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YOUR RETIREMENT PLANNING CONNECTION ChappelWood. Planning for Your Future Why is it important to participate in a retirement plan? What is a 403(b) retirement.

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Presentation on theme: "YOUR RETIREMENT PLANNING CONNECTION ChappelWood. Planning for Your Future Why is it important to participate in a retirement plan? What is a 403(b) retirement."— Presentation transcript:

1 YOUR RETIREMENT PLANNING CONNECTION ChappelWood

2 Planning for Your Future Why is it important to participate in a retirement plan? What is a 403(b) retirement plan? How does a 403(b) benefit me? How do the tax law changes affect me? YOUR RETIREMENT PLANNING CONNECTION

3 How Do You Obtain Retirement Security? Start early Maximize pre-tax savings Invest tax deferred Protect against inflation Diversify YOUR RETIREMENT PLANNING CONNECTION

4 Maximize Your Pre-Tax Savings Monthly Gross Earnings Present Paycheck Pre-Tax Savings Net Taxable Spendable Take Home Savings with Pre-tax Dollars Tax* $2,250 $225$2,025$567$1,458 $0$2,250$630$1,620 A $225 retirement savings benefit with only a $162 reduction in spendable take-home pay * Assumes a 27% tax rate

5 . Why Diversify Don’t get caught timing the market or chasing what’s hot today–have faith in your long-term plan One year’s market leader may be next year’s market straggler Diversification allows you to participate in the market’s upside, while protecting your portfolio on the market’s downside YOUR RETIREMENT PLANNING CONNECTION

6 A Safe Investment Fixed Annuity –Safety of principal –Tax-deferred growth –Guaranteed minimum interest rate –Income you cannot outlive YOUR RETIREMENT PLANNING CONNECTION

7 What is a 403(b) Plan? A 403(b) plan is a long-term retirement savings program Contributions are made via salary deferral, reducing your current taxable income The pre-tax contributions and earnings grow tax deferred YOUR RETIREMENT PLANNING CONNECTION

8 Benefits of a 403(b) Plan Contributions can be increased, decreased or completely stopped at any time You have full investment control over your contributions You can take low interest loans from your 403(b) contract You can make a financial hardship withdrawal (subject to the pre-59½ penalty for early distributions and IRS regulations) YOUR RETIREMENT PLANNING CONNECTION

9 Tax Law Changes MEA calculation is repealed Increased contribution limits in 2002 and beyond Catch-up provisions Portability rules eased Purchase of service credits Tax credit for low and middle income savers Ability to contribute the maximum amount to both a 403(b) and 457 plan YOUR RETIREMENT PLANNING CONNECTION

10 403(b) Contribution Limits AGE 50+ CATCH-UP YEARDEFERRAL LIMIT $11,000 $12,000 $13,000 $14,000 $15,000 indexed $1,000 $2,000 $3,000 $4,000 $5,000 indexed

11 Catch-up Provisions Can contribute an additional $1,000 if age 50 and over 15 years of service with same employer (example on next slide) For 2002, with 15 years of service and age 50 and over, may be able to contribute $15,000 ($11,000 + $3,000 + $1,000) YOUR RETIREMENT PLANNING CONNECTION

12 15 Years of Service Catch-up Example Sally has taught in ABC District for 15 years –Sally has contributed $65,000 –If she would have contributed the catch-up base amount of $5,000 per year x 15 years = $75,000 –Subtract actual contributions from catch-up base amount ($75,000 - $65,000 = $10,000 available for service catch-up) –For 2002 she can contribute an additional $3,000 YOUR RETIREMENT PLANNING CONNECTION

13 Why Choose a 403(b)? To save on a pre-tax basis To save via salary deferral To have access to your money because of a financial hardship or from a loan Flexible payout options at retirement Guaranteed death benefit YOUR RETIREMENT PLANNING CONNECTION

14 ChappelWood Why Choose a 403(b)? To save on a pre-tax basis To save via salary deferral To have access to your money because of a financial hardship or from a loan Flexible payout options at retirement Guaranteed death benefit YOUR RETIREMENT PLANNING CONNECTION YOUR FUTURE IS HERE! Retirement is sooner than you think …… are you ready? ChappelWood Financial Services invites you to learn how to financially prepare for retirement with a 403(b) retirement plan. Representatives will be at Columbus on October 24, 2002 Register for a free prize and learn how you can plan for today's needs and tomorrow's dreams.


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