SEP IRA

Archive for March, 2007

Question: I have a SIMPLE IRA What should i do what it?

I started the IRA a Year and 1/2 ago it was a FA Freedom 2050 – CL A fidelity. It is a High Risk Mutual fund because i am only 24 years old. Every quarter i have received a statement every quarter i have lost money. i have put in about cash $10,000 right now it is valued at $5400. i know the stock market has tanked but what pisses me off is even when the market was good Dec, Oct of 07 it still showed a loss that quarter. I was putting in about 500 a month into it but i stopped adding money 3 months ago because i would feel better burning it. it is suppose to have No Loads or Fees with this fund is that true or is that a load of crap they sell you? Please Give me you Wisdom!

Answer: Since you’re decades from retirement, you should leave your money in the market, as long as you’re tolerant of the risk. The minute you sell, you’ll realize those losses and give up the shares of that fund. Right now, you’re only theoretically losing money. Although nothing is guaranteed, the market has always fluctuated, history has shown it will rebound. Also, consider that you’re buying shares of the fund at a discount compared to what you used to spend on them.

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Question: What is the penelty for cashing out a SEP IRA, roth ira and an individual ira prior to retirement?

Being laid off a last resort might be to cash is retirement to pay off mortgage. What are the downfalls?Thanks

Answer: ROTH – after 5 years of that money being in the account, you can take the money out without the 10% penalty.
Read all the rules – there may be something there about not paying the 10% penalty if you are unemployed – so many rules – makes your head spin.
IRA – you will pay 10% penalty plus current tax rate – which if you are unemployed may be LOW.
SEP – have no clue.
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Question: What to do with about employer not contributing to my SIMPLE IRA?

I recently found out that my employer has not contributed to my SIMPLE IRA for 2006 and 2007. Every year he hands out the paperwork saying he is going to contribute the 3% to match my 3%, but he hasn’t done it. I confronted him and he says he couldn’t afford to contribute as promised, but he will soon. In addition he just sent out a memo on April 3, 2008 saying he changed his mind from the earler paperwork and that he is only going to contribute 1% instead on the 3% promised in December 2007. It is my understanding that he can’t change this either, is that true?

Any advice/knowledge would be greatly appreciated!

Answer: Company’s can change the matching program as long as the employee’s are notified. My former company had a match for a few years, and then stopped the match due to a downturn in the economy.
If you have written notice (that was not recinded) that he would still pay back match, take it to the labor board, and he will be audited and forced to pay those matches. However, if he provides documentation that the match was dropped, you have no case.

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