IRAs

How to Invest Your IRA In Your Future Retirement Home

twocents@thestreet.com (Brian O'Connell) — Mon, 13 May 2013 15:00 GMT

NEW YORK (TheStreet) -- According to the Employment Benefit Research Institute, 49% of Americans are either "not too confident" or "not at all confident" about achieving a comfortable retirement. And it's true: A comfortable retirement can demand a lot of money many Americans don't have.

One novel way working Americans can close that retirement gap is to buy a home and rent it out to generate more retirement income, all using an Individual Retirement Account. Also see: 5 Things You Didn't Know About Taking a Vacation

That's what Lil Miller-Fox did, and she's more than lived to tell the tale. ...

How To Consolidate Your 401(k)s

twocents@thestreet.com (MainStreet) — Thu, 04 Apr 2013 19:26 GMT

By Paul Menchaca

NEW YORK (MainStreet) --For professionals in their 30s, a decade-plus spent in the workforce not only means that they've held a number of different jobs at different companies but also that they've held multiple 401(k)s spread across their former employers. But all too often, people have not taken the steps to consolidate these stray pension plan accounts.

"It's a significant problem," says Kile Lewis, co-CEO and founder of oXYgen Financial, a full-service family office in Alpharetta, Ga. for clients in their 20s and 30s -- or the so-called Generations X and Y. "One of the biggest issues for this demographic is they have four or five small accounts, and so it doesn't seem like a lot of money to them." Also see: How Retirees Can Maximize Their Social Security Payouts ...

Generation Debt: The Good, the Bad and the Ugly

twocents@thestreet.com (MainStreet) — Tue, 02 Apr 2013 19:22 GMT

by William Richards

NEW YORK (MainStreet) --Indebtedness is a power relationship; one side has it, the other doesn't. A cynic will see the debtor as a serf tilling someone else's land. A naked capitalist, on the other hand, will see the debtor playing a supporting and necessary role the psycho-drama of our national economy.

Debt is a much more nuanced beast. As something so intrinsic to economics, it represents equal parts financial opportunity and millstone. And, that's why we distinguish between good and bad debt. Also see: Should You Pay Your Taxes with a Credit Card? ...

Why Are We Ignoring the IRA?

twocents@thestreet.com (Brian O'Connell) — Thu, 28 Mar 2013 16:31 GMT

NEW YORK (TheStreet) -- By and large, Americans aren't too confident about their chances at a comfortable retirement. According to the Employment Benefits Research Institute, 49% of U.S. adults say they either are "not too confident" or "not at all confident" of affording a decent lifestyle in retirement.

A big part of the problem is that Americans don't have a firm grip on how much to save for retirement, and aren't sure of the tools they need to reach financial security after their working years. Also see: 5 Experts Tell Retirees How They Can Get Back to Work

In the EBRI study, respondents were all over the map in estimating how much to save, with some workers aiming at 30% or more (23% of respondents) and 20% saying they were aiming to save 20-29% of their income for retirement. ...

'Spring Cleaning' Tips for Your Wallet, Purse or Portfolio

twocents@thestreet.com (Brian O'Connell) — Thu, 28 Mar 2013 13:00 GMT

NEW YORK (TheStreet) -- It's spring, and a young man's (and woman's) fancy turns to love.

OK, maybe or maybe not.

But one other fancy Americans could be, and probably should be, turning to is their personal finances -- the engine that makes any long-term relationship more stable and enjoyable. Also see: 6 Myths About Resume-Writing You Can Forget ...

Get Ready for Automatic IRA Payroll Deductions

twocents@thestreet.com (Brian O'Connell) — Wed, 06 Feb 2013 16:00 GMT

NEW YORK (TheStreet) -- America has a savings problem: U.S. adults aren't nearly saving enough for retirement, and about half the country isn't saving for retirement at all.

According to LIMRA, a financial industry marketing and distribution group, 49% of Americans aren't contributing to a retirement plan. Of that number, 56% of young consumers (ages 18-34) are in the "non-savings" group.

"The findings from this survey were disturbing, given that people will increasingly need to rely on their personal savings to make ends meet in retirement," offers Matthew Drinkwater, associate managing director at LIMRA Retirement Research. ...

Charitable Transfers Get Maximum Return on 'Minimum Distribution'

twocents@thestreet.com (Robert D. Flach) — Thu, 31 Jan 2013 14:30 GMT

NEW YORK (TheStreet) -- One of the temporary benefits extended for tax year 2013 by the American Taxpayer Relief Act of 2012 was the ability for people age 70.5 and older to transfer up to $100,000 tax free directly from an IRA account to a qualifying charity. These charitable transfers can be used to satisfy the taxpayer's "required minimum distribution" for the year.

Using this technique can result in substantial tax savings. Here is how it works:

Dave Donor, 72, must take a fully taxable required minimum distribution of $4,263 from his IRA this year. Dave also owes $5,000 on a pledge to the Visual Art Center of New Jersey building fund. He can contact the trustee of his IRA account and request that $5,000 be sent directly from the account to the center to cover his required minimum IRA distribution for 2013 and his pledge. The $5,000 is not reported as income on his 2013 Form 1040, but he cannot deduct it as a charitable contribution on his Schedule A. ...

Steadier Ways to Play the China Rally

twocents@thestreet.com (Stan Luxenberg) — Mon, 10 Dec 2012 15:18 GMT

NEW YORK (TheStreet) -- China funds have been rallying. During the past three months, the average China fund returned 12.1%, according to Morningstar. Investors have taken notice of the strengthening environment, putting $2 billion into iShares FTSE China 25 Index ETF this year.

Positive economic news has been spurring the market gains, says Morningstar analyst Patricia Oey. Retail sales in China have been climbing, growing at an annual rate of 14.5% in October. After slowing for months, industrial production growth has stabilized at a healthy annual rate of 9%.

Economists say the improving picture may be connected to a temporary increase in infrastructure spending this year. The government mandated the stimulus to strengthen the economy at a time when a new leadership team is about to take office. ...

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Finding Hefty Yields in Emerging Markets Bonds

twocents@thestreet.com (Stan Luxenberg) — Wed, 28 Nov 2012 14:54 GMT

NEW YORK (TheStreet) -- Emerging markets bond funds have been rallying. The funds returned 15.0% this year, outdoing the Barclays Capital Aggregate Bond index by 11 percentage points, according to Morningstar. Investors have taken notice, pouring $19 billion into the funds this year, a huge inflow for a category with $73 billion total assets.

Can emerging bonds continue to deliver solid returns? Probably. The bonds pay compelling yields. At a time when 10-year Treasuries yield 1.65%, some emerging markets funds yield more than 5.0%. Besides paying rich yields, many countries in Latin America and Asia boast strong balance sheets. That has special appeal in an era when developed countries are plagued with huge debt burdens.

After struggling with financial crises in the 1990s, many emerging countries tightened their belts, reducing budget deficits and paying down debts. As a result, ratings agencies have upgraded many emerging countries, including Brazil, Turkey, and Russia, that were once considered below-investment grade. The upgrades have helped bond prices to rise sharply. ...

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Why Some Fund Managers Avoid the Biggest Stocks

twocents@thestreet.com (Stan Luxenberg) — Mon, 26 Nov 2012 14:47 GMT

NEW YORK (TheStreet) -- Plenty of fund managers like to own top dogs, stocks that have the biggest market values in their sectors.

Familiar names in the elite group include Apple , Johnson & Johnson and Coca-Cola . Investors figure that the biggest stocks are stable choices with strong growth potential.

But some portfolio managers are wary of buying the No. 1 stocks. Instead, they tend to prefer stocks that rank second or lower. "In general, the No. 2 stocks tend to be cheaper, and they can be more dynamic," says Tom Forester, portfolio manager of Forester Value . "The No. 2 managements can be a little more aggressive because they are trying to get the lead. The No. 1 companies may be more cautious because they are trying to protect their leads." ...

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Mutual Funds That Get High Returns From Low-Quality Companies

twocents@thestreet.com (Stan Luxenberg) — Mon, 19 Nov 2012 14:51 GMT

NEW YORK (TheStreet) -- Plenty of mutual funds focus on high-quality stocks. Their portfolios include familiar names such as Coca-Cola and Johnson & Johnson , companies with rock-solid balance sheets.

But Aquila Three Peaks Opportunity Growth takes a different approach. The fund specializes in stocks with below-investment grade ratings. Buying low-quality names has proved to be a winning formula lately. This year Aquila has returned 16.5%, outdoing the S&P 500 by 6 percentage points and topping 99% of competitors in the mid-cap growth category, according to Morningstar.

Aquila is not the only investor to prosper by buying companies with heavy debt burdens and shaky balance sheets. According to a study by Morningstar, companies with above-average debt levels outdid those with below-average debt by 2 percentage points this year. ...

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Prepare Your Portfolio Now for Tax Code Changes

twocents@thestreet.com (TheStreet Guest Contributor) — Thu, 01 Nov 2012 13:00 GMT

By Eric Henderson of Nationwide Financial COLUMBUS, Ohio (TheStreet) -- No one knows for sure how the tax code will ultimately look in the next year, but we know the tax code will change. Bush-era tax cuts are set to expire at the end of 2013, and if our lawmakers take no action we can expect higher estate, investment and income taxes. In a lame duck congressional session, it's unclear what actions lawmakers will take before the end of the year.

That's why it's a great time to meet with a financial adviser to begin formulating a plan to ensure your portfolio is prepared for the changes to come. You won't find an adviser who knows exactly how things are going to play out, but a good one can help you understand the three most likely potential tax change scenarios: Tax rates will increase, particularly for the wealthy. Tax deductions will be reduced. Tax rates will decrease, but tax preferences are removed.

Despite a lack of clarity on which scenario may finally materialize, there are several actions worth considering that may put your portfolio in a better position for an uncertain future. Some opportunities may disappear when current tax laws expire, so don't wait until next year. ...

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Taking the (Investing) Road Less Traveled

twocents@thestreet.com (Steve Cordasco) — Tue, 02 Oct 2012 16:24 GMT

NEW YORK (TheStreet) -- I believe the portfolios of retirees and near-retirees can benefit from alternative investments. But I'm not sure that hedge funds really reprsent the alternative investment asset class.

Hedge funds seem like a way for Wall Street's brightest stars to make obscene amounts of money by doing what they have always done, but with a lot less transparency.

But because hedge fund managers are some of the best and brightest and tend to hold ideas close to the vest, it is worth listening to them when they do talk. ...

Proof Active Funds Are a Waste, All in One Place

twocents@thestreet.com (AdviceIQ) — Fri, 21 Sep 2012 18:53 GMT

NEW YORK (AdviceIQ) -- Some high-flying mutual fund managers promise outsized returns in exchange for their wisdom. Many investors are happy to pay handsomely to beat the market. Unfortunately, a lot of these top-notch funds don't. Look at the data before buying into one of them.

A better idea: passively managed index funds that track benchmarks like the Standard & Poor's 500. Fees for funds like these are much lower than for actively managed investments, which try to outpace an index by investing in the securities the manager believes will touch the stars. Active funds charge around 1.4% of asset yearly, while indexes ones go for 0.1% or so.

You might think, "Why would I limit myself to just average gains by buying an index fund when I could pick a manager who has a chance of beating it?" Before you buy, look at the supposedly stellar fund's performance. ...

2 Obamacare Taxes Hitting High-Income Earners

twocents@thestreet.com (Michael Maye) — Wed, 19 Sep 2012 16:10 GMT

NEW YORK (TheStreet) -- The Patient Protection and Affordable Care Act (PPACA) became law back in March 2010. Various provisions of the law go into effect over the next several years. The Supreme Court during 2012 decided not to strike down the law so it largely moves forward as written with a few exceptions. The PPACA includes two new taxes which become effective in 2013. It is critical for those defined as high earners to understand how these new taxes work and the strategies available to minimize their impact.

The first new tax is an incremental 0.9% Medicare tax on wages above $250,000 (married filing joint) and $200,000 (single). A married couple with $500,000 in wages in 2013 will owe an incremental $2,250 in taxes or simply $250,000 x.9%. This new tax is applied to gross wages and is before deductions for items like 401(k) contributions and healthcare premiums. It should be noted the tax also applies to self employment income earned by sole proprietors and partnerships as well.

This first tax will be hard to avoid as it is simply a function of wages or self employment income. The only way to avoid it is to structure compensation to stay below the $250,000 or $200,000 level. ...

More Young People May Enjoy Secure Retirements

twocents@thestreet.com (Stan Luxenberg) — Tue, 18 Sep 2012 13:28 GMT

NEW YORK (TheStreet) -- According to a variety of polls, many young people are glum about their retirement prospects. The pessimists fear their savings will be inadequate to cover living costs. Some members of the younger generation worry that Social Security will disappear.

In fact, the outlook may not be so bleak. In recent years, more people have begun saving. After facing pressure during the financial crisis, the Social Security program has rebounded and remains on solid footing.

The improvement in savings patterns is particularly noteworthy. According to a survey by TD Ameritrade, young people are proving to be better savers than their parents. While 46% of people aged 48 to 66 have regular savings plans, the figure is nearly 60% for those aged 23 to 47. ...

IRA Cheats Become Focus on IRS Cop Beat

twocents@thestreet.com (AdviceIQ) — Mon, 17 Sep 2012 10:00 GMT

NEW YORK (AdviceIQ) -- The word is out that the Internal Revenue Service is less and less lenient regarding individual retirement account mistakes. Potential penalties are large.

Failing to take a required minimum distribution (RMD) from your IRA socks you with a whopping penalty that is 50% of the RMD itself. The penalty for an improper IRA contribution is 6% annually, potentially accumulating for years on end. As a result, you should be more cautious than ever complying with all IRA rules.

A recent article in the Wall Street Journal described how the IRS appears to be cracking down on IRA snafus with increased audits and less leniency in forgiving penalties and interest. ...

Four Money Questions to Answer Before Retirement

twocents@thestreet.com (AdviceIQ) — Sun, 16 Sep 2012 10:00 GMT

NEW YORK (AdviceIQ) -- Every now and then you probably ask yourself, "When should I retire?"

Is it simply a matter of finances? Or do you retire when you've "had enough" and are simple unwilling to take it anymore? Of course, there is no one answer for everyone. But you can ask yourself the following four questions and easily come to a better-informed conclusion:

1. How much does it cost you to live on average each month? Before you quit your job, find out if you have the money to start living the life of Riley or not. And to determine if you have enough money to retire, you must first know what it costs you to live. ...

How Much Monthly Income Will Your 401(k) Produce?

twocents@thestreet.com (Stan Luxenberg) — Mon, 10 Sep 2012 14:36 GMT

NEW YORK (TheStreet) -- The average 401(k) account has $72,800 in it, according to a study by Fidelity Investments -- hardly enough to support a lengthy retirement. To increase savings, plan sponsors are trying a variety of techniques. One of the most promising is an effort to redesign the statements that savers receive.

For decades, a typical 401(k) statement has displayed account balance. But new approach also shows a saver the monthly retirement income that this balance would support. Someone with $50,000 might be told that the account would provide monthly retirement income of $275.

Seeing a monthly income figure could have a big impact on savers. According to a study by Principal Financial Group, participants who know their monthly income save 46% more than plan participants who don't. ...

Finding Dividend Stocks That Still Look Like Bargains

twocents@thestreet.com (Stan Luxenberg) — Wed, 29 Aug 2012 13:31 GMT

NEW YORK (TheStreet) -- Searching for yield, investors have been racing to buy dividend-paying stocks.

Favorite choices include AT&T and Duke Energy, which both yield more than 4.6%, a rich payout at a time when 10-year Treasuries yield only 1.63%.

Now some fund managers worry that high-yield stocks have become too rich. According to T. Rowe Price, a warning signal went off recently when dividend-paying stocks became more expensive than non-dividend payers -- a big change from the pattern that has held for past three decades. ...

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Paul Ryan's Jumbled Mutual Fund Portfolio

twocents@thestreet.com (Stan Luxenberg) — Tue, 28 Aug 2012 14:46 GMT

NEW YORK (TheStreet) -- While Mitt Romney may favor complicated overseas accounts, his running mate Paul Ryan is a more down-to-earth millionaire. According to disclosure documents, the presumptive GOP vice presidential candidate and his wife Janna have up to $3.2 million in assets, and much of the portfolio is stashed in mutual funds. The couple's documents are posted at opensecrets.org, a Web site maintained by the Center for Responsive Politics.

Holdings include some well-known funds, such as Pimco Total Return, the biggest bond fund, and Fidelity Contrafund, a star performer with $82 billion in assets. Those are good choices, but in many respects the portfolio is a jumble. Altogether the couple own more than 30 mutual funds, including eight different international funds and more than a few lemons. The strategy of the Ryans -- or their financial advisers -- resembles the approach taken by all-too-many investors who latch onto one promising fund and then buy another that strikes their fancy. Holding too many funds, investors lose control of their portfolios and pay unnecessary expenses.

The best approach is to shop carefully for six to ten funds. The holdings should complement each other and provide adequate diversification. By buying a limited number of funds, you can keep track of each one and understand its role in the portfolio. ...

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Retirement Savers Should Benefit From Declining Target-Date Fund Fees

twocents@thestreet.com (Stan Luxenberg) — Mon, 27 Aug 2012 14:25 GMT

NEW YORK (TheStreet) -- Many target-date funds have been slashing fees.

Allianz Global Investors recently reduced its expenses from 0.91% to 0.64%, while Nationwide cut costs from 0.64% to 0.42%.

Companies such as Fidelity Investments and TIAA-CREF have introduced index funds with expense ratios less than 0.50%. The average expense ratio of the target funds is 0.72%, according to BrightScope. ...

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IRAs Should Love Procter & Gamble

twocents@thestreet.com (Jim Van Meerten) — Fri, 24 Aug 2012 11:00 GMT

NEW YORK (TheStreet) -- Procter & Gamble has been around for over 175 years. The stock is a huge conglomerate and, as such, can be expected to pretty well track the overall market.

In fact, the total annual return of this stock and the overall market are almost exactly the same 13%+ over the past five years.

Even during the past six months, as this graph from Barchart shows, the stock and the market as measured by the Value Line Index have tracked each other pretty closely. The market was down about 3% for the period while the stock was down about 1%: ...

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You'll Finish Down If You Wait for Up Market to Invest

twocents@thestreet.com (AdviceIQ) — Tue, 21 Aug 2012 10:00 GMT

NEW YORK (AdviceIQ) -- One of the most common questions I get: Should I wait until the market goes up before I make another contribution to my investment account?

The answer is no. You should be investing continuously, in fair weather and foul. Ongoing contributions to your 401(k), individual retirement account or other investment vehicle give you the best results over time.

Since April, the market has generally headed up, following a two-month slump. Given the unending turmoil in Europe, slowing growth in China, high unemployment in the U.S. and other troubles, it likely will slip again before too long. ...

Retirement Planning: How Long Will You Live?

twocents@thestreet.com (Stan Luxenberg) — Mon, 20 Aug 2012 14:22 GMT

NEW YORK (TheStreet) -- A generation ago, it was rare for anyone to live to 100 years of age. But now when a couple reaches 65, there is a 10% chance that at least one of the partners will live to 100, according to recent data from the Society of Actuaries. There is a 1% chance that one partner will reach 107.

The gains in life expectancy present a challenge for anyone who is developing a retirement plan. To maintain comfortable living standards, retirees may require savings that can cover expenses for four decades. But many planners fail to consider the new data on life expectancy.

Instead, people in their 60s plan for retirements of 10 or 20 years. ...

Cramer on Retirement: Defending Your 401(k)

twocents@thestreet.com (Jim Cramer and Wally Konrad) — Mon, 20 Aug 2012 10:00 GMT

NEW YORK (TheStreet) -- If you think your company may go bankrupt, more than your job is at risk. Your retirement account may also be in jeopardy.

Bureaucratic snags, legal hassles, delayed deposits, frozen accounts and tumbling account balances can all mess up your retirement savings. Here's what to watch out for and what you can do to protect your nest egg if you think your company is failing. You're Protected -- Sort of

Under the Department of Labor's ERISA laws, individual 401(k) accounts are protected from creditors. In other words, your employer can't use 401(k) funds -- your money or the money the firm may contribute in match dollars -- to pay debts. ...

Cramer on Retirement: Catching Up

twocents@thestreet.com (Jim Cramer and Wally Konrad) — Mon, 23 Jul 2012 10:00 GMT

(Editor's note: This is the fifth in a series of columns on retirement by Jim Cramer, founder of TheStreet, and Wally Konrad, former senior editor for Smart Money magazine. To read the first installment, click here. The second article is here, the third here and the fourth here.)

NEW YORK (TheStreet) -- About 44% of Americans ages 38 to 65 haven't saved enough for retirement, according to the most recent survey from the Employment Benefits Research Institute.

Numbers aside, most people feel they could be and should be saving more. Even diligent savers may feel behind when they open recent account statements. The roller-coaster ride in the market in the past months has meant plenty of red ink for lots of employees. ...

Average Investor 20 Year Return Astoundingly Awful

twocents@thestreet.com (Michael Maye) — Wed, 18 Jul 2012 10:00 GMT

NEW YORK (TheStreet) -- The average investor's 20 year annualized return is astounding simply because of how awful it was.

According to an analysis by Dalbar, the average investor earned 2.1% over the twenty year period ended Dec. 31, 2011. How did this compare to other asset classes?

To make it very simple, the S&P 500 returned 7.8%, while the Barclays Capital US Aggregate Bond Index returned 6.5% over the same time period. A 50/50 blend of these two asset classes would have yielded a nominal annualized return of 7.2%. Wait, it gets even worse. ...

Cramer on Retirement: What to Do With Old 401(k)s

twocents@thestreet.com (Jim Cramer and Wally Konrad) — Mon, 25 Jun 2012 10:00 GMT

(Editor's note: This is the fourth in a series of columns on retirement by Jim Cramer, founder of TheStreet, and Wally Konrad, former senior editor for Smart Money magazine. To read the first installment, click here. The second article is here, and the third is here)

NEW YORK (TheStreet) -- If you're leaving a job, or worse, suddenly laid off, the last thing on your mind is your retirement account. You mean to get around to rolling your money over into an IRA, but the world has turned upside down and you're faced with more urgent priorities such as beginning a painful job search or grabbing the best retirement options.

No wonder 32% of workers leave their retirement savings in their former employers' 401(k) plans. Employers love it when you do nothing. The more assets a plan has, including money from former employees and retirees, the easier it is for sponsors to negotiate with plan providers for better terms and lower fees. ...

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Cramer on Retirement: Can Master Limited Partnerships Hurt Your IRA?

twocents@thestreet.com (Jim Cramer) — Mon, 21 May 2012 10:00 GMT

(Editor's note: This is the first in a series of weekly columns on retirement by Jim Cramer, founder of TheStreet, and Wally Konrad, former senior editor for Smart Money magazine.)

NEW YORK (TheStreet) -- Income.

It's the holy grail of retirement and there's not much of it. Master limited partnerships are a nice exception. Their yields of 6%-plus look fabulous compared to anemic Treasury bond and CD rates. No wonder they're attracting retirement investors in droves. ...

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