Grand Rapids Business Daily - 2008 401k Limit Knowledge Base

What's the 2008 contribution limit for Roth 401k and Roth IRA combined? Like the question asks what is the combined total limit for the Roth 401k and the Roth IRA? I've read too much conflicting information that you can contribute the full 5k in the Roth IRA and 14k in the Roth 401K? Then I've checked with financial advisors and they indicate otherswise. Hm, please CITE sources with your response, need accurate information. Lastly, if anyone know what the combined limit between the Roth401k, Roth IRA and the traditional 401k also list it as well. Thanks! Can Icontribute to all three: Roth 401k, 401k and the Roth IRA? I know you can do the last two but what about all three? I am of course referring to just partial amounts so I don't exceed the 15k annual limit and the as far as I know the 5k limit for the Roth IRA is considered separate. Thanks! Forgot to mention within the Roth IRA AGI limits and under the age of 50.

What are my 401k limits for 2008? (see detail for my specific situation) I changed jobs within 2008. In Job A I contributed $5k to a Roth 401k in 2008. At Job B there is no Roth option, just the traditional 401k. Am I limited to $10,500 contributions at job B for a total of $15,500 for the year? or are the limits independent and I can still contribute a full $15,500 to the Job B 401k? I'd also like to rollover my prior 401k balances to IRA accounts. Say my prior 401k balances consist of $100 of traditional (pre-tax contributions) and $50 of Roth 401k (post-tax contributions). I realize that I need to keep these balances separated since they have different tax treatment but can I co-mingle the balances with my existing traditional and Roth IRA accounts respectively? or is there any reason to open brand new accounts to roll these balances into?

For 401k contribution limits for 2008 of $15,000, does that total include contributions from my company?

How long does my employer have to deposit their contribution into my 401k? My employer deposits their contribution into my 401k once per year. They deposited their portion from 2007 into my account Feb 2008. They still have not contributed their portion from 2008. Is there a time limit?

401K early distribution for first home purchase? I withdrew $10,000 from my 401k to purchase a home, but I closed on may of 2009. Since the purchase did not occur until 09 I paid the 10% tax penalty plus taxes for the 401k distribution on my 2008 income tax return. Can I amend my 2008 return to avoid the penalty? The money was used to purchase the house. Was there a time limit to close on the house in order to avoid the penalty?

What are my retirement combination limits? My company states that the IRS limits the dollar amount an employee can contribute on a combined standard before-tax and Roth 401(k) basis. For calendar year 2008, the limit is $15,500. I believe that means that both 401k and Roth 401k contributions through my employer are limited to $15,500 for the year. Can I contribute the maximum $15,500 and the open an IRA and contribute the $5000 maxium there too? The would be a total of $20,500 per year.

Can I contribute up to the limit into separate traditional IRA and Roth IRA accounts on the same year? Let's say for 2008, I would like to contribue the $5k (max amount) to my traditional IRA and another $5k to a Roth IRA. At the same time, I'm an active participant to an employer sponsored 401k plan. I will be filing on single status. Can I do this?

Can I still put more into my 401k? My 401k contribution for this year looks like this: Before-Tax $7,748.81 Company Match $7,284.73 Total 2008 Contribution: $15,033.54 Can I still keep contributing even thought the total will go over $15,500 or will I have to stop when the total amount equals $15,500? In other words, is the employer contribution considered in my maximum limit of $15,500?

Urgent Question: Roth IRA: Do employer 401k contributions count for income limits? If I add up my income + my employer's 401k contributions I may exceed the Roth IRA income cap for 2008. When calculating the income cap for Roth IRA contributions, do you include the employer 401k contributions? Or do I just go by my income and not count the employer 401k contributions? Thanks, Daniel

Traditional to Roth IRA Conversions and the 1-year time limit.? In October 2006 I rolled over my old 401k to a new traditional IRA at Vanguard, where I had an existing roth IRA. This year I wanted to take advantage of my low tax-rate and convert the new traditional/rollover IRA into the existing roth IRA, which I did last month. The people at Vanguard explained to me that this would be a taxable event, without penalty. So can I claim that distribution in my income tax at the end of 2007 and pay the applicable taxes without taking any distributions from the IRA? In addition, I would like to transfer the roth IRA to Fidelity and am wondering if I can do that now or do I have to wait until March 2008? Thank you for the answers. I want to clarify one point. Since I rolled over from traditional to roth, I need to pay that tax as income but the funds for the tax need not come out of the IRA? Can I pay the tax with other funds? In other words, I don't need to withdraw funds from the IRA in order to pay the tax if I don't want to.

Can I roll over my newly opened traditional ira into my 401k to increase the exemption for the 401k? Turbo tax says I make too much money to deduct my traditional ira contributions. I opened the IRA in 2008. I did not max out my 401k contributions through my employer. Can I roll over my 2008 IRA to my 401k to increase my exemption under the 401k? If so, what rules will I need to follow, and what are the limits? *This question is being asked for a friend, so I don't have all the specifics. Sorry.

Employer max for 401k? My client has a owner 401 (k), we are trying to determine employer contribution limits for 2008 if no employee contributions are made.

IRA Question / 401K? Can I contribute $5500 to a Roth IRA and $5500 to a traditional IRA or is it $5500 total in 2008? I need to know so that I can avoid over contributing to the limited investment choices in my company 401-K because I am still under the $15500 limit. Thanks for the insight. I wanted to put as much in my IRAs as possible as I like the investment options I have selected more than those available in my company 401-K. I contribute up to the company match, but not beyond. However, if $5000 is the limit in 2008, then I have no other options, but to open up a taxable account or allocate more of my pre-tax paycheck dollars to the 401-K to get a tax deduction.

IRA and 401 Contribution Limits? Can someone please explain me how the IRA and 401 Contribution limits work for 2008? My wife and I each have a 401k plan in which we make contributions. I also have an IRA account. I need to know how do the contribution limits work for 401k and IRA plans work. Are the limits separate? Are they combined? Are they doubled for a married couple filing jointly? Someone please explain. Thank you

How can I secretly open a ROTH IRA behind my parent's back? I'm 17 almost 18 in December. I asked my parents if I can open a Roth IRA with $2,500. My Asian parents said NO! My Asian parents have retirement accounts with fidelity. Once every 6 months they send a huge envelope that show my parent's earning at fidelity $44,000. I am planning on opening a roth IRA with fidelity online. My Asian parents said my retirement will hurt my financial aid. I have $8,000 in the bank and $500 in my savings. I currently have a job. I have no 401K. My Dad LOST his job and my mom is working to support 3 kids in college. I am the last one to go to college, currently a senior at HS. I have good grades. 1) How can I achieve my goal of opening a roth? How can I tell my parents it's smart to open one now? 2) Will my future 401K conflict with my Roth IRA??? 3) If I DIE what will happen with my Roth? should I care? 9 minutes ago 4) Ths current 2008-09 limit for contributing is $5,000. What happens if I don't contribute? Do I have to? 5) What if I lose money in my Roth IRA and it falls below the $2,500 requirment at Fedility will I be charged? http://www.themoneywisecoach.com/tag/financial-aid/ says here, that it wont my financial aid because the aid only assess the income not your retirement!

Can anyone explain how the contributions under IRC Section 415(c)(1)(A) are treated? The question is: In a Safe Harbor 401k, the regular employee deferral limit of $15,500 plus the over 50 $5,000 catch-up contribution would allow elective deferral of 20,500. Plus, if the HCE is making $200k, another $8,000 of matching contributions would be allowed for a total of $28,500. However, under IRC Section 415(c)(1)(A) the total amount contributed is limited to $46,000 for 2008 plus the $5,000 catch-up for over 50 for a total of $51,000. Where does the extra $22,500 come from (51,000-28,500)? Is it an employee or employer contribution and is it tax deductible?

how can i get out of my apartment lease early? my fiance has become disabled from an accident and cant? ok i want to know how can i get out of my apartment lease early? its up may 31, 2008. my fiance was hit by a truck back in sept 07, and is since disabled. he cant work. im working 2 jobs and still cant make the 1600 lease payment and car payments and bills, ect. hes having problems climbing the stairs to get up to our apartment too. is there anyway to get out of our lease early? i have exhausted our credit limits, savings, my 401k everything to pay over the last couple months. his disabitlity only lasted for 2 months until the state cut it off and we are still waiting to hear from social security. . is there a way for us to get out of our lease early? thankyou its appreciated yes he is on the lease and we have plenty of hospital records/ doctors/police reports, everything from what happened. he broke his back, arm, leg, and more

What are my best options from a tax and debt standpoint? I make 72k a year, I have a potential for a 5k annual bonus, it will probably happen, but be more around 3k this year(2008). My company matches dollar-for-dollar up to 6% for my 401k, and thats currently how much I contribute. I plan on writing off some college tuition expenses this year(for my MBA classes), and i would also like to deduct student loan interest..I wasnt able to deduct student loan interest in 2007 because i made over 70k(and i didnt know how to lower my AGI ahead of time). Also, i was only able to deduct 2k instead of 4k for tuition expenses cause the limit there is 65k. I currently owe about 4k on my credit cards, I dont really do much with savings or checking because I have credit card debt.. What should I do for 2008 in order to make sure i am debt free, and to maximize deductions, maybe increase my tax return when i file next year. Overall please tell me what i need to do financially to benefit myself the most? Please the more detail for me the better. Thanks!

401Ks for Well Paid Executives (USA)? First, I totally agree with free enterprise, capitalism, and making as much money as you can while one is alive. Second, I don't understand how executives can make contributions to their 401Ks well above the 2009 limit of $16,500? Here's my reference, last sentence, second paragraph: "And coming in at No. 10 was Michael Jeffries, chief executive of Abercrombie & Fitch. Despite a tough year for retail, in which Abercrombie's stock dropped nearly 70%, Jeffries made more than $60 million in stock options. Jeffries was also awarded a $6 million "stay bonus" after remaining as the company's chairman and CEO through December 2008, on top of his $1.5 million salary, $1.3 million for personal aircraft usage and $382,687 towards his 401(k)." (http://search.finance.yahoo.com/career-work/article/107529/the-top-10-highest-paid-ceos-are.html?mod=career-salary_negotiation; downloaded 17 Aug 2009) From my understanding, one can contribute $16,500 and receive matching funds up to that amount, which equals $33,000. How is it possible for this guy to receive $382,687 towards his 401K? Like I said, I'm all for getting well paid, but I'm jealous that I receive a modest $1,600 a year from my employer's match towards my 401K, while I max it out. Please, can someone explain how he can contribute well above the $16,500 towards his 401K because if there's a way to do so, I'd also like to do it. Thanks.

I have $20,000 coming to me as a gift. Should I invest, save, or pay off debt? I am currently finishing up grad school and have about $65,000 in student loan debt, $21,000 of private loans which cannot be consolidated. I am also currently unemployed and on UC benefits. My credit card debt is under $1000 divided between a few low limit cards. I have had bad credit problems in the past which I took care of in 2008, but opened the smaller cards to begin to rebuild my credit in the last 3 months. What I am wondering is, how should I handle the $20,000? I would like to have a small and accessible cash savings of $3000 to $5000 (in an account such as an ING Orange Savings at 3%). But other than that I'm not sure what to do with the remaining. I also do not have any other savings or 401k. I do not yet own a home, but would like to as soon as I am more financially stable. As I said, my student loan debt equals about $65,000 and $21,000 is in private loans with a higher interest rate and cannot be consolidated. My payments, once they begin in 6months will total $650 to $700 a month, $250 to $300 of which is the private student loan. The consolidated government loans are fairly manageable when considering they equal over $40,000. Should I pay down the private loan and credit card debt with all of it? Or divide it among savings and pay part of the loan off? Or save all of it? Also, what kinds of savings options should I use? Thanks!

When to start making taxable investments over IRA / Roth investments? I've been contributing to my 401K / Traditional IRA for a few years and just opened a Roth as well knowing that I can tap it for a first time home purchase if needed. With my emergency fund nearly full, I'm wondering what's the best move now - pump more into the retirement accounts (specifically the Roth) or start mixing in some taxable investments in my brokerage? Also I know the Roth has income cut-offs, and between my wife and I we're starting to near those limits. Maybe within the next 5 years, and likely within the next decade, we might exceed those limits. With that in mind is it best to max it out while I can? Here's my current allocations: - 8% pre-tax to 401k - 5% post-tax to Roth + initial $1000 contribution in 2008 - 10% post-tax to emergency fund (will stop once it reaches ~20% of annual take-home income appx. 3-4 months from now) Thanks!

I owe Uncle Sam money this year in taxes. Is there anyway I can invest my money so I'll have to pay less? I just finished doing my taxes but unfortunately, this year I owe Uncle Sam a descent amount of money (more than 5K). I have already maxed out my 401K and I am not eligible for IRA due to income limits. So what can I do before April 15th 2009 to reduce my tax bill for 2008? I heard you can invest in tax-deffered Annuities and claim it as tax deduction. Is that allowed? Do I have any other options to keep my money legally?

Can you help me to reduce my federal income tax liability? Hello. I am trying to figure out if there is a way to reduce my tax liability. As you can see from the numbers below, my federal tax liability has been steadily increasing: 2006, 8,446; 2007, 12,039; 2008; 14,601. I am currently working on my 2009 federal tax return, but I believe that the upward trend will continue. I have always used the standard deduction and exemption. I contribute the maximum allowable amount to my traditional 401k. I pay a portion of my employer provided health insurance premium, which reduces my federal taxable income. I do not own a home, so I can't itemize and deduct mortgage interest or property taxes. I don't think I can deduct for an HSA because I have employer-sponsored health insurance. I am not self-employed. I do not pay alimony. I do not think I am eligible for a traditional IRA deduction because my income is too high. I do contribute the full allowable amount to a Roth IRA, however. I have paid off my student loans, so no interest deduction there. My filing status is single and I can only claim myself as an exemption. I don't think I am eligible for the earned income credit due to my income level. I am 39 years old. For 2009, I had laser eye surgery. I put the cost for it in an employer based FSA and that allowed me to pay for the surgery with pre-tax income. Would a master limited partnership, or a deferred annuity or some other investment reduce my tax liability? My investments are mostly in 401K, 403b, Roth IRA, after tax mutual funds and an emergency fund. I am hoping to retire early. Is there any way that I can reduce my tax liability while I am in the accumulation phase. Here are my numbers: 2008 83,397 Adjusted Gross Income 74,447 Federal Taxable Income 14,601 Total Federal Tax 17.51% Effective Tax Rate 78,948 wages 928 taxable interest 3,082 ordinary dividends 2,445 qualified dividends 439 capital gain 2007 74,411 Adjusted Gross Income 65,661 Federal Taxable Income 12,039 Total Federal Tax Effective Tax Rate 16.18% 65,120 wages 265 taxable interest 3,083 ordinary dividends 1,621 qualified dividends 5,943 capital gain 2006 58,216 Adjusted Gross Income 49,766 Federal Taxable Income 8,446 Total Federal Tax 51,342 wages 292 taxable interest 2,419 ordinary dividends 1,391 qualified dividends 4,161 capital gain Thank you for your advice!

Foreign press: (About the Bailout) Its not the end of the US? (Translated using BabelFish) Myths and realities of the financial crisis 22 of September of 2008, 04:00 A.M. by Xavier Serbia It has been one week, for some, exciting; for another horrifying one. But, also it has been one week full of myths that are repeated with as much conviction that who says it thinks that it is so. Thus we had personages in the media shouting to us how to make money in the hypothecating market; now they are saying to us that this one is the economic fiasco of history. Of the same form that motivated us with the “irrational exuberance”, now they want to fill to us of “apocalyptic” messages awaiting the “monster of thousand heads”. We go to the point. We take some myths and put them out naked, until we see the reality of each of them. Myth #1: “We are in a recession like the one of the 29” Reality: Nothing like that. With 6,1% in the rate of unemployment and 3,3% in the GDP (preliminary), can we say that it is depression? Certainly we are in a deep financial crisis, but to call it the "depression of 2008”? No. In the depression of 1929 there were hundreds of banks closed, the savings (not the investments) were lost, one in four people ready to work were unemployed and the cities were facing long rows of poor men looking for work and food. Do We see that now? Now what we see are long lines of people buying Ipods. Certainly this financial crisis is affecting the investments of many and can open the iron door from a financial to an economic one (so that it happens to other areas of the economy). But, mechanisms exist that did not exist then to stop the spill. And the leaders are moving towards that direction. My people, the same “catastrophic” shouts occurred after Baring, LTCM, the Asian crisis, dot.com, and with 9/11. Still we are waiting for the depression. Myth #2: “The greed of the rich ones of Wall street has taken us to this” Reality: As far as I know, the didn't call that to Wall Street when individuals, families, salesmen, bankers, mass media, politicians, investors were participating in the celebration of the “hypothecating tequila”. They called it “the opportunity of the American dream”. It is certain that many investment banks, funds of insuring capitalists of risk and insurers took extreme risks when bathing in debts with "the hypothecating tequila" . But, many drank of the same glass of the greed, and not necessarily they are in the high floors of Manhattan, but in common streets like California, Florida, Nevada, Arizona and the list goes on. For that reason, I prefer to say that “the extreme appetite to risk in Wall street as in Main Street has taken us to this”. Myth #3: “The banks are falling” Reality: of nearly 8.425 financial institutions assured by the FDIC, How many banks have closed in the period of 2007-2008? Fifteen (15), which have been in their majority acquired by other banks. Do You know how many banks closed during the crisis of “Savings and Loans” in the decade of the 80's? more than 1,600. Certainly some real estate mortgage banks have undergone the effect of their excesses (IndyBanc, Countrywide, Ameriquest, etc.), investment banks of weight have been carved up (Lehman), others fell to the arms of other banks (Merrill Lynch and Bear Stearn), others are flirting to be merged with another banks (Morgan Stanley), the GSE like Fannie and Freddie fell at the hands of the government, AIG obtained a financial rescue, “hedge funds” have closed, small banks fell at the hands of others, the FDIC increased the level of reserves and it expects that several banks will close down. But, “the banks are not falling”. Myth #4: “My investments are assured” Reality: The investment is not assured, which is assured is the account and its content in case of a closing or fraud on the part of the financial institution. And the protection has a limit. One thing is the loss by fraud or closing of an institution; another thing is the loss by the fall in the value of the investment. It is the FDIC (in the case of the banks), SIPC (in the case of the brokerage houses), NCUA (in the case of credit unions) or Funds of State Guarantee (in the case of the insurance companies) who cover in case of bankruptcy, closing or fraud. We say that if I invested $25.000 in Lehman shares, the value of the shares went through the floor, because nobody covers the loss because that is part of the risk that faces investing. If my money is in an institution that has its respective insurance and it closes or exists a fraud, now they insurance me as long as it fulfills the specifications of that certain insurance. In the case of money that we have in the accounts of retirement by contributions with our employer (for example 401k) this is separated from the employer and the administrator of the money (company of investments that invests the money) in a separated account in our name. Now, if you lost 20% of your value of the investment (example you had $100.

Foreign Press: About the Bailout, its not the end of the US? (Translated using BabelFish) Myths and realities of the financial crisis 22 of September of 2008, 04:00 A.M. By Xavier Serbia It has been one week, for some, exciting; for another horrifying one. But, also it has been one week full of myths that are repeated with as much conviction that who says it thinks that it is so. Thus we had personages in the media shouting to us how to make money in the hypothecating market; now they are saying to us that this one is the economic fiasco of history. Of the same form that motivated us with the “irrational exuberance”, now they want to fill to us of “apocalyptic” messages awaiting the “monster of thousand heads”. We go to the point. We take some myths and put them out naked, until we see the reality of each of them. Myth #1: “We are in a recession like the one of the 29” Reality: Nothing like that. With 6,1% in the rate of unemployment and 3,3% in the GDP (preliminary), can we say that it is depression? Certainly we are in a deep financial crisis, but to call it the "depression of 2008”? No. In the depression of 1929 there were hundreds of banks closed, the savings (not the investments) were lost, one in four people ready to work were unemployed and the cities were facing long rows of poor men looking for work and food. Do We see that now? Now what we see are long lines of people buying Ipods. Certainly this financial crisis is affecting the investments of many and can open the iron door from a financial to an economic one (so that it happens to other areas of the economy). But, mechanisms exist that did not exist then to stop the spill. And the leaders are moving towards that direction. My people, the same “catastrophic” shouts occurred after Baring, LTCM, the Asian crisis, dot.com, and with 9/11. Still we are waiting for the depression. Myth #2: “The greed of the rich ones of Wall street has taken us to this” Reality: As far as I know, the didn't call that to Wall Street when individuals, families, salesmen, bankers, mass media, politicians, investors were participating in the celebration of the “hypothecating tequila”. They called it “the opportunity of the American dream”. It is certain that many investment banks, funds of insuring capitalists of risk and insurers took extreme risks when bathing in debts with "the hypothecating tequila" . But, many drank of the same glass of the greed, and not necessarily they are in the high floors of Manhattan, but in common streets like California, Florida, Nevada, Arizona and the list goes on. For that reason, I prefer to say that “the extreme appetite to risk in Wall street as in Main Street has taken us to this”. Myth #3: “The banks are falling” Reality: of nearly 8.425 financial institutions assured by the FDIC, How many banks have closed in the period of 2007-2008? Fifteen (15), which have been in their majority acquired by other banks. Do You know how many banks closed during the crisis of “Savings and Loans” in the decade of the 80's? more than 1,600. Certainly some real estate mortgage banks have undergone the effect of their excesses (IndyBanc, Countrywide, Ameriquest, etc.), investment banks of weight have been carved up (Lehman), others fell to the arms of other banks (Merrill Lynch and Bear Stearn), others are flirting to be merged with another banks (Morgan Stanley), the GSE like Fannie and Freddie fell at the hands of the government, AIG obtained a financial rescue, “hedge funds” have closed, small banks fell at the hands of others, the FDIC increased the level of reserves and it expects that several banks will close down. But, “the banks are not falling”. Myth #4: “My investments are assured” Reality: The investment is not assured, which is assured is the account and its content in case of a closing or fraud on the part of the financial institution. And the protection has a limit. One thing is the loss by fraud or closing of an institution; another thing is the loss by the fall in the value of the investment. It is the FDIC (in the case of the banks), SIPC (in the case of the brokerage houses), NCUA (in the case of credit unions) or Funds of State Guarantee (in the case of the insurance companies) who cover in case of bankruptcy, closing or fraud. We say that if I invested $25.000 in Lehman shares, the value of the shares went through the floor, because nobody covers the loss because that is part of the risk that faces investing. If my money is in an institution that has its respective insurance and it closes or exists a fraud, now they insurance me as long as it fulfills the specifications of that certain insurance. In the case of money that we have in the accounts of retirement by contributions with our employer (for example 401k) this is separated from the employer and the administrator of the money (company of investments that invests the money) in a separated account in our name. Now, if you lost 20% of your value of the investment (example you had $100.