Author: Arabian Media staff

Deferred Compensation Plans vs. 401(k)s: An Overview Deferred compensation plans offer an additional choice for employees in retirement planning and are often used to supplement participation in a 401(k) plan. Deferred compensation is simply a plan in which an employee delays accepting part of their compensation until a specified future date. For example, an individual who’s 55 years old and earning $250,000 a year might choose to defer $50,000 of annual compensation per year for the next 10 years until retiring at age 65. Key Takeaways Highly-compensated executives often opt for deferred compensation plans.Deferred compensation plans cannot generally be accessed early.Deferred…

Income inequality is consistently a major topic in U.S. presidential races. Gini coefficient figures have ranked the U.S. as one of the worst places for income equality among developed economies for many years now, and this issue is only getting worse. With a host of social ills—such as slavery, immigration problems, and Japanese internment camps—correlated with high levels of income inequality, it is crucial for the U.S. to figure out how to reduce its income inequality. Fortunately, history gives us a useful guide to policies that can be implemented to aid in that goal. A brief history of income inequality…

Federal, state, and inheritance tax rules explainedReviewed by Anthony BattleFact checked by Suzanne KvilhaugStephanie Deissner / F1online / Getty Images When a loved one dies and leaves you with an inherited IRA, the rules can be very different from your existing IRAs.Money or property you inherit may be subject to estate taxes and inheritance taxes, but it’s not likely. Most estates are not rich enough to qualify for the federal estate tax. The federal estate tax applies only to those whose estates are valued in the multiple millions. Surviving spouses are exempt.Moreover, most states have neither an estate tax, which…

Tax Brackets and Social Security As a taxpayer, total income determines your highest tax bracket. Social Security benefits are included in that total income, as reported on Form 1040. Your taxable income is your gross income minus all allowable deductions. A portion of your Social Security benefits may be subject to federal taxation. In fact, up to 85% of your benefits may be taxable if your total income meets a certain threshold amount noted by the Internal Revenue Service (IRS). Key Takeaways Your taxable income equals your gross income less all the deductions that you are allowed. Up to 85%…

When a spouse dies, each of their assets transfers to their beneficiary, who is typically their surviving spouse. Unlike Social Security benefits, which have an automatic survivor benefit, retirement plans require account holders to choose their beneficiaries. These beneficiary designations take precedence over what is stated in a will. Without a named beneficiary, a retirement account will be transferred through a legal process called probate. Key Takeaways Individuals should name beneficiaries on their accounts so that their assets are distributed as they want at their death.Individual retirement accounts (IRAs) can be rolled over, inherited, converted to a Roth IRA, or…

Like its close cousin the 401(k), a 403(b) plan can be a convenient way to save for retirement if your employer offers one. Later, as your retirement date approaches, you’ll face some important decisions about how to handle the money you’ve built up in your account over the years. This article will walk you through your basic options and their tax implications. Key Takeaways If you have a 403(b) plan at work, you may be able to leave it with your employer when you retire or roll it over tax-free into an individual retirement account (IRA).When you make withdrawals, you’ll…

Student loan debt is one of the most significant issues impacting Americans’ lives today. As of 2024 Q4, the Federal Reserve Bank of St. Louis reported that outstanding student loan debt in the United States exceeded $1.77 trillion. Please don’t ignore your debt since this can have serious consequences. In most respects, defaulting on a student loan carries the same consequences as failing to pay off a credit card. However, it can be much worse, as the government can take action to recover what’s owed. The federal government guarantees most student loans and can act as a debt collector. Please…

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When employees leave a job that had a company retirement plan, it’s customary to roll over the balance in the plan’s 401(k) into a traditional individual retirement account (IRA). This allows the person to continue deferring taxes until they retire and begin taking distributions. Or it does, at least, for most of the plan’s assets. But if your 401(k) includes publicly-held stock in the company you’re leaving, you shouldn’t necessarily roll these assets over to an IRA. It may make more sense to instead move the stock to a brokerage account and pay at least some tax on it immediately.…

What Is Decentralized Finance (DeFi)? Decentralized finance (DeFi) is an emerging financial system using blockchain and cryptocurrencies to enable direct transactions between individuals and businesses. By eliminating intermediaries like banks, DeFi aims to reduce costs and speed up processes, although it’s currently in its infancy and presents security challenges. In the United States, the Federal Reserve and Securities and Exchange Commission (SEC) define the rules for centralized financial institutions like banks and brokerages, which consumers rely on to access capital and financial services directly. DeFi challenges this centralized financial system by empowering individuals with peer-to-peer transactions. Key Takeaways Decentralized finance,…