For most people, a mortgage is their biggest monthly bill.? Although few realize it at first, their mortgage also represents one of their biggest savings each month. Since a part – a growing part – of every mortgage payment represents the repayment of principal, part of that big monthly bill is actually savings.? At the end of the typical 30-year mortgage, you’ll own your home free and clear.? Depending on what happens to the value of your home over that time, you might find yourself with quite an asset.

While a mortgage is certainly no substitute for a 401(k) or IRA, it’s certainly better than that other big monthly bill – the credit card.

Is your mortgage part of your retirement plan?

Is Paying your Mortgage like Saving for Retirement? originally appeared on About.com Retirement Planning on Monday, August 22nd, 2011 at 13:00:39.

Permalink | Comment | Email this

Is Paying Your Mortgage Like Saving for Retirement?

What’s inside? here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question. 1. taking sick days 2. ending a cell contract early 3. Homemade putty and playdough 4. International travel for wedding 5. making everyone happy 6. Basic 401(k) [...] …

Reader Mailbag: The After-Rain Smell

If it weren’t for our 401(k)s many of us would be up the retirement creek without a paddle. this year, there are some noteworthy changes to 401ks. Here’s what you need to know to take advantage of the … …

What the New 401(k) Rules Mean for You

For most people, a mortgage is their biggest monthly bill.? Although few realize it at first, their mortgage also represents one of their biggest savings each month. Since a part – a growing part – of every mortgage payment represents the repayment of principal, part of that big monthly bill is actually savings.? at the end of the typical 30-year mortgage, you’ll own your home free and clear.? Depending on what happens to the value of your home over that time, you might find yourself with quite an asset.

While a mortgage is certainly no substitute for a 401(k) or IRA, it’s certainly better than that other big monthly bill – the credit card.

Is your mortgage part of your retirement plan?

Is Paying your Mortgage like Saving for Retirement? originally appeared on About.com Retirement Planning on Monday, August 22nd, 2011 at 13:00:39.

Permalink | Comment | Email this

Is Paying Your Mortgage Like Saving for Retirement?

When you reach 70 1/2, IRS rules say you have to start required minimum distributions from your traditional IRAs or your 401(k)s. The tax bite for not obeying the rules can be major.

required minimum distributions calculating_and_taking

Charles Schwab this week began offering employers a new type of 401(k) plan that it says is unique because it includes index funds only and will automatically enroll participants in an independent advice service that will choose their investments unless they opt out.

The goal is to increase workers’ retirement savings by driving down costs, simplifying the investment process and providing individualized advice.

Today, most 401(k) providers let employers decide if they want to offer their employees index funds, actively managed funds or a mix of the two. most choose a mix although most plans are skewed toward active funds, which are more expensive than index funds.

“So far the industry has not made available an index-fund-only 401(k) plan,” says Jim McCool, a Schwab executive vice president.

That compares with an industry-wide cost of around 0.95 percent per year for a typical midsize plan, or 1.5 percent if you include advice, McCool says.

New fee-disclosure rules scheduled to take effect this year are expected to put downward pressure on 401(k) costs. McCool says Schwab started developing a low-cost 401(k) long before the Labor Department published its proposed rules. (For more on the rules, and a potential delay, see my Tuesday column.)

Employers can choose from about 40 index funds managed by companies including Vanguard, BlackRock and Schwab. McCool says he expects most will offer employees 10 to 15 funds.

Most 401(k) plans already offer employees help choosing investments from some type of independent advice service, which is typically computer-based. about three-quarters of Schwab’s existing plans offer advice but only about 10 percent of employees who are offered it take advantage of it, says Steve Anderson, a Schwab senior vice president.

The new Schwab plan will automatically enroll employees in a program offered by GuidedChoice, an outside investment advisory firm headquartered in San Diego.

This service will choose 401(k) investments for employees based on information they provide, including any outside investments they or their spouse might have. They can enter the information online or provide it to a Schwab employee, but the investment advice will be generated by a computer program developed by GuidedChoice.

“The more information they share the more customized it becomes,” Anderson says.

If an employee doesn’t provide any information, the program will automatically invest their account based on information the employer can provide – such as age and salary – as well as the 401(k) account balance and savings rate.

Employees who opt out of the advice service and make all their own decisions will only pay 0.2 to 0.25 percent a year, McCool says.

The new Schwab plan is also unusual in that it will not offer target-date funds, which offer a mix of stock and bond funds geared toward the employee’s estimated retirement date. as that date approaches, the fund gradually becomes more conservative – by using fewer stock and more bond funds.

Target-date funds

Target-date funds are seen as a good option for employees who don’t want to manage their 401(k) accounts. Many plans that automatically enroll employees in the 401(k) will place them in a target date fund if they don’t choose another option.

But Schwab believes they’re a bad option because they are based solely on age.

“Two 45-year-olds can be altogether different,” McCool says. if one has built up a nice nest egg and the other has no savings, the recommendations for each should be very different.

The new plans will also offer an FDIC-insured account from Schwab Bank that will be available only to 401(k) account holders, not the general public. McCool could not say what the interest rate will be.

<a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/11/BUQ81MO2UA.DTL&type=businesstag:news.google.com,2005:cluster=http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/11/BUQ81MO2UA.DTL”>Charles Schwab offers new index-fund 401(k) plan

For most people, a mortgage is their biggest monthly bill.? Although few realize it at first, their mortgage also represents one of their biggest savings each month. Since a part – a growing part – of every mortgage payment represents the repayment of principal, part of that big monthly bill is actually savings.? at the end of the typical 30-year mortgage, you’ll own your home free and clear.? Depending on what happens to the value of your home over that time, you might find yourself with quite an asset.

While a mortgage is certainly no substitute for a 401(k) or IRA, it’s certainly better than that other big monthly bill – the credit card.

Is your mortgage part of your retirement plan?

Is Paying your Mortgage like Saving for Retirement? originally appeared on About.com Retirement Planning on Monday, August 22nd, 2011 at 13:00:39.

Permalink | Comment | Email this

Is Paying Your Mortgage Like Saving for Retirement?

Last week, Microsoft 401(k) plan Administrators announced several exciting changes to the plan in 2008.

First off, four mutual fund investment options currently available to plan participants will be replaced with Separately Managed Accounts (SMAs) on January 16, 2008. These SMAs are designed exclusively for Microsoft’s 401(k) plan, managed by the same investment team and closely mirroring the current investment options. the caveat, however, is the new investment options will carry much lower fee structure, thus improving long-term return of the portfolio.

One has to admire our plan Administrators for doing an excellent job in negotiating down the cost. Especially in the case of ING International value Fund, annual fee will be reduced from 1.22% to 0.41% in the new SMA that is to be set up. What’s the last time you can invest in a fine actively managed foreign equity fund by only paying 0.41% on annual fee? (In comparison, the widely-held index-tracking foreign-equity ETF option iShares MSCI EAFE Index carries an annual fee of 0.35%.)

READ FULL POST …

Hot Deal: 1.10% APY online savings with no minimal balance only from HSBC

Read more news like this from PFBlog.com, the Unique Personal Finance Blog Since 2003.

Upcoming 401(k) Plan Changes: More SMAs and Self-Directed Brokerage Accounts

A Roth Conversion means entering retirement with tax-free income. however, a Roth IRA conversion also comes at an upfront cost of paying taxes now. Converting your qualified retirement account (like a traditional IRA or old 401(k) plan) to a Roth IRA may be a great idea. But since your tax may be significant, make sure to learn the key considerations.

Roth Conversion

401k retirement plan is one form of many retirement savings accounts in the United States. the term 401k is derived from the 401(k) article of the Internal Revenue Code of the United States Code. Roth IRA 401k account is the most common withdrawal plan used by American employees from way back in 1980s. It was [...]

401k Retirement Plan For Beginners