Financial advisors and other financial professionals throw around certain terms like everyone already knows what they mean. In some cases, they are right, and in other cases, most people only have a partial grasp on what exactly a certain financial term means. In many cases, knowing the full definition of a word or phrase makes all the difference.
Pre-tax dollars is a phrase that is often used in conjunction with retirement planning and 401k contributions. In fact, one of the benefits of a 401k plan is that contributions are made with pre-tax dollars. But, what is the definition of pre-tax dollars, anyway?
When an employee gets paid, there are numerous deductions that get taken out of their paycheck. These payroll deductions range from income tax withholding to FICA taxes to voluntary contributions for things like health insurance or cafeteria plans (Section 125 plans).
Some of the deductions from your paycheck, like federal tax withholding, are computed based on how much you are paid.
One topic that generates a lot of confusion in people’s personal finances is what is the difference between exempt and nonexempt employees?
There are actually a lot of nuances and pages of labor law that deal with the difference between nonexempt and exempt employees. However, the practical implications of what it means to be an exempt employee or non exempt employee are pretty straight forward.
Basically, it comes down to whether you have to be paid for overtime or whether you have to be paid the minimum wage.
The definition of exempt employee is one who is not subject to the minimum wage or overtime rules of the Fair Labor Standards Act, or FLSA.
An FLSA exempt employee must fall into one of several categories to qualify as exempt. What determines exempt employee by labor law standards is what role the employee has in their job. A
Several major banks, including most of those deemed “too big to fail,” are set to raise their dividends and announce large stock repurchases after passing the latest Federal Reserve “stress test.”
Banks and financial institutions that have repaid their government bailout TARP funds and passed the stress test have been given the go-ahead by the Federal Reserve to make new capital-based decisions such as increasing their dividend payouts or doing share buybacks.
Shortly after the Fed’s announcement, the financial sector came alive with press releases about how the banking stocks would take advantage of the new allowances.
J.P. Morgan announced both a higher dividend and a share buyback, for example.
During the height of the banking crisis, most banks and financial stocks were forced to cut their dividends to minimal levels, or even to zero. Eliminati
Signed into law over a year ago, the credit card bill of rights was touted as protection against practices and fees imposed by credit card issuers on to consumers and which have long been considered arbitrary. Just to refresh your memory, banks must practice the following:
- No more arbitrary rate increases: cardholders must be notified prior to such a move.
- Periodic reviews and reduction of a cardholder’s annual percentage rate (APR) where it is warranted or requested: reviews should take place every 6 months.
- Allocate payments fairly: payments made should go towards balances accruing higher interest.
- No universal default: a cardholder cannot be penalized on Card B should he/she default on Card A.
- No double-cycle billing: banks cannot charge late fees on payment that has been made for a previous billing cycle.
- No phone-payment surcharge
- Elimination of due date gimmicks: payment made by 5 p.m. E
Let’s forget credit card companies and the various ways they conspire to squeeze more money out of you for a moment. That’s a dead horse that’s already been beaten too many times with no resolution in sight. Instead, let’s focus our attention on banks. I can accept the fact that burying my money out in the backyard is not the acceptable way of “making it grow”. However, what I can’t swallow is all the sneaky, underhanded ways banks think up to use my money for their profit.
Fees for Foreign Transactions
Anyone would be excited to go on vacation, right? Most of the time, credit cards and travelers’ checks are sufficient to cover the cost of any expense incurred, and you won’t have to worry about not having enough money on you.
The bad news is, credit card issuers can charge up to 5% of the expenditure to grant you the convenience of using your own credit card outside the country. Not only that, th
Frugality is a virtue worth cultivating, but there are those of us whose desire to put money away means doing things that result in them missing the bigger picture when it comes to budgeting and savings.
Hoarders Unlimited
On the face of it, ensuring you have emergency funds is sensible. However, it’s time to take a step back and reevaluate your goals when it hampers your quality of life. Signs of stinginess include having few or no friends resulting from a reluctance to go out, or opting to wait 3 hours before eating (though you’re starving) so you can take advantage of a $2 discount at the local diner. It goes penny-pinching and is a sign you’ve gone completely overboard.
If you recognize yourself, or someone you know in this description, you might want to have a chat with a financial planner to put the fears to rest. At th
With the difficulty in the housing market, and an increasing number of foreclosures, many people are looking for help with their mortgage payments. For many people their 401k account is their largest untapped resource of funds. Unfortunately, using your 401k for mortgage payments or other reasons can be tricky, and expensive.
Most 401k plans do not allow current employees to withdraw funds from their current 401k. There are two major exceptions.
Remember that all 401k plans are governed by their own specific rules as specified in their plan document. The features described below are allowed, but not required, by IRS rules. As such, they may not apply to your employer’s 401k plan.
A 401k hardship withdrawal allows a current employee to withdraw money from their 401k account for expenses that are “immediate and heavy.” Immediate and heavy expenses can include payments necessary to avoid foreclosure or eviction, or even expenses associated with purchasing a home. There
Contributions to IRA accounts for 2010 and 2011 are subject to an annual limit of $5,000 for all taxpayers under age 50. (The IRA contribution limits for 2011 are the same as the IRA contribution limits for 2010.) IRA owners over age 50 can contribute an additional $1,000 catch-up contribution to their IRA account for a total contribution of $6,000 per year.
Contributions must come from taxable income.