Index

Numerics

  • 401(k). See also small-business employers
    • administrative issues, 69–85
    • bankruptcy and, 61–62
    • benefits of participating in, 16–17
    • brokerage window, 60
    • company stock, 93–94
    • contributions, 52–58, 198–199, 201–202, 309
    • ERISA requirements, 60–61, 81, 245
    • Investment Policy Statement, 80
    • IRAs vs., 14–15
    • launching of, 15
    • leaving with previous employer, 91–92, 222–223
    • loans, 211–215, 307–308
    • multiple employer plan, 11
    • mutual funds, 59–60
    • nondiscrimination tests, 62
    • origin of, 11, 49
    • overview, 10–12, 47–48
    • payroll deduction, 10, 17, 56
    • pitfalls, 62
    • plan document, 54
    • pooled employer plan, 11, 278
    • pooled plan provider, 11, 278
    • portability of, 307
    • QACA, 56, 251–253, 285–286
    • reasons to participate in, 305–309
    • rollovers, 87–91, 93
    • Safe Harbor plan, 11, 56, 251–253
    • signing up for, 63–68
    • Solo 401(k), 11, 250–251
    • tax benefits, 49–53
    • as trust for savings, 306–307
    • valuation dates, 85
    • variable matching contribution, 55
    • withdrawals, 89, 92–93, 205–215, 218–224
  • 72(t) withdrawals, 401(k)
    • amortization method, 221
    • annuitization method, 221
    • five-year rule, 223–224
    • minimum distribution method, 221
    • situation requiring, 222
  • 2008 Financial Crisis, 184

A

  • actively managed funds, 76, 161–162
  • adjusted gross income (AGI), 22–23
  • administrative issues, 401(k)
    • electronic processing, 85
    • expressing dissatisfaction with, 83–84
    • information services, 82–83
    • mutual funds, 76–78
    • service fees
      • extra services, 74
      • finding, 70–71
      • overview, 69–70
      • paying, 72–74
      • small businesses, 74–76
      • understanding, 71–72
    • support services, 79
    • upgrading investment performance, 80–81
  • advisors, financial
  • AGI (adjusted gross income), 22–23
  • amortization method, SEPP withdrawals, 221
  • annual statement, 401(k), 82
  • annuities, 132, 158
    • contracts for, 234
    • 50 percent joint and survivor annuity, 235
    • fixed-income annuity, 232–233
    • joint life annuity, 233
    • life-income annuity, 233
    • 100 percent joint and survivor annuity, 234
  • annuitization method, SEPP withdrawals, 221
  • asset allocation
    • basing investment choices on past performance, 170–171
    • common mistakes, 170–173
    • comparing different types of funds, 171–172
    • ignoring long-term performance, 172
    • overview, 168–170
    • rebalancing, 174
    • setting unrealistic return expectations, 172–173
  • asset-based fees, 264, 276
  • audits, 262–263

B

  • balanced funds, 160
  • bankruptcy, avoiding losses in, 61–62, 92, 223, 306–307
  • basis points, 401(k) fees, 265
  • benchmarks, savings plan, 136–139
  • beneficiaries of retirement accounts
    • company stock, 37–39
    • detailing distributions, 35–36
    • inherited IRA
      • deciding how to handle money, 42–43
      • disclaiming, 43
      • stretching, 43–44
      • ten-year rule, 36–37
    • naming, 34–35
    • overview, 33
    • qualified charitable distributions
      • donor-advised funds, 40
      • overview, 39
      • RMDs and, 40–41
      • taxes, 41–42
    • Roth IRA, 39
  • bonds, 180
    • bond funds, 159–160, 182
    • fidelity bonds, 61
  • bonus money, saving, 294
  • brokerage window, 273–274
    • 401(k), 60
    • day-trades, 165–166
    • IRAs, 166
    • non-traditional investing, 166–167
  • budget
    • including saving and investing in, 148–149
    • reducing expenses
      • of home ownership, 239–240
      • money saving tips, 134–135
      • refinancing mortgage, 295–296
      • shopping for better insurance rates, 296
      • transportation costs, 296–297
  • bundling
    • 401(k) bundled products, 275–276
    • mutual funds, 77

C

  • capital preservation strategy, investing, 167
  • capitalization (market cap), 162–164
  • CARES Act of 2020, 2
  • catch-up contributions, 198–199, 309
  • CDs (certificates of deposit), 180, 189, 230
  • Charles Schwab, 102, 103, 176, 178, 255
  • Clear View Advisors, 177
  • click bait, 296
  • cliffvesting schedule, 401(k), 249
  • combined income, defined, 22
  • company risk (unsystematic risk), 190
  • company stock
    • 401(k), 93–94
    • overview, 164–165
    • passing along, 37–39
    • risk of owning too much, 189–190
  • compounding savings, 140–141, 308–309
  • conduit IRAs, 117, 119. See also rollovers
  • contributions. See also matching contributions
    • 401(k)
      • catch-up contributions, 309
      • exceptions, 58
      • matching contributions, 53–55, 200–201
      • non-matching contributions, 55–56
      • timing of, 201–202
      • vesting, 57–58
    • federal limits on
      • catch-up contributions, 198–199
      • 100-percent-of-pay limit, 198
      • percentage-of-pay limit, 198, 199
      • personal IRA, 200
      • pre-tax contributions, 198
  • conversions, IRAs, 121
  • cost basis, company stock, 37

D

  • day-trades, 165–166
  • debt investments
  • defined benefit plan, 26
  • Department of Labor (DOL)
    • audits, 262–263
    • fee disclosure, 265
    • payroll-deduction IRAs, 254–255
  • direct rollovers
  • direct-billed fees, 264
  • discretionary matching contribution, 401(k), 55
  • distributions
    • from 401(k)
      • 72(t) withdrawals, 221–224
      • early withdrawal penalty, 89, 92–93, 221–222
      • first home purchase, 210–211
      • hardship withdrawals, 205–210, 214–215
      • in-service withdrawals, 206
      • leaving with previous employer, 222–223
      • loans, 211–215
      • overview, 205, 218–220
      • SEPP, 221–222
    • from IRAs, 97–98, 111–112, 204, 223–224, 300–301
    • QCDs
      • donor-advised funds, 40
      • overview, 39
      • RMDs and, 40–41
      • taxes, 41–42
    • RMDs, 224–227
      • IRAs, 303
      • QCDs and, 40–41
      • Roth conversions and, 121
  • diversifying
    • investment risk, 183–185
    • mutual funds, 59
  • DOL (Department of Labor)
    • audits, 262–263
    • fee disclosure, 265
    • payroll-deduction IRAs, 254–255
  • dollar cost averaging, 59, 186–187
  • donor-advised funds, 40
  • dot-com bubble burst, 184
  • downturns, market, 185–187

E

  • EACA (eligible automatic contribution arrangements), 248
  • early withdrawal penalty
  • earned income, defined, 22
  • electronic processing, 401(k), 85
  • eligibility for 401(k), 63–66
    • automatic enrollment, 66
    • hours-of-service method, 64
    • workers excluded from, 65
  • eligible automatic contribution arrangements (EACA), 248
  • Employee Retirement Income Security Act (ERISA) requirements
    • 401(k), 60–61, 81, 245
    • IRAs, 13
    • small-business owner's fiduciary responsibility, 263–264
  • employer contributions
    • exceptions, 58
    • matching, 48, 53–55
    • matching contributions, 48, 53–55, 200–201, 306
      • SIMPLE IRAs, 256
      • small-businesses, 249
      • variable, 55
    • non-matching, 55–56
    • overview, 16–17
    • vesting, 57–58
  • employer-sponsored plans, 293
    • 401(k)
      • 72(t) withdrawals, 221–224
      • administrative issues, 69–85
      • bankruptcy and, 61–62
      • benefits of participating in, 16–17
      • brokerage window, 60
      • company stock, 93–94
      • contributions, 52–58, 198–199, 309
      • early withdrawal penalty, 89, 92–93, 220–222
      • ERISA requirements, 60–61, 81, 245
      • for first home purchase, 210–211
      • hardship withdrawals, 205–210, 214–215
      • Investment Policy Statement, 80
      • IRAs vs., 14–15
      • launching of, 15
      • leaving with previous employer, 91–92, 222–223
      • loans, 211–215, 307–308
      • lump sum withdrawals, 92–93, 219
      • multiple employer plan, 11
      • mutual funds, 59–60
      • nondiscrimination tests, 62
      • origin of, 11, 49
      • overview, 10–12, 47–48
      • payroll deduction, 10, 17, 56
      • pitfalls, 62
      • plan document, 54
      • pooled employer plan, 11, 278
      • pooled plan provider, 11, 278
      • portability of, 307
      • QACA, 56, 251–253, 285–286
      • reasons to participate in, 305–309
      • rollovers, 87–91, 93
      • Safe Harbor plan, 11, 56, 251–253
      • SEPP withdrawals, 221–222
      • signing up for, 63–68
      • Solo 401(k), 11, 250–251
      • tax benefits, 49–53
      • as trust for savings, 306–307
      • valuation dates, 85
      • variable matching contribution, 55
    • cash balance plan, 21
    • small-business employers
      • advisors, 272–273
      • bundled products, 275–276
      • choosing provider, 267–271
      • cliffvesting schedule, 249
      • cost, 259
      • educating employees, 278
      • ERISA requirements, 245
      • investment types, 271–272
      • limits on withdrawals, 249
      • matching contributions, 249
      • multiple employer plan, 277–278
      • nondiscrimination tests, 247–248
      • overview, 244–245
      • pooled employer plan, 278
      • pooled plan provider, 278
      • Safe Harbor plan, 251–253
      • selecting investments, 273
      • setting up, 262–267
      • Solo 401(k), 250–251
      • top heavy plans, 245–246
      • types of funds, 274–275
    • tax breaks, 20–21
    • traditional defined benefit plan, 21
  • entry dates, 401(k), 66–67
  • equity, defined, 180
  • equity funds
    • actively managed funds, 161–162
    • international investing, 164
    • market cap, 162–164
    • overview, 160–161
    • passively managed funds, 161
    • returns, 182
  • equity investments, 181
  • ERISA (Employee Retirement Income Security Act) requirements
    • 401(k), 60–61, 81, 245
    • IRAs, 13
    • small-business owner's fiduciary responsibility, 263–264
  • estate-planning
    • beneficiaries
      • company stock, 37–39
      • detailing distributions, 35–36
      • inherited IRA, 36–43
      • naming, 34–35
      • overview, 33
    • probate, 35
    • QCD, 39–41
    • Roth IRA, 39
  • exchange-traded funds (ETFs), 185
  • expense ratio, mutual funds, 76, 78
  • expenses, reducing, 134–135
    • of home ownership, 239–240
    • refinancing mortgage, 295–296
    • shopping for better insurance rates, 296
    • transportation costs, 296–297

F

  • FDIC (Federal Deposit Insurance Corporation), 102, 189, 301–302
  • Federal Insurance Contribution Act (FICA) taxes, 29–30, 50–52, 258, 282
  • Federal Unemployment Tax Act(FUTA) taxes, 50
  • fees, 401(k)
    • administrative, 69–70
    • asset-based fees, 264, 276
    • basis points, 265
    • direct-billed fees, 264
    • extra services, 74
    • finding, 70–71
    • fund management fees, 265, 275
    • indirect fees, 265
    • non-investment services, 275
    • participant vs. employer, 266–267
    • paying, 72–74
    • small businesses, 74–76
    • understanding, 71–72
    • wrap fees, 77
  • FICA (Federal Insurance Contribution Act) taxes, 29–30, 50–52, 258, 282
  • Fidelity, 102, 103
  • fidelity bonds, 61
  • fiduciary responsibility, 60–61, 81, 263–264
  • financial advisors
  • five-year rule, IRAs, 112, 120
  • fixed-income annuity, 232–233
  • fixed-income investments, 180
  • Form 5500, IRS, 269
  • 401(k). See also small-business employers
    • administrative issues, 69–85
    • bankruptcy and, 61–62
    • benefits of participating in, 16–17
    • brokerage window, 60
    • company stock, 93–94
    • contributions, 52–58, 198–199, 201–202, 309
    • ERISA requirements, 60–61, 81, 245
    • Investment Policy Statement, 80
    • IRAs vs., 14–15
    • launching of, 15
    • leaving with previous employer, 91–92, 222–223
    • loans, 211–215, 307–308
    • multiple employer plan, 11
    • mutual funds, 59–60
    • nondiscrimination tests, 62
    • origin of, 11, 49
    • overview, 10–12, 47–48
    • payroll deduction, 10, 17, 56
    • pitfalls, 62
    • plan document, 54
    • pooled employer plan, 11, 278
    • pooled plan provider, 11, 278
    • portability of, 307
    • QACA, 56, 251–253, 285–286
    • reasons to participate in, 305–309
    • rollovers, 87–91, 93
    • Safe Harbor plan, 11, 56, 251–253
    • signing up for, 63–68
    • Solo 401(k), 11, 250–251
    • tax benefits, 49–53
    • as trust for savings, 306–307
    • valuation dates, 85
    • withdrawals, 92–93, 205–215, 218–224
  • front-loading, 401(k), 201
  • fund family, 272
  • fund management fees, 265, 275
  • fund managers, 59

G

H

  • hardship withdrawals, 401(k), 205–210, 214–215
  • HCEs (highly compensated employees), 146–148, 247
  • hedging investments, 167
  • home as income-producing asset
    • expenses, 239–240
    • home equity loan, 240
    • reverse mortgage, 240

I

  • index funds, 76, 185
  • indirect fees, 265
  • individual retirement accounts. See IRAs
  • inflation, 153–154, 191, 230
  • inflation-adjusted income, 150–151
  • information services, 401(k)
    • annual statement, 82
    • Plan Disclosure Form, 82–83
    • potential annuity income report, 83
    • summary annual report, 82
    • summary plan description, 82
  • inheritance, role in savings plan, 133
  • inherited IRA
    • deciding how to handle money, 42–43
    • disclaiming, 43
    • stretching, 43–44
    • ten-year rule, 36–37
  • in-service withdrawals, 401(k), 206
  • institutional funds, 77
  • insurance, 296
    • FDIC, 102, 189, 301–302
    • life insurance, 132
    • reducing insurance rates, 296
  • interest. See also saving and investing
    • 401(k) loans, 212
    • bond funds, 159–160
  • Internal Revenue Code (IRC), 11–12
  • international investing, 164
  • Investing For Dummies (Tyson), 3, 175
  • investment election form, 401(k), 66, 68
  • Investment Policy Statement, 401(k), 80
  • investments
    • annuities, 158
      • contracts for, 234
      • 50 percent joint and survivor annuity, 235
      • fixed-income annuity, 232–233
      • joint life annuity, 233
      • life-income annuity, 233
      • 100 percent joint and survivor annuity, 234
    • asset allocation
      • common mistakes, 170–173
      • overview, 168–170
      • rebalancing, 174
    • balanced funds, 160
    • bond funds, 159–160, 182
    • brokerage window
      • day-trades, 165–166
      • IRAs, 166
      • mutual funds, 273–274
      • non-traditional investing, 166–167
    • capital preservation strategy, 167
    • company stock, 164–165
    • growth, 167
    • hedging, 167
    • inflation and, 230
    • investment risk
      • debt instruments, 180
      • determining risk tolerance, 192–194
      • diversifying, 183–185
      • dollar cost averaging, 186–187
      • downturns, 185–187
      • equity instruments, 181
      • inflation and, 191
      • losing everything, 188–189
      • managing risk during retirement, 231–232
      • mutual funds, 181–182
      • overview, 179
      • owning too much company stock, 189–190
      • returns, 182–183
      • risk-reward relationship, 191–192
      • systematic risk, 188
      • time horizon and, 187–188
      • volatility, 180
    • money market funds, 157
    • mutual funds, 156–157
    • objectives, 167
    • overview, 155–156, 229
    • realistic expectations for retirement, 230–231
    • resources for
      • books and publications, 175–176
      • investment advisor services, 176–177
      • online resources, 177–178
      • robo advisors, 178
    • stable value funds, 159
    • stock funds, 160–164
    • Target Date Funds (TDFs), 160
    • tax deferred gains, 199
    • upgrading investment performance, 80–81
  • IRAs (individual retirement accounts)
    • 401(k) vs., 14–15
    • benefits of participating in, 16–17
    • for child, 100–101, 302
    • contributions
      • deductible, 99
      • limits on, 97, 300
      • nondeductible, 99
      • spousal IRA, 100
      • timing of, 202
    • deduction limits, 25
    • early distribution tax penalty, 121–122
    • FDIC protection, 301–302
    • financial advisors, 300
    • inherited IRA
      • deciding how to handle money, 42–43
      • disclaiming, 43
      • stretching, 43–44
      • ten-year rule, 36–37
    • investment options, 301–302
    • maintaining, 104
    • OregonSaves plan, 254
    • overview, 12–14, 97–98, 253–254
    • payroll deduction, 17, 254–256
    • RMDs, 303
    • rollovers
      • conduit IRAs, 119
      • conversion, 121
      • five-year rule, 120
      • to new employer, 117–119
      • overview, 115–117
      • partial rollover, 120
    • Roth IRA, 13, 99–100
      • converting to, 112–114
      • deduction limits, 25
      • five-year requirement, 39
      • five-year rule, 112
      • inflation, 109
      • overview, 107
      • predicting future tax rates, 108–110
      • rollovers, 114
      • trustee-to-custodian transfer, 113
      • withdrawals, 111–112
    • setting up
      • deciding where to invest, 102–103
      • opening account, 103
      • overview, 101–102
    • SIMPLE IRAs, 199, 256–258, 283–284
    • Simplified Employee Pension, 258–259
    • spousal IRA, 22, 100, 302
    • tax breaks, 300
    • traditional IRAs, 98–99
    • transferring, 104–105
    • when to start, 299
    • withdrawals
      • avoiding penalties, 204
      • overview, 97–98
      • SEPP, 223–224
      • taxes, 300–301
    • wrap fees, 176
  • IRC (Internal Revenue Code), 11–12
  • IRS
    • age requirement for penalty-free withdrawal from IRA, 93
    • audits, 262–263
    • disability exemption, 208
    • Form 5500, 269
    • hardship withdrawals, 205
    • life expectancy tables, 225–226
    • Publication 590, 98
    • resource guide, 114
    • rollovers, 89
    • SEPP withdrawals, 221, 223

J

  • joint life annuity, 232

K

  • Kemp, Jack, 32

L

  • leased employees, 65
  • life expectancy method, SEPP withdrawals, 221
  • life expectancy tables, IRS, 225–226
  • life insurance, 132
  • life-income annuity, 233
  • loans
    • from 401(k), 307–308
      • federal limits on, 212
      • hardship withdrawal vs. loan, 214–215
      • interest, 212
      • overview, 211
      • pros and cons of, 213
      • repayment rules, 212–213
    • home equity loan, 240
    • refinancing mortgage, 295–296
    • reverse mortgage, 240
  • Local/municipal government taxes, 50
  • lump-sum withdrawal, 401(k), 92–93

M

  • MAGI (modified adjusted gross income), 23
  • marginal tax rate, 23–24
  • market cap (capitalization), 162–164
  • market drops, 184
  • market risk (systematic risk), 188
  • matching contributions, 48, 53–55, 200–201, 306
    • SIMPLE IRAs, 256
    • small-businesses, 249
    • variable, 55
  • Medicare, 139
  • MEP (multiple employer plan), 11, 277–278
  • minimum distribution method, SEPP withdrawals, 221
  • modified adjusted gross income (MAGI), 23
  • money market funds, 157, 182
  • money purchase pension plan, 26
  • Morningstar, 175–176, 177
  • mortgage, refinancing, 295–296
  • multiple employer plan (MEP), 11, 277–278
  • mutual funds, 156–157
    • 401(k), 59–60, 76–78
      • actively managed funds, 76
      • bundling, 77
      • expense ratio, 76, 78
      • index funds, 76
      • institutional funds, 77
      • prospectus, 78
      • retail mutual funds, 76–77
      • wrap fees, 77
    • brokerage window, 273–274
    • diversifying with, 185
    • fund family, 272
    • investment objective, 59
    • investment risk, 181–182
    • TDFs, 66, 160, 193
      • automatically rebalancing investments, 174
      • defined, 274–275
      • Vanguard 2040 target, 186
  • Mutual Funds For Dummies (Tyson), 3, 175

N

  • National Auto Dealers Association (NADA), 277
  • nondiscrimination tests, 401(k), 62, 247–248, 250
  • non–highly compensated employee (NHCE), 286–287
  • non-matching contributions
    • 401(k), 55–56
    • SIMPLE IRAs, 256
  • nonresident aliens, 65
  • non-traditional investing
    • brokerage window, 60, 165–166, 273–274
    • overview, 166–167

O

    • 100-percent-of-pay limit, contributions, 198
    • online service providers, 268–270
    • OregonSaves plan, 254

    P

    • partial rollovers, IRAs, 120
    • part-time work, as source of income in retirement, 133
    • passively managed funds, 161
    • payroll deduction
    • payroll service, as 401(k) provider, 268
    • Pension Protection Act of 2006, 248, 274
    • PEP (pooled employer plan), 11, 278
    • percentage-of-pay limit, contributions, 198, 199
    • personal IRA, 200
    • Plan Disclosure Form, 401(k), 82–83
    • plan document, 401(k), 54
    • pooled employer plan (PEP), 11, 278
    • pooled plan provider (PPP), 11, 278
    • potential annuity income report, 401(k), 83
    • pre-tax contributions, 198
    • probate, 35
    • prospectus, mutual funds, 78
    • Publication 590, IRS, 98

    Q

    • QACA (Qualified Automatic Contribution Arrangement) plan, 11, 56, 251–253, 285–286
    • QCDs (qualified charitable distributions), 39–42
      • donor-advised funds, 40
      • overview, 39
      • RMDs and, 40–41
      • taxes, 41–42
    • QCE (qualified charitable entity), 40
    • QDIA (Qualified Default Investment Alternatives), 274
    • QMAC (qualified matching contribution), 147
    • QNEC (qualified nonelective contribution), 147
    • Qualified Default Investments, 66

    R

    • Reagan, Ronald, 32
    • refinancing mortgage, 295–296
    • rental properties, 133
    • repayment rules, 401(k) loans, 212–213
    • required minimum distributions (RMDs), 224–227
      • IRAs, 303
      • QCDs and, 40–41
      • Roth conversions and, 121
    • retail mutual funds, 76–77
    • retirement, managing
      • 401(k) withdrawals
        • 72(t) withdrawals, 221–224
        • early withdrawal penalty, 89, 92–93, 221–222
        • leaving with previous employer, 222–223
        • overview, 218–220
        • SEPP, 221–222
      • consolidating accounts, 235–236
      • home as income-producing asset
        • expenses, 239–240
        • home equity loan, 240
        • reverse mortgage, 240
      • improving quality of, 143–144
      • investments
        • annuities, 232–235
        • inflation and, 230
        • overview, 229
        • realistic expectations, 230–231
        • risk management, 231–232
      • IRA withdrawals, 223–224
      • making workable retirement plan, 150–154
      • overview, 218
      • planned withdrawal strategy, 237–239
      • protecting nest egg, 236–237
      • retirement calculator, 154
      • RMDs, 224–227
      • tax strategies, 227–229
    • reverse mortgage, 240
    • risk, investment
      • debt instruments, 180
      • determining risk tolerance, 192–194
      • diversifying, 183–185
      • dollar cost averaging, 186–187
      • downturns, 185–187
      • equity instruments, 181
      • inflation and, 191
      • losing everything, 188–189
      • managing risk during retirement, 231–232
      • mutual funds, 181–182
      • overview, 179
      • owning too much company stock, 189–190
      • returns, 182–183
      • risk tolerance, 192–194
      • risk-reward relationship, 191–192
      • systematic risk, 188
      • time horizon and, 187–188
      • volatility, 180
    • RMDs (required minimum distributions), 224–227
      • IRAs, 303
      • QCDs and, 40–41
      • Roth conversions and, 121
    • robo advisors, 178
    • rollovers
      • 401(k)
        • direct rollover, 88
        • overview, 87–88
        • taxes and, 88–91
      • IRAs
        • conduit IRAs, 117, 119
        • conversions, 121
        • direct rollover, 116, 121
        • five-year rule, 120
        • to new employer, 117–119
        • overview, 115–117
        • partial rollover, 120
        • Roth IRA, 114
    • Roth IRA, 99–100
      • converting to, 112–114
      • deduction limits, 25
      • five-year requirement, 39
      • five-year rule, 112
      • inflation, 109
      • overview, 107
      • predicting future tax rates, 108–110
      • rollovers, 114
      • trustee-to-custodian transfer, 113
      • withdrawals, 111–112

    S

    • Safe Harbor 401 (k) plan, 11, 56, 251–252
    • salary deferral agreement, 144–145
    • SAR (summary annual report), 401(k), 82
    • Saver’s Tax Credit, 14, 27
    • savers vs. spenders, 296–297
    • saving and investing, 301–302
      • automatic withdrawals, 294
      • avoiding click bait, 296
      • bonus money, 294
      • cancel unused subscriptions, 295
      • catch-up contributions, 198–199, 309
      • compounding savings, 308–309
      • contributing plan's maximums, 145
      • employer-based retirement plan, 293
      • highly compensated employees, 146–148
      • improving quality of retirement, 143–144
      • including in budget, 148–149
      • inflation adjustment table, 153–154
      • inflation-adjusted income, 150–151
      • investment risk
        • debt instruments, 180
        • determining risk tolerance, 192–194
        • diversifying, 183–185
        • dollar cost averaging, 186–187
        • downturns, 185–187
        • equity instruments, 181
        • inflation and, 191
        • losing everything, 188–189
        • mutual funds, 181–182
        • overview, 179
        • owning too much company stock, 189–190
        • returns, 182–183
        • risk-reward relationship, 191–192
        • systematic risk, 188
        • time horizon and, 187–188
      • investments
        • annuities, 158
        • asset allocation, 168–175
        • balanced funds, 160
        • bond funds, 159–160, 182
        • brokerage window, 165–167, 273–274
        • capital preservation strategy, 167
        • company stock, 164–165
        • growth, 167
        • hedging, 167
        • money market funds, 157
        • mutual funds, 156–157
        • objectives, 167
        • overview, 155–156
        • resources for, 175–178
        • stable value funds, 159
        • stock funds, 160–164
        • TDFs, 160
      • for long-term retirement, 152–154
      • making workable retirement plan, 150–154
      • for near-term retirement, 150–152
      • overcoming fear of stock market, 306
      • reducing transportation costs, 296–297
      • refinancing mortgage, 295–296
      • retirement calculator, 154
      • salary deferral agreement, 144–145
      • savers vs. spenders, 296–297
      • savings accounts, 132
      • savings plan
        • 401(k), 131–132
        • annuities, 132
        • benchmarks, 136–139
        • compounding savings, 140–141
        • inheritance, 133
        • IRAs, 132
        • life insurance, 132
        • overview, 125
        • part-time work, 133
        • reducing expenses, 134–135
        • rental properties, 133
        • savings accounts, 132
        • social security, 127–131
        • targeting retirement date, 126–127
        • traditional defined-benefit pension plan, 132
      • shopping for better insurance rates, 296
      • small weekly savings, 295
      • starting young, 294
      • tax refunds, 295
    • Savings Incentive Match Plan for Employees (SIMPLE) IRAs, 199, 256–258, 283–284
    • Secure Act of 2020, 2, 36, 64, 208, 248
    • self-directed option, investing, 273–274
      • 401(k), 60
      • day-trades, 165–166
      • IRAs, 166
      • non-traditional investing, 166–167
    • self-employed, 29–30
    • SEP (Simplified Employee Pension), 258–259, 282
    • SEPP (substantially equal periodic payments)
      • amortization method, 221
      • annuitization method, 221
      • minimum distribution method, 221
      • situation requiring, 222
    • service fees
      • administrative, 69–76
      • asset-based fees, 264, 276
      • basis points, 265
      • direct-billed fees, 264
      • extra services, 74
      • finding, 70–71
      • fund management fees, 265, 275
      • indirect fees, 265
      • non-investment services, 275
      • participant vs. employer, 266–267
      • paying, 72–74
      • small businesses, 74–76
      • understanding, 71–72
      • wrap fees, 77, 176
    • service providers, 401(k), 70
      • changing, 287–290
      • friends and family, 268
      • Guideline, 269–270, 287
      • online, 268–270
      • overview, 267–268
      • payroll service, 268
      • third-party administrators, 271, 276
      • Trident Retirement Services, LLC, 271, 287
    • 72(t) withdrawals, 401(k)
      • amortization method, 221
      • annuitization method, 221
      • five-year rule, 223–224
      • minimum distribution method, 221
      • situation requiring, 222
    • SIMPLE IRAs, 199, 256–258, 283–284
    • Simplified Employee Pension (SEP), 258–259, 282
    • small cap funds, 81
    • small-business employers
      • 401(k)
        • advisors, 272–273
        • bundled products, 275–276
        • choosing provider, 267–271
        • cliffvesting schedule, 249
        • cost, 259
        • educating employees, 278
        • ERISA requirements, 245
        • fees, 264–267
        • fiduciary responsibility, 263–264
        • investment types, 271–272
        • limits on withdrawals, 249
        • matching contributions, 249
        • multiple employer plan, 277–278
        • nondiscrimination tests, 247–248
        • overview, 244–245
        • pooled employer plan, 278
        • pooled plan provider, 278
        • QACA plan, 251–253
        • Safe Harbor plan, 251–253
        • selecting investments, 273
        • service fees, 74–76
        • setting up, 262–267
        • Solo 401(k), 250–251
        • top heavy plans, 245–246
        • types of funds, 274–275
      • IRAs
        • overview, 253–254
        • payroll deductions, 254–256
        • SIMPLE IRAs, 199, 256–258, 283–284
        • Simplified Employee Pension, 258–259
      • overview, 243–244
      • selecting suitable retirement plan for business
        • changing service providers, 287–290
        • overview, 279–282
        • QACA plan, 285–286
        • SEP, 282
        • SIMPLE IRAs, 283–284
        • standard 401 (k), 284
        • tax credit, 286–287
    • Social Security benefits, 127–131
      • insufficient for comfortable retirement, 308
      • taxes on, 28–30
    • Solo 401(k), 11, 250–251
    • SPD (summary plan description), 401(k), 82
    • spousal IRA, 22, 100, 302
    • stable value funds, 159, 180
    • stock funds
      • actively managed funds, 161–162
      • international investing, 164
      • market cap, 162–164
      • overview, 160–161
      • passively managed funds, 161
      • returns, 182
    • stock market
      • downturns, 185–187
      • market drops, 184
      • market risk, 188
      • overcoming fear of, 306
    • style drift, 401(k), 81
    • substantially equal periodic payments (SEPP)
      • amortization method, 221
      • annuitization method, 221
      • five-year rule, 223–224
      • minimum distribution method, 221
      • situation requiring, 222
    • summary annual report (SAR), 401(k), 82
    • summary plan description (SPD), 401(k), 82
    • support services, 401(k), 79
    • systematic risk (market risk), 188

    T

    • T. Rowe Price, 103
    • Target Date Funds (TDFs), 66, 160, 193
      • automatically rebalancing investments, 174
      • defined, 274–275
      • Vanguard 2040 target, 186
    • targeting retirement date, 126–127
    • tax refunds, saving, 295
    • Tax Revenue Act of 1978, 15
    • taxes
      • 401(k)
        • lower taxable income, 50–52
        • overview, 49–50
        • rollovers, 88–91
        • state taxes, 50
        • tax deferrals, 53
      • adjusted gross income, 22–23
      • audits, 262–263
      • combined income, 22
      • earned income, 22
      • FICA, 29–30, 50–52, 258, 282
      • FUTA, 50
      • hardship withdrawals, 209
      • IRAs
        • early distribution tax penalty, 121–122
        • tax breaks, 300
      • marginal tax rate, 23–24
      • politics and, 31
      • QCDs, 41–42
      • during retirement, 227–229
      • Roth IRA, 108–110
      • Saver’s Tax Credit, 27
      • on Social Security benefits, 28–30
      • tax breaks
        • deducting IRA contributions, 21
        • employer-sponsored plans, 20–21
      • tax credit for contributions, 24–28
        • according to income, 27–28
        • IRA contributions, 24–26
      • tax-qualified retirement plans, 50
    • Taxpayer Relief Act of 1997, 13
    • tax-qualified retirement plans, 244
    • TDFs (Target Date Funds), 66, 160, 193
      • automatically rebalancing investments, 174
      • defined, 274–275
      • Vanguard 2040 target, 186
    • third-party administrators (TPAs), 271, 276
    • time horizon, investments, 187–188
    • top heavy plans, 401(k), 245–246
    • TPAs (third-party administrators), 271, 276
    • traditional defined-benefit pension plan, 132
    • traditional IRAs, 98–99
    • transferring IRAs
      • conduit IRAs, 117, 119
      • conversions, 121
      • to different financial organization, 104–105
      • five-year rule, 120
      • to new employer, 117–119
      • overview, 115–117
      • partial rollover, 120
      • Roth IRA, 114
      • trustee-to-custodian transfer, 113
      • trustee-to-trustee transfers, 116, 121
    • transportation costs, reducing, 296–297
    • Trident Retirement Services, LLC, 271, 287
    • Trump, Donald, 32
    • trustee-to-custodian transfer, Roth IRA, 113
    • trustee-to-trustee transfers
    • 2008 Financial Crisis, 184
    • Tyson, Eric, 3, 175

    U

    • union employees, 65
    • unsystematic risk (company risk), 190

    V

    • valuation dates, 401(k), 85
    • Value Line, 176, 177
    • Vanguard, 102, 103, 176, 186, 255
    • variable matching contribution, 401(k), 55
    • vesting
      • cliff vesting, 57–58
      • graded (graduated) vesting, 57–58
    • volatility, 180

    W

    • wage deferral agreement, 401(k), 68
    • withdrawals
      • from 401(k)
        • 72(t) withdrawals, 221–224
        • early withdrawal penalty, 89, 92–93, 221–222
        • first home purchase, 210–211
        • hardship withdrawals, 205–210, 214–215
        • in-service withdrawals, 206
        • leaving with previous employer, 222–223
        • loans, 211–215
        • overview, 205, 218–220
        • SEPP, 221–222
    • wrap fees
      • IRAs, 176
      • mutual funds, 77
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