O transfer from one ira to another ira o 401k to ira

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What is allowed? o Transfer from one IRA to another IRA o 401k to IRA o Transfer from one 401k into another 401k o Cannot transfer IRA into a 401k Roth IRA: 1997 Tax Reform Act No tax deduction for contributions Interest grows tax-free Withdraws are tax-free Can contribute up to $5,500 annually
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RISK MANAGEMENT EXAM 4 Retirement Planning Steps *Step #1- set goals* When do you want to retire? What lifestyle? o Travel Europe o Spend lots of money o Relax & do nothing o Buy vacation home *Step #2- estimate what you will need* If you use your living standard today as a gauge– most estimate you will need about 70 to 80% of that in retirement Why? *Step #3- estimate your income* What will you receive from social security? Pension income? (doubtful) Other income? (rentals) *Step #4- estimate the shortfall* Difference between #2 & #3 #2 is usually always greater than #3 As pensions go away and social security is less or possibly non-existent– it will continue to grow *Step #5- calculate how much you need to cover the shortfall* How much (lump sum) is needed by the age you retire *Step #6- calculate how much you need to save each year to reach the amount in step #5* Many online tools can help you figure this out (Fidelity, Vanguard, TD Ameritrade) *Step #7- execute plan* Save money o Hardest step o Needs strong commitment to financial discipline What is Your Net Worth? What you have – what you owe= your net worth Assets – liabilities= owners’ equity What you have o Assets– money, possessions (personal property), home, auto, investments
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RISK MANAGEMENT EXAM 4 What you owe o Liabilities– student loans, credit card debt, monthly bills (current debt) Insolvent This is what most students are – what does that mean? You owe more than you are worth Does that matter right now? Consider the time in your life journey Age 21 vs 35 vs 55 vs 75 Income Statement Where does your money come from? What is your cash inflow and the sources? o Wages o Salary o Gifts (family) Expenditures Fixed o Typically (but not always one you have no control over- obligated- usually a set amount Variable o One you usually have control over- not always obligated and the amount can vary Key component is maintaining budget and good personal finance- controlling costs Many will say- it isn’t what you earn- it is what you save You don’t have to make a lot to get rich Consider that when most for-profit companies have financial difficulties- they tend to focus on cutting expenses first- before attempting to increase income Budget Process of setting spending goals Set control over cash inflow & outflow How do we accomplish and set a good budget Recordkeeping Difficult to budget if you don’t know the figures Save receipts & monthly statements (or know where to look online!) Keep a spreadsheet of all of your accounts & monthly bills Budgeting It is a work in progress Bring together everything you make & spend– then follow it for a month
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  • Spring '10
  • GARY
  • Individual Retirement Account, Risk Management Exam

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Christopher Reinemann
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