Tax-Apocalypse 2012

What awaits us concerning taxes in 2012? What changes or new laws can we expect? It's well known that Congress is working on lifting the limits an individual can contribute on his 401-k retirement plan.

A taxpayer may contribute more to their 401-k plan or other Employer-Sponsored Plan.

IRS has increased the amount:

For the 2012 tax year, workers may contribute up to $17,000, $500 more than in 2011, into their 401-k plan, 403-b plan, 457 plan or Thrift Savings Plan.

Are you over the age of 50? You’ll be able to contribute up to $22,500 into your employer-sponsored retirement plan (Warning: The catch-up contribution limit of $5,500 remains the same for 2012).

Remember, every dollar we contribute is tax deductable.

 

Sounds tempting? Well let me tell you what a friend had go through a couple of weeks ago. Taking advantage of the resent downturn in the Real Estate market she purchased her first home. To be able to have enough for down payment, she turned to her 401(k) plan, which can be done with out having to be penalized 10%. Here is where it gets interesting, it so happened that her “financial advisor” informed her she could not withdraw “HER” own money unless it was absolutely necessary, you mean like buying a home? Not to them. She was asked to take out a loan on her own money. Can you believe that?

I wonder who came up with this rule? Could it be the big shots at WALLSTREET? Should they be allowed to play with our retirement money, have full control even more then us, of our well earned money? You make that decision, but one thing is for sure the one calling the shots with my money is ME, and that’s how it always should be.

So what should we do? Be informed, do your homework, see what other options you have and only then take a decision that is good for YOU.