The Differences Between 401(k) and 403(b) Plans

July 7, 2024 No Comments

A: Named after sections 401(k) and 403(b) of the tax code, respectively, both 401(k) plans and 403(b) plans are tax-advantaged retirement vehicles offered by employers. The primary difference between the two is the type of employer sponsoring the plans—401(k) plans are offered by private, for-profit companies,

Is a Thrift Savings Plan (TSP) a qualified retirement plan?

July 7, 2024 No Comments

A: The Federal Employees’ Retirement Security Act of 1986 established the Thrift Savings Plan, or TSP. It is a qualified retirement plan made available to current and retired federal government and agency employees. The Thrift Savings Plan is a defined contribution plan that is quite

Use your 401(k) to purchase a house

July 7, 2024 No Comments

A: As you may already know, you must meet certain requirements, as outlined in the 401(k) plan document, to be considered eligible to receive a distribution from the plan. Your employer or plan administrator will provide you with a list of the requirements. Amounts withdrawn from

Is a treasury bond a good investment for retirement?

July 7, 2024 No Comments

A: Individuals saving toward retirement use a variety of investments to accumulate funds over time, including stocks, bonds and cash accounts. A Treasury bond (T-bond) is a common choice among investors with low risk tolerances or those focused on generating income. Investments in T-bonds pay

What are activities of daily living (ADL)?

July 7, 2024 No Comments

A: Activities of daily living (ADL) refer to daily activities that individuals normally do, unassisted, to take care of themselves. These activities include: bathing, eating, cooking, walking, dressing, house chores, personal hygiene and walking. Usually, healthcare professionals (nurses, nurse’s aides, doctors) measure a person’s well-being

Is an ESOP a qualified retirement plan?

July 7, 2024 No Comments

A: An ESOP, or an Employee Stock Ownership Plan, is a defined contribution plan, which is a particular form of a retirement plan as defined by the IRS. As a qualified stock bonus plan, an ESOP became a qualified retirement plan in 1974 under IRS

Is an IRA a qualified plan?

July 7, 2024 No Comments

A: A qualified plan refers to whether or not an investment plan offered by an employer qualifies for tax breaks under internal revenue service (IRS) guidelines. An individual retirement account (IRA) is not offered (with the exception of SEP and SIMPLE IRAs) by an employer

Is my IRA or Roth IRA FDIC-Insured?

July 7, 2024 No Comments

A: The Federal Deposit Insurance Corporation, or FDIC, is a government-run agency that provides protection against losses if a bank or savings and loan association fails. Created in 1933, the FDIC’s original mission was to offer peace of mind to banking customers after the financial

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

July 7, 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?

July 7, 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

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