retirement plans

Roth 401k and Roth 457 Plans

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457 retirement

By now, many people are familiar with the basic concepts of a 401k retirement savings plan. But did you know there are different kinds of 401k plans? Do you know what a 457 plan is, or what its variation, the Roth 457 plan is? If you already have a good understanding of regular 401k plans, or traditional 401k plans, then it’s pretty easy to see the difference. If not, don’t worry, we’ll walk you through it step by step. Standard Features 401k and 457 Plans The regular parts of a 401k plan are relatively well known. An employer must start and run the 401k plan. Contributions made to the 401k plan are traditionally made with pre-tax dollars. That means that you pay no taxes on the amounts you contribute to a 401k plan. Also, no capital gains taxes or taxes on dividends are due while the money grows inside of the 401k savings plan. In exchange, you cannot withdraw money from a 401k plan prior to age 59 1/2 except in very specific circumstances without penalty. In addition, you will have to pay taxes on the money as you withdraw it from the account. And, finally, once you turn 70 1/2 …

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Where Is My PERA 401k History?

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the history of pera 401k accounts is missing

Did you login to PERA 401k account and find all of your historical data missing? Do you wonder where your PERA 401k history is on the website? I had the same questions when I tried to log in and plan out buying some PERA retirement years with the 401k. Turns out, there is an easy answer to why all of your PERA 401k data is missing. PERA Changed Custodians If you have a balance in the PERA 401k, then you got the same mailers, emails, and notifications I did. You probably took a quick look at them and figured it wouldn’t matter and decided to ignore them, like I did. That is where the answer lies, however. The PERA Board of Trustees decided they could do better for PERA members. For an organization as large as PERA, doing better usually means lower expenses. 401k Blackout Period Once PERA figured out that they wanted to change 401k custodians, they needed to figure out how. For better or worse, the process of changing 401k administrators is highly regulated with a whole host of rules that must be followed. One of the rules that migrating 401k plans must follow is the imposition of …

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Colorado Secure Savings Program

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colorado secure savings program

Colorado is set to join a handful of other states in creating an automatic retirement savings program for Colorado workers. The idea is that while many Coloradoans have access to a retirement plan like a 401k or 457 plan through their employer, a lot of Coloradoans don’t. Unfortunately, those who do not have an employer sponsored retirement plan often do not start saving for retirement until much later than those who do. And, when it comes to retirement savings, time is lots of money. What Is the Colorado Secure Savings Program? The final Colorado Secure Savings Program won’t launch until at least 2023, but the rough idea is that each Coloradoan who works for an employer without a retirement plan will be automatically enrolled in the CSSP. The CSSP is actually nothing more than an IRA, or Roth IRA. What the program does differently is automatically create the retirement plan account and set the employee’s contribution to a specific minimum which will come from payroll deductions like a 401k plan. People who don’t want to participate can opt out. This plan could be a big retirement driver for Colorado workers over the long term. When I was a financial planner, …

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Retirement Tax Triangle for Better Retirement Planning

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tax triangle save money in retirement

Financial advisors make their bread and butter from retirement planning. Unless you’re wealthy (or young), chances are that most of your money is in your retirement savings and home equity. That makes your retirement accounts the main interest of most financial advisors, so it’s in their best interest to make it sound complicated. Unfortunately, they are right. There are a bunch of little tricks to good retirement planning. Fortunately, most of them are easy to straighten out, like the tax triangle. Retirement Taxes Welcome to Retirement. Oh, while you’re here, we need to tax those 401(k) withdrawals. All too many new retirees find themselves surprised that withdrawals from their 401k accounts are fully taxable. It’s an easy mistake to make. After all, when you contributed money to your 401k it was tax-free (technically, pre-tax, but same difference). And, while all of that money sat in your 401k earning interest and dividends, it was tax-free. So, why wouldn’t it keep being tax-free? Unfortunately, that’s the deal you make with the IRS. A 401k plan is actually a tax-deferred account. As the name implies, the IRS allows you to defer, or wait, to pay the taxes. It is a huge advantage and …

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