Nest Egg News Feed » 401(k)s & IRAs

Consider other funds before using 401(k) for house down payment

Sat, 04 Feb 2012 17:00:21 +0000

Q: Can I tap into a retirement account to help with my down payment?

A: Ideally, the money you use for a down payment should be savings you’ve specifically set aside for a home. but if a lender demands more up-front cash than you expected, an Individual Retirement Account or 401(k) may be the only place you can turn for another $10,000, $20,000 or more.

If that’s the case, tap a Roth IRA or Roth 401(k) plan first.

Since contributions to Roth plans are fully taxed before they’re made, you can withdraw however much you’ve put into those accounts at any time without incurring any penalties or additional taxes.

If you’ve held a Roth IRA for at least five years, you can withdraw an additional $10,000 in earnings without paying any penalties or taxes to buy or renovate a first home. The next place you should turn is a traditional IRA, which will allow you to withdraw up to $10,000 for the purchase of a first home without penalty.

If you and your spouse each have a traditional IRA, then you can take $10,000 or a total of $20,000 from your two accounts penalty-free. but since contributions to traditional retirement accounts such as this are tax-deductible, you’ll have to pay income tax on withdrawals that exceed those limits.

Any withdrawals above the limits are subject to income tax and a 10 percent penalty until you reach 59½ years old.

Q: Can I take money from my 401(k) plan?

A: Your employer’s traditional 401(k) plan is the last place you should turn for a down payment.

It has no special provisions for down payments, and any “hardship withdrawals” are fully taxed and incur a 10 percent penalty until you turn 59½.

The better option is to take a loan out against your 401(k) account. you can usually borrow up to $50,000 or half the value of the account, whichever is less, and take up to five years to pay it back.

The interest you’re charged, which is generally a couple of percentage points above the prime rate, goes into your retirement account and the monthly payments are deducted from your paycheck. You’re talking about a new monthly expense that will reduce the amount you can afford to borrow for a home.

I know this scheme has been in the works in certain areas for a while, but that doesn’t change the fact that every new article I read about it makes me want to throw heavy office equipment through a window:

WTVM.com: Fast Food Giant Lobbies for Food Stamps

I love issues like this, because it’s so easy to see exactly where they lead. if you come out against it with the argument of “Folks on public nutritional assistance shouldn’t be using the funds to buy crappy fast food and other items of convenience,” then you’re an out-of-whack, heartless, right-wing conservative nutso. I unflinchingly reside in this camp (as readers have undoubtedly noticed).

To clarify, my views register something like this:

Should public food-assistance programs be widely available?

Yes. Which they are.

Should public food-assistance programs be “unrestricted;” i.e., they allow access to most all goods/services that private funds could otherwise purchase?

No.

Should public food-assistance programs be “painless;” i.e., the programs make extra efforts to reduce the stigma and “social obstacles” of being a user of the assistance?

Hell no. in fact, I’m all thumbs-up for bright orange EBT cards.

However, I’ll also take a step the other direction — a step at which many pro-business righties gasp — and say that for companies like Yum! Brands to take up such a blatant “Hey look! There’s a pile of taxpayer money over there! Let’s go get some!” lobbying effort is downright pathetic, and worthy of scorn. Most weeks, I’m good for at least one trip to Taco Bell. And I do loves me some Pizza Hut pan pizza from time to time. but that can stop.

We Say “No” To More Government Programs (That Don’t Benefit Us)

Such corporate behavior is pretty typical, though, I’ve found. Expanded government programs are anathema to private business interests … until they figure out that they can get their hands in the pot, too. at that point, miraculously, it’s all good.

“Everyone, regardless of income level or economic station, should have access to our quality offerings,” they’ll exclaim as camera-flashes pop. “we will take special care to ensure that only those who meet the strict qualifications can utilize the program in our many locations.”

Sure you will. And all the while, you’ll be continually and quietly lobbying for increased access by SNAP participants to your “quality offerings.” Trim a big restriction here; remove a little restriction there. because, hey, there’s more profits to be had … and isn’t it, you know, unfair to limit this wonderful program to JUST the homeless, elderly, and disabled, when you really think about it?

One thing is certain: The hole will just get deeper and deeper, because the game is such that EVERYONE who is ANYONE will step up to the trough.

Fast Food & Food Stamps

Revenue allotment differential to be used for airport access road

Sat, 28 Jan 2012 11:00:17 +0000

Lawmaker dies in London

REPRESENTATIVE Ignacio “Iggy” Tuazon Arroyo Jr. (Fifth District, Negros Occidental) died on Thursday in London.

The lawmaker suffered a cardiac arrest at around 10:30 a.m. (Philippine time) and was declared ‘clinically dead’ by his doctors.

Full story

February 13-20 is John Paul II Week

THE City Council of Bacolod passed a resolution declaring February 13 to February 20, 2012 as the Blessed John Paul II week in Bacolod City.

The resolution was authored by Councilor Caesar Distrito, chairman of the committee on Laws, Ordinances and good Government. It was passed…

Full story

Councilor questions legitimacy of school dance program

BACOLOD Councilor Homer Bais, chairman of the SP Committee on Education, authored a resolution questioning the legitimacy of “Jam Step”, a dance-based activity.

It is reportedly compulsorily performed by all public school students, pupils and teachers in Bacolod City.

Full story

Vice guv backs salary increase

NEGROS Occidental Vice Governor Genaro Alvarez said he favors the increase in the salaries and wages of ordinary workers.

However, he said that the P97 per day increase sought by the labor sector in Western Visayas is too high.

Full story

Revenue allotment differential to be used for airport access road

KABANKALAN City Mayor Isidro Zayco said the City Government will utilize the P45 million Internal Revenue Allotment (IRA) differential for the concreting of the airport access road.

Zayco said City Government already received the amount from the Department of Interior and Local…

Full story

Road protocol in highways starts February

SENIOR Superintendent Allan Guisihan, police provincial director, asked for the cooperation of the drivers as the Philippine National Police starts implementing road protocol in the highways on February 1.

Guisihan said police forces in all the localities in the province were on the…

Full story

Capitol employees to receive P15,000 additional bonus

THE Provincial Government is set to release the P15,000 additional bonus for each Capitol employee in February.

Babette Quevenco, Provincial Board Secretary, said the provincial budget office has yet to close the financial book for year 2011 and has yet to pay off financial obligations…

Full story

Police to propagate 10 million trees

THE Philippine National Police (PNP) is eyeing to propagate 10 million trees around the country within the next seven months.

Police Chief Director General Nicanor Bartolome said the approximately 140,000 strong police is poised to embark on a nationwide individual commitment of planting…

Full story

Hospital cashier found dead in Talisay

THE cashier of Teresita Jalandoni Provincial Hospital in Silay City was found dead in the seaside of Sitio Mambukog, Barangay Zone 16, Talisay City.

Jun Iligan, 36, was identified Friday by his family. his body was recovered Wednesday and was named mr. X by the Talisay City police, as no…

Full story

Iggy Arroyo dies in London

NEGROS Occidental Representative Ignacio “Iggy” Tuazon Arroyo Jr. (5th district) died early Thursday night in London after his life support system was pulled out. he suffered a cardiac arrest around 10:30 a.m. (Philippine time).

He was 60 years old. he is survived by his children Bianca…

Full story

Vice mayor: Only responsible payers can complain vs tax code

VICE Mayor Jude Thaddeus Sayson said he believes only a business taxpayer of Bacolod who has actually paid his taxes can file a complaint questioning the new Tax Code of Bacolod City.

“You should show that you have paid in protest before you file the case,” he said. “(Mayor Evelio)…

Full story

Feb. 13-20 is John Paul II Week

THE City Council passed a resolution declaring February 13 to February 20 as the Blessed John Paul II week in Bacolod City.

The resolution was authored by Councilor Caesar Distrito, chairman of the committee on laws, ordinances and good government.

The proposed resolution was…

Full story

Councilor questions legitimacy of ‘Jam Step’

BACOLOD Councilor Homer Bais, chairman of the City Council committee on education, authored a resolution questioning Education Secretary Armin Luistro as to the legitimacy of “Jam Step”, a dance-based activity which is reportedly compulsorily performed by all public school students, pupils and…

Full story

Vice guv backs salary increase

NEGROS Occidental Vice Governor Genaro Alvarez said he favors the increase in the salaries and wages of ordinary workers.

However, he said the P97/day increase sought by the labor sector in Western Visayas is too high.

Full story

City’s P45-M revenue differential to be used for airport access road

KABANKALAN City Mayor isidro Zayco said the City Government will utilize the P45-million Internal Revenue Allotment (IRA) differential for the concreting of the access road towards the airport being constructed by the City Government.

Zayco said the amount was already received by the City…

Full story

Road protocol in highways starts February

NEGROS Occidental Provincial Police Office director Allan Guisihan asked for the cooperation of the drivers as the Philippine National Police starts implementing road protocol in the highways on February 1.

Guisihan said that since Thursday, police forces in all the localities in the…

Full story

Rebels to launch offensives in southern Negros

THE Philippine Army in southern Negros is bracing for tactical offensives, which are expected to be launched by new People’s Army (NPA) rebels, especially against soft targets such as mining companies, telecommunication cell sites and even remote and isolated Army and police outposts.

Full story

Capitol employees to get P15,000 additional bonus next month

THE Provincial Government is set to release the P15,000 additional bonus for each Capitol employee next month.

According to Babette Quevenco, Provincial Board secretary, this is because the Provincial Budget Office has yet to close the financial book for year 2011.

Full story

Police to propagate 10 million trees

THE Philippine National Police (PNP) is eyeing to propagate 10 million trees around the country within the next seven months.

PNP chief Director General Nicanor Bartolome said the approximately 140,000 strong PNP is poised to embark on a nationwide individual commitment of planting at…

Full story

Hospital cashier found dead in Talisay

THE cashier of Teresita Jalandoni Provincial Hospital in Silay City was found dead in the seaside of Sitio Mambukog, Barangay Zone 16, Talisay City.

Jun Iligan, 36, was identified Thursday by his family. his body was recovered Wednesday and was named mr. X by the Talisay City Philippine…

Full story

Raps filed vs pa who raped daughter

RAPE charges were filed Thursday before the City Prosecutor’s Office against a truck driver who allegedly raped his daughter in Bacolod City last week.

Bacolod City Police Office (BCPO) Director Ricardo De la Paz said Thursday charges were filed by personnel of Women and Children…

Full story

‘Totus Tuus’ to highlight 31st year of Pope visit

BACOLOD City will celebrate the 31st anniversary of the visit of Blessed John Paul II when he celebrated mass at the Bacolod reclamation area on February 20, 1981.

“This year marks the 31st anniversary of the visit of then Pope John II to Bacolod on February 20, 1981 – a historic event…

Full story

Water district asserts right to ‘Buro Buro’ water source

BACOLOD City Water District (Baciwa) General Manager lawyer Julie Ann Carbon said the water district has the legal right to use the water source in Buro Buro Springs located in Talisay City.

The springs are located at Lot 1017, the ownership of which is being contested by four claimants…

Full story

Politics behind opposition to revenue code

BACOLOD City Mayor Evelio R. Leonardia said Wednesday there are politicians that exploit the situation relative to the implementation of the revised Revenue Code.

“We know that some have questions which are normal and expected but we want to make the public aware that there are…

Full story

Water district extends services to Purok Gaisano

THE Bacolod City Water District (Baciwa) has opened a waterline extension that will provide the 200 households of Purok Gaisano, Barangay Alijis access to potable and clean water.

These residents were formerly residing at Singcang Airport but were relocated when Gaisano City was built.

Full story

Sorry for the non-blogging today, but I have been working on an educational program regarding Social Security and its possible reforms.

It is amazing how easy research is now that just about everything can be found on the internet. The Social Security and Census web-sites were very helpful. The federal government is not entirely wasteful. Google was not bad either.

Social Security Reform

Thursday Sector Laggards: Music & Electronics Stores, Education & Training Services

Fri, 27 Jan 2012 07:00:17 +0000

Thursday Sector Laggards: Music & Electronics Stores, Education & Training Services

Human frailty caused this crisis

Thu, 26 Jan 2012 09:00:13 +0000

By Richard Thaler and Cass Sunstein

Published: November 11 2008 19:46 Last updated: November 11 2008 19:46

Mea culpas are rare these days. In a debate with John Kerry in 2004, President George W. Bush famously could not name a single mistake he had made in his first term. So it is both noteworthy and commendable that Alan Greenspan, the former US Federal Reserve chairman, fessed up that he had failed to anticipate the financial crisis.

?those of us who have looked to the self-interest of lending institutions to protect shareholders? equity (myself especially) are in a state of shocked disbelief,? he said. Mr Greenspan had faith that banks were prudent enough to make sure they were not lending money cheaply to people who could not pay it back. yet that is what happened. as Mr Greenspan says of securities based on subprime mortgages: ?to the most sophisticated investors in the world, they were wrongly viewed as a ?steal?.?

Why did Mr Greenspan, along with the rest of the world?s regulators, fail to foresee that this could happen? We think their mistake was to neglect the role of human nature. to prevent future catastrophes, regulators should focus explicitly on how to provide safeguards against two all-too-human frailties explored by decades of work in behavioural economics: bounded rationality and limited self-control.

The standard (non-behavioural) economic model has greatly influenced regulators. In that model, economic agents (econs for short) choose optimally, no matter how hard a problem they face. They play chess as well as they play tic-tac-toe. The problem with this approach is that the world is populated by humans, not econs. Humans are not stupid, but when things get complicated they flounder: they suffer from bounded rationality.

This brings us to an aspect of the financial crisis that has not received the attention it deserves: the financial world has become more complex in the past two decades. not so long ago, most mortgages were of the 30-year fixed-rate variety. Shopping was simple: find the lowest monthly payment. Now they come in countless forms. even experts have trouble comparing them and a low initial monthly payment can be a misleading guide to total costs (and risks). A main cause of the mortgage crisis is that borrowers did not understand the terms of their loans. even those who tried to read the fine print felt their eyes glazing over, especially after their mortgage broker assured them that they had an amazing deal.

Yet growing complexity on the borrowers? side was trivial compared with what was going on at the banks. Mortgages used to be held by the banks that initiated the loans. Now they are sliced into mortgage-backed securities, which include arcane derivative products.

Many economists have argued that even if individual consumers suffer from bounded rationality, markets will be set right by specialists who can figure out even the most complex problem. but, as Mr Greenspan now concedes, even these sophisticated investors got things badly wrong.
The second problem involves self-control. Econs do not suffer from self-control problems and so ?temptation? is not a word that exists in the economists? lexicon. as a result, regulators have not thought much about the problem. but when the dessert cart comes by, we humans often cave in. The next thing we know, we are fat. This crisis was fuelled by the seemingly irresistible temptation to refinance the mortgage rather than pay it off. Falling interest rates, rising home prices and aggressive mortgage brokers made refinancing (and second mortgages) seem like the apple in the Garden of Eden. When home prices fell and interest rates increased, the party ended.

Regulators therefore need to help people manage complexity and resist temptation. A potential response to complexity would be to require simplicity ? for example, by allowing only the standard 30-year fixed-rate mortgages. This would be a big mistake. Eliminating complexity would stifle innovation. A TiVo is a more complicated product than a VCR, but it is also better.
A superior approach is to improve disclosure. one reason a TiVo is better than a VCR is that it is easier to use. Regulators can reduce the chances of a future meltdown by making it easier to understand financial products. Aggressive steps should be taken to improve disclosure ? for example, with mortgages, fine-print disclosure should be supplemented by machine-readable files enabling third-party websites to translate hidden details of the terms. Mandatory transparency for investment banks and hedge funds would also help.

The government and the market should try to deal with temptation. We hope that lenders will ask families to have done some saving in order to qualify to buy a home. Conscientious lenders could also nudge people to get off the refinancing merry-go-round, by suggesting that the term of the loan be shortened when a loan is refinanced. More ambitiously, private and public institutions could try to reintroduce an old social norm: try to pay off the mortgage sooner rather than later, and at the latest by the time you retire.

Greed and corruption helped create the crisis, but simple human frailty played a vital role. We will not be able to protect against future crises if we rail against greed and wrongdoers without looking in the mirror and understanding the potentially devastating effects of bounded rationality and limited self-control.

Richard Thaler is professor of behavioural science and economics at the Graduate School of Business, University of Chicago. Cass Sunstein is Felix Frankfurter professor of law at the Harvard Law School. They are the co-authors of ?Nudge? (Yale University Press)

Human frailty caused this crisis

Baby boomers financially burdened by aging parents, adult kids

Tue, 24 Jan 2012 19:00:12 +0000

Baby boomers financially burdened by aging parents, adult kids

Is It Important To Get Branded Tyres?

Mon, 23 Jan 2012 21:00:16 +0000

If you own a car, you should consider that you have to make an important decision when buying car tyres. The thing is, many people are wondering if it is really necessary to go for branded tires. The answer would really depend on your preference as well as your capacity to buy. Branded tires are definitely a lot expensive as compared to used ones so it is up to your budget and preference if you would pick buying branded ones or pick buying those used ones that are also of good quality. always make a smart decision so you would not regret it in the end.

Is It Important To Get Branded Tyres?

Why Not Increase Your 401k Contribution?

Sun, 22 Jan 2012 03:00:12 +0000

The dog days of summer are here.? In most of the country, it’s hot.? I hope you’re enjoying the warmth.? The summer is also a time of year people have more time to think. The longer days means more time outside and less television indoors. Summer means more time grilling and, hopefully, less time grabbing fast food.

With the extended daylight, take a few minutes to reflect on your financial affairs. what goals have you reached in the last year? Where are you still behind compared to your personal benchmarks?? Don’t? have any financial goals yet?? start there.? if you’re lacking for a place to start, begin with your 401(k) plan.? The summer is a great time of the year to increase your 401(k) contribution rate.? You have the time to complete the online form and you can afford to save more.? Increasing your 401(k) contribution rate by just 1% or 2% is unlikely to be felt in your paycheck – especially after the immediate tax savings are factored in. Yet, over the long-term, a slight increase in 401(k) savings can mean big bucks in retirement.

Enjoy the summer, but enjoy your retirement too.

Why Not Increase your 401k Contribution? originally appeared on About.com Retirement Planning on Thursday, July 28th, 2011 at 13:00:15.

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Why Not Increase Your 401k Contribution?

Contributing to more than one IRA

Sat, 21 Jan 2012 17:00:18 +0000

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