Retirement-plan rules on borrowing for a home
I would like to look at ways to invest my income in order to accomplish two goals: Buy my first home and save for retirement. Since there are ways to save on income taxes in 401(k) and IRA programs, I am wondering if there is a way to put money into an IRA or 401(k) and pull money from it for a down payment on a first home without incurring significant tax penalties?
R.L., via e-mail
A: When saving for retirement, a 401(k) or an IRA is definitely the best way to go, says Mike Bowen, vice president at WealthTrust Arizona in Scottsdale. You may be able to contribute to both a 401(k) and an IRA if your income qualifies you to do that. You want to make sure you are within the income limits to claim the IRA contribution as a deduction and are within the contribution limits of both.
If your employer offers a match on your contributions to your 401(k), it’s a great way to save for retirement due to the extra money from the company. But Mr. Bowen says a 401(k) does not allow for penalty-free distributions for the purchase of a first home. There is a 10 percent penalty on early distributions (before the age of 59-½).
An IRA has an exception for this penalty when the distribution is used for the purchase of a first home. But the amount that is exempt from the penalty is limited to $10,000.
Q:
Changes in the estate tax implemented in 2001 will expire in 2010. We did some planning under the old law and implemented changes only to see the exemption change make our planning moot. In the interim, savings and investing have increased our estate again, making it even more likely to have a problem in 2011. How can families plan for the future under uncertainty?
T.S., via e-mail
A: You’ll have to be willing to accept change, and you’ll have to be dynamic. Those are two quick points on this topic that spring to the mind of financial adviser Paul Baumbach, of Mallard Advisors LLC in Newark, Del.
By dynamic, he means that your estate-planning documents should avoid setting dollar amounts, and referring to “Unified Credit” and similar language that change with the law. Further, he says that language in the documents should include the right to disclaim, so a beneficiary, after your death, can strategically elect to refuse some of an inheritance (if this saves on estate taxes).
While the estate tax law will change prior to 2011, Mr. Baumbach doesn’t see any changes occurring until January 2009 at the earliest. “There is zero incentive for Congressional Democrats to compromise now when in January 2009, they will at least have more votes, if not a Democratic White House, and so they will be in a better position to craft a solution more to their liking,” he says.
In the meantime, you, or your planner or attorney or both, should double-check now to see that everyone is prepared to review your documents after estate tax changes have been defined for 2011 and beyond
Related Articles
Aftermath of adoption: Adapting to the culture
China for years, since the great Asian power, when it comes to adoptions, but Vietnam is still a viable option for Americans, adoption of a child. Nguoi Viet tries in the history of the adoption of Viet Nam, on costs and time awaiting trial, the experience of travel to Vietnam
Non-Profit-Krankenhäuser gezielt wegen angeblicher overcharges
Dick Scruggs, vielleicht bekanntesten für seine Rolle in Mississippi die erfolgreiche Rechtsstreitigkeiten zu erholen Milliarden in den öffentlichen Ausgaben im Gesundheitswesen von der Tabakindustrie, hat eine neue Ursache: Push gegen ein gemeinnützige Krankenhäuser angeblicher overcharges wegen nicht versicNon-Profit Hospitals targeted because alleged overcharges Dick Scruggs, perhaps best known for his role
Arizona Supreme Court rejects death row appeal
The April 21 Supreme Court of Arizona unanimously rejected a call from Tucson, a man sentenced to death for killing police officers Patrick Hardesty in 2003. John Cruz-Montenegro was sentenced to death by Pima County Superior Court Judge Ted B. Borek in May 2005 for the murder of Hardesty, who was
Never Ending a disposition by
If they do everything, it would not be as light, irresponsible, young people vulnerable to temptations. But George Shelley would rather the feeling of recognition, as the culprits. It is a brain injury, whose survival was rebuilt almost crumpled piece by jagged piece - like a puzzle, year and never meshed. "I am
The high price of oil in the wreck Havoc Airlines
Mirror boy Make sure the trash collection of people come to your house to make the trash every week and say wait a minute before I can pick up your trash, do I need to see proof of identification. GIBSON: a bitter fight with state services for illegal immigrants to California
Rio Rico, Arizona and the Grand Country race.
It is a slightly modified version of chapter eight landscapes of the fight against fraud: Mission Tumacacori, float Baca, and betrayal of the O'odham, published in 2006 by University of Arizona Press. Landscapes of the fight against fraud examine how upper Santa Cruz River Valley in southern Arizona was a
The complaint alleges that a drug Ketek is defective and dangerous.
Complainant of the action throughout the country Ketek in County St. Clear Sanofi-Aventis USA is pursued by consumers of Ketek - an antibiotic for the treatment of sinusitis, bronchitis and pneumonia - from 47 applicants across the country, St. Clair County Circuit Court Represented by Christopher Cueto of Belleville and John J.
Compensation called 'ridiculous' in 3 Ariz. border survey suits
TUCSON, Ariz. - A Canadian family against the Department of Homeland Security's $ 300 offer access to its three properties of Arizona's border security investigation, to demand compensation "ridiculous". Developer Alex Mills Toronto is the only among those who possess properties of Arizona 12 Challenge to Government condemns the procedure in
Hasselbeck injured in the NFL-Week 7
Ben Roethlisberger was knocked unconscious, Matt Hasselbeck verstauchten a knee, Andrew Walter tweaked a tendon knee and Charlie Frye was recommended, only two answers postgame questions because of a brain concussion.It was not simply a day to an NFL Quarterback. Roethlisberger was a blow to the head, the third quarter of
Diamond V. Don County Mounty
"I could down in history as a legend High Roller's largest ever a prestigious policeman." Thus praised Donald (Don Diamond ") Gilman, 47, in March 1977, when he was appointed sheriff of Indianapolis. Williams and Balding, Gilman is a high dropout rate of, to be entitled to a millionaire in