It May Be A Close As A Simple Amendment To Your Plan Document

Category: Finance, Financial Planning.

Most companies with more than a handful of employees offer a 401( k) savings plan in order to attract and retain workers. In addition to matching contributions, the company may also be paying( directly or indirectly) for other costs to administer the 401( k) plan.

Many of these companies also provide a matching contribution so that when an employee elects to defer part of his or her wages into the 401( k) plan, the employer will make an additional contribution to the employee s account. This can be a pretty costly proposition for an employer. Frequently, they are unaware of funds available to them in the 401( k) plan itself that can be used to save money for the company. I talk frequently with business owners, and human resource, tax directors personnel about their 401( k) plans and they are all trying to save costs. This article explains how this can happen and what employers can do to find this" hidden treasure. " In order to induce employees to stay with the company, most employers which have a matching contribution formula will provide a vesting schedule. The tax rules set limits on the length of vesting schedules with most employers using a schedule that provides for incremental vesting over a period of 6 years.

Under this schedule, if the employee terminates employment too soon, he or she will forfeit some or all of the matching contribution made by the company. Of course, not all employees will stay with the company until they are 100% vested. For employees who are zero vested at the time of termination, their forfeiture can occur immediately. After termination, the former employee will forfeit the unvested portion of his or her account usually at the time they receive the rest of their vested account. Money that is forfeited is required by law to remain inside the 401( k) plan and is part of all the other assets held by the plan s trustee. Often, company personnel do not realize that the forfeitures represent" hidden treasure" to the company.

Unfortunately, many of the vendors who provide administrative services for employers fail to inform the employer of the existence of these forfeited funds. It is not always easy for an employer to spot the extra forfeiture cash because this money is usually lumped in with other liquid investments held by the plan, such as its money market account. Once this money is found, the employer can use it to pay for its current matching contributions and this will free up current cash flow to be used for other business purposes. Tracing forfeiture records with the vendor is usually required to determine the amount of funds that may be available. Some 401( k) plan vendors may inform the employer of the forfeited funds but have provided in the governing documents of the plan that such funds are to be used to pay for the operating costs of the plan. If the plan document is amended, then the costs of plan administration may instead be charged to the participants with the forfeitures being used to fund some or all of the employer s current matching contributions.

While this is perfectly lawful, it still means that the employer is effectively paying for these costs because it is not using the forfeitures to lower its current contributions to the plan. So, the moral of this story is don t stop looking for that pot of gold at the end of the rainbow. It may be a close as a simple amendment to your plan document.

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Money, Are Not Bad, And Budgets Things

Category: Finance, Financial Planning.

Do you equate family finance with tax law?

If this applies to you, take heart- budgeting doesn t have to be rocket science! Does it seem like an overwhelming concept to develop a budget you can live with? Here are five tips to make creating a realistic budget easy: Tip# 1: Think positively about your money. In fact money is wonderful! Money, are not bad, and budgets things. Money enables you to have a wonderful roof over your head, to wear the clothes that help you tell the world who you are and what you re about.

You certainly wouldn t think money was bad if you were giving it to Katrina victims or the parents of a child with a debilitating disease. Money buys education opportunities, and money enables, cultural experiences you to help others in need. So that s the first tip to creating a budget, think positively about your money. If eating out is a major part of your life then you ll want to have a dining out category. Tip# 2: List the categories that you live by. If after- school activities are a large part of your child s life and your family expenses then that is a category for your budget. If you want to create a budget that you can live by, that is easy to use and easy to follow, create categories that make sense to you and your family.

Many budget forms have categories that won t make sense for your lifestyle. Tip# 3: Be realistic about your income. For regularly employed people with a regular and predictable pay check, your budget should reflect your current pay check after taxes. This is more difficult for self- employed individuals, commission based sales people or business owners, because business fluctuates. For folks dealing with unpredictable income, take a look at the minimum you ve made over the past 5 years and base your budget on that income. If you use the highest income you ve made in the past 5 years then there may be months when you make less and your budget won t work.

This way, all your financial bases are covered. The good news is that when you use your minimum average income you will often have extra money. Tip# 4: Set realistic financial goals. Plan how you ll use this extra money so it doesn t get fettered away. Budgeting isn t about tracking your costs and going without. It s about success, not failure. It s about setting and attaining your financial goals.

Before you sit down to create a budget, take a few minutes to evaluate and document your financial goals. For college? Do you want to save for a vacation? For retirement? What are your goals? For a new car? Without goals, a budget is nothing more than a detailed checkbook register.

If your budget, are all about, and categories financial burdens, a budget will be painful to create and more painful to live by. Tip# 5: Plan for fun. Make time, for fun in, and financial room your life. If you absolutely love skiing or taking your children to the zoo then fit that fun time into your budget. If you love going to the movies, create a budget category for going to the movies once a month. If you want your budget to be something that is easy to create and even easier to follow, follow these five tips. Have fun with it!

Making a budget doesn t have to be a chore, in fact it can be tremendously empowering.

This Is Not So For Internet Banking Savings Accounts

Category: Finance, Financial Planning.

Internet banking savings accounts are being used more every year by people across the country. People who use internet banking savings must have a good reasons for doing so.

They can offer better alternatives to the traditional savings account. If you opt in for a traditional savings account instead of an internet account, you will get a very low interest rate. Savings in traditional banks are generally around 1% annually. In fact, you probably wont make enough back on your money to cover the cost of inflation. This low interest rate barely makes it worth your effort to save. That way, when money is worth less, you will not have your money sitting in a traditional account where it will then buy less than it can now. You might be better off to buy things at today s prices.

Internet banking provides an alternative to this situation. They have set up programs where extra money can be put into savings automatically. Many traditional banks have worked to establish incentives to encourage savings among their customers. They have also encouraged the use of automatic transfers from your savings weekly or monthly. However, all of that, with the internet changes. These measures do not work because the interest rates are so low that people see no future in saving. Internet banking institutions tend to offer rates more along the lines of 5% to 5% .

With the traditional savings, rates would have to soar to even come close to this level. This difference allows consumers to put money in internet banking savings accounts and know that it will retain its value over time, as long as the rates stay up. Another advantage of internet banking savings accounts is a good deal for the small investor. If not, you are like many financially strapped Americans. You may not have large amounts of money to save at one time. In many traditional banks, this means that you will be given the lowest possible interest rates.

Sometimes it is even more. If you go to a brokerage firm, you cannot open a money market account for less than$ 1000 as a minimum balance. This is not so for internet banking savings accounts. You can start your internet banking savings account with as little as$ 10 You might have to pay service fees until you reach a certain threshold, usually a few hundred dollars. If you have your savings through internet banking, you will be able to have high interest rates at any level of investments. After that, you will be making money at better rates than you ever could at a traditional bank.

They will discourage these customers from using their services because they are too hard to handle. One downside of internet banking is that some of the major banks will not deal with customers who demand a lot of time. This is not true of all internet banking, but if you need a lot of help, you should be aware of it. There is just no reason to deny yourself the best interest rates your money can earn. Overall, savings done through, though internet banking institutions still work out better for most people than traditional savings accounts.

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Annuity Buyer Auctions

Category: Finance, Financial Planning.

Annuity buybacks normally occur when a specialty finance company offers a lump sum cash payment in return for previously purchased annuity payments. Annuity providers are not only buying back personal annuities, but also structured settlement payments that they previously sold to customers.

Major annuity providers are now beginning to offer buybacks as a way to compete for customers wanting to cash out annuities. The problem for some annuity companies is that specialty financing companies are often able to offer customers more money at a given time, thus capturing most of the buyback market. Let s take a look. What is on the horizon for such competitions? Where Competition Comes From? The first is specialty finance companies who s primary business model is buying annuity payments as investments. Competition for annuity buybacks falls under three main categories.

These companies can have multiple funding sources, and can often very good pricing. The third being independent brokers who work as the middle man with a variety of funding sources. The second is emergence of annuity providers themselves offering a similar service to specialty finance companies, buying back their own policies. Future competition is on the horizon in the form of commercial banks, saving and loans, credit unions institutions, and other lending companies who see the value of offering annuity buyback services to their customers. How Specialty Finance Companies are Competing With the Big Boys. Because the latter mentioned institutions are generally larger they may be able to offer more capital than specialty finance companies, it is quite conceivable that competition may become harder for the smaller companies to keep up with.

In order to compete with larger commercial companies, many specialty finance companies are relying on their personalized customer service abilities as a way to keep and gain customers. It all comes down to convenience for the customer. They are marketing their skills in quality of service provided, as well as the turnaround time it takes during the funding process. Specialty companies also rely on the fact that they may have more power with pricing and funding options, which can be tailored to a particular customer s needs and wants. Retirees are probably the biggest group of individuals who take advantage of buying annuity payments when they cash in on their retirement plan funds. Knowing What Retirees Want.

Many seniors would much rather set up an annuity installment plan that offers a safe, tax advantageous investment, longterm strategy rather than receive a lump sum of their earnings. Annuities are generally considered a very safe investment product. To this end, retirees want to feel comfortable and at ease with the company that they choose to delegate these payments and usually pick an A Rated Annuity Provider. However, financial circumstances change and annuity owners sometimes wish that they had access to the funds they have contributed to the annuity. Giving annuity owners the ability to access a variety of annuity buyers competing for their business is a service whose time is eminent. Annuity Buyer Auctions.

This type of service not only allow retirees to gain the best prices for the sale of their annuity payments, but also clients who own annuities in the form of a structured settlement. In addition, the competitiveness of an auction platform assures that the absolute lowest discount rates are applied to the buyback price of annuity payments, and the client receives the most amount of cash back possible. This forces buyback companies to fine tune their services to keep the annuity buyer game in a fair playing field. Annuities are a valuable part of today s financial world. Financial circumstances do change, and if annuity owners are in need of funds they have contributed to their annuity, then only one option should exist. They provide a safe longterm investment strategy with good returns.

Selling payments using an advanced auction platform that brings top annuity buyers together and gets the maximum amount of cash back for the sale of annuity payments.

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To Save For Retirement

Category: Finance, Financial Planning.

When developing a budget or financial goals it can be tricky to figure out how far in advance you should plan.

Conversely if you think too far out, you could be putting some of that money you re tucking away for your savings to better use. If you re too short- sighted you could wind up with savings that don t meet your needs. Here s how to figure it all out: What are your financial goals? They might be goals like: To save for my child s college education. List your financial goals on a piece of paper. To save for retirement.

To buy a new car or house. To save money for emergencies. Once your financial goals have been listed, here are a few calculations you can make to know how much to save. Figure out how much you have to set aside for this emergency fund after your current expenses, and create a goal. Emergency fund: Experts advice people to set aside at least three to six months of cash or liquid assets( investments you can easily convert to cash) in the event of a loss of job, short, medical emergency- term disability, etc. If you make$ 3000/ month then you ll want to set aside a minimum of$ 900This doesn t mean you have to save it all tomorrow- begin saving for it and create a plan.

Debt: Most experts agree that your total monthly debt payments shouldn t exceed 36% of your gross monthly income. Maybe you ll be able to save that much in a year, maybe it ll take two. This debt includes your mortgage, car payments and credit card debt. If you re above this ration, create a plan to get your debt down quickly. Add up your debt and calculate your monthly gross income to see where you are. Savings: You ve probably heard the rule that you need to save 10% of your income. Use this 10% rule with your other savings goals including your emergency account, college education or other goals.

This rule is a good rule to follow, assuming you are placing additional money into a retirement account. Retirement: Experts tell us that our retirement income should be 75- 80% of pre retirement income. A little basic planning and goal setting will make the process understandable and manageable. This means if you re making$ 50, 000 right now, your retirement income will need to be$ 37, 50 Using these numbers will help you determine exactly how much you need to save, how much you have to work with, and how long it will take you to save the money. The numbers presented here, are just that, and the guidelines- guidelines. This is why it is important to set financial goals and to save with a purpose.

Your budget and financial plan needs to meet your needs and the needs of your family.

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It Has Been Claimed That A- Day Is Set To Be The Biggest Shake- Up That Pensions In The UK Have Experienced In Over 60 Years But It Has Also Left Many Wondering What A- Day Is And What Pension Advice They Will Need To Prepare For It

Category: Finance, Financial Planning.

It has been claimed that A- Day is set to be the biggest shake- up that pensions in the UK have experienced in over 60 years but it has also left many wondering what A- Day is and what pension advice they will need to prepare for it.

What is A- Day? Below we take a closer look at A- Day and what it might mean for the average worker. A- Day refers to the changes to the UK pensions which is set to occur in April this year. The main idea behind A- Day is to" increase choice and flexibility for all" . What is the aim of A- Day? The government s broad aim in the introduction of the new pension rules in April 2006 is to simplify the existing pension rules.

In a nutshell, A- Day aims to take the pressure off agencies that need to give pension advice by actually simplifying the whole pension system. The rules will affect all pensions including personal and work pensions. What pension changes will occur with A- Day? Furthermore, the entitlement in the Occupational Pension Schemes can actually be less than 25% . The Standardisation of Tax Free Cash- The tax- free cash sum entitlement currently differs between Pension Schemes. The simplified pension rules will ensure that Tax Free Cash allowance of all Pension Schemes is set at 25% of the fund value as standard.

Alternatively Secured Pension- An Alternatively Secured Pension will also be introduced which will mean that after the age of 75 withdrawal of income will be known as" Alternatively Secured Pension" and will be similar to income drawdown. If you have an occupational pension where the tax- free cash entitlement is higher than 25% then you will need to seek pension advice from an experienced Independent Financial Adviser, who will be able to help you protect this right. This allows you to draw an income, up to a maximum of 70% of the highest single- life annuity, each year from your pension fund. You may also be able to sell and buy these properties between individuals. Greater Flexibility in Investment- There will also be greater flexibility in investment including the provision enabling you to hold residential property within your pension fund. Contributions- The amount you can currently contribute into a pension scheme is capped but A- Day is set to change all this. Who will be affected by these pension changes?

As of April this year, there will be no maximum amount of pension saving. Actually nearly everybody who will work or has worked will be affected by these pension simplification rules. Where is the best place to get pension advice regarding A- Day? It will impact on any individual who already has a pension in place or any individual who will start a pension plan at any point in the future. It is always highly advisable to discuss any pension advice you may require with a professionally trained financial adviser. It is also worth noting that you should always check that any financial adviser you speak to is registered with the FSA and is thereby duty bound to offer you unbiased advice.

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Know The Terms Before You Choose A Credit Card To Fit Your Situation

Category: Finance, Financial Planning.

A business credit card is both a convenience and an effective way to track expenses. Whether a business credit card appeals to you for simplicity and convenience or because it provides good record- keeping, there is still more you need to know.

Cash transactions burden your accountant who is trying to make all of this work for tax purposes. The annual fee for business credit cards can be higher than for personal credit cards. But if you just need to get credit for basic purchases, look for a card with an introductory 0% APR. You might pay as much as$ 150 a year for cards with more bells and whistles. That means you pay no interest for a stated period, which can be 6 months up to a year or more. It looks like an interest free loan.

This is great for a new business when so many expenses occur in the first year. The due date on your billing cycle is the absolute last day your payment must be received by the company, not the next day or the day after. If you have a variable rate APR, you will find that the credit card company will kick up your interest rate as a further penalty for chronic late payments. Late fees can run as high as$ 35 or more for each late payment. Some cards, expect that you, like American Express will pay the balance each month or in full. The Annual Percentage Rate is the amount of interest you pay on the credit card balance. Know the terms before you choose a credit card to fit your situation.

Choose a fixed rate- not a variable. That is tough on your budgeting. Not only can the company hike the rate for late payments, but a variable rate can be changed at any time without warning. If you got stuck with a variable or high rate card that is getting painfully expensive, look for a new card with a free introductory transfer of balance offer. Late paying clients put every business in a bind. Moving your debt to the lower rate card saves you money. If you need cash to tide the business over, you can get cash advances immediately from some credit cards.

Save it for real emergencies. Be careful not to overuse this. The interest rate on cash advances is usually much higher than it is for purchases. Is your credit cards help system limited to web page FAQs, or can you connect with a live person? If you have a problem or need information fast, how can you get it? In shopping for a business credit card, contact the customer service number and see what kind of response you get. Do not go overboard applying for a business credit card if you are operating as a small business entity such as a DBA.

You want a credit card company that makes it easy for you to get support online or by telephone- at least a major portion of the business day. The credit will be built under your social security number, so you want to make sure you are able to effectively manage the debt.

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