Investments can play a key role in any financial plan. For individuals, a mix of investment products, income and pension plans can help address short- and long-term goals.
I specialize in the following areas:
- 401 (k) retirement plan advice
- Individual Retirement Accounts
- 529 qualified tuition plans
- Mutual funds
- Certificates of Deposit
Everyone looks forward to retirement, but not everyone looks forward to planning for it. A strong financial plan is aimed to take the hassle out of this process and secure a balance of investment products that may yield the retirement lifestyle everyone dreams of.
While most working Americans will receive Social Security benefits, in most cases, they will not be sufficient to provide a comfortable retirement income. Depending on personal circumstances, either a 401(k) retirement plan or an Individual Retirement Plan can help in accumulating a more sizeable retirement account.
401(k) Retirement Plans
Employer-sponsored 401(k) retirement plans offer several benefits, including potential employer contributions. Enjoy tax savings by setting aside a portion of pre-tax salary in a tax-deferred investment account, which can also generate compound interest. Depending on the type of plan selected, 401(k) plans can also offer yields from a variety of investment options.
Working together with a financial planner, decide the amount and frequency of 401(k) contributions while taking into consideration contribution limits and employer requirements. Some advantages include:
- Employer contributions in most cases
- Contributions taken from pre-tax salary allow for a reduced tax rate (Traditional 401K)
- Contributions taken from post-tax salary allow for tax free growth if taken in retirement (Roth 401K)
- Tax deferral of compounding income and growth
- The opportunity to select from a variety of investment products
Individual Retirement Plans
Another option for retirement planning is to contribute to an Individual Retirement Plan (IRA). IRAs allow a variety of investment options, including variable annuities, stocks, and government securities. There are several types of IRAs, including the Traditional IRA, Non-Deductible IRA, or Roth IRA.
A traditional IRA is funded through after-tax dollars, and can be contributed to even if a client holds another retirement plan, such as a 401(k). A traditional IRA has several tax advantages: all income tax is deferred until money is withdrawn, and the growth of contributions and earnings is generally tax-deferred. The non-deductible IRA is similar to the traditional IRA except that contributions are made with after-tax dollars, and there is no income tax deduction allowed. In contrast to those two options, contributions to a Roth IRA include income tax payments, but when money is withdrawn, it is distributed tax-free as long as it is considered qualified.
The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
Other Retirement Planning Options
Depending on the nature of your employment, you may be eligible for other kinds of retirement planning options. For example, 457 plans are designed for independent contractors or employees of a state or local government or a tax-exempt organization. These plans allow participants to exclude certain specified types of salary from their gross income. Other options may include Deferred Compensation Plans and 403(b) plans, which are designed for employees of non-profit corporations.
Contact us today to discuss alternative retirement planning options.
Certificates of Deposit
Many investors are careful when choosing where to invest their hard-earned money, particularly given the recent economic downturn.
For this reason, Brokered Certificates of Deposit (CDs) are a common low-risk investment, since they can feature federal deposit insurance. A CD is a deposit account that generally offers a higher rate of interest than a regular savings account. Investors put a fixed sum of money into a CD for a fixed period of time, and when the CD is redeemed, gain the accrued interest, plus the principal amount invested.
If a CD is redeemed before it matures, the issuing institutional may enforce an “early withdrawal” penalty or forfeit a portion of the interest.
Contact us today to learn about how Brokered Certificates of Deposit can benefit your investment portfolio.
Brokered CDs sold prior to maturity in the secondary market may result in loss of principal due to fluctuations in the interest rate or lack of liquidity. Brokered CDs are registered with the Depository Trust Corp. (“DTC”). Brokered CDs with step-down and/or call provisions may be less favorable than traditional CDs without these features.