How to Keep Your Nest Egg Intact After a Layoff

Unexpected job loss -- stressful as it is -- comes with another headache: what to do about your 401(k). Without careful attention, there are plenty of taxes and penalties that could shrink your existing retirement account balance. Here is how to keep your retirement stash intact when your job is eliminated.




Find out if you are vested. All the money that you deposit into a 401(k) still belongs to you after a layoff. But you can only keep your employer's contributions if they are vested. Only about a third of 401(k) plans provided immediate vesting in 2008, which means employees can keep a 401(k) match when it is deposited, according to a Profit Sharing/401k Council of America survey. Other retirement accounts may require you to be with the company for several years before you can keep any of your employer match or gradually increase the percentage you may keep based on job tenure. Find out how much of your employer's contributions you are entitled to.

Make your move. You have several options to maintain the tax-deferred benefits of your 401(k) when you leave a job: You can keep the money in your old employer's plan, roll it into another tax-deferred account such as an IRA, or transfer your balance into a new 401(k) when you land your next position. Transferring your old 401(k) balance to an IRA makes sense when the IRA offers better investment choices and lower expenses than your old 401(k) plan. But you may want to leave your 401(k) funds with your former employer if the company has negotiated low investment fees on behalf of employees. David Loeper, author of Stop the Retirement Rip-off: How to Avoid Hidden Fees and Keep More of Your Money, says savers should aim to pay 0.75 percent or less in annual fees.

Avoid transfer penalties. If you decide to move your retirement savings, have your former employer directly transfer the money into an IRA or your new employer's retirement plan. "Have the check made out to the institution where it is going instead of the check being made out to you," says IRA expert Ed Slott, founder of irahelp.com and author of Stay Rich for Life!: Growing & Protecting Your Money in Turbulent Times. When a check for the balance is made out to the worker, the company will withhold 20 percent for income taxes. Employees have 60 days to deposit the cash in a new tax-deferred retirement account before Uncle Sam keeps the 20 percent, and the worker may also be responsible for additional taxes. If you're under age 55, you will also have to pay a 10 percent early withdrawal penalty. The employer withholding also means you have to come up with the absent 20 percent from another source if you want to roll your entire nest egg into an IRA. For example, if you have a $10,000 401(k) balance, your former company will give you a check for $8,000. If you put only that $8,000 into a new retirement account the $2,000 will be counted as income that year and taxes and penalties may be applied.

Consider your age. IRA withdrawals before age 59 1/2 result in a 10 percent early-withdrawal penalty. However, retirees can begin taking penalty-free 401(k) withdrawals at age 55. "If there is any possibility that you might need that money at age 57, you want to leave it in that 401(k) plan," says Kathleen Campbell, principal of Campbell Financial Partners in Fort Myers, Fla.

Leave employer stock behind. The stock of the company you work for gets special tax treatment when it is held in an employer-sponsored 401(k). "If you roll over the stock to an IRA, the deal is off forever," says Slott. When you withdraw company stock, the original cost of the shares will be taxed as ordinary income, but the appreciation of the stock is not taxed until you sell it (then it's taxed at the long-term capital-gains rate of 15 percent). If company stock is rolled over to an IRA, appreciation is taxed at the typically higher ordinary income tax rate of up to 35 percent when withdrawn from the account.

Think before you cash out. Almost half of laid-off workers who left their job in 2008 cashed out their 401(k), according to a Hewitt Associates study of 401(k) participants who terminated employment. But early withdrawals come with a significant cost. A worker with a $5,000 401(k) balance in the 20 percent tax bracket would receive just $3,500 after taxes and penalties. "If there is any way you can avoid touching that money, I would avoid it," says Loeper. If you need to spend some of your retirement stash on necessities, at least try to avoid the 10 percent early withdrawal penalty. Both 401(k)s and IRAs can be used to pay for unreimbursed medical expenses that exceed 7.5 percent of your income without penalty. Other Uncle Sam sanctioned ways to spend an IRA, but not 401(k), balance without incurring an early withdrawal penalty include health insurance premiums after 12 consecutive weeks of unemployment, college costs, and first home expenses up to $10,000. Income tax, however, is still due on retirement account withdrawals, even when used for emergency expenses

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How to Rehabilitate a Dying Career

Ariel Preminger spent a decade running a construction business that built entry-level homes for families in the Los Angeles area, but by the middle of 2008, Southern California's housing market had gone bust and Preminger quickly found himself without customers, and without a job.



"At the beginning of the recession, I thought we were going through a slowdown in the housing market for a couple years and then we would rebound," Preminger said. "But instead of a slowdown, it was a complete collapse and our business completely stopped."

Preminger, who moved to the U.S. from Chile in 1987 to build "a better future" for himself, realized he had no choice but to change his career to protect that future. He spent much of the year after his business collapsed weighing his options, considering whether to open a business in the food industry or perhaps start a trucking company. Eventually deciding it would be better not to abandon the home construction world he knew, he opened a home painting store in 2009 instead that is already doing quite well.


"The housing business had dried up, but I wanted to stay in this industry, so I chose the paint business because it's not something you can do away with," he said. "There is always a need for a paint."

Many Americans have likely had the unfortunate experience of realizing they are stuck in a dead-end job with little room for advancement. But in recent years, millions of workers like Ariel have had a different kind of awakening. It's not the job that's the dead end, but rather the entire profession.

Virtually every profession experienced some cut-backs during the recession, but for a handful of industries, the layoffs were much more severe. Estimates say that 8 million jobs were lost nationwide during the recession, and the majority of these were in the retail and manufacturing industries as well as construction. The number of people employed in the construction industry in particular dropped from about 7.5 million the month before the recession began to 5.6 million by the beginning of this year, and has largely stalled there. As a result, the unemployment rate in this industry peaked at 27% in February 2010 and continues to hover around the 20% line, more than twice the national average.

Even as the economy begins to improve, some economists now predict that these industries will never be able to reach pre-recession employment levels.

"I think we have entered a period of long and permanent unemployment for these industries," said Edward E. Leamer, director of the Anderson Forecast at the University of California, Los Angeles, which provides quarterly predictions about the direction of the U.S. economy. "This is completely unprecedented."

According to an analysis Leamer published recently, as many as 5.5 million jobs lost during the recession will never come back. These include some 2.5 million manufacturing jobs, 2 million construction jobs and roughly 1 million retail jobs. The reason, Learner noted, is that there is no longer a need for these jobs, either because the positions are being outsourced overseas, or assumed by computers and robots. The recession did not cause these problems, but simply accelerated the need for companies to trim the fat and modernize their workforce.

"It's been ticking away in the background and now we have to confront reality," Learner said. "A large fraction of our workforce is unsuited for work in the 21st century."



If you're working in one of these troubled industries, now might be the time to follow Preminger's example and find a way to fortify your career.

Step 1: Research Your Profession's Future

The first and perhaps most important step that all workers should take right now is to begin researching trends in their industry.

"Many employees don't realize that industry downsizing will affect their jobs until it's too late. But in this economy, you should be on the lookout for telltale signs," said Alexandra Levitt, a career expert and author of New Job, New You: A Guide to Reinventing Yourself in a Great New Career. "One key question to ask yourself is if there have been major layoffs or consolidations in companies similar to yours."

Levitt also recommends browsing through periodicals that relate to your industry so you can spot trends as they happen. Not only is this a good way to forecast your job security, it could give you clues about the next big thing in your industry or a related profession so you can begin searching for opportunities there.

If you don't feel like running to your local library to browse through niche periodicals, use online tools like the Future-Jobs-O-Matic, from American Public Media's Marketplace. Just click on any of the professions listed on the page, and this tool will show you the job prospects and average salary of the position in 2018, based on government data. If the outlook is grave, it may be time to look elsewhere.

Step 2: Focus on Your Skill, Not Your Industry

If you find out your industry is in trouble, it doesn't mean you need to spend thousands of dollars to go back to school and jump into a completely unrelated sector. Instead, focus on what you are particularly good at and see where you can apply the skills you have already learned.

"The people who do best in a difficult workforce are the most flexible, so focus on where you're flexible. Even if you are in a dying field, you are really just in an aspect of a dying field," said Penelope Trunk, a popular blogger and CEO of the Brazen Careerist, a career management site. "Maybe you specialize in the accounting part of manufacturing, or in the relocation segment in real estate, or the online section of a newspaper. Focus on the subset of your job, rather than the sector you're in, and transfer that skill to another sector."

Step 3: Don't Be Afraid to Tweak Your Resume

As part of this, it may also be necessary to give your resume a makeover to play up your skillset, rather than your dying profession.

"You absolutely need to start re-tooling your resume," Trunk says. "A lot of moving yourself from one sector to another is purely a matter of marketing. If you frame the history of your career as being manufacturing, then you're unemployable. So you need to work to re-invent yourself on paper first and accentuate your skills."


Part of tweaking your resume may mean leaving off certain jobs you've worked, or even making slight changes to the positions that you've had.

"That's not lying," Trunk says. "It's marketing yourself."

Step 4: Pay Attention to the Professions of the Future

While many positions in the country are gradually being handled by machines, some jobs will always need people.

"Many careers in fields such as health care, education and information technology simply cannot be automated," said a spokesperson for the Department of Labor. "That is something that any job seeker should consider when looking at a career change."

Indeed, the professions that are growing the fastest, according to government data, are positions like health care aides, physicians' assistants and personal trainers, not just because real people are needed to do these tasks, but also because the U.S. population is getting older and requires more care from these professionals than before.

Needless to say, the tricky part is finding a way to make the leap from your old job to one of these new ones. It may not be incredibly difficult for someone who handled technical computer duties in a manufacturing job to make the transition to an information technology position, but how can you suddenly move to the medical profession?

According to the Department of Labor spokesperson, it's not impossible, as there are various short-term training programs and education options around the country for people interested in pursuing jobs in information technologies and health care.

Workers can find these programs and other job resources on sites like CareerOneStop.org and MySkillsMyFuture.com, both of which are run by the Department of Labor.

And as with any career, Levitt, the career expert, notes that it's also useful to try networking with professionals in your desired industry and being willing to take opportunities at smaller companies to get your foot in the door.

Step 5: Embrace the Information Age

Regardless of which industry you choose to pursue, in order to secure your job prospects going forward, it is absolutely essential now to get comfortable with a computer, as this is quickly becoming a requirement for jobs in all major professions.

"Whatever field one wants to go into, they need to understand the information age," said Tyrone Everett, regional director at the Center for Employment Training, one of the largest career training programs in the country. "Plumbers, maintenance workers, roofers and more all need to understand how to access and pull information from the Internet to do their jobs now. There's no way around it."



Everett recommends Americans start doing what he calls "barrier reduction exercises," such as playing computer games with your children or grandchildren and simply being willing to get on the computer and "make mistakes so you realize the computer won't blow up when you do."

"We have seen so many people laid off from the post office and construction work sites who have a great work ethic but just need to be re-careered in this way," he said.

Step 6: Be Honest With Yourself

Obviously, no one wants to find themselves in the situation where their career is in danger, but the only thing that can make the situation worse is by failing to be honest with yourself and acknowledge that a change is needed.

"It's important to recognize that your industry or expertise is in decline, not growth," said Tory Johnson, CEO of Women for Hire, a recruiting company. "You need to avoid denial."

___

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Financial Products That Are a Waste of Money

You can save big bucks by skipping unnecessary financial products and services.

There are many things that people buy, sometimes repeatedly, that are a waste of money or just a bad value. Often, you don't need them at all or you can opt for less-costly or free alternatives. Take a pass on these financial products and save hundreds or even thousands of dollars.




Skip it: Collision on older vehicles
Save: $300 a year, based on national averages in 2007

If you have an accident, collision coverage reimburses you only up to the value of your car, no matter how severe the damage. So at some point, the cost of the coverage might approach or exceed the maximum the policy would pay on a claim. You might consider dropping collision once its cost equals 10 percent of the car's book value.



Do this instead

Self-insure by putting away a fixed amount each month to cover unexpected losses. Decide whether you should keep comprehensive coverage. Typically less costly than collision, it reimburses you for theft and nonaccident damage, for example, if a rock cracks your windshield or a falling tree limb dents your hood. But like collision, it won't pay more than the vehicle's worth, so weigh the cost.

Skip it: Load mutual funds
Save: About $200 to $300 on an initial investment of $5,000

Load funds siphon off 4 to 6 percent of your investment for sales commissions. No-load funds generally perform as well or even better.

Do this instead

Skip the load and put your entire investment to work for you. Compare funds by type and rating at www.morningstar.com.


Skip it: Extended warranties
Save: $30 to a few thousand dollars

Some products, such as cars, have become more reliable, and others, including electronics, aren't likely to break down during the extended service contract period. Service plans often cost more than you'll recover, and many have fine-print terms that can limit or disqualify your claim.

Do this instead

Buy reliable brands and models, and follow the manufacturer's usage and maintenance recommendations. If possible, make purchases with a credit card that extends the warranty. And if a product fails after the warranty has expired, try negotiating with the retailer and manufacturer for compensation.

Skip it: Fee-based checking
Save: $36 to $600, plus any per-check fees each month

There are many no-fee checking accounts that don't require you to maintain a minimum monthly balance. Some even pay interest, such as FNBO Direct (www.fnbodirect.com), which pays 1.25 percent.

Do this instead

Check local and national banks and credit unions for the best deals. If you regularly use your debit card for purchases and can set up direct deposit or automatic billing, consider a high-yield checking account. To find one, go to www.checkingfinder.com or www.kasasa.com.

Skip it: Credit-card insurance
Save: 18 cents to $1.35 for every $100 of your balance each month

Also known as payment protection and credit safeguard, this coverage promises to make your minimum payments for a certain period or erase your entire credit-card debt in case of unemployment, injury, disability, or death.

Do this instead

Check for coverage you already have in other policies, such as life and disability. Or set up a fund to cover your bills if you lose your income.

Skip it: Cancer insurance
Save: $200 to $3,000

Like any disease-specific coverage (including those for strokes or heart attacks), cancer insurance might duplicate or even negate coverage you already have under your basic health insurance. Some cancer policies exclude certain types of cancer, or they might not pay at all unless you're hospitalized. And they're certainly no substitute for comprehensive medical coverage.

Do this instead

Check to see what your health policy covers. If you're on Medicare and want more coverage, consider buying a Medicare supplemental policy. Medicaid recipients don't need additional coverage.

Skip it: Identity-theft protection
Save: $120 to $240 a year

These services might do less than they claim. In May, Lifelock, a leading vendor, agreed to pay $12 million to settle charges by the Federal Trade Commission and 35 state attorneys general that "the protection it actually provided left enough holes that you could drive a truck through it," said Jon Leibowitz, the FTC's chairman.

Do this instead

Take steps to protect your identity. For example, you can place a security freeze on your credit reports at all three major credit-reporting bureaus (Experian, Equifax (NYSE: EFX - News), and TransUnion). That will deny access to your credit report to prospective creditors and prevent a scammer from setting up an account in your name.

Skip it: Cell-phone insurance
Save: $48 to $96 a year

Between the cost of the coverage and the deductible, typically $25 to $100 or more, this insurance might not save you anything if you need to replace your phone because there might be fine-print exemptions. And if the policy does replace your phone, you might get a different or refurbished model.

Do this instead

Check your home and auto insurance policies to determine if your phone is (or can be) covered. When you get a new phone, don't chuck your old one if it still works. If the new one is lost, stolen, or breaks down, you might be able to use the old one for the duration of your contract. Another option is to buy a less-costly "unlocked" replacement.

Consumer Reports has no relationship with any advertisers on Yahoo!

Read more »

Financial Products That Are a Waste of Money

You can save big bucks by skipping unnecessary financial products and services.

There are many things that people buy, sometimes repeatedly, that are a waste of money or just a bad value. Often, you don't need them at all or you can opt for less-costly or free alternatives. Take a pass on these financial products and save hundreds or even thousands of dollars.



Skip it: Collision on older vehicles
Save: $300 a year, based on national averages in 2007

If you have an accident, collision coverage reimburses you only up to the value of your car, no matter how severe the damage. So at some point, the cost of the coverage might approach or exceed the maximum the policy would pay on a claim. You might consider dropping collision once its cost equals 10 percent of the car's book value.

[Click here to check savings products and rates in your area.]

Do this instead

Self-insure by putting away a fixed amount each month to cover unexpected losses. Decide whether you should keep comprehensive coverage. Typically less costly than collision, it reimburses you for theft and nonaccident damage, for example, if a rock cracks your windshield or a falling tree limb dents your hood. But like collision, it won't pay more than the vehicle's worth, so weigh the cost.

Skip it: Load mutual funds
Save: About $200 to $300 on an initial investment of $5,000

Load funds siphon off 4 to 6 percent of your investment for sales commissions. No-load funds generally perform as well or even better.

Do this instead

Skip the load and put your entire investment to work for you. Compare funds by type and rating at www.morningstar.com.

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More From Yahoo! Finance
Skip it: Extended warranties
Save: $30 to a few thousand dollars

Some products, such as cars, have become more reliable, and others, including electronics, aren't likely to break down during the extended service contract period. Service plans often cost more than you'll recover, and many have fine-print terms that can limit or disqualify your claim.

Do this instead

Buy reliable brands and models, and follow the manufacturer's usage and maintenance recommendations. If possible, make purchases with a credit card that extends the warranty. And if a product fails after the warranty has expired, try negotiating with the retailer and manufacturer for compensation.

Skip it: Fee-based checking
Save: $36 to $600, plus any per-check fees each month

There are many no-fee checking accounts that don't require you to maintain a minimum monthly balance. Some even pay interest, such as FNBO Direct (www.fnbodirect.com), which pays 1.25 percent.

Do this instead

Check local and national banks and credit unions for the best deals. If you regularly use your debit card for purchases and can set up direct deposit or automatic billing, consider a high-yield checking account. To find one, go to www.checkingfinder.com or www.kasasa.com.

Skip it: Credit-card insurance
Save: 18 cents to $1.35 for every $100 of your balance each month

Also known as payment protection and credit safeguard, this coverage promises to make your minimum payments for a certain period or erase your entire credit-card debt in case of unemployment, injury, disability, or death.

Do this instead

Check for coverage you already have in other policies, such as life and disability. Or set up a fund to cover your bills if you lose your income.

Skip it: Cancer insurance
Save: $200 to $3,000

Like any disease-specific coverage (including those for strokes or heart attacks), cancer insurance might duplicate or even negate coverage you already have under your basic health insurance. Some cancer policies exclude certain types of cancer, or they might not pay at all unless you're hospitalized. And they're certainly no substitute for comprehensive medical coverage.

Do this instead

Check to see what your health policy covers. If you're on Medicare and want more coverage, consider buying a Medicare supplemental policy. Medicaid recipients don't need additional coverage.

Skip it: Identity-theft protection
Save: $120 to $240 a year

These services might do less than they claim. In May, Lifelock, a leading vendor, agreed to pay $12 million to settle charges by the Federal Trade Commission and 35 state attorneys general that "the protection it actually provided left enough holes that you could drive a truck through it," said Jon Leibowitz, the FTC's chairman.

Do this instead

Take steps to protect your identity. For example, you can place a security freeze on your credit reports at all three major credit-reporting bureaus (Experian, Equifax (NYSE: EFX - News), and TransUnion). That will deny access to your credit report to prospective creditors and prevent a scammer from setting up an account in your name.

Skip it: Cell-phone insurance
Save: $48 to $96 a year

Between the cost of the coverage and the deductible, typically $25 to $100 or more, this insurance might not save you anything if you need to replace your phone because there might be fine-print exemptions. And if the policy does replace your phone, you might get a different or refurbished model.

Do this instead

Check your home and auto insurance policies to determine if your phone is (or can be) covered. When you get a new phone, don't chuck your old one if it still works. If the new one is lost, stolen, or breaks down, you might be able to use the old one for the duration of your contract. Another option is to buy a less-costly "unlocked" replacement

Read more »

Shopping Tips and Secrets

It is possible that you may be frequenting one of the supercenters for your groceries. These stores occupy a much larger land area compared to the regular grocery store. The super stores tend to sell almost a general list of goods such as apparel, electronics, toys, food, produce and much more.

In some of these stores there are other independent businesses within the super center like a bank, photo studio, or even a beauty shop. In addition to the company's main departments other branch department like automotive where car maintenance takes place as you shop. A classic one-stop shop indeed.

To make sure that you do not over spend or lose you money in anyway, consider these experiences to help you make an informed choice:

Coupons/ Cost Cutters

1. Check out the advertisement flyers at the store front or read the ones you get in the mail.

2. Cut out coupons, coupons also are easily found in magazines, the store flyers, back of receipts, within the aisles, on other products and more.

3. The store coupon machines are within the aisles extends out from the shelves usually next to a particular product take some if you buy that product.

4. Buy generic, or store brands, the secret is that most of the generic or store brand are usually manufactured by the same brand name company. For example, some toothpastes, for instance, both the brand and generic(cheaper) brands are manufactured by the same maker.

5. Some sources suggest that signing up for company's newsletters allow you the opportunity for more saving programs.

6. Joining a fan page on Face book and other social media may also be a good way to enjoy some savings, free stuff and more.

Apparel

1. Shopping for apparels consider the clearance rack, the items are mark down.

2. Clearance racks clothes are usually the season before items that are mark down very low to be sold out completely. You can buy for the next year‘s season.

3. Keep receipts and tags for return at least thirty days – ninety days. Wal-Mart for instance gives three returns without a receipt per household per year note, a valid drivers license is required.

Canned/Bottled Items

1. Check dates on items such as can foods, and bottle drinks before buying. The problem usually is severe in areas with fewer shoppers and if the item is hardly a hot seller.

Produce 1. Check your fruits and veggies for freshness before buying especially if you are not using them right away. 2. It is important to run produce under running water or rinse them before eating.

Deli/Prepared Foods

1. Foods at the deli are not always fresh. Some of them have been in the case for a few days. What they do is they change the bowls and put in the same stuff.

2. If all possible lightly rinse with water or cook your cold meats from the deli before you eat them. They are not always handled with care.

3. If you are hungry and you can, try to stick to hot items at the deli. The fried chicken is usually fresh, because in some states they are allowed to sell them after few hours of cooking. In Illinois, it has been that after about four hours of cooking fried chicken they should be thrown out.

4. Health inspections are not usually random, managers and owners of the deli departments and even your regular restaurants are usually notified. So they prepare for inspection in most cases.

General Grocery Store Secrets

1. Ask questions; ask for help.

2. Buy milk by the date, the furthest date is what you want.

3. Keep a list of items to shop for so you are not easily overwhelmed by useless and unnecessary stuff.

Check Out Stand

1. Get an idea of your bill before you go to the checkout counter.

2. Keep a small pocket size calculator along with your shopping list and budget.

3. This is most painful one, sometimes items are scanned twice by accident, in major stores in some cases, if the subtotal appears on your receipt more than twice be cautious of erroneous balance. Though it can be due to some valid reasons but once you get out of the store no one will buy your story.

4. Check your receipt before you live the store.

5. Be careful going to the express checkout lanes with double the quantity of items displayed for that lane.

6. If you have a lot of items say a cart full, do not check them all out on one receipt. Split them up, basically load about half the items on the conveyer belt and divide it with the divider (stick). And load the rest. The registers in the large stores can screw up or they can freeze, usually the manager will come and unlock the machine with a key.

7. Ask questions; ask for help with your grocery to your car.

8. Use your own bags if you like.

9. Refer store clerks by their names on their badges.

10. Initiate friendliness and respect toward store clerks that can go a long way for your everyday shopping experience and better care.

Though you may have encountered some of these tips for yourself before, it helps to know somebody out there also notice them as well. Some of the check out issues may be attributed to systems error others just human error but they can be costly. The best way to shop in these supercenters is to be prepared and be vigilant, knowing that you are on a mission.

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