My Financial Tips

The research of the Federal Reserve Survey on Consumer Finances for years 2001 and 2004 shows that only 41% of American households saved regularly. If you compare that information to 1981 would see that then savings averaged 11% of income and credit card debt was only 4%.

It is really important to know for those who are intelligent and “savvy” employer that both you and your employees can take advantage of IRS Qualified Retirement

Here you will not find information concerning explanation of all of the available plans with accompanying statistics “ad infinitum” but, instead, you will be shown the advantages of setting up a “painless” savings plan through IRA’s, 401-K’s, SEP plans etc.

Lets start with such a “painless” and smart way as setting aside funds for retirement by having money deducted from salary before FICA taxes etc. are taken out that is called “Pre Tax” contributions.

What concerns SEP plans they are made for small businesses. An employer can set up individual IRA type accounts for employees to contribute to with higher limits than an individual IRA with no cost to the employer. It means that the employer pays nothing to set up and keep this retirement plan for their employees. A 401-K plan does require a certain amount of start up and maintenance charges but a few providers have lower fees than the rest of the 401-K market that is a distinct advantage to the employer who sponsors this plan. Companies which have a plan in place already or a company that wishes to start a new 401-K must take mentioned fact into consideration as it is very important for them.

The next thing to discuss is how actually your funds grow. The return on these investments is tax deferred (not taxed the year it is earned but until you withdraw funds for retirement). To make it clear, money that would have been paid in taxes that year is instead reinvested into your retirement account. You must keep in mind that any withdrawals made before age 59 1/2 will be taxed as income and penalized at 10% of the amount withdrawn.

You shouldn’t be afraid that something will go wrong because a retirement specialist can help you and your employees by guiding you in choosing the correct plan for your business. There are many considerations that require a professional’s assistance and they are: choice of investments, fiduciary responsibilities, education of employees regarding their participation, review of employee’s progress concerning the growth of their accounts and taking advantage of new options. A good retirement professional will put you in a plan that will have the best tax advantages for you an your company at the least cost. You will be also provided an opportunity to grow your retirement funds for those years. As a result you and your employees will not become lumped in with government statistics consisting of those who don’t save at all.

Read more about withdraw from 401k matters explained.

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