This is a difficult question to answer without knowing exactly how the money is invested. But, it sounds to me like you are more frustrated with the performance of your investments than your the need for cash. If that is the case, then I would suggest that you avoid any penalties and concentrate instead on a new investment strategy. Many people who have subscribed to the philosophy of buying good quality companies and holding on to them (the ol' Buy, Hold, and Hope approach) are in the same boat with you. They just want the heck out of the market and keep what they have left. While I understand the feeling, it does nothing to help them achieve their initial goal. There are probably ways that you can change your investment strategy without incurring fees and penalties. Try looking at your current investment vehicles and see what your investment choices are inside of these. Then meet wtih your advisor, and see what kind of strategy he/she can develop for you. You may be suprised at the things that are available.    « less

This question seems simple enough, but is indeed a litle more complicated so I am going to refer you to a CPA or Tax Attorney to get your final answer. I will tell you that the last information I had said that you are eligible for the favorable tax treatment of NUA if you receive a "lump sum distribution" of your 401k. In general, a lump sum distribution is defined as a distribution within one taxable year of the balance credited to the employee which becomes payable as a result of the following triggering events: 1. on account on the employees death 2. after the employee attains age 59 1/2 3. on account of the employee's separation from service, or 4. after the employee has become disabled In many cases, the employee's retirement will be the triggering event. Again, consult your CPA or Tax Attorney for the definitive answer.   « less

You are correct that you will have to use Fidelity, but you should be able to find an advisor to help you with your investment selections within the plan. You really do not need to pay someone to manage the account. The fund managers are managing the money so all you need is to select the money managers and the allocations. I think most advisors would only charge a nominal fee for this, but it is a complimentary servce we provide at Investment and Retirement Services Group.   « less

This is a question I think a lot of people would like to know the answer to. When it comes to "hardship withdrawls" they are most commonly allowed through a 401(k) plan. For a distribution from a 401(k) plan to be on account of hardship, it must be made on account of an immediate and heavy financial need of the employee and the amount must be necessary to satisfy the financial need. The need of the employee includes the need of the employee's spouse or dependent. (Reg. §1.401(k)-1(d)(3)(i)) Whether a need is immediate and heavy depends on the facts and circumstances. Certain expenses are deemed to be immediate and heavy, including: (1) certain medical expenses; (2) costs relating to the purchase of a principal residence; (3) tuition and related educational fees and expenses; (4) payments necessary to prevent eviction from, or foreclosure on, a principal residence; (5) burial or funeral expenses; and (6) certain expenses for the repair of damage to the employee's principal residence. Expenses for the purchase of a boat or television would generally not qualify for a hardship distribution. A financial need may be immediate and heavy even if it was reasonably foreseeable or voluntarily incurred by the employee. There is generally no limit on when an IRA owner may take a distribution from his or her IRA, although there may be unfavorable tax consequences, such as an additional tax on early distributions. However, certain distributions from an IRA that are used for expenses similar to those that may be eligible for hardship distributions from a retirement plan are exempt from the additional tax on early distributions. Specifically, a distribution from an IRA for higher education expenses or to finance a first-time home purchase is exempt from the early distribution tax. As always, consult your tax consultant before making any changes in your IRA.   « less

01-23-2007 - How much she can take and when she can take it is entirely up to her. She is allowed to take as much of the money out as she wishes. Any money she takes will be subject to income taxes, but no penalty. However, since she inherited her husband's IRA, she is only required to take a Required Minimum Distribution each year. That amount will be determined based on her age and the value of the account on December 31st of each year. As long as she is taking the Required Minimum Distribution she can take out any amount she wishes whenever she wants. Thanks for the question. J. Larry Cox   « less

01-23-2007 - Thanks for the question Katie. You bring up several questions here. First off, in addressing your age, and whether to save for retirement or to invest, I can tell you that you can do both. Investing and saving for retirement are both a function of time. There is no one absolute right way to invest. But, the people who are the most successful at investing start with a plan, and they start early. Starting early and using the most conservative investments has the potential to yield a greater amount of savings than starting later in life and averaging double digit returns. So, to answer this first question about saving for retirement or investing the answer is to simply get the money working for you. Later in this response I will address "what in". The next part of your question has several areas to address. Use a Roth IRA or not? There are certain restrictions to open a ROTH IRA. To be eligible you must have earned income equal to the amount of the contribution, not to exceed a contribution of $4,000 for 2006. There are also income limits, but since you are just graduating I doubt those will be a factor. To insure you qualify talk with your CPA, or you can reference the IRS Website www.irs.gov Mutual Funds?? A Roth or a Traditional IRA can both invest in mutual funds. Think of an IRA as any other regular savings or investment account except it has certain tax advantages. Inside this account you can invest in any investment vehicle such as certificate of deposits, stocks, bonds, mutual funds or other investment products. The only investments not allowed in these accounts are real estate, precious metals, and insurance. The biggest problem in using a mutual fund for your Roth is the unknown in regards to if and when you may need the money. Mutual funds are variable products. The value is adjusted daily depending on the investments inside the mutual fund. If you think there is a reasonable expectation you will be using the money within the next 5 years you may want to consider another investment option. Accessibility to your money?? Both the Traditional IRA and the Roth IRA allow for early distributions for higher education and first time home buyers. However, with the Roth you will need to wait five years before attempting to access the money. What to invest in? This is the last part of your question, and unfortunately I cannot answer this without knowing more about you and your plans. What I can tell you is that you are heading in the right direction. Saving/investing the money instead of spending it will pay dividends for you in the future. My suggestion is to seek an investment professional to help guide you. Ask your father if he works with someone. You will not only have a personal introduction, but I am sure he will be proud of your inclinations. Or, if you prefer contact any advisor at Investment and Retirement Services Group and we will be happy to help you in any way we can.   « less

01-23-2007 - This is a very good question and a problem many people face. We actually covered this exact question on our radio show, which airs daily from noon to 1 PM on AM 850. There are several investment products available today that will provide a guaranteed income. The problem is trying to fully understanding how each one works. Without getting into a lot of technical detail about the ones I do not like, let me explain the one that I do like. This particular investment will give you a guaranteed 5% income for life based on your initial investment. But, that isn't the bood part! The good part is that you never lose control of your money and it can be invested in mutual funds to give you the opportunity to earn more than the 5% you withdraw. Each year your account is evaluated to see if it has grown in value. If it did grow in value, then you will begin receiving 5% of the higher amount guaranteed for life. So, in effect you get a guaranteed income for life and if the market performs as expected you will receive periodic raises in your income. This is very important because of the need to guard against inflation. People are living longer. The average life expectancy in 2004 was 77.9 years, but once you attain the age of 65 your life expectancy increases to over 82 years. You can only imagine what $650 a month will buy in 2027. Even if you were guaranteed an 8.5% income for the rest of your life inflation qould eventually erode that amount down to something less tahn you need. That is why it is important to have the ability to potentially increase your income. When it comes to investing in retirement you need to be concerned with four things: 1. Inflation 2. Control of your money 3. Passing money to the next generation and 4. Safety Feel free to call one of us at our office if you would like to learn more about solving your dilema. There may be other options for you as well.   « less

01-23-2007 - Thanks for the question Marcia. If you are wanting to sell your stock the easiest way is to open an account with a local brokerage company. It is difficult to determine what it will cost you to sell, however, a full service broker will charge on average about 2% of the total sales amount. Again, this is an average and it could be lower or higher. If this is going to be the only transaction you will ever do in the stock market then you might want to look into contacting a discount broker. Here in Knoxville the ones I know of are Charles Schwab and Scott Trade. Call and ask what they charge, and they can give you an approximation of the total cost. If the stock is trading at $50.00 a share, and you have 500 shares, then the total value of your shares is $25,000. For tax purposes you will need to go back to your original purchase to determine the capital gain. It sounds as if you may have inherited this stock. If this is the case then your cost will be the value of the stock on the day you inherited it. Luckily for you the tax rate for capital gains is only 15%. If anyone at Investment and Retirement Services Group can be of further help please write again or give us a call.   « less

01-23-2007 - This is a very good question. All companies to my knowledge will charge some kind of annual maintenance fee on an IRA. I think the average fee is around $30 to $50 per year. My broker/dealer, Linsco/Private Ledger, charges $30. You will pay this fee every year regardles of the performance of your money, and regardless of the size of your account. There are some companies that do charge based on the dollar value of your account, but I would I would avoid these because they tend to be more expensive. You can call some of the local brokerage firms, or banks, and ask what their fee is so you can compare. But, your real question should be "who" will I be working with, and how much service will I receive. The person you are working with is much more important than any fees you will pay. You want to find a person who you feel comfortable with because you will both have to be able to communicate well with each other. You want someone that will help you, teach you, and be with you for many years to come. You are not really opening an Roth IRA with a company.....you are opening an account with a person. The companies provide you statements, back office support, and maybe an 800 number, but your financial representative will give you the advice. Thanks for the question. J. Larry Cox   « less