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Thursday, July 28, 2011

Named after Section 1035 of the Internal Revenue Code, a 1035 exchange allows life insurance policyowners (and annuity contract owners) to exchange an old policy (or contract) for a new one from a different insurance company without tax consequences. Of course, it must meet the requirements of Section 1035 in order for the transaction to be tax-free. This strategy can be especially beneficial to a person who purchased a life insurance policy or annuity contract many years ago that has less favorable contract stipulations than those available today.



Read More...http://bit.ly/o9sRxy http://amplify.com/u/a19s1h
Most people have good intentions about saving for retirement.

But few know when they should start and how much they should save.

Sometimes it might seem that the expenses of today make it too difficult to start saving for tomorrow. It’s easy to think that you will begin to save for retirement when you reach a more comfortable income level, but the longer you put if off, the harder it will be to accumulate the amount you need.

The rewards of starting to save early for retirement far outweigh the cost of waiting. By contributing even small amounts each month, you may be able to amass a great deal over the long term. One helpful method is to allocate a specific dollar amount or percentage of your salary every month and to pay yourself as though saving for retirement were a required expense.



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A few days ago I wrote about retirement savings advice for folks in their 20’s and 30’s.



But folks in their 30’s and 40’s confront many challenges than can interrupt a good retirement savings strategy. This is the time when other life events, like getting married, buying a home, having children, etc., can compete for more of your income, leaving little if any to save for retirement which is a long way down the road.







Read more: http://moneywatch.bnet.com/retirement-planning/blog/what-works/retirement-savings-advice-age-30s-and-40s/753/#ixzz1TQ1cSb72 http://amplify.com/u/a19s18
A decade ago many people strived to retire young. Now most people are nudging back their retirement date and wondering if they will be able to retire at all. The age workers expect to retire has increased from an average of 60 in 1995 to 66 today, according to a new Gallup poll of 1,077 adults.



[See Why the Retirement Age Is Increasing.]



Most Americans now expect to retire at age 65 or later. Over a third (37 percent) of workers plan to retire after age 65, up from just 15 percent in 1995. Retirement at exactly age 65 also remains a popular choice. A quarter of employees plan to retire at age 65, down only slightly from 29 percent in 1995.



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Tuesday, July 12, 2011

Capital gains are the profits realized from the sale of capital assets, such as stocks, bonds, and property. The capital gains tax is triggered only when an asset is sold, not while the asset is held by an investor. However, mutual fund investors could be charged capital gains on investments in the fund that are sold by the fund during the year.

There are two types of capital gains: long term and short term; each has different tax rates. Long-term gains are profits on assets held longer than 12 months before they are sold. As a result of the 2003 tax law, the long-term capital gains tax was reduced from 20% to 15% (0% for individuals in the 10% and 15% tax brackets) through 2010; the 2010 Tax Relief Act extends the reduced tax rate through 2012. Short-term gains (on assets held for 12 months or less), on the other hand, are taxed as ordinary income at the seller’s marginal income tax rate.



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All types of IRAs and employer-sponsored retirement plans are subject to annual contribution limits set by the federal government. The limits are generally adjusted periodically to compensate for inflation and the increase in the cost of living.

IRAs

For the 2011 tax year, you can contribute up to $5,000 to all IRAs combined, the limit will be adjusted for inflation annually. For instance, if you have a traditional IRA as well as a Roth IRA, you can only contribute a total of the annual limit in one year, not the annual limit to each.

If you are age 50 or older, you can also make an annual $1,000 “catch-up” contribution.



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Traditional IRAs and most employer-sponsored retirement plans are tax-deferred accounts, which means they are typically funded with pre-tax or tax-deductible dollars. As a result, taxes are not payable until funds are withdrawn, generally in retirement.

Withdrawals from tax-deferred accounts are subject to income tax at your current tax rate. In addition, withdrawals taken prior to age 59½ are subject to a 10% federal income tax penalty.

If you made nondeductible contributions to a traditional IRA, you have what is called a “cost basis” in the IRA. Your cost basis is the total of the nondeductible contributions to the IRA minus any previous withdrawals or distributions of nondeductible contributions. The recovery of this basis is not seen as taxable income.



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Most people have good intentions about saving for retirement.

But few know when they should start and how much they should save.

Sometimes it might seem that the expenses of today make it too difficult to start saving for tomorrow. It’s easy to think that you will begin to save for retirement when you reach a more comfortable income level, but the longer you put if off, the harder it will be to accumulate the amount you need.

The rewards of starting to save early for retirement far outweigh the cost of waiting. By contributing even small amounts each month, you may be able to amass a great deal over the long term. One helpful method is to allocate a specific dollar amount or percentage of your salary every month and to pay yourself as though saving for retirement were a required expense.



Read More....http://bit.ly/lUzL1T http://amplify.com/u/a17q12