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Posted by Elle on September 6, 2007, 2:01 pm
General impressions of 401(a) plans, please? Generally good,
very good, not so good, really depends? I am googling a lot;
reading sections of the Internal Revenue Code and
interpretations; etc. trying to get a handle on these. I
have the proverbial "friend" whose employer (a state)
requires participation. The question is how much more saving
he should do for retirement, in view of the income he will
get from this pension plan.
In particular, I am interested in
--whether cost-of-living adjustments tend to be "generous."
If one can generalize about this...
--whether payments (while in retirment) from the 401(a) tend
to set off the social security taxation trap (whereby having
too much income from sources such as a Traditional IRA can
launch one into an absurdly high tax bracket for SS
benefits).
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Posted by joetaxpayer on September 7, 2007, 2:31 pm
Elle wrote:
> General impressions of 401(a) plans, please? Generally good,
> very good, not so good, really depends?
I googled as well. If only because you surprised me with a plan I never
heard of, I don't recall this ever mentioned in the CFP section on
retirement. After the google, I don't understand the rest of your
question. It seems to be close to a 403(b) which is close to 401(k).
Investments inside the wrapper can be mutual funds just like the 401(k)
so your reference to COLA confuses me, as well as the question about
avoiding the SS tax trap, the withdrawals from this account are still
taxable. If you find specifics, I'd be curious to see details. I suspect
much of any good reply will be based on how the account is run. What
funds at what expenses are offered? What is the employer match?
JOE
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Posted by kastnna on September 7, 2007, 3:43 pm
Maybe I'm not following the right set of numbers and letters, but I
thought a 401(a) was simply the part of the revenue code that allowed
for employer profit sharing plans.
Profit sharing plans are sometimes included along with a 401k, 403b,
etc and count towards the maximum annual combined contribution of $45k
(this year). Employers may make contribs to employees accounts on a
non-discriminatory basis and the amount can increase or decrease
annually (hence the "profit sharing").
I could be totally off-base.
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Posted by on September 7, 2007, 4:10 pm
> Maybe I'm not following the right set of numbers and letters, but I
> thought a 401(a) was simply the part of the revenue code that allowed
> for employer profit sharing plans.
As far as I know, you're exactly right and they are often
simply not *referred* to as 401(a). It's an odd accident
of history that the 401(k) is referred to by that cryptic
name rather than something like ERAs ("Employer Retirement
Accounts") or whatever.
Look for things like "Money Purchase Plan" for example.
An employer may provide one (as did my previous employer),
without ever referring explicitly to the part of the
code which allowed the existence of the plan.
Google for Money Purchase Plan. The first hit is
the IRS web page about them.
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
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Posted by HW \"Skip\" Weldon on September 7, 2007, 4:06 pm
On Fri, 7 Sep 2007 13:31:14 -0500, joetaxpayer
>
>
>Elle wrote:
>
>> General impressions of 401(a) plans, please? Generally good,
>> very good, not so good, really depends?
>
>I googled as well. If only because you surprised me with a plan I never
>heard of, I don't recall this ever mentioned in the CFP section on
>retirement. After the google, I don't understand the rest of your
>question. It seems to be close to a 403(b) which is close to 401(k).
Around here (my area of the country) these 401a plans are the State
Retirement Plans - usually a defined benefit pension plan. Usually
very good... employees required to pay in 6% or so of pay, employer
matches, and ultimate benefit is based on years of service, average
compensation (definition varies by plan), etc. And retirees get COLAs
every year. All in all a great retirement plan. But there's a lot
more to it and I grow weary already. <grin>
Here's a helpful web site.
http://benefitsattorney.com/modules.php?name=States
-HW "Skip" Weldon
Columbia, SC
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