| The Do's and Don'ts of IRA Withdrawals
Editor's note: As a special feature for April, TheStreet.com is offering a seven-part series on maximizing your IRA. This installment is Part 3. Click here for Part 1, Part 2, Part 4, Part 5, Part 6 and Part 7. There are substantial penalties to be paid for making withdrawals from an IRA before you reach age 59 1/2 or, in the case of a Roth IRA, if withdrawals occur within the first five years of a contribution. So investors need to make every effort to plan ahead and should have a reserve fund established for emergencies. Early withdrawals from traditional IRAs are subject to a 10% penalty in addition to the payment of income taxes on the amount withdrawn. There is a loophole that lets you avoid a penalty if you withdraw money from an IRA and pay it back within 60 days. However, no investor should rely on this form of short-term financing.
HSAs a health-care option
The tax system creates some powerful incentives. Have you ever wondered why it is health insurance in this country is provided mainly through employers? To a large extent it is because the money a company spends on its employee's health insurance is tax deductible for the company. On the other hand, that money, which is a form of employee compensation, is not taxable income for the employee. So, following World War II, American companies found health insurance to be a tax-efficient way of compensating employees. Fast forward to today, as health costs spiral upward, both companies and individuals are beginning to look for alternatives. A reason cited by some analysts to at least partially explain the rapid rise in health costs is that consumers, who have their medical expenses paid to a large extent by insurance, have no motivation to control costs.
Chiefs' Pro Bowl guard Shields announces his retirement
KANSAS CITY (AP) - Will Shields, Kansas City's 12-time Pro Bowl right guard and the anchor for many years of one of the NFL's finest offensive lines, announced on his Web site Sunday that he's retiring after 14 seasons.
A third-round draft choice out of Nebraska in 1993, Shields had made a team-record 224 starts, the second-longest active streak in the NFL behind only Green Bay quarterback Brett Favre. He and former Minnesota guard Randall McDaniel are the only players in NFL history with 12 Pro Bowl appearances.The Chiefs had been waiting patiently for Shields to decide whether he would come back for a 15th season. Making the announcement entirely without warning on his Web site seemed in keeping with the privacy he has closely guarded throughout his stellar career. A team spokesman said Sunday night the club was not aware of Shields' announcement.Shields, who strongly contemplated stepping down after the 2005 season, wrote on his site that the physical requirements of the game had become more difficult with each passing day.“The decision to hang up my cleats has not been an easy one to make for me but one I knew I would eventually have to make," Shields wrote.
Rolling over a 403(b)
The problem: I retired in April 2006. From January 2006 until I retired, I had contributed into my 403(b) annuity account. Can I continue to put additional contributions into my 403(b) even though I didn't work from May 2006 until the end of December? I'm currently not working but contemplating a part-time job.
The expert: Jeffrey Trugman, MetLife senior financial planner and financial services representative, Hauppauge.
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