Michael Drews and Company

Retirement Planning

It is never too early to start planning for retirement. If you want to live the same lifestyle--or an even better one--than you do now, you need to start planning for retirement as early as possible. Michael Drews, CPA can analyze your projected income and expenses and suggest investment funding techniques to help you make sure that your golden years 10, 20, and even 50 years from now live up to your expectations. Michael can even help you decide on the specific investments to make.
If you’ve changed jobs or are retiring, rolling over your retirement assets has tax implications if not done correctly. Michael educates and assists his clients in transferring assets easily with the purpose of maintaining tax-deferred growth. Done correctly, a rollover is a non-taxable event and gives you access to a wide range of investments. Benefits Include:

  • Your retirement savings continue to grow tax-deferred.
  • You gain greater control over your retirement assets.
  • You may enjoy a wider range of investment options.
  • You can simplify your financial life by consolidating your
    retirement savings into a single IRA.
  • You can have greater control control over withdrawals and
    distributions.

401(k)s

The most popular retirement plan in America, the 401(k) plan is named after the IRS code section creating it. Like most things, the 401(k) plans of today are vastly different from the 401(k) plans of even just 10 years ago. Previously, 401(k) plans were only for the very largest corporations as the plan administration costs were prohibitive for smaller companies. Today, there are various types of 401(k) plans, including “safe harbor” plans which do not require annual testing and the “solo” or “single” 401(k) plans designed for just a few employees. These plans are inexpensive to administer and offer the same tax benefits of the larger plans. Perhaps the biggest change is the introduction in 2006 of the Roth 401(k). This feature allows participants to invest their funds in tax-free “Roth” accounts. In fact, participants can mix and match which portion of their retirement contribution goes into a traditional tax-deferred account and which goes to the tax-free Roth account.


A SEP-IRA (Simplified Employer Pension) allows a company to defer up to the lesser of 25% or $45,000 of an employee’s salary (deferral amount is for 2007). As with all qualified accounts, the money is a pre-tax contribution and the account grows tax-deferred until distributions are taken.



A drawback to SEP-IRAs is the requirement that the company must contribute the same percentage of each employee’s salary (given that the employees meet certain criteria relative to length of service and hours worked). Therefore, a SEP is a good solution if you are self- employed or if the business owner is comfortable making equal contributions, on a percentage basis, for all of its employees.


If your company employs fewer than 100 people and is considering adding a qualified retirement plan (pre-tax contributions and tax-deferred growth), a SIMPLE-IRA Plan (Savings Incentive Match Plan for Employees) is one of the most hassle-free and inexpensive means of doing so. SIMPLE Plans are certainly not a misnomer. From an administrative aspect, implementing a SIMPLE plan couldn’t be easier.



IRAs

An IRA is a personal savings plan that provides income tax advantages to individuals saving money for retirement purposes. The Individual Retirement Account brings together two powerful forces, both of which benefit you: 1) tax-deferral, and 2) tax savings. If you have money that you can afford to invest for the long term, there's really no reason not to open an IRA. Any individual can open and make contributions to a traditional or Roth IRA, as long as you, or your spouse (if you file a joint return), received taxable earned compensation during the year and you were not 70 ½ years old by the end of the year.


Defined Benefit Plans provide small business owners with a means of deferring more income than 401K, SIMPLE and SEP-IRA plans. These plans are being implemented less frequently by big businesses, but they are growing in popularity with certain types of small businesses, such as law firms, medical practices and consulting firms. If you have a limited number of employees and wish to defer amounts in excess of $50,000, it may be a solution worth considering.

Both Qualified Plans and IRAs typically involve fees, expenses and services that should be compared when considering a qualified plan rollover.

Michael Drews is a registered representative with the following registrations [6 & 7] and can transact business with clients in California.  Michael Drews is also an investment adviser agent licensed in California.  If you are not a resident of the state noted above, all investment-related information on this site is for informational purposes only and does not constitute a solicitation or offer to sell securities or investment advisory services over the internet.

 

Securities offered through HD Vest Investment ServicesSM, Member SPIC, Advisory Services offered through HD Vest Advisory ServicesSM, 6333 North State Highway 161, 4th Floor, Irving, Texas 75038, 972-870-6000.

 
Michael Drews and Company is not a registered broker/dealer or independent investment advisory firm.
 
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