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Why should I invest in my Employer Retirement Plan?

Client Centered

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 401k
Employer Sponsored Retirement Plans

YearEmployeeEmployerCatch Up 50+

**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

See IRS publication 560 for Retirement Plans for Small Businesses

Risk for each category varies.
Please contact Doleman Wealth Management, LLC, for more details.

*please see below for important disclosure

There are retirement account risks that could diminish investor returns, such as, but not limited to: low interest rates, market volatility, withdrawal timing and sequence of returns risk, government policy uncertainty and increased longevity. Prospective investors should perform their own due diligence carefully and review the “Risk Factors” section of any prospectus, private placement memorandum or offering circular before considering any investment.

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