Posts Tagged ‘retirement planning’

Finding “Missing” Retirement Accounts

Posted on: August 2nd, 2010 by

Financial Planning - Rockville, MDAccording to a 2008 Bureau of Labor Statistics survey, the average baby boomer has worked 10 jobs by his or her 42nd birthday.  Younger people tend to change jobs even more frequently; sometimes as often as every one or two years when they are fresh out of college.

Many job changers simply leave their pensions, 401(k) accounts, or other employer-sponsored retirement plans in the care of their former company without giving it a second thought.  Sometimes former employees forget about these older retirement plans.  Something could also happen with the company that prevents them from paying you.  For example, companies may merge, get bought out, or go out of business and be unable to contact you when it is time for you to begin receiving your pension or other retirement benefits.  But that doesn’t mean your money isn’t still there.  Whether you left behind $100 or $100,000, it’s your money and you should claim it and use it toward your retirement goals.

If you were once employed by a company that offered a pension, try contacting your former company.  If you can’t find the company or they don’t have a record for you, then contact the Pension Benefit Guaranty Corporation, a Federal agency that insures private sector pensions.  At the PBGC website you can look up information about pension plans trusted by the agency.  To make your claim you will need to provide a variety of information including your Social Security number, the dates you worked at the company, pension plan name, PBGC case number, and company or plan sponsor name.

The PBGC may also be able to help you find a lost 401(k) plan.  If that doesn’t work, try the National Registry of Unclaimed Retirement Benefits (NRURB).  The NRURB is a free service managed by the La Mesa, California based benefit distribution processing firm PenChecks that works to put you in contact with your former employer so you can claim your retirement benefits.

Another important step in your retirement planning is consolidating your retirement accounts.  It’s much easier to balance your portfolio and plan for retirement when you only have a few accounts.  You may be able to roll some or all of your previous retirement account balances into one or two accounts.  For example, you may be able to roll old 401(k) plans into your current 401(k) plan or you can roll over a 401(k) plan into an IRA.  You can also roll all your other IRAs into a new IRA.

Make sure you understand which accounts can be combined and which accounts must remain separate though.  You can’t combine traditional IRAs and Roth IRAs.  But you may be able to do a Roth IRA conversion, which will re-characterize your traditional IRA contributions.  Keep in mind that you may have to pay taxes when you make the transition from a traditional IRA to a Roth IRA.

Cash Balance Plans

Posted on: April 27th, 2010 by

Retirement Planning - Financial Planning - Rockville, MDAs far as retirement plans go, cash balance plans are definitely not as well known or discussed as traditional 401(k)s with regard to retirement planning.  Cash benefit plans are a form of defined benefit plan.  Participants are guaranteed a certain amount of money when they reach normal retirement age, and the participant gets to choose from one of three types of distributions: lump sum, single life annuity, or joint and survivor annuity.  Cash balance plans are also backed by the Pension Benefit Guaranty Corporation.  This means that if the participant’s employer goes under, the PBGC will pay the pension up to the legal limits.

As with traditional defined benefit plans, the employer bears all the investment risk.  The employer will invest the money in any manner they choose, however they will establish a guaranteed rate at which the employees money will grow by.  The nice thing about these plans is that their value never goes down, which is great if there is a volatile stock market.

Now, when it comes time to take the money out, you should discuss your options with your financial adviser to determine where you stand on your retirement savings.  Financial advisers will suggest that if you feel you may outlive your assets and don’t want to take on investment risk, you should consider single life annuity or joint and survivor annuity distributions.  The annuities provided by the employer do not have the expenses of annuities purchased on the open market.  Of course, you can still take a lump sum, especially if you already have many sources of fixed income to pay for your retirement expenses.  Before deciding which distribution method is best for you, you really should sit down and analyze your finances and discuss whether or not you have enough to last those 30 years of retirement.