FAQs- Frequently Asked Questions
How much can I contribute to my IRA this year? $5,000 is the limit for IRA and Roth IRA contributions in 2010. The catch-up provision allows participants age 50 and older to contribute an additional $1,000 to these accounts. How much can I contribute to my 401(k), 403(b) or 457(b) this year? $16,500 is the limit for such contributions in 2010. The catch-up provision allows participants age 5 and older to contribute an additional $5,500 to these accounts .The same rules apply if you participate in a Roth 401(k). How much can I contribute to my SIMPLE IRA this year? $11,500 is the limit for contributions to SIMPLE IRAs in 2010. The catch-up provision allows participants 50 and older to contribute and additional $2,500 to these accounts. What is the difference between a Traditional IRA and a Roth IRA? Both a Traditional and Roth IRA are qualified retirement accounts which allow tax-deferred growth. The big difference is that disbtributions from a Roth IRA are withdrawn tax-free. For that reason, contributions for a Traditional IRA have the ability to be tax-deducted when they are made, while Roth IRA contributions are not tax-deductible. The income limit for a Roth IRA is modified adjusted gross income of $167,000-$177,000 for joint filers and $105,000-$120,000 for single filers. When must I make contibutions to my IRA by? Contributions for 2010 must be made by 4/15/2011. When can I take full Social Security? Full retirement age is 66. The earliest you can start receiving Social Security retirement benefits is age 62. How are distributions from my retirement plans taxed? Distributions from retirement plans are taxed as ordinary income with the exception of Roth IRAs and Roth 401(k)s, in which the principal and earnings are withdrawn tax-free. When do I have to start taking my required minimum distributions? Government Required Minimum Distributions must begin by age 70 1/2. When can I pull from my retirement accounts without penalty? Withdrawals from qualified retirement accounts can begin at age 59 1/2 without penalty. Any withdrawals made prior to 59 1/2 are subject to a 10% tax penalty. This rule does not apply in the case of death, diability or a qualifying rollover. For Roth IRAs, withdrawals up to $10,000 can be made prior to the attained age to be used as a down payment for a first-time home buyer. How much life insurance do I need and what type? The amount and type of life insurance that is right for you depends on multiple factors including your age, income, family, and what you want the life insurance to do for you. Everyone's need for life insurance is unique. It is best to sit with an adviser to come up with a life insurance plan that is appropriate for you. You can start by taking MetLife's Life Insurance Selector to get an idea of where you stand. How much disability income insurance do I need? Like life insurance, the need for disability insurance varies person to person. The amount you need is based on your current income. There are different types of disability insurance plans that serve different objectives. It is best to sit with an adviser to come up with a disability insurance plan that is appropriate for you. You can start by taking MetLife's Disability Income Selector to get an idea of where you stand. I have group disability insurance through work, isn't this enough? If you have disability income insurance through a group plan at work, that is an excellent start. However, group plans will generally cover a percentage of your base salary. If commissions, overtime or bonuses make up a substantial portion of your income, your group plan is most likely insufficient. In addition, benefits recieved through groups plans are taxed, thus further reducing the benefit you actually recieve. Most people require a supplemental disability income insurance policy to adequately replace their income if they ever become disabled. What does long term care insurance cover? A long term care policy will provide funds for care given in different settings: your home, an assisted-living facility or a nusring home. Qualified long term care insurance policies can protect your assets from being taken by the state to pay for care, as Medicaid eiligibility may require the depletion or "spending down" of countable assets to meet state-aid requirements.
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