COMMON SENSE

Arcording to  Trent of the “Simple Dollar”

Three Questions to ask yourself if you are in your 20’s and want to save for Retirement.

1. If money were no object, what would you do with your time?
2. Are you frugal?
3. Are you interested in having children?

The Simple answer is….

Just worry about the saving for now – don’t sweat the details.

Many people get overly wrought about making sure that their money is in the “perfect” investment. To put it simply, your investment choice is secondary – by a long shot – to simply saving your money as soon as possible and as much as possible. Start saving now. If you don’t know what to invest in, just ask for suggestions from the representative there. Since it’s a tax-deferred retirement account, you can make investment changes later on without any tax issues.

Doctrader says: The most import aspects of long term planing is learning there are market cycles. If you can identify the market cycles, you will be miles ahead in your investment choices!  During bull markets, you should have your money invested in high growth areas of the market through an index fund.  When the bull market begins to wane, you should move your long term investments to a money market position or a  cash position.    If you chose a “stable fund” alternative to cash, you run the risk of losing money due to inflation or hidden land mines within a “stable fund”.

Stable funds usually are guaranteed by an insurance companies.  Insurance companies are subjected to the 7 deadly sins of investing.

These are:

• regulation
• investigation
• litigation
• arbitration
• capitalization
• Taxation
• politicization

These 7 deadly sins of investing will impact your future retirement.   If you are serious about your future, your best option is to “create a product or service” which can launch your career into a small business.  After all, our founding fathers were small businesses.  In  fact, most of new jobs created today and in the future will belong to small businesses.

My suggestion, turn your passion into a profitable small business!

doctrader

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By Adam Cohen

Of DOW JONES NEWSWIRES  BRUSSELS -(Dow Jones)- European Union finance ministers on Wednesday reached a compromise on a new supervisory framework for the bloc’s financial markets.  Under the plan agreed by the ministers, the EU will create two new supervisory groups for financial markets: a “macro-prudential” body to study big-picture risks to stability and three “micro-prudential” groups to look at specific issues in the banking, securities, and insurance and pension sectors.
The U.K., home to the EU’s largest financial center, was worried about ceding control over the City of London to a powerful new EU committee. It also wanted to ensure its taxpayers wouldn’t be forced to fund bailouts for banks operating across the bloc’s borders or spend money on other measures.

The three groups supervising the regulation of specific industries will be responsible for harmonizing the rules and methods applied by national authorities. They will also have the authority to resolve disagreements between countries and to coordinate action in a crisis, albeit with certain limits. The EU finance ministers agreed that the supervisory groups can’t dictate how EU governments spend money and outlined an appeal procedure for states that think a regulatory decision will affect their national purse.

Technorati Tags: bank, City of London, EU, European Union, finance, Finance minister, government, Multilateral

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Final Warning: Adopt Those PPA Amendments by Year-End

by

Dave Seitter

For calendar-year plans, this PPA amendment deadline is December 31, 2009. (Governmental plans have an additional two years, and certain collectively bargained plans may enjoy an extension, as well.) As reported in our August 2009 article, tax-qualified retirement plans must be amended by the end of the 2009 plan year to reflect the mandatory changes enacted as part of the 2006 Pension Protection Act (“PPA”). … Modified assumptions

for converting annuities into lump-sum payments (even small, lump-sum cashouts); Benefit restrictions based on a plan’s funding status; Expansion of the direct rollover rules (e.g., allowing such rollovers to Roth IRAs, of after-tax …

The consequences of missing any of these amendment deadlines could be quite severe. The plan would lose its tax-qualified status. We therefore strongly recommend that retirement plan sponsors review the terms of their plans to ensure that all PPA-related and discretionary changes have been reflected in appropriate plan amendments. Due to the number and variety of PPA changes, this will not be a simple task.

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This is just the beginning of massive law suits which will be filed by pension plans participants.  The government has imposed rules and changes to pension plan sponsors by the Pension Protection Act 2006.   You have to understand the difference between defined benefit plans and defined contribution plans.  In the roaring days of spectacular stock market gains, everyone wanted to participate in the the gains.  Even the employers, who by unburdening themselves of a “defined benefit plane”, switched to a defined contribution plans.

Image by Getty Images via Daylife

Under the defined benefit plan rules, employees are guaranteed a specific dollar amount upon retiring.  Unfortunately, 75% of the SP500 companies that have these types of plans, have not contributed the minimum to their employees accounts.  So, when the opportunities comes along to switch, ie. mergers, the company dumps the defined benefit plan and switches the employees to a “defined contribution” plan.  The defined contribution plan has not such benefit guarantee, only what the employees themselves contribute.  Therefor the burden of providing  a “secure, guaranteed retirement” is placed squarely on the shoulders of the employees and not the company.   Currently there is an estimated 100 trillion unfunded liabilities!

Telephone company retirees have filed a complaint for proposed class action relief under the Employee Retirement Income Security Act (ERISA) charging that they and over two thousand others were involuntarily switched in November 2006, post-retirement, from the financially secure Verizon Communication Inc. (NYSE: VZ) pension plans to pension plans sponsored by a newly spun-off company, Idearc Inc. (OTC: IDARQ).

Less than two years after Verizon transferred the retirees, Idearc encountered financial problems and began cutting back various earned retiree benefits. These benefit reductions were not experienced by retirees remaining in Verizon’s pension plans. In March 2009, Idearc filed for Chapter 11 bankruptcy.

Therefore, Plaintiffs filed a proposed class action on November 25, 2009 in the U.S. District Court for the Northern District of Texas, Dallas Division. The Complaint filed in Civil Action No. 3: 09-CV-2262 charges pension plan administrators with numerous ERISA violations including:

• – Failure to provide requested plan documents;
• – Breach of fiduciary duty for refusal to disclose pension related plan
• information;
• – Breach of fiduciary duty for failure to comply with pension plan
• document rules;
• – Various other ERISA violations justifying court ordered declaratory,
• injunctive and other equitable relief;
• – Unlawful refusal to make payment of Verizon pension plan benefits;
• and
• – Unlawful interference with retirees’ rights to receive Verizon retiree
• pension and welfare benefits.

FinancialWire™ – http://www.financialwire.net/

Technorati Tags: business, Chapter 11 Title 11 United States Code, Employee Retirement Income Security Act, ERISA, Human Resources, law, Lawsuit, pension, Verizon Communications

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