{"id":15495,"date":"2014-08-07T13:58:25","date_gmt":"2014-08-07T17:58:25","guid":{"rendered":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics.html"},"modified":"2014-08-07T13:58:25","modified_gmt":"2014-08-07T17:58:25","slug":"retirement-account-basics","status":"publish","type":"post","link":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/","title":{"rendered":"Retirement Account Basics"},"content":{"rendered":"\n<div class=\"img-left\">\n<div><img loading=\"lazy\" decoding=\"async\" alt=\"lissa mcnaughton.jpg\" src=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg\" class=\"alignleft\" height=\"232\" width=\"150\">\n<\/div>\n<div class=\"img-caption\">Lissa McNaughton,director, SMF Financial Advisors, a division of SaxBST\n<\/div>\n<\/div>\n<p>By Lissa McNaughton<\/p>\n<p>Your plan for saving for retirement<br \/>\nmay experience a great deal of change<br \/>\nbetween your first job and retirement.<br \/>\nNo matter what changes or unexpected<br \/>\nevents occur, it is essential to continue<br \/>\nsaving.<\/p>\n<p>The purpose of saving in a 401(k) plan<br \/>\nis to provide you with a financially secure<br \/>\nfuture. It sounds easy, but getting from<br \/>\nPoint A to Point B can be complicated.<br \/>\nEconomic factors and life events can affect<br \/>\neven the best-laid plans. The following<br \/>\naddresses common questions about<br \/>\nretirement accounts including 401(k)s,<br \/>\nRoths and IRAs.<\/p>\n<p>A Roth 401(k) allows you to contribute<br \/>\nto your 401(k) plan with after-tax dollars<br \/>\nand grow your money tax-free. A Roth<br \/>\n401(k) is not a separate account but<br \/>\nrather a potential option within a 401(k)<br \/>\nplan. When you retire, withdrawals from<br \/>\na Roth 401(k) are not taxed.<\/p>\n<p>A traditional 401(k) allows you to contribute<br \/>\nto your plan with pre-tax dollars<br \/>\nand your money will grow tax-deferred.<br \/>\nWhen you retire, withdrawals from a<br \/>\ntraditional 401(k) will be taxed. Pre-tax<br \/>\ncontributions lower your current taxable<br \/>\nincome and, consequently, your current<br \/>\ntax bill.<\/p>\n<p>There are annual limits as to how much<br \/>\nyou can contribute to your 401(k) &#8211; Roth or pre-tax. In 2014, you can contribute<br \/>\nup to $17,500 or $23,000 if you are age<br \/>\n50 or older. However, there are no income<br \/>\nrestrictions as to who can take advantage<br \/>\nof their 401(k) plan.<\/p>\n<p>A Roth IRA allows you to contribute<br \/>\nup to $5,500 (or $6,500 if you are age<br \/>\n50 or older) of after-tax dollars. Your<br \/>\ninvestment grows tax-free and qualified<br \/>\nwithdrawals are not taxed. Roth IRAs are<br \/>\nalso not subject to the minimum distribution<br \/>\nrules.<\/p>\n<p>There are income limitations, so not<br \/>\neveryone can use the Roth IRA. For<br \/>\nexample, if you&#8217;re married filing jointly<br \/>\nand your adjusted gross income is over<br \/>\n$188,000, you cannot make a Roth IRA<br \/>\ncontribution.<\/p>\n<p>A traditional IRA allows you to contribute<br \/>\nup to $5,500 (or $6,500 if you<br \/>\nare age 50 or older) and your money<br \/>\nwill grow tax-deferred. When you retire,<br \/>\nwithdrawals from a traditional IRA will<br \/>\nbe taxed. Your contributions may or may<br \/>\nnot be deductible depending upon your<br \/>\ncircumstances.<\/p>\n<p>You should not assume your tax rate<br \/>\nwill be lower in retirement; this may not<br \/>\nbe the case. There is no one right answer<br \/>\nfor deciding how much to place in pretax<br \/>\nand Roth accounts. If you expect to<br \/>\nbe taxed at a higher rate in retirement,<br \/>\nyou may want to consider saving in the<br \/>\nRoth 401(k) or IRA. If you expect to be<br \/>\ntaxed at a lower rate in retirement, you<br \/>\nmay want to consider saving in the pretax<br \/>\n401(k) or IRA.<\/p>\n<p>However, because we can only speculate<br \/>\nabout future tax rates, a good course<br \/>\nof action would be to diversify the tax<br \/>\ntreatment of your retirement savings<br \/>\nby splitting your savings between a traditional<br \/>\nand a Roth 401(k). You should<br \/>\nalways take advantage of any employer<br \/>\nmatching contributions before saving<br \/>\noutside of your 401(k) plan.<\/p>\n<p>What happens if the plan provider is in<br \/>\nfinancial trouble?<br \/>\nYour plan is safe, even if an employer,<br \/>\nplan provider, custodian or recordkeeper<br \/>\nis in financial trouble. Your money is<br \/>\nheld in a trust, the assets are not owned<br \/>\nby the plan provider and the funds are<br \/>\nnot subject to the claims of creditors.<\/p>\n<p>In the event of a company&#8217;s decision to<br \/>\nterminate your plan, you will receive<br \/>\nnotification and rollover forms. Your plan<br \/>\nmay go through some alterations, but your<br \/>\nsavings are secure.<\/p>\n<p>It is not unusual for an individual to<br \/>\nacquire several retirement plan accounts<br \/>\nover different phases of a career. When it<br \/>\ncomes to retirement accounts, simplicity<br \/>\nis key. Having several plans may seem like<br \/>\na fail-safe in troubled times, but from a<br \/>\npersonal bookkeeping perspective, it will<br \/>\nbe easier to keep track of and maintain<br \/>\nfewer accounts when retirement begins.<br \/>\nHolding fewer accounts may also reduce<br \/>\naccount expenses paid over time.<\/p>\n<p>If your current employer offers a plan<br \/>\nwith reasonable costs and diversified<br \/>\ninvestment choices, consider rolling<br \/>\nsmall accounts into your current plan<br \/>\n(as long as your plan allows for incoming<br \/>\nrollovers). If your employer does not offer<br \/>\nreasonable options, such accounts can be<br \/>\nmoved into an IRA or Roth IRA.<\/p>\n<p>(Roth 401(k) accounts are eligible<br \/>\nfor rollover distributions into Roth IRAs<br \/>\nupon retirement or separation from employment.<br \/>\nTraditional 401(k) accounts,<br \/>\non the other hand, can be rolled into<br \/>\ntraditional, rollover IRAs).<\/p>\n<p>Saving for retirement before saving for<br \/>\na child&#8217;s education may seem surprising.<br \/>\nHowever, it is a wise approach for securing<br \/>\nthe future for you and your family.<\/p>\n<p>One reason for prioritizing saving for<br \/>\nretirement would be the financial stress<br \/>\npotentially placed on a family if an individual<br \/>\nreaches retirement age without<br \/>\nenough saved to live independently.<\/p>\n<p>Additionally, you may be entitled to<br \/>\nreceive a matching contribution from<br \/>\nyour employer. You would, certainly, want<br \/>\nto maximize the match to the extent your<br \/>\ncash flow allows.<\/p>\n<p>While college loans are more difficult<br \/>\nto obtain in today&#8217;s economy, it is easier<br \/>\nfor a student to obtain a loan to pay for<br \/>\neducation than for a retiree with fewer<br \/>\noptions for borrowing. Ideally, of course,<br \/>\nsomething would be set aside for each<br \/>\ngoal.<\/p>\n<p>You should start saving in a retirement<br \/>\nplan as soon as you start working.<br \/>\nAlthough it&#8217;s hard to believe you&#8217;ll ever<br \/>\nbe 60 or 65 when you&#8217;re just starting out,<br \/>\ntime has a way of catching up with you.<br \/>\nA 25-year old who saves $100 each week<br \/>\nuntil age 65 and earns 6 percent will<br \/>\naccumulate over $800,000. A 45-year old<br \/>\nsaving $100 each week to age 65, earning<br \/>\n6 percent will accumulate just $191,000!<br \/>\nTime makes a big difference.<\/p>\n<p>When you save for retirement, you are<br \/>\nsaving for the long run. Over time, you<br \/>\nshould expect cycles of volatility. But<br \/>\nwhen it comes to retirement plans, time<br \/>\nis the greatest asset. If you ignore market<br \/>\nnoise and stick to your existing plan, you<br \/>\ngive yourself a better chance of remaining<br \/>\non course to achieve your long-term<br \/>\nfinancial goals.<\/p>\n<p>McNaughton is a director with<br \/>\nSMF Financial Advisors, the wealth<br \/>\nmanagement division of SaxBST.<\/p>\n<p>Photo Courtesy SaxBST<\/p>\n","protected":false},"excerpt":{"rendered":"<p> Lissa McNaughton,director, SMF Financial Advisors, a division of SaxBST By Lissa McNaughton Your plan for saving for retirement may experience a great deal of change between your first job and retirement. No matter what changes or unexpected events occur,&#8230;<\/p>\n","protected":false},"author":121,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[41],"tags":[58,70],"class_list":["post-15495","post","type-post","status-publish","format-standard","hentry","category-senior-living-retirement","tag-business-reports","tag-financial"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Retirement Account Basics - Saratoga Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Retirement Account Basics - Saratoga Business Journal\" \/>\r\n<meta property=\"og:description\" content=\"Lissa McNaughton,director, SMF Financial Advisors, a division of SaxBST By Lissa McNaughton Your plan for saving for retirement may experience a great deal of change between your first job and retirement. No matter what changes or unexpected events occur,...\" \/>\r\n<meta property=\"og:url\" content=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/\" \/>\r\n<meta property=\"og:site_name\" content=\"Saratoga Business Journal\" \/>\r\n<meta property=\"article:published_time\" content=\"2014-08-07T17:58:25+00:00\" \/>\r\n<meta property=\"og:image\" content=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg\" \/>\r\n<meta name=\"author\" content=\"Saratoga Business Journal\" \/>\r\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\r\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Saratoga Business Journal\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\r\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/\",\"url\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/\",\"name\":\"Retirement Account Basics - Saratoga Business Journal\",\"isPartOf\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg\",\"datePublished\":\"2014-08-07T17:58:25+00:00\",\"author\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/ddf5fd6df8c43505ff3a5fb93e64871d\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#primaryimage\",\"url\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg\",\"contentUrl\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg\",\"width\":480,\"height\":744},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Retirement Account Basics\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#website\",\"url\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/\",\"name\":\"Saratoga Business Journal\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/ddf5fd6df8c43505ff3a5fb93e64871d\",\"name\":\"Saratoga Business Journal\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/1ba402a238e359969bec40757b031230a02e1b4065fbc669f6b28ebacf90f75f?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/1ba402a238e359969bec40757b031230a02e1b4065fbc669f6b28ebacf90f75f?s=96&d=mm&r=g\",\"caption\":\"Saratoga Business Journal\"},\"sameAs\":[\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/\"],\"url\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/author\/saratogabusinessjournal\/\"}]}<\/script>\r\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Retirement Account Basics - Saratoga Business Journal","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/","og_locale":"en_US","og_type":"article","og_title":"Retirement Account Basics - Saratoga Business Journal","og_description":"Lissa McNaughton,director, SMF Financial Advisors, a division of SaxBST By Lissa McNaughton Your plan for saving for retirement may experience a great deal of change between your first job and retirement. No matter what changes or unexpected events occur,...","og_url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/","og_site_name":"Saratoga Business Journal","article_published_time":"2014-08-07T17:58:25+00:00","og_image":[{"url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg","type":"","width":"","height":""}],"author":"Saratoga Business Journal","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Saratoga Business Journal","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/","url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/","name":"Retirement Account Basics - Saratoga Business Journal","isPartOf":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#primaryimage"},"image":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#primaryimage"},"thumbnailUrl":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg","datePublished":"2014-08-07T17:58:25+00:00","author":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/ddf5fd6df8c43505ff3a5fb93e64871d"},"breadcrumb":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#primaryimage","url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg","contentUrl":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2014\/08\/lissa20mcnaughton.jpg","width":480,"height":744},{"@type":"BreadcrumbList","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/08\/retirement-account-basics\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/"},{"@type":"ListItem","position":2,"name":"Retirement Account Basics"}]},{"@type":"WebSite","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#website","url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/","name":"Saratoga Business Journal","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/ddf5fd6df8c43505ff3a5fb93e64871d","name":"Saratoga Business Journal","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/1ba402a238e359969bec40757b031230a02e1b4065fbc669f6b28ebacf90f75f?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/1ba402a238e359969bec40757b031230a02e1b4065fbc669f6b28ebacf90f75f?s=96&d=mm&r=g","caption":"Saratoga Business Journal"},"sameAs":["https:\/\/www.saratoga.com\/saratogabusinessjournal\/"],"url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/author\/saratogabusinessjournal\/"}]}},"_links":{"self":[{"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/posts\/15495","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/users\/121"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/comments?post=15495"}],"version-history":[{"count":0,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/posts\/15495\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/media?parent=15495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/categories?post=15495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/tags?post=15495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}