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Will a Personal 401-K Get You to Your Retirement Goal?

Posted by Larry Jones on Feb 26, 2019 9:30:00 AM

Self-Employed Lives Matter!

In 1978 our tax code was amended to allow the creation of a tax-deferred savings vehicle for employees. It was defined under section 401(k) of the Internal Revenue Code, and quickly became one of the best known employee benefits. Known as the 401(k) plan, it was great for individual investors because tax-deferred growth was a huge benefit over the long haul, was great for employers because it allowed more flexibility than pension plans, and (I'd say) it was also great for the economy as well. Massive employer matched investments fueled a great stock market bull. It was a win-win all around!

There were, however, some drawbacks. The plans were subject to ERISA rules, which defined specifically how the plans could and could not be implemented along with contribution limits and other administrative details. Discrimination between one employee and another was absolutely not allowed, which is a good thing. One of the rules that many didn't like was that self-employed people had no access to this powerful retirement savings vehicle.

In 2001 that changed with the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), and the personal, or Solo 401(k) was born. Now the self-employed worker can take advantage of this powerful savings vehicle too.

Read More

Topics: Tax Deferral

Tax Strategies: Use Tax Advantaged Vehicles for Greater Portfolio Growth

Posted by Larry Jones on Jul 26, 2018 9:00:00 AM

The Power of Tax-Deferral

When it comes to growing assets for retirement, especially in today's volatile economic environment, you want to take advantage of every break you can get. One of these breaks is through the use of a tax-deferred vehicle, such as a 401-k, IRA, or 403-b plans, etc. How do these plans work? Quite simply, any growth inside them is sheltered from taxation in the accumulation phase. You don't pay the taxes until you begin to take the money out and spend it. This becomes a huge advantage over time.

For example, let's look at a person, age 45 who has $100,00 in a 401-k. She's in a 25% tax bracket. Let's assume this person contributes nothing else for 20 years, and that she averages an 8% return over that same 20 year period. At age 65, in a normal non-tax-deferred account that money would have grown to over $306,000.

But since she was in a 401-k, all of her earnings continued to grow without being taxed. Now the value is well over $466,000, an increase of $145,000. As tax strategies go, this is a good one.

What's the downside to using these tax-deferred vehicles? There are limits as to how much you can contribute to them each year. So what's a person with a very healthy investment budget to do?

 

Read More

Topics: Tax Deferral

Will a Personal 401(k) Get You to Your Retirement Goal?

Posted by Larry Jones on Feb 22, 2018 9:30:00 AM

HappyPiggyBank.jpg

Self-Employed Lives Matter!

In 1978 our tax code was amended to allow the creation of a tax-deferred savings vehicle for employees. It was defined under section 401(k) of the Internal Revenue Code, and quickly became one of the best known employee benefits. Known as the 401(k) plan, it was great for individual investors because tax-deferred growth was a huge benefit over the long haul, was great for employers because it allowed more flexibility than pension plans, and (I'd say) it was also great for the economy as well. Massive employer matched investments fueled a great stock market bull. It was a win-win all around!

There were, however, some drawbacks. The plans were subject to ERISA rules, which defined specifically how the plans could and could not be implemented along with contribution limits and other administrative details. Discrimination between one employee and another was absolutely not allowed, which is a good thing. One of the rules that many didn't like was that self-employed people had no access to this powerful retirement savings vehicle.

In 2001 that changed with the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), and the personal, or Solo 401(k) was born. Now the self-employed worker can take advantage of this powerful savings vehicle too.

Read More

Topics: Tax Deferral

Tax Strategies: Using Tax Advantaged Vehicles for Greater Portfolio Growth

Posted by Larry Jones on Aug 1, 2017 9:30:00 AM

The Power of Tax-Deferral

When it comes to growing assets for retirement, especially in today's volatile economic environment, you want to take advantage of every break you can get. One of these breaks is through the use of a tax-deferred vehicle, such as a 401-k, IRA, or 403-b plans, etc. How do these plans work? Quite simply, any growth inside them is sheltered from taxation in the accumulation phase. You don't pay the taxes until you begin to take the money out and spend it. This becomes a huge advantage over time.

For example, let's look at a person, age 45 who has $100,00 in a 401-k. She's in a 25% tax bracket. Let's assume this person contributes nothing else for 20 years, and that she averages an 8% return over that same 20 year period. At age 65, in a normal non-tax-deferred account that money would have grown to over $306,000.

But since she was in a 401-k, all of her earnings continued to grow without being taxed. Now the value is well over $466,000, an increase of $145,000. As tax strategies go, this is a good one.

What's the downside to using these tax-deferred vehicles? There are limits as to how much you can contribute to them each year. So what's a person with a very healthy investment budget to do?

 

Read More

Topics: Tax Deferral

Can a Personal 401(k) Get You to Your Retirement Goal?

Posted by Larry Jones on Feb 28, 2017 9:30:00 AM

Self-Employed Lives Matter!

In 1978 our tax code was amended to allow the creation of a tax-deferred savings vehicle for employees. It was defined under section 401(k) of the Internal Revenue Code, and quickly became one of the best known employee benefits. Known as the 401(k) plan, it was great for individual investors because tax-deferred growth was a huge benefit over the long haul, was great for employers because it allowed more flexibility than pension plans, and (I'd say) it was also great for the economy as well. Massive employer matched investments fueled a great stock market bull. It was a win-win all around!

There were, however, some drawbacks. The plans were subject to ERISA rules, which defined specifically how the plans could and could not be implemented along with contribution limits and other administrative details. Discrimination between one employee and another was absolutely not allowed, which is a good thing. One of the rules that many didn't like was that self-employed people had no access to this powerful retirement savings vehicle.

In 2001 that changed with the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), and the personal, or Solo 401(k) was born. Now the self-employed worker can take advantage of this powerful savings vehicle too.

Read More

Topics: Tax Deferral

Tax Strategies: Using Tax Advantaged Vehicles for Portfolio Growth

Posted by Larry Jones on Aug 2, 2016 10:30:00 AM

The Power of Tax-Deferral

When it comes to growing assets for retirement, especially in today's volatile economic environment, you want to take advantage of every break you can get. One of these breaks is through the use of a tax-deferred vehicle, such as a 401-k, IRA, or 403-b plans, etc. How do these plans work? Quite simply, any growth inside them is sheltered from taxation in the accumulation phase. You don't pay the taxes until you begin to take the money out and spend it. This becomes a huge advantage over time.

For example, let's look at a person, age 45 who has $100,00 in a 401-k. She's in a 25% tax bracket. Let's assume this person contributes nothing else for 20 years, and that she averages an 8% return over that same 20 year period. At age 65, in a normal non-tax-deferred account that money would have grown to over $306,000.

But since she was in a 401-k, all of her earnings continued to grow without being taxed. Now the value is well over $466,000, an increase of $145,000. As tax strategies go, this is a good one.

What's the downside to using these tax-deferred vehicles? There are limits as to how much you can contribute to them each year. So what's a person with a very healthy investment budget to do?

 

Read More

Topics: Tax Deferral

What you don't know can hurt you!

As a fiduciary I am required to always act in your best interests, and as a professional planner, it's my job to be familiar with all types of possible solutions and financial vehicles. In short, I have no interest in selling any particular product or any affiliation with a particular company. I work for my clients.

Are you:

  • concerned that your tax bill is too high?
  • tired of watching your nest egg decline by significant amounts every 5-7 years?
  • wishing you could find more free time?
  • looking for ways to help protect yourself against litigation that could destroy all you have worked for?
  • worried that Uncle Sam is going to enjoy your retirement more than you are?

If any of the above describes you and you'd like to get a question answered then just click the button below and we'll be in touch.

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p.s. we have the ability to meet virtually regardless of your location! Give us a shout!

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