Retirement Accounts

Americans are increasingly using aggressively managed mutual funds in their retirement-plan accounts."There's been a real shift away from conservatively managed accounts to equity over the past five years, and it's really accelerated with the bull market," said Marty Beaulieu, senior vice president of MFS Fund Distributor Inc., a subsidiary of MFS Investment Management.Almost 60 percent of all contributions into 401(k) plans are going to equity funds, up from 45 percent in 1990, Beaulieu said.

The next several years will see a flood tide of a new kind of retiree — the rollover retiree. Millions of baby boomers will be transitioning into retirement without the comfort of the old-fashioned monthly pension check, but rather with a lump sum rollover check from their employment 401(k) or 403(b) retirement account. Ready or not, each rollover retiree will start a new career as an investor. Most will not be ready. For the fortunate few who have been able to accumulate large retirement accounts, the transition to retiree investor is eased by the legions of financial planners, investment advisers, money managers, etc. who are ready — for a fee — to advise and shepherd these rollover retirees into the world of investing.

WORKERS today are unlikely to remain with one employer throughout a career. Many will be confronted from time to time with the decision of what to do with a 401(k) or other retirement account when switching jobs. The choices are simple: They may be able to keep the account where it is, or transfer it to a new employer's plan. Or, they can roll the money over into an individual retirement account, or just pocket the cash. As easy as it sounds, workers need to tread with care. Whatever they decide will have an impact on their retirement.

A staff member at Baltimore Behavioral Health Inc. has filed a lawsuit against the private clinic in Southwest Baltimore, alleging that officials there "diverted and stole" thousands of dollars from employees by failing to deposit payroll deductions into their retirement and disability plans. The lawsuit, filed in U.S. District Court in Baltimore, claims that more than 100 employees "suffered substantial financial losses in both 2009 and 2010 as a result of the diversion and theft of employee contributions that should have been placed in the Retirement and Disability Plans.

The federal insurance limit for retirement accounts at banks will more than double to $250,000 this year - just in time for retiring baby boomers. The increased coverage will apply to accounts such as Keoghs, individual retirement accounts and individual 401(k)s. The new limit could kick in as early as next month, although it will be in place in November at the latest. "Our hope is to make it before the April 15 date because many banks really encourage additional contributions through IRAs and rollovers before the tax date," said Jim Chessen, chief economist at the American Bankers Association.

WASHINGTON -- Stepping up the debate over Social Security's future, House Speaker Newt Gingrich proposed yesterday that federal budget surpluses should be divided among all U.S. workers and deposited directly into new, personal retirement accounts.The average worker might receive a total of $3,500 or $4,000 over the next decade as a share of the federal government's emerging surplus, the Georgia Republican predicted in testimony before the House Ways and Means Committee.The "Social Security Plus" account is the Republican political response to President Clinton's call to "Save Social Security First."

Low inflation is a welcome economic sign for spenders, but for savers, it can be too much of a good thing. The effect of super low inflation could be seen in recent days when the government announced changes to savings bond rates and retirement account limits that are pegged to inflation. Savers can now expect meager returns on the inflation-protected Series I Savings Bonds, if they even still want to buy them. And employees won't be able to sock away more next year in a 401(k)

The new federal tax law allows workers to sock away more money in retirement accounts, but for some Maryland companies with offices across the country, the change provides a potential headache. Most states' income tax laws, including Maryland's, track federal law. But unlike Maryland, not all those states automatically conform when the federal law changes. Unless the legislatures of those states change their laws to conform, national companies may find that workers' higher 401(k) contributions are fully sheltered from state income tax in one state but not in another.

The Bush administration is working on a major shift in retirement savings plans that would allow most Americans to greatly increase the amount of money they could put away in tax-free accounts for retirement and other purposes, administration officials and congressional staff members said yesterday. The change, which would primarily benefit the affluent who can afford to save more of their incomes, is aimed at encouraging an increase in the lagging personal savings rate and at simplifying the maze of retirement savings choices and other tax-deferred accounts for things such as college education and medical expenses.

An answer that appeared in the Tax Questions feature on April 11 contained erroneous information. The deadline for contributions to individual retirement accounts (IRAs) was April 15, regardless of whether or not a taxpayer received an extension.The Sun regrets the errors.Pub Date: 4/19/97

I read Eileen's Sunday column about how former Gov. William Donald Schaefer amassed millions with interest. It's clear that the former mayor, governor and comptroller enjoyed some perks --- eight years of free housing in the governor's mansion, for example --- that most public employees do not. And Schaefer received a pension for his public service, something many of the newest entrants into today's job market won't have. But Eileen shows that Schaefer also made choices that worked in his financial favor.

The U.S. Department of Labor has opened an inquiry into the employee retirement plan of a taxpayer-funded mental health clinic in Baltimore after former workers said money deducted from their paychecks as far back as 2009 never reached their retirement plan accounts. The government has instructed Baltimore Behavioral Health Inc. to provide an array of documentation related to its retirement plan, according to two certified letters obtained by The Baltimore Sun. The federal inquiry began around two weeks after The Sun reported Dec. 10 that two former employees at the nonprofit clinic had discovered unexplained shortfalls in their retirement accounts.

William Henry Meyer, a retired hardware store owner whose recollections of 1930s Baltimore baseball are part of downtown's Sports Legends Museum, died of pneumonia Nov. 23 at Gilchrist Hospice Care. He was 97 and lived in the Glen Meadows Retirement Community in Glen Arm. Born in Baltimore and raised on Bonaparte Avenue, he was the son of a beverage distributor and saloon owner. A 1931 City College graduate, he attended the University of Alabama and earned a degree in business from the University of Baltimore.

Low inflation is a welcome economic sign for spenders, but for savers, it can be too much of a good thing. The effect of super low inflation could be seen in recent days when the government announced changes to savings bond rates and retirement account limits that are pegged to inflation. Savers can now expect meager returns on the inflation-protected Series I Savings Bonds, if they even still want to buy them. And employees won't be able to sock away more next year in a 401(k)

A good indication of the disconnect between Wall Street and Main Street is shown by the stock listings in the "Business Maryland" section. The list of most widely held stocks contains the names of businesses that many American know and have in their IRA/401(k) retirement accounts. But that's not where the action seems to be on Wall Street. More than half of the stocks on the list of most active stocks have unintelligible names. For example, "SPDR Fncl XLF", "iShEMktsEEM," and "iShR2K IWM" are among the most active stocks on the list.

Y ou have about six weeks left to make moves to cut your tax bill in the spring. Besides the usual tax strategies, such as making charitable donations before year's-end, you might be able to take advantage of one of the many temporary tax breaks Congress created to stimulate the economy. One of them, the popular first-time homebuyer credit, was recently extended so you have more time to get it. But it's unclear whether others will survive. Congress isn't expected to pass any major tax legislation before year's-end, although it will likely make a short-term fix to the estate tax so it doesn't disappear next year as scheduled.

A staff member at Baltimore Behavioral Health Inc. has filed a lawsuit against the private clinic in Southwest Baltimore, alleging that officials there "diverted and stole" thousands of dollars from employees by failing to deposit payroll deductions into their retirement and disability plans. The lawsuit, filed in U.S. District Court in Baltimore, claims that more than 100 employees "suffered substantial financial losses in both 2009 and 2010 as a result of the diversion and theft of employee contributions that should have been placed in the Retirement and Disability Plans.

Retirement savers have been plowing money into foreign stocks, but experts say many are failing to consider taxes and how the investments fit within their overall plan. Foreign stock mutual funds accounted for $722 billion in workplace retirement accounts, including 401(k) plans, and in individual retirement accounts last year, says the Investment Company Institute, a mutual fund trade group, a more than 80 percent increase in just two years. As investors pile on, however, many fail to realize their foreign dividends are subject to tax, even though their money is sitting in tax-deferred retirement accounts.