Retirement Planning

In the past, it may have made sense to count on the "3-legged stool" of Social Security benefits, employer pension plans and personal savings to support your retirement.

Today, the futures of Social Security and pension plans are increasingly uncertain, and the one leg left standing could turn out to be your personal savings.

Are you prepared for that?  At F.R. Owen & Associates, we firmly believe you should be.

That's why we give your retirement strategy the care and attention it deserves.  We know it's tough to save these days and to invest those savings wisely.  We also know how important it is to minimize your tax liability. 

So, we're committed to helping you overcome the challenges to saving and investing for a more promising retirement.  Beyond a 401k and every step of the way.

A Brief Word on 401k Plans

Since 401k plans are implemented by employers, you may not think to seek out guidance from a financial advisor about your company's 401k.  But, it's important to do so because many plans allow you to choose your own investment mix.  F. R. Owen & Associates can help you make sound strategic choices for your 401k plan.  And, if you don't have a company 401k, our team can guide you to individual retirement plans that meet your needs.

403b Plans (Tax-Sheltered Annuities)

As a tax-deferred investment, 403b accounts are available for employees of educational systems and non-profit organizations.  Contributions are deducted from gross earnings and reduce your taxable income.  And, this is great way to save for retirement because it takes less of your net income than many other investments do.  For example, tax-payers in the 28% federal tax bracket who contribute $100 per paycheck to a 403b will only see a $70 reduction in net pay. 

For the tax year 2006, an eligible employee under age 50 can shelter $15,000 through a payroll reduction plan.  If over age 50, an additional $5,000 can be sheltered as well.  In some cases, employees with more than fifteen years of service with the same employer could shelter an additional $3,000 for up to 5 years.  Altogether, that adds up to as much as $23,000 in 2006.

457 Plans

457 plans are available for employees of government agencies and various non-profit organizations.  They offer tax deductible contribution, tax deferred growth and taxable distribution. Some organizations can have 457 and 403b plans side-by-side, and eligible employees can contribute fully to both.

For 2006, voluntary annual contributions up to $15,000 can be made through salary deduction by employees under age 50.  For individuals over age 50, catch-up contributions of $5000 per year are also permitted.  If permissible under your 457 plan, distributions can be rolled into other 457 plans, 403b, 401k and IRAs.

Securities and insurance products can also be used to fund 457 plans. All mutual funds, annuities and insurance products are offered by prospectus only, so obtain a prospectus and read it carefully before you invest.

Traditional IRAs (Individual Retirement Accounts)

Traditional IRAs are one of the few investment vehicles that continue to grow tax-deferred until funds are withdrawn.  By placing money into a number of investments, interest accrues and provides you with income upon retirement.

For the 2006 tax year, based on income levels, an individual under age 50 can contribute and deduct as much as $4,000.  If over age 50, an additional $1,000 can be contributed, for a total of $5,000.  Tax deductibility depends upon your income and employment status.  Consult your tax advisor to determine the tax deductiblity of your contributions.

And remember, IRAs have been specifically developed for retirement and should not be used for short-term savings goals.  For information about how the Economic Growth and Tax Relief Reconciliation Act of 2001 effects your IRAs, please contact us.

Roth IRA

A Roth IRA allows taxpayers, subject to certain income limits, to save money for retirement while the account grows tax-free.  Although contributions are made with after-tax income, any interest earned on a Roth IRA is not taxed, making the Roth IRA an appealing investment for those seeking tax-free interest and dividend payments.  Withdrawals are tax-free after the later of five years from the time the account was established or age 59 & 1/2.

For the 2006 tax year, based on income levels, an individual under age 50 can contribute and deduct as much as $4,000. If over age 50, an additional $1,000 can be contributed, for a total of $5,000.  Tax deductibility depends upon your income and employment status.  Consult your tax advisor to determine the tax deductiblity of your contributions.