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How to choose between 401(K) and 403(B) plan

March 28th, 2011 admin 1 comment

401(k) Plan:
401k plans are from a bunch of retirement plans known as defined contribution plans in the US. When you participate in a 401k plan, you can usually put up to 15 percent of your salary into the account every month. But, the employer has the right to limit that amount. These plans are tax-qualified plans that are covered by ERISA and the assets held are generally protected from the creditors of the account holder, which in the past was not generally true for IRA plans.

403(b) Plan:
A 403(b) retirement plan is quite similar to a 401(k) plan. It is offered by non-profit organizations, like universities and charitable organizations. Your employer can determine the financial institutions where you can maintain your 403(b) accounts.

Differences Between 401(k) and 403(b) plans:

1. The most basic and vital difference between a 401(k) and 403(b) plan is that a 401(k) plan is available for profit making organizations while a 403(b) plan is available for non profit making organizations such as schools, hospitals and religious communities etc.

2. Easy Review and Certification Processes: 403(b) plans are exempted from ERISA(Employee Retirement Income Security Act). Also 403(b) plans have no administrative costs associated with them hence this money is indirectly passed on to the employees only. Whereas 401(k) plans are linked to a administrative costs which goes from employees pocket only.

3. Benefits to employees: In case of 403(b) plan the institutions contribution can be easily taken out without penalty if invested in a annuity. Since these non profit organizations are not liable to pay any taxes hence US government has exempted these contributions from taxes.
Also since there are no administrative costs associated with 403(b) plan hence institutions always let them leave the account in place after they leave the organization.

Conclusion:
Although 403(b) plan seems to offer greater benefits as compared to a 401(k) plan yet at the same time it offers limited choices to invest and may not match your investment objective. It may also offer poor funds that under perform in the market.
Hence it is also advisable to consult your Financial advisor or Investment Manager before taking a final decision.

Liability Umbrella Insurance

March 3rd, 2011 admin No comments

Liability umbrella insurance is a kind of insurance that can be availed by companies as well as individuals. It offers a level of protection which can come to your help during extreme situations. As in case of the other types of insurance coverage, the Liability Umbrella Insurance also includes some kind of deductible. If you want to get some kind of compensation from the coverage, then you will have to submit an insurance claim. The insurance claims are received as well as evaluated for determining whether the contents of the claim are in accordance with the terms of policy or not. If the insurer assures that the claim is authentic then the compensation is approved as well as forwarded to the insured. An important thing that you need to remember about this insurance policy is that it isn’t a substitute for standard liability coverage.

This policy has been specifically designed for covering catastrophic situations wherein a legal award often exceeds the limits of the primary liability insurance. This policy is inclusive of coverage in case you have been sued for wrongful eviction, false imprisonment, slander, libel, invasion of privacy or defamation of character. To sum up, umbrella insurance helps you with additional peace of mind for all individuals engaged with the organization and strengthens the overall constancy of the company.

It also lays a foundation of a strong Retirement Planning.

Importance of Retirement Planning 

March 2nd, 2011 admin 4 comments

Do you want to lead a stress free life in the days to come? Well, this largely depends on what you will be contributing today. After all, we all want to retire happily with financial and personal peace of mind. The worst thing we would expect is a stressful life ahead.

Before you begin, you need to first focus on a couple of essentials. For instance, you need to consider the exact amount that you will need so as to lead a comfortable life post retirement. Say for instance, you are used to a lavish lifestyle; well in that case you need to work on ideas and your finances that will help you continue with the same lifestyle.

Consider your retirement goals. If your professional life or other financial burden is preventing you from enjoying stuffs you have always wanted to, make sure you have enough finances left so as to enjoy the same post retirement. If you are troubled with health problems, ensure keeping aside funds that will help meet your medical expenses in the days to come. Another important factor that we often ignore is analyzing whether your savings are enough during emergencies or you will have to plan for long term care insurance.

The Retirement Planning world is pretty overwhelming; hence make sure to consult a tax consultant or an investment planner for relevant details as well as to know about the importance of Retirement Planning.