Individual Retirement Account (IRA)

The Individual Retirement Account (IRA) is a tax deductible defined contribution retirement account. This means that taxes are not paid that year for any money deposited in your IRA. Instead, withdrawals made from the account upon retirement are taxed as income.

Pros:

Cons:

An individual Retirement Account allows the account holder to make investments using the funds in their retirement account. This means they can allocate the funds across a variety of stocks, bonds, and mutual funds. The importance of this is that any growth in these investments is tax deferred until withdrawal along with all funds in the account.

The negative side of this tax deferral is that the growth of investments will be taxed at your income tax rate rather than capital gains which is 15%. For the tax advantage to really come through, the funds in an Individual Retirement Account (IRA) must be allowed to have time for growth. In general, it is advantageous when the Individual Retirement Account (IRA) is allowed to grow for more than 20 years before withdrawal for the tax deferral to be advantageous.

A disadvantage of the Individual Retirement Account (IRA) is the low deposit limit of only $5,000 a year with a catch-up addition of $1,000 a year allowed for individuals 50 or older. Also, funds can be difficult to withdraw from an IRA before the designated age of 59 ½ is reached. To see a more detailed analysis of an Individual Retirement Account (IRA).

When is a Roth IRA for me?

The Roth Individual Retirement Account (IRA) is an account that is not tax deferred; therefore taxes are paid on any money before it is deposited in the Roth Individual Retirement Account (IRA). This can be advantageous for individuals who expect to have a higher income upon retirement so would rather pay the current lower tax rate than a future expected higher tax rate.

When is a SEP IRA for me?

The Simplified Employee Pension Individual Retirement Account (SEP IRA) is an Individual Retirement Account (IRA) specifically meant for self-employed individuals and their employees. The account is shared among all members involved and uses a profit-sharing model. The contribution limits for an SEP IRA are the lesser of 25% of income or $49,000 in 2009. All members of the SEP IRA are required to make the same contribution.

A SEP IRA can be advantageous to a business owner due to its higher contribution allowance. It is not really an option for individual retirees who do not own a business of their own. All contribution made to the SEP IRA are made by the employer and not by employees themselves. Thus, the business owner must evaluate whether the tax benefits of expensing these costs and the increased benefits to their employees are worth the cost of increasing their own retirement contributions.

Comparison of Individual Retirement Accounts (IRA) to 401k

401k and Individual Retirement Accounts (IRA) are similar in that they both are tax-deferred retirement accounts which can increase in value over time before funds are withdrawn and they both have restrictions on fund withdrawal. One difference is that the contribution limit is only $5,000 a year for an Individual Retirement Account (IRA) while it is $16,500. A 401k also has the possibility of employer contributions in addition to your personal contributions.

In general, it is a good idea to prefer your 401k plan over your Individual Retirement Account (IRA) due to the higher limits and employer contributions. Before using this as a hard and fast rule, it is best to review what types of investments are made within your employer sponsored plan and your Individual Retirement Account (IRA) and what type of contributions are made by your employer.

Comparison of Individual Retirement Accounts (IRA) to Retirement Annuity

Both an Individual Retirement Account (IRA) and a Retirement Annuity are tax deferred retirement accounts. Unlike an Individual Retirement Account (IRA) which has a $5,000 contribution limit, a retirement annuity has no contribution limits. Both accounts have a 10% penalty for early withdrawal.

The main feature a retirement annuity has that an Individual Retirement Account (IRA) does not is its variety of guarantees. These guarantees include a guarantee to receive a minimum income per year after retirement and guarantees that the accounts value will be at a minimum level in the future. But these features come at a cost of about 3% a year in fees.

It is generally a poor idea to invest in a retirement annuity rather than an Individual Retirement Account due to these high fees charged. If the benefits being offered are worth the 3% annual fee due to your circumstances, a retirement annuity would be something to consider looking into.

401K

A 401k is a retirement account sponsored by your employer. It is a defined contribution plan where you contribute a certain portion of your income into the account.

Pros:

Cons:

401k and Individual Retirement Accounts (IRA) have a variety of similarities. They are both tax deferred plans to taxes are only paid on withdrawals from the account, allowing a tax-free buildup of funds and investment returns. This tax deferred features of both retirement accounts is advantageous to retirees who expect a lower income upon retirement than the income they receive during their careers.

A very large advantage of a 401k retirement account is that your employers may have a benefit where they will add funds to your account or match funds you add to the account. This is the primary advantage that a 401k has over an Individual Retirement Account (IRA) but is highly dependent on what your employer contributes.

As with the Individual Retirement Account (IRA), the 401k has a negative side if the account holder does not allow the account to be active for more than 20 years. This is due to the growth within the retirement account’s investments being taxed at your income rate upon withdrawal rather than the customary 15% capital gains tax on investments. The tax advantages on investment growth are only seen after a long period of time.

When is a Roth 401k for me?

A Roth 401k, unlike a standard 401k retirement account, is taxed before the funds are placed into the account and withdrawals are made tax free. As with a Roth Individual Retirement Account (IRA), the Roth 401k is advantageous to individuals who expect their income upon retirement to be higher than their career income, therefore the tax-deferral of a standard 401k can be a negative to them.

To find out more in-depth information about 401k retirement accounts, read our article about 401k.

Comparison of 401k to Individual Retirement Account (IRA)

401k and Individual Retirement Accounts (IRA) are similar in that they both are tax-deferred retirement accounts which can increase in value over time before funds are withdrawn and they both have restrictions on fund withdrawal. One difference is that the contribution limit is only $5,000 a year for an Individual Retirement Account (IRA) while it is $16,500. A 401k also has the possibility of employer contributions in addition to your personal contributions.

In general, it is a good idea to prefer your 401k plan over your Individual Retirement Account (IRA) due to the higher limits and employer contributions. Before using this as a hard and fast rule, it is best to review what types of investments are made within your employer sponsored plan and your Individual Retirement Account (IRA) and what type of contributions are made by your employer.

Comparison of 401k to Retirement Annuity

401k and Retirement Annuities are both tax-deferred accounts in which the funds are only taxed upon withdrawal. 401k retirement accounts have an annual limit of $16,500 while a retirement annuity has no annual limit.

The main feature a retirement annuity has that a 401k does not is its variety of guarantees. These guarantees include a guarantee to receive a minimum income per year after retirement and guarantees that the accounts value will be at a minimum level in the future. But these features come at a cost of about 3% a year in fees.

It is generally a poor idea to invest in a retirement annuity rather than 401k due to these high fees charged. If the benefits being offered are worth the 3% annual fee due to your circumstances, a retirement annuity would be something to consider looking into.

Retirement Annuity

A retirement annuity is a defined contribution retirement account sold exclusively by life insurance companies. The earnings within a retirement annuity are tax deferred until withdrawal. Insurance companies can offer a variety of guarantees with their retirement annuity products, but these benefits come with extremely high fees.

Pros:

Cons:

The main benefits of retirement annuities are the guarantees that life insurance companies provide. These can include a guarantee that you will receive a minimum income per year after retirement and guarantees that the accounts value will be at a certain level in the future. The income earned within an annuity is tax deferred upon withdrawal providing a tax shelter for potential investment growth.

These benefits come at a cost. The fees charged on annuities can be extremely large and are highly criticized in the financial world. The total amount of fees charged on an annuity are around 3% a year, a far cry from the 1% a year charged by mutual funds directly. To read a more in-depth breakdown of retirement annuities and the fees charged, read our article on Retirement Annuities.

Retirement Annuities become advantageous when an individual is willing to deal with the 3% fees to acquire the potential guarantees.

Comparison of Retirement Annuity to Individual Retirement Account (IRA)

Both an Individual Retirement Account (IRA) and a Retirement Annuity are tax deferred retirement accounts. Unlike an Individual Retirement Account (IRA) which has a $5,000 contribution limit, a retirement annuity has no contribution limits. Both accounts have a 10% penalty for early withdrawal.

The main feature a retirement annuity has that an Individual Retirement Account (IRA) does not is its variety of guarantees. These guarantees include a guarantee to receive a minimum income per year after retirement and guarantees that the accounts value will be at a minimum level in the future. But these features come at a cost of about 3% a year in fees.

It is generally a poor idea to invest in a retirement annuity rather than an Individual Retirement Account due to these high fees charged. If the benefits being offered are worth the 3% annual fee due to your circumstances, a retirement annuity would be something to consider looking into.

Comparison of Retirement Annuity to 401k

401k and Retirement Annuities are both tax-deferred accounts in which the funds are only taxed upon withdrawal. 401k retirement accounts have an annual limit of $16,500 while a retirement annuity has no annual limit.

The main feature a retirement annuity has that a 401k does not is its variety of guarantees. These guarantees include a guarantee to receive a minimum income per year after retirement and guarantees that the accounts value will be at a minimum level in the future. But these features come at a cost of about 3% a year in fees.

It is generally a poor idea to invest in a retirement annuity rather than 401k due to these high fees charged. If the benefits being offered are worth the 3% annual fee due to your circumstances, a retirement annuity would be something to consider looking into.

Retirement Accounts Conclusions

Overall 401k retirement accounts provide the best variety of features for retirement. Individual Retirement Accounts (IRAs) are very similar to 401ks but lack the benefits of employer contributions and have lower contribution limits. It is best to deposit all funds available into your 401k until the limit is reached and if your income allows it, contribute the remainder into your Individual Retirement Account (IRA).

Retirement annuities are widely criticized and rightfully so. They provide a few features that may entice individuals to contribute but those features come at a very hefty price that isn’t associated with any other type of account. Retirement annuities should only be used if your individual life circumstances make the features they provide a worthwhile sacrifice of 3% in fees every year.

In addition, each type of 401k and Individual Retirement Account (IRA) is different based on who is providing the account. This would be either your employer for a 401k or a financial institution for your Individual Retirement Account (IRA). They all provide different ways in which to manage the investments within the fund itself.

Only general recommendations can be given about which of these three main types of retirement accounts are best for individuals. Decisions must be made in an informed way while taking into account very specific circumstances of the individuals planning their retirement and deciding which retirement accounts are right for them.

You can read more about retirement planning and retirement investing and how these accounts fit into your overall retirement goals.

Table Of ContentsKey Information 1Key Ratios 1Performance Chart 1Table Of Contents 2List of Tables 2List of Figures 3Key Facts 4Business Description 4Major Products and Services 5History 5Key Competitors 6Key Employees 6Key Employee Biographies 6Company Statement 7Locations And Subsidiaries 8Head Office 8Other Locations & Subsidiaries 8Financial Ratios 9Capital Market Ratios 9Annual Ratios 9Interim Ratios 10Ratio Charts 11Appendix 12Methodology 12Ratio Definitions 12About Global Markets Direct 15Contact Us 15Disclaimer 15

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It may seem odd, but it’s undeniable that the profile of games and consoles has been steadily rising over the last year. With the arrival of the big three ‘next gen consoles’ – Microsoft’s Xbox 360, Sony’s Playstation 3 and Nintendo’s Wii – computer gaming was suddenly making headlines all over the media, while starting to shed its rather geeky image.

A few years ago you could be forgiven for thinking, as many people did, that games were for kids and the only people who didn’t ‘grow out of’ them were antisocial misfits probably dealing with some deep-seated anger management problems. The latest systems, to a greater or lesser extent, can be seen as the fresh-faced debutantes of a brave new dawn for the gaming industry, the ugly duckling that grew up to be a beautiful swan. After all, we’ve recently seen video games advertised by the rather gorgeous likes of Ian Wright and Nicole Kidman – a far cry from the nerds of yesteryear.

Wii Games Rated E

Gaming’s place in the collective consciousness has been firmly cemented by the efforts of the friendly little white box we call a Wii. Having been squarely aimed at a wider demographic, including more women, it seems to have largely succeeded in hitting Britain right in the generation gap. Once we got over sniggering at the silly name (which Nintendo have defended as ’short, to the point, easy to pronounce, and distinctive’), it worked – pensioners aged up to 103 have reportedly been enjoying the Wii. So, while a few years ago your granny wouldn’t have known a games console if it poked her in the eye, now you shouldn’t be surprised to hear she’s got one and is enjoying the new Metroid Prime just fine, thank you.

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Public service professionals seeking news on current developments within the public sector can find various news sources especially dedicated to reporting on relevant industries. The internet, for example, is an excellent tool to source such news, with countless forums and targeted websites offering insight into the world of public services. So, whether you’re searching for the latest developments on green policies, education budgets or care for the elderly, you can quickly and easily source accurate information via official public sector websites and informational forums.

However, many people – whether public service professionals or members of the general public – will want to get a more in-depth view of certain public sector issues. In such instances, dedicated journals and reviews can certainly come in handy, offering analysis, opinions, and debate opportunities with regard to a wide range of public sector topics – from defence management to HR and training issues.

Still, those who want to get an even closer look into the public sector can attend any number of relevant events throughout the UK. Such events enable service professionals and anyone interested in the public sector to learn more about countless public service issues – for example, infection prevention in the health sector, sustainable development, social housing, and NHS recruitment, training, and HR.

Finally, there are various resources dedicated to helping people find jobs in the public sector. With tools designed to help you hone in on a specific industry – whether relating to environment and energy, policy, finance and pensions, science and technology, or central government and public policy – you’ll be able to find the ideal public sector job in no time.

So, if you’re a public sector professional, or would simply like to get more involved with the public sector, rest assured there are many resources available to get you the information you need. Moreover, it’s now easier than ever to access these resources, enabling service professionals and the public to gain comprehensive knowledge regarding relevant industries.

What is Passive Income?

By definition, passive income is a type of income requiring minimal work involvement from your initial investment. Investments may take the form of the following:

Operating a Rental Property
Earning interests through interest for a business capital
Earnings through royalties for an invention or work
Dividends derived from an affiliate marketing agency
Real Estate Renting or Leasing
Online Advertisements (Pay-Per Click)

Rewards from these types of investments are awarded to you depending on the length of time an investment operates to produce revenues.

More often than not, the time when you will reap the fruits of your investment will take you quite a while but once it starts earning, the benefits will last a lifetime and usually have accumulative effect, increasing every year or month or a particular time set.

Why People Love it?

It was shown in a survey conducted among 1000 American adults that more than 76% are open to the idea of working less while earning more and reap the benefits of life while young.

The introduction of online market (Internet) makes it even more challenging nowadays for more and more people earn a lot using interactive online tools managed by several people where one have tasked others to perform.

The benefits of passive income can be seen when one is able to rely on others, direct their actions on a reasonable scale, benefits from their personal hard work. The idea is to invest your money today and earn in the future while maintaining a small physical involvement.

Benefits of Passive Income

The benefits of passive income cannot actually be seen outright. While passive income seems enticing the truth is that, one has to be able to maintain relative focus and never move astray while the work is ongoing on establishing your businesses and reputation.

Flexible Working Hours, Although passive income may connote someone who is earning without one having to work on anything, the fact is that you will still need to get a little amount of involvement in order to keep your business running and keep the benefits from flowing in.

It won’t demand most your time and you do the maintenance in your most comfortable hours of the day.

Secured Retirement, investing today will secure your entire length of your retirement career. For most elderly, working on a networking industry is one of the most popular. Records show that, 45% among the people involved in such business activity, occupy the most number of membership.

Low Maintenance, People who are involved in real estate / apartment leasing and renting enjoys the full and real benefits of passive income. These types of business ventures usually provide stable monetary benefits and do not require your direct participation.

For external and internal maintenance, you may hire your own carpenter, engineer, and foreman in the management of these details and you also seek the help of a private collection agency in taking care of the collection of payment.

If you have your own website which creates a high volume of traffic, you can somehow allow advertisements which utilizes a pay-per click scheme or page impression strategy in order to generate income without you having to work out on anything.

However, it should be emphasized that your relative degree of participation lies on how you make your daily website as interesting as possible in order to attract more visitors which adds up to the possibility of visiting the online ads as well.

Tips To Starting Your Own Source o f Passive Income

Start Early, Working things early gives you a competitive advantage in any kind of activity you have set on doing in the first place.

Know what you want, Having a clear distinction of your values, your target market or clients will let you decide which among the passive income option you are to take and how you can better maximize at them.

Financial Applicability, Are you financially ready to take on the challenge of investing your money into such activity? Are you prepared to play with the risk or the odds associated with such undertakings?

Preparation, Are you aware of your responsibilities related to such plan? Do you have the leadership ability to direct others‚ Take actions and use them to the fulfillment of your objective?

With all the questions related to self-directed IRAs…..with some of them being answered here….more people who “fit the box” should be seriously considering a self-directed 401(k) rather than a self-directed IRA.

As mentioned in a previous blog, if an individual enters into a prohibited transaction within their IRA , the plan as nationally-recognized tax expert, Tim Berry, states, “blows up.” In this parlance, it simply means that the individual will face full distribution on the first day of the calendar year which the prohibited transaction occurs, incur early distribution penalties (if they apply) and taxes. Yikes, that doesn’t sound user-friendly to me.

But, let’s not digress and…..now for the Top 10 list (courtesy of www.pgiselfdirected.com):

1) What is a Self-Directed IRA?

Legally speaking, a self-directed IRA is no different than any other IRA. Having a self-directed IRA simply means that you are allowed to direct the investments of the IRA. Many custodians claim that they allow you to self-direct your IRA investments but then turn around and restrict what you can invest in. A truly self-directed IRA allows you to make the decisions without restriction.

2) Why Haven’t I Heard of This Before/Is It Legal?

Congress passed ERISA in the Securities Act of 1975. As a result of this passage, banks and brokerage houses found that this was an ideal time and market to bring IRA and 401(k) plans to individuals and employers and sell the products they wanted to sell….stocks, bonds and mutual funds. Nothing in the IRS code states that you can only invest with a brokerage house…let alone in stocks, bonds and mutual funds. But this IS what 97% of the population believes. Banks and brokerage houses have a vested interest in having you invest in stocks, bonds and mutual funds – not real estate, businesses and other non-traditional investments.

As investors have become more disillusioned and frustrated with traditional investment choices, they have begun looking for alternatives. After the steep stock market decline, corporate scandals and corruption (e.g. Enron, ImClone, Worldcom) and many investors seeing their retirement accounts cut in half, they are ready to take control of their own investments. They often want more tangible investments such as Real Estate.

However, when they ask their current custodians / brokers, they are typically told that such investments are illegal, too complicated or that it can’t be done. But those are ignorant and self-serving responses. Although those custodians / brokers may not allow it, it can be done. It is just likely you can’t do it through your current custodian so they financially suffer if you make a move.

3) What Can My IRA Invest In?

Well, the real question should be what CAN’T my IRA invest in? Now, that being said, there are some very strict IRS regulations that must be followed, but the IRS does not provide an all-inclusive list of possible investment options but rather excludes and stipulates what you CANNOT invest in: life insurance contracts and collectibles

The following list is an EXAMPLE of some permissible investments with your self-directed IRA:

Residential Real Estate

Commercial Real Estate

Raw Land

Trust Deeds / Mortgages, and Mortgage Pools

Private Notes and Loans

Private Stock Offerings

Limited Liability Companies (LLC)

Limited Partnerships (LPs)

Tax Certificates

Receivables

Stocks, Bonds, Mutual Funds

Annuities

Options

Currency

Futures

Commercial Paper

4) What is ERISA?

ERISA stands for the Employee Retirement Income Security Act. It more or less passed along the responsibility of an employee’s retirement plan from the employer (company sponsored pension) to the employee. As a result of this act, the IRS only excludes what can be invested in. These two prohibited investments are: life insurance contracts and collectibles.

5) What Types of Retirement Accounts can be Moved into Self-Directed Status?

Traditional IRAs;

Sep IRAs ;

Roth IRAs;

401(k)s;

403(b)s;

Coverdell Education Savings (ESA);

Qualified Annuities;

Profit Sharing Plans;

Money Purchase Plans;

Government Eligible Deferred Compensation Plans;

Keoghs

6) How Do I KNow This is Legal?

Well, first of all, be prepared to be told by many accountants and CPAs (and possibly yours) that this is not legal or is very dangerous to do. Neither is true. First of all, as mentioned before, this is legal as a result of the ERISA Security Act passed over 30 years ago. It is more of a question of whether an individual SHOULD do it (see question #7).

Find out for yourself by going to the Internal Revenue Service’s website www.IRS.gov. Request Publication 590. On pages 40-41 you will see what investments are not allowed (see below – collectibles, life insurance, s-corporation stock, etc.). Real Estate is NOT mentioned as a disallowed investment just like stocks, bonds, mutual funds are not mentioned as a disallowed investment.

7) Should Everyone Do This? How do I Know it is Right for Me?

Of course you know the answer to this question is NO. Not everyone should do this and not everyone will. It really depends on a person’s interest level to self-direct. Some folks would rather bury their heads in the sand and just hope that everything turns out okay for retirement. Others have done well with the brokerage accounts and have not diversified into real estate. However, the best aspect of a truly self-directed plan is that you can invest in non-traditional assets (e.g., real estate) and STILL invest in stocks, bonds and mutual funds.
Are There Certain Investments Disallowed?

Of course. As previously mentioned, IRS Code does exclude one from investing in Life Insurance Contracts and Collectibles. These are referred to as “prohibited transactions”. Prohibited Transactions are defined in IRC 4975(c)(1) and IRS Publication 590.

The biggest concern at times is for the Manager (you) of the IRA self-directed account to REMEMBER that any and every transaction that the SD IRA engages in is for the exclusive benefit of the retirement plan. An individual cannot “self-deal”. Self-dealing occurs when an IRA owner uses their individual retirement funds for their personal benefit rather than to benefit the IRA. As an IRA owner, if you violate these rules, your entire IRA could loose its tax-deferred or tax-free status.

9) What Are Prohibited Transactions?

Prohibited transactions as noted by IRC 4975 (c) (1), identifes prohibited transactions to include any DIRECT or INDIRECT:

- Selling, exchanging, or leasing, any property between a plan and a disqualified person;

- Lending money or other extension of credit between a plan and a disqualified person;

- Furnishing goods, services, or facilities between a plan and a disqualified person;

- Transferring or using by or for the benefit of, a disqualified person the income or assets of a plan;

- Dealing with income or assets of a plan by a disqualified person who is a fiduciary acting in his own interest or for his own account.

- Receiving any consideration for his or her personal account by a disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan.

10) Who Is a Disqualified Individual?

As it related to IRC, the following would constitute disqualified individuals for entering into any investment or arrangment with, directly or indirectly.

- The IRA holder and his or her spouse;

- The IRA holders ancestors, lineal descendants and their spouses;

- Investment advisors and managers;

- Any corporation, partnership, trust or estate in which the IRA holder has a 50% or greater interest; and,

- Anyone providing services to the IRA such as a trustee or custodian.

Please note that too many individuals are playing games with the disqualification provision of an IRA holder who has 50% or greater interest in an investment. A word to the wise, do not play games with this provision by placing the IRA holder as a 47%, 48% interest in the endeavor. This is dangerous grounds to walk on for reasons to be examined later….but caution if you are advised to do this.