Is my non-qualified Roth IRA distribution subject to taxes or early distribution penalties?

June 30, 2024 No Comments

A: The ordering rules must be applied to determine whether the distribution is subject to income taxes and/or the early distribution penalty. Under these ordering rules, distributions are taken from funding sources in the following order: Regular contributions Roth conversions Earnings Note: Roth conversion amounts

Is the cost-of-living adjustment (COLA) mandatory?

June 30, 2024 No Comments

A: A cost-of-living adjustment, or COLA, is a purchasing power protection mechanism provided to all monthly Social Security and Supplemental Security Income benefits. While a cost-of-living raise for Social Security recipients is technically “mandatory,” it does not mean there will be an actual increase every

Is there a minimum I have to contribute to my 401(k) plan?

June 30, 2024 No Comments

A: No, there is no minimum you have to contribute to your traditional 401(k) plan, but to maximize your retirement account potential, there are suggested amounts that should be contributed. There is also a maximum that you are allowed to contribute to your retirement account.

My company is the trustee of our 401k plan (which has 112 participants). What are the pros and cons of having the company instead of the plan provider/vendor as the trustee?

June 30, 2024 No Comments

A: The answer may vary depending on the plan provider and the provisions of the plan document. For questions relating to a specific issue, the employer should consult with an ERISA attorney, who will be able to make an appropriate recommendation. An ERISA attorney may

My daughter would like to use some of her Roth IRA to pay for some current tuition fees and loans. Can she do this without a penalty?

June 30, 2024 No Comments

A: This is a surprisingly complicated question, as it touches on the differences between traditional and Roth IRAs, as well as what counts as a “qualified education expense.” Because Roth IRA contributions are made with after-tax earnings, a person can withdraw his or her direct

My husband left his ex-wife as his retirement plan beneficiary. Can this be changed?

June 30, 2024 No Comments

A: Even when assets are divided following a divorce, in many cases, former spouses and heirs engage the services of attorneys and the courts to determine the beneficiaries of the retirement-plan assets of a deceased retirement account owner. This occurs when the deceased fails to

Receiving Social Security benefits abroad

June 30, 2024 No Comments

A: If you are planning on retiring abroad, you may be concerned about forfeiting your Social Security retirement, disability or survivors’ benefits. However, because the United States has Social Security agreements with many nations throughout the world, this may not be the case. The Social

Should a Canadian citizen who lives and works in the U.S. continue to contribute to a RRSP account?

June 30, 2024 No Comments

A: No, a U.S. resident should not contribute to a RRSP account. RRSP contribution rules allow you to contribute a certain percentage of your earned income, but since your income is not from a Canadian source, you would not be eligible for any tax deductions

The company I am working for said that 401(k) contribution can be based on only straight time pay! The company I previously worked for allowed me to contribute on gross earnings. Has the law changed, or is the current employer wrong?

June 30, 2024 No Comments

A: The regulation (law) that addresses your specific question has not changed. However, both employers may be right. Here’s why: The regulations allow the employer to determine, to a certain extent, what is defined as “eligible compensation/pay” for the purposes of determining contributions to the

The Difference Between a 401(a) and a 401(k)

June 30, 2024 No Comments

A: Both of these savings plans are workplace retirement plans, included in the 401 section of the Internal Revenue Code. The difference between a 401(a) plan and a 401(k) plan is first in the type of employer offering them and then in certain details and provisions. What

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