Invest

Invest

Investments can play a key role in any financial plan. For individuals, a mix of investment products, income and pension plans can help work toward short- and long-term goals. For employers, we can offer advice on savings and pension plans.

401 (k) Retirement Plans and Individual Retirement Plans

Everyone looks forward to retirement, but not everyone looks forward to planning for it. A strong financial plan can 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 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

• 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 A traditional IRA has several tax advantages: all income tax is deferred until money is withdrawn, and the growth of contributions and earnings is generally tax-deferred.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.

IRA distributions may be subject to a 10% additional tax if you’re under age 59 and a half.

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 and a half or prior to the account being opened for five 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.

529 Qualified Tuition Plans

A college education is expensive – and prices for tuition and living expenses are only getting higher. Families with children might consider planning how to finance an education as early as possible, so as to take advantage of tax and investment opportunities and contribute to pre-paid tuition rates.

Many states and educational institutions offer a 529 Qualified Tuition Plan (529) to help finance a college education. The specifics vary between states and institutions: some guarantee a minimum rate of return, while others offer tax incentives. Even if your state does not offer a 529 plan, many allow non-residents to contribute to their plans, and private plans are available.

There are two main types of 529 plan: a pre-paid tuition plan, and a college savings plan. Pre-paid tuition plans involve purchasing units or credits at participating educational institutions that can applied to tuition and, in some cases, living expenses. Most are sponsored by state governments and have residency requirements. College savings plans establish an account for a student that can be used to pay eligible college expenses, and allow contributors to choose among several investment options.

It is important to carefully consider how to invest in a 529 plan, since it can impact a student’s eligibility to participate in need-based financial aid programs. A financial planner can help balance assets held in college savings plans against financial aid requirements.

Some of the advantages of 529 Plans include:

• Depending on the state, the ability to deduct 529 contributions from state income tax returns

• Federal and state tax deferral of compounding income and growth, if contributions are used for eligible college expenses

• Matching grants in many states

• Some pre-paid 529 qualified tuition plans sponsored by a state government are guaranteed

• College savings plans allow the option to invest in a variety of investment products

• When money is withdrawn from a 529 plan, the student typically pays little tax, due to a low income tax rate

Working together, we can examine college investment options to build a customized portfolio that takes into consideration your financial goals, tolerance to risk and timeline. Contact us today to find out more.

Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

Annuities

Annuities offer an extremely flexible, customizable long-term investment option that can be tailored to fit almost any lifestyle and financial plan.

Annuities are available through insurance companies. Some can minimize risk by guaranteeing all or part of the principle amount invested. Since they are designed for retirement, compound earnings are tax-deferred until withdrawn, and contributors can choose to make contributions and receive returns in either a single lump-sum amount, or through a regular stream of payments.

There are several types of annuities. A non-qualified annuity is bought individually with post-tax dollars, while a qualified annuity is part of an employer-sponsored retirement plan and is funded with pre-tax dollars. The two types have differences in limits of withdrawals and contributions.

Annuities are also different in the ways they generate earnings. A Fixed Annuity is designed around regular fixed interest rates, while a Variable Annuity is managed by a professional money manager, who invests in a portfolio of mutual funds that might be in stocks, bonds or other instruments. Variable annuities are best suited for long-term investments, since taxes and insurance company charges can apply if money is withdrawn early. Depending on the performance of the annuities selected, an investment’s unit values will increase or decrease.

Depending on the specific annuity chosen, benefits can include:

• Tax-deferred growth

• Access to professional money managers

• Lump-sum or periodic payments

• Choice of fixed or variable annuity types

• Some annuities offer guaranteed returns of principal investment

• Hundreds of variable annuities to choose from

Contact us today to discuss how annuities might strengthen your investment portfolio, and to receive an information package.

Note that any amount allocated to an annuity may increase or decrease in value, and is invested at the risk of the policyholder. Guarantees are based on the claims paying ability of the issuing insurance company.

Mutual funds

Group retirement and savings plans