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Why should I invest in my Employer Retirement Plan?

Regardless of the investment choices offered, and even if your employer does not contribute to the plan, due to the tax advantageous treatment of an employer sponsored retirement plan, it may be suitable for you to maximize this account type first.

If a company offers a retirement plan, all employees must be covered if they are at least 21 years of age, work at least 1,000 hours and have at least 1 year of service.

Retirement Plan Highlights:

• Pre-tax / tax-deductible contributions and deferred growth
• Pay ordinary taxes on investment at retirement
• Pay capital gains tax on growth

The rationale here is that many individuals will have a lower tax rate in retirement than during their working years.

• Types of Plans: 401(k), SIMPLE IRA
401(a) plan - Money Purchase Plan
403(b) plan - Sometimes called a Tax Sheltered Annuity, TSA

Maximum Contribution Levels for
Employer Sponsored Retirement Plans

Year

Employee

Employer

Catch Up 50+

2019

$19,000

$37,000

$6,000

2018

$18,500

$36,500

$6,000


**See Contribution Limits for more information

What can I do with my plan when I retire or separate from my current employer?

Roll it to an IRA**
– How and where do I establish an IRA?
– What are my investment choices?
– Rollover directly from your employer or indirectly with a check from the plan?

Convert it to a ROTH IRA**

– Pay taxes now, proceeds then grow tax free.
– Depends on age (usually under 40) and future assumed tax rate.
– Conversion may be temporary for high income investors.

**See IRS publication 590 for ROTH IRA and IRA qualifications https://www.irs.gov/uac/About-Publication-590A

See IRS publication 560 for Retirement Plans for Small Businesses
http://www.irs.gov/publications/p560/

Risk for each category varies.
Please contact Kim Doleman, Investment Advisor Representative, for more details.

*please see below for important disclosure