Reply #1 and #2: Post provides specific, constructive, and supportive feedback.

Reply #1: A traditional 401(k) involves contributing pre-tax dollars to a retirement account. The investment continues to grow until retirement, and then the funds are withdrawn. This occurs at age 59 ½ or older. "Upon retirement, withdrawals are taxed at the IRA owner's current income tax rate. Capital gains or taxes on dividends are not assessed" (Hayes, 2021). There is a limit on an individual's contributions to a 401(k). For 2022, those under 50 can contribute $6,000, and those over 50 can contribute $7,000 (Hayes, 2021). The contributions are typically tax-deductible. There are not any penalties for withdrawals at 59 ½.

A Roth 401(k) is like a traditional 401(k). A Roth 401(k) allows individuals to pay taxes on the money put into the account. There is a limit on an individual's contributions to the Roth 401(k). For 2022, those under 50 can contribute $6,000, and those over 50 can contribute $7,000. "Contributions can be withdrawn at any time, tax-free and penalty-free. Five years after your first contribution and age 59½, earnings withdrawals are tax-free, too" (Appleby, 2022). There are no tax benefits relating to a Roth 401(k).

The Pension Protect Act was created to protect retirement accounts. "The Pension Protection Act of 2006 was the federal government's way of closing the loopholes that allowed the companies that paid into the Pension Benefit Guaranty Corporation to cut pension funding" (Appleby, 2022). The Pension Protect Act increased the amount people can contribute to their IRA. Under this Act, individuals can convert their current asset plan to a Roth IRA. These provisions allow individuals to maximize their retirement savings.

I believe that my clients should participate in the Roth 401(k). The Roth 401(k) is continuing to grow in popularity. "Any doubts your clients expressed on the basis that this feature was scheduled to sunset after 2010 can now be eliminated since PPA made it permanent" (Caudill, 2007). This plan has a better tax benefit. I believe it would be wiser to have taxes taken out when the money is placed into the account. An individual does not know what tax bracket they will be in the future. This could be very risky and result in more money being spent on taxes.

Reply #2: "The Pension Protection Act was intended to reverse the trend of a slowing economy due to the lack of employer contribution to pensions by forcing plan sponsors to adequately fund their pensions plans which would put an end to the drastic cycle of low contributions and lower spending and a slowing economy" (Gad-Harf, 2008, p. 1425). This was the initial plan that started the change of pensions into contribution plans for employers.

An obvious point in the financial world that needs to be stated right away in regards to contributing to a work-related retirement plan is that if they are matching your contributions, it is a great idea. For example, at my work the only retirement plan that is offered is a simple IRA. My employer then matches up to 3.5% of my salary. So the way I think of it, even if my money were not to grow at all, by me contributing 3.5% of my salary, I am doubling my money each time which is a necessary investment in my eyes.

When looking at contributing between a tradition and a Roth 401(k), the biggest

difference is taxes. A Roth 401(k) is taxed before you put the money into the account compared to a traditional that the taxes are paid when distributions begin. You will then get taxed on the bracket you are in at that time.

The reason that the Pension Protection Act is so closely related to 401(k) is because "the PPA encourages employees to contribute to sponsored defined-contribution plans such as a 401(K)" (Gad-Hard, 2008, 1428). With all the extra work that now went into these pension plans, it turned away employers.

When deciding which of these plans to invest in, it really depends on your tax bracket currently, and where you see yourself in the future. If you plan on making more money year over year and at retirement are in a high tax bracket, then the Roth should be for you as taxes are taken out as you go. If you plan on being in a lower tax bracket then you currently are in at the time of retirement, then the traditional will be better for you as you will ultimately pay less in taxes at that time. My advice would be to invest in the Roth 401(K) as most people plan to make more money as time goes on and therefore be in a higher tax bracket at the time of retirement. This will make you feel a lot better knowing that you do not have to pay taxes our of your retirement when you need it since you already did that with the contributions.

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Reply #3 #4 #5 and #6: Response is substantive, insightful, provokes further thought. ******* responses should be researched and must include a citation using APA format.********

Reply #3: The efficient market hypothesis states that share prices reflect all information and consistent alpha generation is impossible. The efficient market hypothesis assumes that the current share price is going to reflect all of the information about the company in the market. Whenever there is a change in stock prices for a company it is going to reflect those changes in the market or on the reports of the company. There is some conflict as to whether prices reflect all of the information or not. Some people believe that it is an assumption while others believe there can’t be a logical explanation for price fluctuation. Intrinsic values are reflected instantaneously in actual prices. Prices are determined by supply and demand. Information regarding is going to have effects on the supply and demand. As the information changes its movement is reflected by the curves that change market prices. This tells us that the prices do reflect all of the available information. Abnormal returns are the difference between what the actual return should be and what the expected return is from a security. Abnormal returns cannot be earned by searching for mispriced stocks. The efficient market hypothesis states that stocks should trade at a fair market price. Making it harder for stocks to outperform the market to earn abnormal returns.

Reply #4: The Efficient Market Hypothesis states that the prices of shares reflect the information of the company. The three categories are weak form, semi-strong form, and strong-form efficiency (Madura 2020. p. 273). In the weak form, information gets into the prices by the past data. In the semi-strong form, all public information is used to determine the prices. In the strong form, information that is public and not public is believed to be used to determine prices. You can tell if prices reflect all available information when something that was previously private becomes available. You would see gaps up or down in the stock that would allow you to see changes when the information becomes available. For example, a scandal that may become public can cause a stock to plummet. That is when you'll know the price reflects the currently available information. An abnormal return is a return or loss that is unusually large. The efficient market hypothesis states that it is impossible to have abnormal returns. According to EMH, if a market is efficient then it is impossible to beat the market (Maverick 2022). This is because the EMH suggests that all available information was given and that the price reflects that information.

Reply #5: "Insider trading involves trading in a public company's stock by someone who has non-public, material information about that stock for any reason" (Ganti). There is a time when insider trading is legal. It all depends on when the trade is made by the insider. If the trade is made before the information is public, then it is considered insider trading. It is illegal to trade stock based on insider information because it is not fair. The SEC created this so that certain individuals could not have the advantage over everyone else, by knowing this inside information. "An individual who has access to insider information would have an unfair edge over other investors, who do not have the same access and could potentially make larger, unfair profits that their fellow investors" (Ganti). Another example of someone who was trading stocks on inside information was R. Foster Winans. He wrote a column for the Wall Street Journal that was called "Heard on the Street" (Barone). In each of his pieces, he would choose a particular stock to talk about and each time, depending on what Winans wrote about the stock, it's price would move up or down. He began leaking which stock he was going to talk about in his column to a set of stockbrokers, who would buy into the stock the column was about. These stockbrokers would make more money off of this and then give some to Winans.

Reply #6: Why is Trading Stocks based on Insider Information Illegal?

It is illegal to trade stocks based on information in order to keep the market fair for all investors. Insider trading can cause many outliers and inefficiencies due to the fact that people who have this information can buy or sell an abnormally large amount on a stock they have information about which the public does not (Ganti, 2022). Due to this the SEC has set regulations that prevent the holders of this information from taking a position in the market on the stock. It is also important to note that not all insider trading is illegal if the information is available to the public.

Other than Martha Stewart, provide an example of someone who was trading stocks on inside information.: Ivan Boesky Ivan Boesky was a stock trader in the 1980’s who owned astock brokerage company. Boesky’s company mainly profited off the speculation of corporate takeovers (Barone, 2022). This meant that his stock trading strategy came from buying or selling stocks based on what he believed would happen to major or up and companies. After a lawsuit and SEC investigation Boesky was found to be paying people with inside information on these takeovers to make accurate decisions and make major profits. Boesky was then sentenced with a permanent ban from trading, a major fine, some jail time, and had to work with the SEC to catch potential informants (Barone, 2022).