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Pensions  arrow

Different types of pension plans and programs.


Most employers will offer 401k as their preferred pension plan. 401k allows before tax contributions and  accumulations to grow tax free. The plan is employee directed, and most employers also offer a match of contributions to encourage your participation. The tax benefits coupled with the employer match may offer you an immediate return of 30-100% on your investment before you earn anything. Maximizing these plans are generally a good idea for those eligible. The question is: Is it allocated properly inside the plan and is it coordinated with everything else you have as part of your total investment program? We can help you determine what your investment allocation should be.   Ask us


For employees of hospitals and school districts, more commonly referred to as a Tax Sheltered Annuity (TSA). Similar to a 401k in that it is a self-directed before tax contribution, which grows tax deferred. It has the added benefit of a “catch-up” provision that will allow additional contributions under special rules. The combination of the tax advantages and any potential employer matching contributions suggests maximizing this plan is well advised. The question is: Is it allocated properly inside the TSA and is it coordinated with your other investment assets? We can help you determine the appropriate allocation.  Ask us


They were a great deal in 1986 and in some cases still are today. The contribution limit for 2010 is $5,000 of earned income, and for those 50 years old and older, the limit is $6,000  and fully deductible for all who qualify. Tax deferral and great investment flexibility are still important components of today’s IRA and can be used as a stand alone or supplemental retirement plan. Are you eligible?  Ask us

Roth IRA

Roth IRA is a newer version of the old IRA, with a few differences. A Roth contribution is not tax-deductible, however growth is tax-free and an additional benefit is that withdrawals upon retirement are also tax-free. In a traditional IRA withdrawals are taxable. Like a traditional IRA, a Roth also allows a $5,000 contribution limit (and the same $6,000 for those age 50 and older) from earned income in 2010 for all who qualify. Does this make sense for you and do you qualify?  Ask us

Rollovers / Takeovers

Most qualified plans, IRA, 401k, Defined Contribution, and 403b etc. can be rolled over in the event of a “separation of service” – legalese for a lay-off, retirement, death, or disability. This allows for the plan owner to take the assets and move them to a self directed IRA account or a new plan with a new employer (subject to some rules) without having to pay taxes. Thus keeping the tax deferred savings growing unencumbered. Further, if your nearing retirement you may be forced to take some action on your company plan shortly before you retire. What are the opportunities and the pitfalls?  Ask us

Defined Benefits

In past years this was the predominate company retirement plan, the most familiar defined benefit plan is Social Security. Most companies have been converting slowly to more “portable” plans such as 401k’s to react to today’s more mobile job market. However, for the family owned or  closely held small company, defined benefit plans still offer a few significant advantages which have forestalled their pre-mature death. If you own a small or closely held business we can show you what they are.   Ask us

Defined Contributions

An older form of pension plan, that offers higher contribution limits than 401k’s and can make sense in a small family owned or closely held company. This assumes the rules are not too cumbersome in your situation. Specifically, the mandatory annual contribution could become problematic unless the company’s year-by-year cash flow is consistent. Does this fit your company?  Ask us


Designed for the sole proprietor who would like to have a pension plan with the same basic benefits that large companies offer without the expense of complicated administration. These plans are also employee directed and very portable. If you are a small company or professional this can make some sense.   Ask us

Stock Purchase Plans (ESOP) / Stock Options

If you work for a publicly traded company or even a large private company, you may have access to one of these plans. Taking a close look and understanding all the plan can do for you warrants careful attention. However, they can be complicated with a variety of rules and restrictions, which must be understood to avoid missed opportunities. Further, the exercise of these options may have unique tax consequences, which also must be understood. Should you participate?   Ask us