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457 retirement plans when and what, the affect on your retirement

09May

When Would A 457 Account Affect Your Retirement?

BlogMay 9, 2023

If you’re a government employee, you may have access to a 457-retirement account. A 457 plan is a type of tax-advantaged retirement account that is available to employees of state and local governments, as well as certain non-profit organizations.

Let’s take a closer look.

What is a 457-retirement account?

A 457 plan is like a 401(k) or 403(b) plan, but it is designed specifically for government and non-profit employees. Like a 401(k), a 457 plan allows you to make pre-tax contributions, which can help lower your taxable income. The money you contribute to the plan grows tax-free until you withdraw it in retirement. Additionally, like a 401(k), some employers offer a matching contribution, which can help boost your savings.

One key advantage of a 457 plan is that it allows you to contribute more to your retirement savings than a 401(k) or 403(b). In 2023, the maximum amount you can contribute to a 457 plan is $22,500. However, if you are 50 or will be 50 by end of the year, you can contribute a catch-up of an additional $7500.

Another advantage of a 457 plan is that you may be able to withdraw money penalty-free before you reach age 59 and a half. This is known as the “substantially equal periodic payments” provision, and it allows you to receive a stream of payments over your lifetime, based on your life expectancy.

What are the differences between a 457 and a 401(k) or 403(b)?

While a 457 plan shares many similarities with a 401(k) or 403(b), there are a few key differences. For example, a 457 plan does not have an early withdrawal penalty if you leave your job before age 59 and a half. Additionally, you can contribute the maximum amount to both a 401(k) or 403(b) and a 457 plan in the same year, which can help boost your savings.

However, one key disadvantage of a 457 plan is that it may not be as well-known or widely available as a 401(k) or 403(b). Additionally, some 457 plans may have higher fees or less investment options than other retirement plans.

Is a 457-retirement account right for you?

If you are a government or non-profit employee and have access to a 457 plan, it may be a good option for your retirement savings. However, like any retirement plan, it’s important to carefully consider the fees, investment options, and contribution limits before deciding to contribute.

the overview and buzz about retirement plans having FIAs fixed indexed annuities

05Apr

The Buzz about Fixed Indexed Annuities

BlogApril 5, 2023

Consider an FIA for Your Retirement

When it comes to planning for retirement, it’s important to consider all of your options for generating income. One option that many retirees choose is a fixed indexed annuity. A fixed indexed annuity (FIA) is a type of annuity that offers a guaranteed minimum interest rate, along with the potential for higher returns based on the performance of an underlying index, such as the S&P 500. Here are some of the reasons why FIAs can be a good option for retirement planning:

Protection Against Market Losses

One of the biggest benefits of a fixed indexed annuity is that it offers protection against market losses. Unlike other investments, the principal amount invested in an FIA is not at risk of loss due to market downturns. This can provide peace of mind for retirees who are concerned about market volatility.

Guaranteed Minimum Interest Rate

In addition to protecting against market losses, FIAs also offer a guaranteed minimum interest rate. This means that even if the underlying index performs poorly, the annuity will still earn a minimum interest rate. This provides a stable source of income for retirees.

Tax-Deferred Growth

Another advantage of FIAs is that they offer tax-deferred growth. This means that the interest earned on the annuity is not taxed until it is withdrawn. For retirees who are in a higher tax bracket, this can be a significant advantage.

Flexible Payment Options

FIAs offer flexible payment options, allowing retirees to choose how they receive their payments. They can opt for a lump sum payment, periodic payments, or even lifetime payments. This allows retirees to tailor their annuity to their individual needs.

Estate Planning Benefits

Finally, FIAs offer estate planning benefits. In the event of the annuity owner’s death, the beneficiaries of the annuity can receive the remaining balance of the annuity without going through the probate process. This can be a significant advantage for retirees who are concerned about leaving assets to their heirs.

Fixed indexed annuities can be a good option for retirement planning. They offer protection against market losses, a guaranteed minimum interest rate, tax-deferred growth, flexible payment options, and estate planning benefits. It’s important to work with a trusted financial advisor to determine if an FIA is the right choice for your individual retirement goals.

23Mar

Estate Planning IS Retirement Planning

BlogMarch 23, 2023

Retirement planning is an important part of ensuring financial stability in your golden years. It involves budgeting, saving, and investing to ensure you have the necessary funds to support your lifestyle when you retire. However, another essential aspect that is often overlooked in retirement planning is estate planning. Estate planning is the process of deciding for the management and distribution of your assets after your death. Here are some reasons why estate planning should be included in your retirement planning:

Protect Your Assets

Estate planning can help ensure that your assets are protected and passed on to your loved ones according to your wishes. Without a proper estate plan, the probate court will determine how your assets are distributed, which may not align with your preferences.

Avoid Family Disputes

An estate plan can also help avoid family disputes over your assets. It is not uncommon for families to fight over inheritances, and a clear and comprehensive estate plan can help prevent such disputes.

Minimize Taxes

Estate planning can also help minimize the tax burden on your estate. By taking advantage of strategies such as gifting and trusts, you can reduce the amount of taxes owed and ensure that more of your assets are passed on to your beneficiaries.

Plan for Incapacity

Estate planning can also include a power of attorney or healthcare proxy, which will allow someone to manage your affairs if you become incapacitated. This can be important in retirement, as the risk of cognitive decline or health problems increases as we age.

Peace of Mind

Finally, including estate planning in your retirement planning can provide peace of mind, knowing that your affairs are in order and your loved ones will be taken care of after you are gone.

In conclusion, estate planning should be an essential part of retirement planning. It can help protect your assets, avoid family disputes, minimize taxes, plan for incapacity, and provide peace of mind. It’s important to work with a qualified estate planning attorney to ensure that your estate plan is tailored to your individual needs and preferences.