The Bottom Line EXTRA: This week's gMoney posts

This just in from Charles Schwab financial consultant Eric Cramer:

WHEN YOU SHOULD NOT ROLLOVER YOUR RETIREMENT PLAN TO AN IRA on Gather.com's money channel

Intriguing topic indeed. Those that don't need to know the answers should still know about a new rule that helps us all. Cramer describes it in his article:

"There is a new rule for 401(k) beneficiaries, but many plans haven't been updated to allow it yet. Beginning in 2007, retirement plans may now let you list a non-spouse as a beneficiary and be eligible for a rollover to an 'inherited IRA.' In past, the plan would either send the non-spouse beneficiary a check for the balance (causing a big tax bill) or at best let them leave it in the plan for five years. But now, the non-spouse is eligible to distribute the balance out of the Inherited IRA using the much more liberal rules for Inherited IRAs, potentially decades. The problem is that many 401(k) plans are designed to serve participants best during the asset accumulation phase of their lives, but they may not be doing all they can to serve all your needs during the retirement phase."

Comments: 10

JoAnne D. Oct 5, 2007, 1:42am EDT

I wish I had thought of a retirement plan when I was younger.

reply to this comment

donna h. Oct 5, 2007, 5:14am EDT

good info, thanks

reply to this comment

Charlotte McClain Oct 5, 2007, 7:29am EDT

Great info. Now I have to get one.

Three Alarm Tenant Chapter 2

reply to this comment

Chick J. Oct 5, 2007, 9:23am EDT

Thanks for the update.

reply to this comment

Ms. Meacham: Money Maven Oct 5, 2007, 2:39pm EDT

Thank you all for your comments. I have a self-directed Roth, which I rolled over from a 401(k) and that allows alternative investments, and a self-employed pension plan, which allows for tax-deductible contributions up to $45,000 each year. The different types of retirement plans each have their place.

reply to this comment

Ms. Meacham: Money Maven Oct 5, 2007, 2:40pm EDT

RE: I wish I had thought of a retirement plan when I was younger.

It's never too late JoAnne and Christine.

reply to this comment

Mary S. Oct 6, 2007, 5:38pm EDT

Good grief! I knew it would be hard on my non-disabled son if I died. Now, I really can't afford to die. I know we can make trusts. The problem is dealing with the issue of trustee. My oldest son is in graduate school and under stress. I feel for the families that struggle with this. There are so many variables and contingencies. This is an area of intense concern for single parents in particular. Thanks for bringing up the issue.

reply to this comment

Jo C. Oct 7, 2007, 6:05pm EDT

Good info! Please check out my article about why that 44K job may be better than the 55 or 65K job and weigh in, thanks! Your opinion is valued, especially after I saw that gorgeous leopard print accessory set you had.

reply to this comment