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There’s now a record number of 401(k) and IRA millionaires

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Thanks to record-breaking markets and more retirement savings, the number of 401(k) and IRA millionaires has reached a new record, according to Fidelity.

Fidelity, the largest 401(k) provider in the United States, released its quarterly analysis Thursday. The report on retirement trends has become increasingly relevant as baby boomers retire in record numbers.

The study found a record 441,000 IRA or 401(k) accounts Fidelity manages had balances of $1 million.

Still, 401(k) and IRA millionaires are relatively rare: The number of retirement millionaires represents 1.6% of the 27.2 million IRA and 401(k) accounts managed by Fidelity.

As for the rest of us, there’s good news and bad news, particularly for those at or near retirement.

The good news:

  1. Average 401(k) and IRA balances have hit record levels. The average 401(k) balance rose to $112,300, a 7% increase from last quarter’s balance of $105,200. The average IRA balance was $115,400, also a record.
  2. It’s not just because the markets are up — employees are saving more. One-third of plan participants increased the amount they were saving by an average of 3%.
  3. A record number of workplace plans (32%) offered a managed account, which provides workers with professional planning and support. That support is a big confidence booster for savers.
  4. Automatic enrollment is catching on — a record 35% of employers automatically enrolled new workers in their 401(k) plan. Studies have consistently shown that automatic enrollment has been a major factor in increasing savings. Too many people don’t act affirmatively to start saving–automatic enrollment does that for them.

The bad news

Drill down into the results, and the situation is particularly difficult for baby boomers — the huge segment of society born between 1946 and 1964 who are now entering retirement age in record numbers.

Boomers — they are now 56 to 74 years old — have an average balance of $210,400, but it’s well-known that small groups of super-savers — the 401(k) millionaires — push the averages up.

The median — where half have more and half have less — is a far-more modest $69,900.

That leaves very little to draw down on a yearly basis. Assuming a 5% yearly drawdown, that’s about $3,500 a year.

“As the median amounts in this study show, millions of Americans over the age of 55 have too little saved for a comfortable retirement, and not enough time to save significantly more,” David John, senior strategic policy advisor, AARP Public Policy Institute, told CNBC. “They will have Social Security, but not much else. This will continue until every employer offers some form of retirement benefit and every American can save for retirement from the day they go to work until the day they retire.”

Of course, that is not the complete retirement picture. There is Social Security and pensions. And some have more than one retirement account. For example, if someone takes a new job but rolls their old 401(k) into an IRA, their new 401(k) would have an initial balance of $0, which would keep the median and average down.

More from Invest in You:
No 401(k)? No problem. Here’s how to save for retirement when you’re your own boss
Josh Brown says rushing into the market is like eating junk food
5 powerful money hacks from financially savvy people

Fidelity notes that those who have been in their 401(k)s longer have higher averages, which makes sense. Among individuals who have been in their 401(k) plan for 10 years straight, the average balance reached a record of $328,200.

Still, even Fidelity admits more needs to be done. “Millions of people rely on a 401(k), 403(b) or IRA as primary vehicles for retirement savings, so the industry needs to continue to find ways to make these accounts more accessible, more efficient and easier to use,” Kevin Barry, president of Workplace Investing at Fidelity Investments, said in a statement.

The recently passed SECURE Act should help: It raises the minimum age for required minimum distributions, which allows older investors to keep more in their retirement plan for longer periods. It allows investors to contribute to traditional IRAs after turning 70.5 years old and makes it easier for administrators to offer annuities, which under some circumstances may be an attractive way to reduce risk.



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These high-income taxpayers are getting a visit from the IRS

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The IRS will soon start make house calls to high-income individuals who didn’t submit a tax return.

Starting this month, the agency will send its revenue officers to visit people with income in excess of $100,000 and who failed to file Form 1040 in 2018 or in previous years.

“These visits shouldn’t come as a surprise to the taxpayer because the IRS has contacted these individuals multiple times regarding their tax issues prior to their cases being assigned to an IRS revenue officer,” said Hank Kea, director of field collection operations, small business/self-employed division, at the federal agency.

Kea discussed the new measures on a phone call with reporters on Wednesday.

So far, the IRS anticipates making about 800 in-person visits to these high-income non-filers in the first two months, he said. Thousands more will follow through the year. The agency anticipates sending additional revenue officers out as it identifies more cases of noncompliance.

“When you look at the tax gap, there’s a significant amount of revenue lost to individual high-income non-filers, and it literally does measure into the billions,” Kea said.

The visits are taking place at a time when taxpayers enjoy reduced odds of an audit by the IRS. During the fiscal year 2019, only 0.45% of taxpayers were audited.

Third-party data

The IRS can sniff out unreported income and earnings through third-party reporting sources, including your employer, your bank or brokerage, and small businesses that pay you.

When those entities detail your wages on your Form W-2 or report payment on a Form 1099, a corresponding report goes out to the taxman.

The IRS flags returns in which taxpayers’ returns fail to match those third-party reports.

By the time a revenue officer has been dispatched to your home or office, the IRS has already been in touch with you via snail mail several times to address your obligations.

“When clients of mine get a visit from the IRS, they get a little note posted to the door, saying to call this person at the IRS,” said Laurie Kazenoff, partner at law firm Moritt Hock & Hamroff LLP.

“In my mind, the visit serves two purposes,” she said. “It jolts the taxpayer into compliance and the second reason is to gain information about the taxpayer — see where the taxpayer lives and the vehicles they drive.

Bear in mind that the IRS doesn’t initiate contact with taxpayers through unsolicited calls or e-mails. Be wary if someone claiming to be from the IRS calls you out of the blue and demands payment; it’s probably a scammer.

File and pay on time

The Internal Revenue Services offices in Washington, D.C.

Adam Jeffery | CNBC

If you’re dreading filing your tax return because you have a large sum due, always take the first step of at least submitting your Form 1040.

The IRS tacks on steep penalties for those who fail to file.

In that case, you’re responsible for 5% of the unpaid taxes for each month or part of a month that the return is late.

While you can file for a six-month extension to submit your 2019 tax return, you have until April 15 to pay whatever sums you owe.

More from Smart Tax Planning:
What Trump’s tax overhaul extension plans mean for you
One in 5 fear they’ll owe the IRS money this spring
How to protect yourself from tax scams this season

The failure-to-pay penalty is equal to 0.5% of the taxes owed after the due date for each month or part of a month the liability goes unpaid.

In a dire situation, you could file your return on time and work out a payment plan with the IRS.

Options include a 120-day installment plan with no set-up fees; however, penalties and interest will accrue until you’re fully paid.



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China Expels Three Wall Street Journal Reporters

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China revoked the press credentials of three Wall Street Journal reporters based in Beijing, the first time in the post-Mao era that the Chinese government has expelled multiple journalists from one international news organization at the same time.

China’s Foreign Ministry said the move Wednesday was punishment for a recent opinion piece published by the Journal.

Deputy Bureau Chief Josh Chin and reporter Chao Deng, both U.S. nationals, as well as reporter Philip Wen, an Australian national, have been ordered to leave the country within five days, said Jonathan Cheng, the Journal’s China bureau chief.

The expulsions by China’s Foreign Ministry followed widespread public anger at the headline on the Feb. 3 opinion piece, which referred to China as “the real sick man of Asia.” The ministry and state-media outlets had repeatedly called attention to the headline in statements and posts on social media and had threatened unspecified consequences.

“Regrettably, what the WSJ has done so far is nothing but parrying and dodging its responsibility,” Foreign Ministry spokesman

Geng Shuang

said in a daily news briefing Wednesday. “The Chinese people do not welcome those media that speak racially discriminatory language and maliciously slander and attack China.”

The three journalists work for the Journal’s news operation. The Journal operates with a strict separation between news and opinion.

Wall Street Journal Publisher and Dow Jones CEO William Lewis said he was disappointed by the decision to expel the journalists and asked the Foreign Ministry to reconsider.

“This opinion piece was published independently from the WSJ newsroom and none of the journalists being expelled had any involvement with it,” Mr. Lewis said.

“Our opinion pages regularly publish articles with opinions that people disagree—or agree—with and it was not our intention to cause offense with the headline on the piece,” Mr. Lewis said. “However, this has clearly caused upset and concern amongst the Chinese people, which we regret.”

Dow Jones is owned by

News Corp.

Secretary of State

Mike Pompeo

criticized China’s action, saying: “The United States condemns China’s expulsion of three Wall Street Journal foreign correspondents. Mature, responsible countries understand that a free press reports facts and expresses opinions. The correct response is to present counter arguments, not restrict speech. The United States hopes that the Chinese people will enjoy the same access to accurate information and freedom of speech that Americans enjoy.”

China is battling a fast-spreading coronavirus, as well as questions from Chinese citizens and some global health experts about Beijing’s handling of the epidemic, which has included the lockdown of much of Hubei province, with a population of nearly 60 million. Public anger at a perceived lack of transparency surrounding the coronavirus has exploded online, overwhelming the country’s censorship apparatus.

In August, the Chinese government didn’t renew press credentials for Chun Han Wong, a Beijing-based correspondent who co-wrote a news article on a cousin of Chinese President

Xi Jinping

whose activities were being scrutinized by Australian law-enforcement and intelligence agencies.

Mr. Xi’s private life and those of his relatives are considered sensitive by Chinese authorities. The Foreign Ministry had cautioned the Journal at the time against publishing the article, warning of unspecified consequences.

Mr. Wong was the first China-based Journal reporter to have his credentials denied since the newspaper opened a bureau in Beijing in 1980.

Beijing has taken a more combative stance with the foreign media in recent years, as Mr. Xi’s government has exerted greater control over information and reasserted the Communist Party’s influence over citizens’ lives.

It has declined to renew the credentials of several reporters, but it is rare for it to expel a credentialed foreign correspondent.

China hasn’t expelled a credentialed foreign correspondent since 1998.

Chinese authorities expelled two American reporters simultaneously in the aftermath of the 1989 Tiananmen Square massacre, though they worked for different news organizations.

John Pomfret

was a correspondent for the Associated Press while

Alan Pessin

was Beijing bureau chief for Voice of America.

The simultaneous expulsions of Wall Street Journal reporters Wednesday marks “an unprecedented form of retaliation against foreign journalists in China,” the Foreign Correspondents’ Club of China said. “The action taken against The Journal correspondents is an extreme and obvious attempt by the Chinese authorities to intimidate foreign news organizations by taking retribution against their China-based correspondents.”

Censorship has been more strictly imposed on domestic news outlets and social media, and authorities have strengthened internet firewalls designed to keep Chinese people from accessing foreign reporting that Beijing deems objectionable.

On Tuesday, the U.S. State Department said it had decided to identify the U.S. operations of state-run Chinese news outlets as foreign missions akin to embassies or consulates, the latest in a series of moves designed to pressure China’s Communist Party into loosening controls on diplomats and foreign media. Employees of those news organizations will now be required to register with the State Department as consular staff, though their reporting activities won’t be curtailed, U.S. officials said.

Mr. Geng, the Foreign Ministry spokesman, called that change “totally unjustified and unacceptable” and warned of unspecified repercussions.

The phrase “sick man of Asia” was used by both outsiders and Chinese intellectuals to refer to a weakened China’s exploitation by European powers and Japan in the late 1800s and early 1900s, a period now described in Chinese history textbooks as the “century of humiliation.”

The Journal’s use of the phrase in a headline, on an opinion column by Hudson Institute scholar

Walter Russell Mead

that referred to the coronavirus epidemic in China, sparked waves of angry commentary on Chinese social media.

The three Journal reporters are based in Beijing.

Mr. Chin, 43 years old, has worked for the Journal in various roles since 2008 and in recent years covered cybersecurity, law and human rights. A team he led won a 2018 Gerald Loeb Award for its coverage of the Communist Party’s pioneering embrace of digital surveillance.

Ms. Deng, 32 years old, joined the Journal in 2012 and has reported out of Shanghai, Hong Kong and Beijing. Her recent areas of focus included China’s economy and finance, and the trade war between the U.S. and China. Ms. Deng is currently reporting in Wuhan, the central Chinese city where the coronavirus epidemic originated late last year.

Mr. Wen, 35 years old, started at the Journal in 2019 and has been reporting on Chinese politics. He co-wrote the article with Mr. Wong on the cousin of Mr. Xi whose activities were being scrutinized by Australian law-enforcement and intelligence agencies.

All three have reported on the Chinese Communist Party’s mass surveillance and detention of Uighur Muslims in the country’s far western Xinjiang region.

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Main opposition UFP floor leader hits on gov'ts past 3 years in policy speech

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심재철 교섭단체연설, 文정권, 헌정•민생•안보 실적 지적

In the South Korean parliament today, the floor leader of the newly formed main opposition party took to podium for a policy speech..
Shim Jae-cheol, the floor leader of the United Future Party, used his speech to criticize the Moon administration’s record over the last three years in terms of the economy, diplomacy and the constitution.
He brought up a few items in particular the big increases in the minimum wage, the relationship between Seoul and Washington and its policies on North Korea.
Shim claimed none of these initiatives have brought the changes they sought to achieve.
The floor leader also called for improving the country’s disaster management system.
He vowed to raise the budget for dealing with infectious diseases and called for the ruling party to adopt a resolution on banning the entry of foreigners from China.

#policy #election #speech

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