Money Matters

Who Controls Your Retirement Money?

People make a mistake when they feel as though they’ve lost control of their qualified retirement plans – they never had control in the first place, says retirement advisor Mark Cardoza.

“Qualified retirement funds – whether we’re talking about an IRA, 401(k), Contributory or Defined Benefit Pension Plan, or a Roth IRA – have so many hazards, pitfalls and strings attached to the government that it’s simply misguided to think one has ‘control’ over that money,” says Mark Cardoza, author of the book “Positioning 4 Retirement.” (

“However, the more you know about this money the more control you can get back – and the more money you can keep.” Here, he explains the basics:

Identify the type of qualified plan you may have through your employer – 401(k), IRA, etc. – or your options for a retirement plan if you are self-employed. Plans are assigned these numbers based on the tax code they follow. The employee has the right to participate in the plan based on the guidelines established by the organization and the U.S. government to receive tax advantages. By managing your qualified and non-qualified money properly, you can save on taxes. Often, the employer will match the employee’s contribution and will receive a tax advantage as well. From there, one needs a solid understanding of qualified and non-qualified money, which is based on your retirement plan.

A qualified plan refers to an account that meets certain IRS guidelines in order to be considered a retirement account. It is also referred to as “qualified money” or a “qualified fund.” Qualified funds can be in the form of securities, such as stocks, bonds, mutual funds, CDs and annuities. The money placed in a qualified plan has special tax considerations. Each plan has elements that differentiate one from the other, such as distribution restrictions and limiting plan sponsors. The money that goes into a qualified retirement fund has not been taxed and is referred to as “pre-tax dollars.” The pre-tax dollars grow tax-deferred, meaning until you take a distribution, you do not pay income taxes. The money is taxed based on the individual’s tax bracket and tax rules at the time of withdrawal. The general assumption is that the tax bracket will be lower when the individual has retired.