In an effort to help encourage Americans to save more for retirement, Congress enacted the Tax Reform Act in 1978. The Act allows people to save for retirement while lowering their state and federal taxes. The term 401(k) refers to the section number and paragraph in the Internal Revenue Code — section 401, paragraph (k).
401(k) is the most widely used investment vehicle through which an individual can save for retirement. It is a plan set up by an employer, where employees can contribute and invest the money tax free until withdrawal. In some cases, the employer might match the contribution of the employee.
The Internal Revenue Service dictates on how much an employee can contribute, and when the individual can withdraw funds from the plan. If the employee withdraws funds from 401(K) before the retirement age, they might be faced with penalties.
We all know how hot the social media space is with some sizzling returns shown by such stock market heavyweights as Facebook, Inc. (NASDAQ/FB), Twitter, Inc. (NYSE/TWTR), Yelp, Inc. (NYSE/YELP), and LinkedIn Corporation (NYSE/LNKD) to name a handful. The valuation of these momentum stocks is especially high, but as long as there are buyers, these stocks will continue to attract major market surges. Much of the easy money may be gone for now, but there are still some Internet stocks trading here that offer excellent potential for some staggering gains for aggressive traders. Yet the stocks I’m referring to are based out of Read More
Your 401(k) is supposed to be a retirement account with a long investing horizon—not a day trading platform. Unfortunately, there are a growing number of investors doing just that, throwing not just caution to the wind, but also their long-term financial stability. Way, way back in 1978, Congress enacted the Revenue Act to help encourage Americans to save more for retirement. The Act allows Americans to save for retirement while ... Read More
On July 23, the Dow Jones Industrial Average hit an all-time intraday high of 15,604.22. That same day, the S&P 500 also hit a new high of 1,698.78. With the markets doing so well, you could be forgiven for thinking today’s baby boomers are laughing all the way to the bank. But that’s not so! Most baby boomers haven’t really benefited from the bull market. While it runs with reckless abandon, it’s leaving behind most Americans who are in retirement. Over the last five years, stocks and bonds have rallied, but the housing marke ... Read More
The dream of retiring comfortably is a mirage for the vast majority of Americans. According to the National Institute on Retirement Security (NIRS), the retirement savings shortfall in the U.S. is worse than anyone thought. But it’s not an impossible dream for wise investors. After the U.S. markets crashed in 2008, many Americans saw the value of their hard-earned nest egg evaporate. While the S&P 500 and Dow Jones Industrial Average have been on a five-year bull run, this hasn’t trickled down to the average American. In fact, unemployment remains high, a record number of America ... Read More
Do you want to save more or less by the time you reach 65? It might seem like a question with an obvious answer, but… Back in the 1950s and 1960s, Americans on the cusp of retirement had their defined pension plans to look forward to and didn’t really worry too much about saving for retirement—or running out of money. All of that changed in the 1980s, when many companies rolled their retirement plans over to 401(k) accounts. That one simple act meant a worker’s retirement savings now fluctuated with ... Read More