Make the most out of your 401(k)

This year (2007) you can contribute up to $15,500 to your employers’ 401(k) plan. If you are older than 50 add an extra $5,000 in catch-up contributions for a total of $20,500. If you are eligible to participate and your employer offers matching contributions there is really is no reason for you to say “no” to this free money. This is probably one of the best ways to achieve your desired retirement income.

Benefits of 401(k) participation:

It’s easy & helps lower your taxes
You decide how much you want so save. Your contributions are automatically deducted from your paycheck before federal and state income taxes are calculated. This reduces your taxable income by the amount of your contribution and saves you tax dollars.

Your money grows faster
Your contributions and company match may grow further through investments in stocks, mutual funds, and money market funds. The important point is that this is tax-deferred growth. Taxes are paid when you withdraw the money at retirement; usually at a much lower tax rate.

Rollover option
When you change jobs you have an option to rollover your vested 401(k) balance into an IRA or a new 401(k) plan. Do not cash it out or take possession of that money. Instead, use a direct rollover and your current company will send your check to the new IRA or 401(k) trustee.

Flexibility
Most 401(k) plans have hardship withdrawals and a first time home buyer provision.

Visit your employer's human resources department and learn everything you can about 401(k) plan offered. Your financial advisors should be willing to give you advice as well. Start as early as your can. Time (number of years investing), compounding interest, and persistency all work in your favor.

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Saving Energy = Saving Money

An easy way to save money is to conserve energy.
Not only is it good for your wallet, it’s also good for the environment.

Look for the ENERGY STAR logo.

ENERGY STAR is a government-backed symbol for energy efficiency. It is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy helping us all save money and protect the environment through energy efficient products and practices.

Appliances

When buying an appliance, remember that it has two price tags: what you pay to take it home and what you pay for the energy and water it uses. ENERGY STAR qualified appliances use 10–50% less energy and water than standard models. The money you save on your utility bills can more than make up for the cost of a more expensive but more efficient ENERGY STAR appliance.

Compact Fluorescent Light Bulbs

When replacing lightbulbs, you should also look for the ENERGY STAR qualified compact fluorescent light bulbs [CFLs]. These light bulbs fit into a standard incandescent socket and use 2/3 less energy than a standard incandescent and last much longer. This translates into a savings of $30.00 or more in energy costs over each bulb’s lifetime.

For more information about ENERGY STAR visit www.energystar.gov.

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Have you over looked these 2006 tax deductions?

Telephone tax refund – This is a one-time refund and many taxpayers are not aware of its existence. Married couples, with no children, can receive a $40 refund. Those with one child can claim $50 & those with two, $60. If you kept your phone bills for the last three years and the telephone excise tax on your invoices exceeds these credits, you can apply the actual amount.

Child care credit – If you paid for child care while working, you can claim a tax credit on your tax return. It is worth up to $3,000 for one dependent and up to $6,000 for two or more. You must be able to identify the child care provider on your tax return and be able to submit their SSN or Tax ID number.

Education credit – If you attended college last year, you might be eligible for a Hope Credit or Lifetime Learning Credit. You can also deduct up to $2,500 in student loan interest. This amount begins to phase out when modified Adjusted Gross Income (AGI) exceeds $50,000 ($105,000 for Married Filing Jointly).

Saver’s credit – If your AGI is less than $50,000 and you are setting money aside in your IRA or employer-sponsored 401(k), you will earn this extra credit. This credit is actually a reward for your saving efforts.

Alternative fuel vehicle credit – Purchase of one of the certified hybrid vehicles last year will earn you as much as $3,150 in tax credit. The precise amount of the credit depends on the make, model of the vehicle, and when the vehicle was purchased. For details visit http://www.irs.gov/newsroom/article/0,,id=165649,00.html.

Charitable contributions – If you itemize your taxes (Schedule A), do not forget to add all your charitable contributions. If the amount of non-cash property is in excess of $500, Form 8283 needs to be filed.

IRA deductions – Contributions to Traditional IRAs help reduce your taxable income. Even if you or your spouse participated in an employer-sponsored 401(k), you might be able to contribute to an IRA. The amount of deductibility needs to be calculated, so check with your tax preparer. This year’s maximum contribution is $4,000 per person ($5,000 if you are 50 years of age or older).

Please consult your tax, legal, or investment advisor when making financial decisions.