The Wall Street Journal
Family Value – May 14, 2011
Money Strategies For Mr. Mom
By Kelly Greene
Husbands and wives increasingly are switching the traditional roles of breadwinner and household manager. But many of them haven’t followed through with an appropriate financial tune-up.
Given that employers in recent years have shifted management of most benefits—from retirement savings to health insurance—onto workers’ shoulders, it is critical that couples recognize areas where adjustments might be needed.
Comments May 14,2011
Unfortunately, Mr. Mom cannot contribute to Mrs. Mom’s employer sponsored retirement plan. So, while Mrs. Mom may normally contribute $5,000 or $10,000 per year to her retirement plan, she should compensate for Mr. Mom’s lack of an employer sponsored retirement plan by maximizing contributions to her employer sponsored retirement plan.
If Mrs. Mom’s employer offers a 401(k) plan she can contribute up $16,500 per year or $22,000 if she is 50 years of age or older. Through a combinations of contributions by Mrs. Mom and her employer, total contributions can reach $49,000 or $54,500 if she is 50 years of age or older.
If Mrs. Mom’s employer offers a 403(b) plan she can contribute up $16,500 per year or $22,000 if she is 50 years of age or older. If she has 15 or more years of service with a qualified organization, she can also up to $3,000 per year, up to a lifetime catch-up limit of $15,000 (based on the Lifetime Catch-up or “15-year rule”).
If Mrs. Mom’s employer offers a 457(b) plan she can contribute up $16,500 per year or $22,000 if she is 50 years of age or older. If she did not contribute the maximum amount to a 457(b) plan or another Workplace Savings Plan subject to Workplace Savings Plan coordination rules, she may be able to contribute up to $33,000 for up to three years (based on the Double Limit Catch-Up or “Special Section 457(b) Catch-up”).
Fortunately, many public school districts offer both 403(b) and 457(b) plans. If Mrs. Mom works for a qualifying employer she may be ably to simultaneously maximize her contributions to 403(b) and 457(b) plans.
In addition to or in lieu of employer sponsored retirement plans Mrs. Mom and Mr. Mom can each contribute to an Individual Retirement Account (IRA) – even though Mr. Mom does not earn a salary. Mrs. Mom and Mr. Mom can each contribute up to $5,000 per year or $6,000 for each person that is 50 years of age or older.
Just because one spouse is not earning a salary does not mean the couple cannot build a healthy retirement nest egg.
Aaron Skloff, AIF, CFA, MBA
CEO – Skloff Financial Group
Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA), Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.