Retirement Savings There When You Need It

There are times when we find ourselves in financial pinches perhaps an unexpected medical bill or car repair or we could just be going through a rough patch and need some help. These are the times when we should consider a 401k loan because they are different than traditional bank loans in that they come with very low interest rates, there is no credit check and you have longer to pay them back which is done through payroll deductions. Though there are tax implications involved, it still may be your best bet.

All companies are different and have different rules attached. For instance, some will allow you only one 401k loan per twelve months whereas others will allow you two and the maximum loan amount is typically fifty percent of what you have contributed. Also, some plans prevent you from contributing more until the loan is paid back. In addition, there is also a 401k hardship withdrawal in which you can take if there is an immediate need for the funds such as primary residence eviction prevention or funeral expenses for the death of a spouse. This type of loan is a little different in that it requires additional paperwork and you can obtain one even if you have maxed your regular loan limit. There again, you may not be allowed to contribute to your account for a minimum of six months. This is actually a withdrawal and not a loan so you are not required to pay it back.

Should you change jobs and still owe money on your retirement loans, it may be a good idea to consider a 401k rollover. That way, you will not lose any of your contributed funds. If you are already fully vested with your present company, the face value of the account is yours however, cashing it out may involve early withdrawal penalties. Your outstanding loans, any penalties and a twenty percent tax will be taken right off the top and could most literally leave you with very little in the end so rolling it over into a new account would most likely be your best option in that situation.

Tax Changes you Need to Know About

Tax Changes you Need to Know About

The American Recovery and Reinvestment Act (ARRA) has many different tax provisions to spur economic growth. The First Time Home Buyer’s credit and the new expanded Long Time Home Buyers credit are things you can take advantage of if you purchase a home. Tuition changes make school more affordable. And making your home more energy efficient can earn you tax credit.

The IRA limits have been increased to provide additional saving opportunities. Now singles with income up to $65,000 and couples with income up to $109,000 can put money into IRAs with … Read more at 2009 Tax.

Tax Changes you Need to Know About

The American Recovery and Reinvestment Act (ARRA) has many different tax provisions to spur economic growth. The First Time Home Buyer’s credit and the new expanded Long Time Home Buyers credit are things you can take advantage of if you purchase a home. Tuition changes make school more affordable. And making your home more energy efficient can earn you tax credit.

The IRA limits have been increased to provide additional saving opportunities. Now singles with income up to $65,000 and couples with income up to $109,000 can put money into IRAs with a deduction.

Standard deductions have been increased for almost everyone which reduces your tax burden. And the standard mileage rates have been improved to make driving for work affordable. A 55 cent deduction is available for business travel while 24 cents per mile is available for medical travel.

Finally the ceiling for child interest income taxed at a child’s tax rate (Kiddie tax) has been raised to $1,900. Gifting more to children is now beneficial for the whole family.