Is A Roth 401(k) Right For Me?

Since 1997, Roth IRA accounts have been around as an investment vehicle. In the past several years, participants at many work places have been offered the opportunity to do a Roth 401(k). Readers have e-mailed me over the past year about whether or not the Roth 401(k) is a good idea. The Roth 401(k) follows many of the same rules as your current Traditional 401(k). There are two very large distinctions between doing a Traditional 401(k) and a Roth 401(k): 1) How contributions are taxed – In a traditional 401(k) plan, all of your contributions will be put in your plan on a pre-tax basis.  Thus, your reportable w-2 income at year end will be lowered by the amount of Traditional 401(k) contributions that you make over the course of the year. In a Roth 401(k), your contributions will be taxed now and put in your plan on an after tax basis.  Thus, you will have no change in your ...

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What a GRAT trust to fund before 2010 ends!

Who knows where the estate tax limits will fall in 2011.  It might be 1 million or 3.5 million or higher depending on how the legislators settle on this issue. Meanwhile, back at the ranch, Congress is trying to put limits on a popular trust families have used for years to avoid the estate tax. Since this type of trust works best at times when interest rates are low and asset values are depressed, we are urging high net worth clients to look at setting one of these up before Congress decides to make these trusts look like a rainy day in the tax world. This type of trust is known as a GRAT or grantor-retained annuity trust, which allows people to give a portion of an asset’s future profits to heirs tax-free. The trusts we have found can be very popular for clients who have a family business that is expected to increase in value or may have stock ...

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