401(k) vs IRA – WHAT'S THE DIFFERENCE?

401(k) and IRA plans are two of the most common retirement investment vehicles. Each allows you to reduce current income for tax purposes through annual contributions, and both allow for tax deferred accumulation of investment income. But each plan is unique, and offers options and opportunities that the other doesn’t.

A 401(k) is a qualified retirement plan that allows participants to contribute a portion of their income and invest it for future retirement. Not only are the contributions deductible from income in the year made, but investment income earned in the plan also accumulates on a tax deferred basis. This provides a way to both reduce current tax liability and allow for faster accumulation of investment assets for retirement.

401(k) plans are generally sponsored by an employer, though it is possible for a self-employed person to set up a plan for a small business as well.

An employee is eligible to participate in a plan that is offered by his or her employer. In general, there are no limits on how much income you can earn in order to qualify for a 401(k), though there is special consideration for employees determined to be “highly compensated employees”.

Contributions are limited to the amount of income an employee earns at the sponsoring employer, but there are no percentage limits with regard to that income. An employer may however impose percentage of income limits, or limit the dollar amount of contrib

Goals vs. Objectives – WHAT'S THE DIFFERENCE?

Its often hard to know the difference between goals and objectives – in fact, we often use the two terms interchangeably. But knowing the difference can help us to use both in a constructive way, to get us from where we are to where we want to go.

The major similarity between goals and objectives is that the both involve forward motion

, but accomplish it in very different ways. We can think of goals as being the Big Picture — where we hope that our efforts will ultimately bring us. Objectives are about a specific plan of attack — usually a series of them — each being relatively short-term in nature.

Goals tend to be long on direction, and short on specific tactics. For example, you can set a goal of losing 30 pounds without having a specific plan as to how to do it. You’ve defined the destination you want to arrive at,

and tactics can be developed as you move forward.

We can think of a goal as doing the following:

Defines the destination Changes the direction to move toward the destination Changes the mindset to adjust to and support the new direction Creates the necessity to develop specific tactics

Goals tend to change your mindset by changing your focus. And as your focus changes, it takes your thinking with it. This is why goals are often accompanied by affirmations

, which involve projecting yourself into the desired (but as yet unattained) destination.

People set goals all the time, without ever being very specific. Organiz

Medicare vs. Medicaid – WHAT'S THE DIFFERENCE?

Medicare and Medicaid. Both are government programs, both relate to healthcare, both are in the news much of the time…and both begin with the letter M.

It’s easy enough then to confuse the two programs. But that’s the extent of the similarities. For the most part, each program provides benefits to a different segment of the population, though there can be overlap between the two under certain circumstances.

For the most part, Medicare is a health insurance program, but one provided by the US federal government. Throughout your life you pay into the system through payroll taxes that are split between you and your employer, and when you are eligible for benefits, you will also pay a monthly premium — a relatively small one — for participating in the medical services and prescription drug portions of the program.

If you have paid payroll taxes into the program for at least 40 quarters (10 years), you will not be required to pay premiums for the hospital portion of the plan. But if you have paid in for less, there is a sliding scale on premiums, and they can be substantial.

And just as is the case with most other health insurance plans, you will have co-payments and deductibles that you will pay for medical services.

The program is primarily for people who are 65 years old and older, but it also extends to younger people who are deemed to be disabled.

Medicaid is a healthcare assistance program. It is also a government program, but one in which funding for the plan is shared between the

GDP vs. GNP – WHAT'S THE DIFFERENCE?

If you spend much time listening to politicians or watching financial news programs on TV or on the internet, you’ve undoubtedly heard the terms “GDP”

and “GNP”. The terms come up in discussions of the economy or big picture financial matters, and sometimes seem interchangeable. But what are GDP and GNP, and what is the difference between the two?

Both represent an attempt to measure the total economic output of a nation during a given period (usually one year), and serve as barometers to measure both the level and direction of a country’s economic activity.

GDP, or Gross Domestic Product is calculated either by measuring all income earned within a country, or by measuring all expenditures within the country, which should approximately be the same.GNP, or Gross National Product uses GDP, but adds income from foreign sources, less income paid to foreign citizens and entities.

GNP can be either higher or lower than GDP, depending on whether or not a country has a positive or negative result from net foreign inflows and outgo. Though GNP is still calculated, the United States shifted to GDP as its primary economic measure in 1991, in part because most countries in the world use GDP to measure the size and direction of their economies. As a result, GNP numbers are less common than GDP figures.

Both GDP and GNP are complicated, and best summarized in a side-by-side comparison:

A measure of the total economy of a nation Measuring all income earned within a country, or by measuring all expenditures within the country, which should approximately match GDP, plus income from foreign sources, less income paid to foreign citizens and

C Corporation vs S Corporation – WHAT'S THE DIFFERENCE?

Now we see the difference of C corporation and S corporation.

C Corporations, or “C Corps” as they’re commonly known, are the primary format of publicly held companies. Their shares can be easily bought and sold on public stock exchanges since there is no limit on the number of shareholders they can have. In addition, unlike S Corporations, C Corp shareholders are not limited to natural persons (can be corporations or partnerships), nor is there a requirement that they be US residents or citizens.

C Corp status enables a business to function as a separate legal entity, able to enter into contracts, borrow money, hire employees and perform all other business functions without personal guarantees from its shareholders. This separation enables shareholders to participate in the company’s profits, but without the potential liability that a sole proprietor or partner would have in the event of liabilities, lawsuits and income tax obligations.

S Corporations, or “S Corps”, are similar to C Corps in that they are owned by shareholders, and provide all the same legal protections from debts, lawsuits and other company liabilities. They can also conduct business as a separate legal entity from their shareholders, including the hiring of employees.

In order to become an S Corp, the business must file IRS Form 2553 (Election by a Small Business Corporation) with the Internal Revenue Service, and meet the following requirements:

The business must first be either a C Corp or a Limited Liability Company (LLC) (which have the option to elect to be taxed as a corporation)The maximum number of shareholders is 100. Shareholders must be natural persons, not partnerships or other corporations. The business must be a domestic corporation, and its shareholders must be

Interest Rate vs APR – WHAT'S THE DIFFERENCE?

What is the difference?

Nearly all loan types come with two interest rates: the actual interest rate and annual percentage rate, or APR. Though the disclosure of both rates is done primarily to help borrowers decide what the true cost of loans are from one lender to another, they often confuse borrowers in the process.

Interest rate is the basic rate charged on a loan. It is sometimes referred to as the “note rate”, mostly by lenders, and will be the interest rate of record in all loan documents.

Your loan payments will be based on the total amount of the loan, multiplied by the interest rate, plus loan principal repayment (based on the required loan amortization).

APR is the effective rate on a loan, after subtracting required loan fees from the face amount of the loan. Unless the loan involves no required closing costs, the APR will always be higher than the actual interest rate.

APR is a rate that government regulators require lenders to disclose to prospective borrowers. Since lender fees can vary widely from one lender to

S Corporation vs. LLC – WHAT'S THE DIFFERENCE?

Hi ,,,,Many businesses – small ones in particular – make the decision to seek some type of legal and liability protections, as well as special tax treatment. This is typically done through adopting a business organization form that will effectively separate the business owner(s) from the business itself. In doing so, the obligations and liabilities of the business become the responsibility of the business entity, and not its owners.

Two prominent forms of ownership are corporations and limited liability companies (LLC’s). Each will provide the needed liability protection as well as certain income tax advantages. Corporation status is generally more formal in its structure and can be better suited to large, established businesses. LLC’s, being less rigid, tend to work better for newer and smaller businesses.

(NOTE: This discussion will limit consideration of Sub-chapter S corporations (“S corporations”) in order to minimize an already complex comparison.)

S Corporations are distinct legal entities created under state law. They enable business owners to separate themselves, legally and financially, from the business itself. This provides a strong level of protection for owners from creditors and lawsuits seeking financial compensation from