If you are... approaching retirement retiring early changing jobs looking to borrow money from your retirement plan wondering what to do with an inherited plan ...you need this book! IRAs, 401(k)s & Other Retirement Plans helps you make sense of the rules that govern distributions from retirement plans, and avoid the stiff penalties that lurk in the fine print. It covers the different types of retirement plans -- including 401(k)s and other profit-sharing plans, Keoghs, IRAs and tax-deferred annuities -- and the taxes and penalties that can deplete your nest egg. In accessible, plain English, IRAs covers: the tax strategies before retirement the tax strategies at retirement dividing a plan at divorce tax penalties for taking your money out early methods for avoiding tax penalties distributions you must take during your lifetime distributions to your heirs after your death Roth IRAs With this book as your guide, you'll know the rules, avoid the penalties and save for your future like a pro.

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Introduction Who Should Read Chapter 1 Read this chapter if you aren't certain which types of retirement plans you have -- either through your employer or as a self-employed person. Also read this chapter if you have an IRA but aren't sure which type. How many people have warned you that you'll never see a penny of the hard-earned money you've poured into the Social Security system and that you'd better have your own retirement nest egg tucked away somewhere? Perhaps those doomsayers are overstating the case, but even if you eventually do collect Social Security, it is likely to provide only a fraction of the income you will need during retirement. Congress responded to this problem several decades ago by creating a variety of tax-favored plans to help working people save for retirement. One such plan is set up by you, the individual taxpayer, and is appropriately called an individual retirement account or IRA. Another, which can be established by your employer or by you if you are self-employed, is referred to by the nondescript phrase, a qualified plan. A qualified plan is one that qualifies to receive certain tax benefits as described in Section 401 of the U.S. Tax Code. There are other types of retirement plans, too, which enjoy some of the same tax benefits as qualified plans but are not technically qualified, because they are defined in a different section of the Tax Code. Many of these other plans closely follow the qualified plan rules, however. The most common of these almost-qualified plans are tax-deferred annuities (TDAs) and qualified annuity plans. (Don't be thrown by the name. Even though it may be called a qualified annuity plan, it is not defined in Section 401 and therefore is not a qualified plan in the purest sense.) Both of these plans are defined in Section 403 of the Tax Code. Because many of the rules in Section 403 are similar to those in Section 401, TDAs and qualified annuity plans are often mentioned in the same breath with qualified plans. Helpful Terms Adjusted gross income (AGI). Total taxable income reduced by certain expenses such as qualified plan contributions, IRA contributions, and alimony payments. Beneficiary. The person or entity entitled to receive the benefits from an insurance policy or from trust property, such as a retirement plan or IRA. Deductible contribution. A contribution to a retirement plan that an employer may claim as a business expense to offset income on the employer's tax return. You may know it as simply the employer's contribution. In the case of an IRA, a deductible contribution is one that an individual taxpayer may use to offset income on the individual's tax return. Distribution. A payout of property (such as shares of stock) or cash from a retirement plan or IRA to the participant or a beneficiary. Earned income. Income received for providing goods or services. Earned income might be wages or salary or net profit from a business. Eligible employee. An employee who has met certain conditions of an employer's retirement plan, such as years of service, and now qualifies to participate in the plan. Nondeductible contribution. A contribution to a retirement plan or IRA that may not be claimed as a business expense or used as an adjustment to offset taxable income on an income tax return. Nondiscrimination rules. The provisions in the U.S. Tax Code that prohibit certain retirement plans from providing greater benefits to highly compensated employees than to non-highly compensated employees. Participant or active participant. An employee for whom the employer makes a contribution to the employer's retirement plan. more...

 

I. How to Use This Book 1. Types of Retirement Plans 2. Basic Tax Rules for Distributions 3. Taxes on Early Distributions 4. Avoiding the Early Distribution Tax: Substantially Equal Periodic Payments 5. When Must You Begin to Take Your Money? 6. Distributions You Must Take During Your Lifetime 7. Distributions to Your Beneficiary If You Die Before Age 70 1/2 8. Distributions to Your Beneficiary If You Die After Age 70 1/2 9. Roth IRAs Appendix A. IRS Forms, Notices and Schedules Appendix B. Life Expectancy Tables Index

An explanation of the complicated rules on withdrawal, written for ordinary people. Hank Ezell, syndicated money columnist

 

IRAs, 401(k)s & Other Retirement Plans belongs on the bookshelf of anyone with an IRA, 401(k) or other type of qualified retirement plan. When the inevitable questions come up, here's where you'll find the answers.

 

Twila Slesnick is an Enrolled Agent who specializes in tax and investment planning for retirees and prospective retirees. She has conducted numerous seminars throughout the U.S. in the areas of computer use, retirement planning and tax planning. She has also served as senior editor of a national computer magazine, developed computer software and designed mathematics curricula. She lives in Dublin, California. IRAs, 401(k)s & Other Retirement Plans is her first book for Nolo.

 

IRA, 401(k)s & Other Retirement Plans by Twila Slesnick
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