Life is too long to make bad money decisions, so it’s important you make the decisions that matter. Taking advantage of the incentives provided by your employer and the federal government is a valuable start for your retirement plan.
Employer contributions
This may be the quickest way to build your retirement savings. If your employer provides 50 cents for each dollar you put into your 401(k) plan, then that’s a 50% return for your investment. If you have an annual income of $40,000 with a 50% 401(k) match on up to 6% of pay, then you stand to gain an extra $1,200 in contributions. Of course, this only works if you stay with the company for several years, depending on their vesting schedule.
Tax breaks
The government encourages workers to save for retirement by providing a variety of tax breaks. One example is you can defer income tax of up to $18,000 if you deposit it instead on a traditional 401(k). For a traditional IRA, it’s as much as $5,500. If you belong in the 25% tax bracket, maxing both the 401(k) and IRA accounts will lessen your tax bill by $5,875. If you’re 50 years old and older, you get to defer an additional $6,000 in 401(k) and $1,000 in IRA.
Small Business Owner? Utilize third party retirement plan administrators.
We make retirement planning easier, straightforward, efficient and financially beneficial. We specialize in retirement plan design and compliance. At Prenger & Profitt, LLC, our mission is to advise and guide you through – not sell. In fact, because we do not sell investment products, we provide our clients a completely objective and knowledgeable view of the product market, so that you can choose an investment platform that meets the needs of your business.
Our Retirement Services Include:
Plan Design, Consulting and Setup Plan Documents
Participant and Trustee Reporting Employee Meetings
Form 5500
Coverage and Compliance Testing
Starting to save early can do wonders!
It allows the returns to save and amass in your account and makes things better for your retirement plans. It’s definitely something that will help keep your long-term goals a reality. Contact us now at Prenger & Profitt to start your retirement solutions.
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