Category - Retirement

1
Examine Your Retirement Plan’s Stable Value Fund Closely
2
Social Security “Free Loan” Loophole Redux
3
2009 Retirement Plan Contribution Limits
4
More Social Security Back Doors
5
Can You Really Take a Social Security Benefit, Pay It Back, and Then Get A Bigger Benefit?

Examine Your Retirement Plan’s Stable Value Fund Closely

retirement funds over timeMany employer-sponsored tax-deferred retirement plans, including 401(k)s, offer a unique investment option called a “stable value” fund. If you’ve invested in such a fund, you should take a close look at what’s inside – its value might not be as stable as you think.

For years, I’ve had some of the money in a 401(k) plan with my former employer invested in something called the “fixed income fund.” The fund documents describe it as a conservative cash-like investment with a $1.00/share price.  Over the years, the fund has always yielded more than a money market fund; its current yield is …

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Social Security “Free Loan” Loophole Redux

Researchers over at Boston College’s Center for Retirement Research have analyzed the “interest-free loan” opportunity presented by the loophole in Social Security that I’ve discussed before. Once their findings reach Congress, I’m betting this loophole gets closed.

Alicia Munnell and her colleagues at the Center recently published a short note in which they examine the potential impact of the loophole.  The idea is this: normally, once you retire, your Social Security retirement benefit level is locked in – other than adjustments for inflation, it can’t go higher.  The older you are when you start taking Social Security, the bigger your …

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2009 Retirement Plan Contribution Limits

The IRS has announced the cost of living adjustments applicable to dollar limitations for 401(k), profit sharing, IRAs, and other retirement plans in 2009. The new limits are as follows:

  • 401(k) limit will increase from $15,500 to $16,500.
  • 401(k) “catch-up” limit for individuals age 50 and over will increase from $5,000 to $5,500.
  • Defined contribution plan limit will increase from $46,000 to $49,000.
  • Defined benefit and cash balance plan annual benefit limit will increase from $185,000 to $195,000.
  • Contribution limit for benefit and contribution calculation will increase from $230,000 to $245,000.
  • Highly compensated employee definition will increase from $150,000 to
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More Social Security Back Doors

I previously discussed a loophole in the Social Security law that allows current retirees to pay back the benefits they’ve received (without interest) and restart the Social Security clock at a higher benefit level. Recently, I discovered two additional unusual Social Security strategies.

Boston College maintains a Center for Retirement Research that publishes all sorts of interesting working papers and studies about retirement.  Recently, the center published a short worksheet discussing three Social Security strategies that it dubbed “Strange, but True.”

The first item is the scheme that I discussed back in May; it arises from a loophole that …

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Can You Really Take a Social Security Benefit, Pay It Back, and Then Get A Bigger Benefit?

An idea that seems to have gained a lot of attention through an article by financial journalist Scott Burns is worth examining. Basically, the idea is this: you retire at 62 and apply for Social Security benefits, which are reduced because you’re retiring early. Then, at age 70, you withdraw from Social Security, pay back the benefits you’ve received, and reapply. Now you receive a much bigger Social Security check.

Normally, if you start taking Social Security benefits at a certain age, your benefit level is locked in from that point forward, although you get cost-of-living adjustments.  You forfeit the …

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