401K

1. Questioner: Mary

   Question: My mother is 65, had a heart attack, and will be retiring next month. She will be receiving about $1200 a month from ss. She still owes $40,000 on her house and her mortgage is $750 a month. She has a 401K with $60,000, what would be her best move to do with it. For now, my sister lives with her and pays half the bills. Thank you in advance for your help. View Answer

2. Questioner: Deborah

   Question: One of our staff died today and he has frozen his 401k in OCt 07, amount 1,300.00 before his death. His age 39 years old. Divorced Leaves behind a 12 year old. Will this 401k become apart of his estate, or can the family put in a trust fund for the 12 year old. I work in HR and I will call the 401k agency but I am not sure they will understand fully. If she can rollover no taxes if not will taxes have to paid if she is under age. Her mother has full cusody of the minor child. View Answer

3. Questioner: Lori

   Question: My employer stopped contributing to the profit sharing over 2 years ago and the money i have in the account has lost money every quarter for over 2 years. can i withdraw the money and put it somewhere else, i thought i read something in the guidelines that if an employer stopped contributing for over a 12 mo. period i could do something about it, and also what constitutes a hardship? View Answer

4. Questioner: Liz

   Question: I have a chance to participate in a 401k I must choose to contribute pre-tax dollars or after tax dollars- which one is best? I'm a pharmacist in a high tax bracket-- 40 years old----this 401k is a regular account not a roth 401k---thanks very much. I just want to know which pre or post dollars will be better for me in the long run. Most say pre-tax?????? View Answer

5. Questioner: Paul

   Question: I'm starting a new job with the opportunity to participate in the 401(k) immediately. This is my first job out of college and I'm not certain how long I will be with the company or what's going to happen in my future. I'm in the process of earning my cpa right now but I plan on attending law school in 2 or 3 years. Anyway, my employer will contribute a fully vested contribution equal to 3% of my gross payroll once I am eligible. I understand the basic premise, compounding interest without taxation over a long time period, however I'm trying to understand why someone would not participate in their 401(k), excluding issues of liquidity and the possibility of withdrawal penalizations. Are there any other major concerns or reasons not to participate? For myself, I'm fortunate enough not to have student loans or any dependents at this time. I plan on investing and saving quite a significant portion of my income considering my expenses are probably lower now than they will ever be in my life. As you can tell, having the cash readily available and maintaining a certain sense of liquidity is not top priority right now. I'd sincerely appreciate your advice on the matter. View Answer

6. Questioner: Vineet

   Question: As a solo business person Would a 401K make sense.What is my obligation to my two employees. Nice reference in the Wall St Journal. View Answer

7. Questioner: Randy Green

   Question: This was your answer to a previous person's question: "You are right. This is the "still working exception" for RMD distributions from your employer plan. You may put off the age 70 1/2 required minimum distribution until you are fully retired. This still working exception to the RMD rules DOES NOT apply to distributions from your IRA. You still need to make those".

   My client is 74 years old and now is retiring and has fallen under the still working exception rule. Now her employer is telling her that all past RMDs must be taken from the plan this year. I have never seen this requirement nor can I find where it says that in the IRS code. Does she need to take the last three years of RMDs or is the RMD only calculated for the current year? View Answer

8. Questioner: CECELIA

   Question: MY SISTER IS GETTING HER HUSBAND'S 401K AS HER DIVORCE SETTLEMENT, SHE WAS PLANNING ON BUYING A HOME, NOW SHE CAN NOT BECAUSE SHE CAN NOT TOUCH THE MONEY FROM THE 401K WITHOUT BEING PENALIZED. IN OCTOBER SHE WILL BE 59 1/2 SO IF SHE PUTS THIS MONEY INTO HER IRA, SHE CAN DRAW ON THE MONEY. CAN SHE DO A ONE TIME DRAW TO USE AS A DOWN PAYMENT ON THE HOUSE SHE WANTS TO BUY? I UNDERSTAND THAT SHE WILL BE TAXED ON WHATEVER SHE WITHDRAWS, BUT IS SHE ALLOWED TO DO A ONETIME ONLY WITHDRAW WITHOUT A PENALTY BEING ASSESSED? View Answer

9. Questioner: Nathan

   Question: Hi Richard. Will I incur a US tax liability if I withdraw my 401K capital (I worked in the US until 1973) at age 65? I am not a US citizen. I am a resident and citizen of Switzerland. The capital will be subject to Swiss tax on retirement capital withdrawal (it's progressive but caps at about 12% and is independent of other revenue). View Answer

10. Questioner: aaron

    Question: the irs says for 2010 you can contribute 16,500 to your 401k.
    For some weird reason my company only allows its employees to contribute 15% of their salary to the company 401k plan. For me that comes out to about 8k. Is there any type of retirement account i can open that will allow me to put the remaining $8500. I know about IRA but thats a different limit and different vehicle. View Answer

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