Can Money Withdrawn From a 403(b) Plan in Retirement Be Put Into a Roth IRA?

It depends. You must have earned income to contribute to an IRA of any type, including a Roth IRA. This means that you must have a salary, hourly wage, or net earnings from consulting or a small business.

If you have earned income, the maximum amount that a person over age 50 can deposit in 2017 in a Roth IRA is the larger of 100% of earnings or $6,500 (the regular $5,500 contribution plus an additional $1,000 catch-up contribution). Roth …

How do Spousal IRAs Work?

Spousal IRAs are a type of individual retirement account designed for married couples where one spouse is not employed. The working spouse may contribute up to $5,500 per year (2017 figure) to an IRA, in the name of the non-working spouse, and up to $5,500 per year to his or her own IRA. As a result, a couple may contribute 100% of their income up to a total of $11,000 per year (2017 figure).

In addition, if you are age …

How Do You Purchase Stock From a Company That is Going Public?

You are talking about an IPO (initial public offering). You should be able to get information (e.g., company research) from a stockbroker. Also, visit an online search engine (e.g., Bing or Google), type in the company name, and see what information you get. If there is an address or toll-free telephone number for the company’s “shareholder relations” department, call it. As for purchasing an IPO stock, you may or may not be able to buy shares directly from the company. …

How Does a Target Date Mutual Fund Work?

With a target date mutual fund, investors simply need to pick a fund with a date at or near the year that they expect to retire. For example, there are funds with dates such as 2020, 2030, 2040, and 2050 in their title.

The fund manager will gradually change the asset allocation of the fund as time goes by so that, eventually, there will be a smaller percentage of the portfolio in stocks and a higher percentage in bonds and …

Monthly Investment Message: July 2016

Barbara O’Neill, Extension Specialist in Financial Resource Management

Rutgers Cooperative Extension

oneill@aesop.rutgers.edu

July 2016

Challenge Yourself to Save and Invest

What’s the best way to “find” money to save or invest? There is no one right answer. Automatic payroll deductions work well for many people, For example, they have deposits into a credit union account or 401(k) or 403(b) retirement savings plan automatically taken out of their paycheck, before they spend it. Other people do well saving loose change in …

Investment Risk and Risk Reduction Strategies

Dr. Barbara O’Neill, Extension Specialist in Financial Resource Management

Rutgers Cooperative Extension

oneill@aesop.rutgers.edu

Did you ever wish that there was a “perfect investment”? That would be an investment that is risk-free, tax-free, and pays a double-digit rate of return. Unfortunately, it does not exist. Every type of investment product has some type of risk.  The types of risks vary for different types of investments, however, (e.g., stocks versus bonds). The causes of investment risks include inflation, economic trends, political uncertainty, …

Please give an example of the principle of risk-return trade-off.

When investors take more risk with their investments, they generally have the potential for, but not a guarantee of, a higher average return. For example, stocks (and stock mutual funds), which are very volatile in the short term, have historically produced the highest average annual returns of any asset class over the long term. By comparison, cash-equivalent assets, such as money market mutual funds and certificates of deposit, have less risk of loss of principal but generally pay relatively low …

Do I have to pay capital gain taxes on my required minimum distribution (RMD)?

To calculate your RMD, divide the amount of money held in your tax-deferred account(s) at year end by the number of years left in the account owner’s life expectancy and take out at least that amount. The amount of your RMD withdrawal is then added to your other taxable income for the year and taxed according to your marginal tax rate. Thus, the whole amount of a distribution or withdrawal from an IRA, 401(k), 403(b), or other tax-deferred retirement savings …

What does the (NYSE) number mean, and how is it derived? In other words, when they say “the market is down 777 points today,” what do the “points” represent?

Think of the NYSE (New York Stock Exchange) as a marketplace where stocks are traded. The Dow Jones Industrial Average (sometimes referred to as the Dow or DJIA) is one of many stock market indexes that are used to track the performance of the stock market.

Within the thousands of stocks that are actively traded and tracked, the Dow tracks 30 specific large U.S. company stocks on a daily basis. It was originally established in 1896 and has been providing …

Can I roll over or transfer a fixed deferred annuity tax free?

Fixed annuities are similar to bank certificates of deposit (CDs) in that they earn a guaranteed interest rate for a set period of time. Two major differences are that fixed annuities are tax deferred and often provide a higher return than bank CDs. Yes, you can roll over or exchange a fixed annuity for a new annuity. Check to make sure that surrender charges don’t apply, however. Typically, a minimum deposit of at least $5,000 will be required. Investment experts …