socked away the maximum in 401(k)s last year - and the median deferral rate among workers participating in the company's plans was just 6 percent, which works out to $3,000 for a worker earning $50,000. But even among workers with gross income above $100,000, the average deferral rate was just 8.2 percent last year.
Average Balance In Fidelity 401k
Fidelity Investments, the nation's largest 401(k) administrator, said the average balance among its nearly 12 million accountholders was $74,600 at the end of March. That's up from $69,100 at the end of 2011.
Fidelity's 401(k) participants set aside an average $5,810 through paycheck deductions for the 12-month period ended March 31, and employers kicked an additional $3,360. Both numbers are slightly higher than they were a year ago.
401k and 403b Limits For 2012
Maximum contribution has raised from $16,500 to $17,000. If you're 50 or older remember you can add an additional $5,500. Don't forget to add money to your Roth IRA!
And, look at your employer plan and see if the Roth 401k has beed added.