How do I save for my retirement years?

Traditional employer-sponsored pension plans were and often continue to be based upon defined contributions or defined benefits that are not nearly sufficient for a retired couple to survive retirement without making drastic adjustments to its living standard. Nor is social security (even if it survives as a concept for the future) designed to award people the approximately 75% – 85% of annual pre-retirement income that is necessary for the task. What must we do to survive retirement?

Americans must increasingly rely upon personal retirement savings, investment and budgeting plans. There is no choice but to use those tax-deferred and tax-free retirement savings tools that the government has provided to the public: IRAs (Roth and traditional) 401(k) plans, 403(b) tax-sheltered annuities available to employees of charitable institutions, 457 retirement annuities available to state and municipal employees; and SEP and SIMPLE plans available to small businesses.

Providence IRA annuities (currently paying 4.75% interest) can be used to fund any of these pension funds (with the exception of employer sponsored plans that allow for no discretion in fund selection). Providence IRA annuities are also available for a safe professional rollover from other qualified plans. Your Providence professional can make the appropriate arrangements.

Once the investor reaches the maximum allowable contribution limit in any given qualified pension plan, he should turn to personal annuities (such as Providence’s) to supplement retirement savings. Annuities afford full tax-deferral and taxation only of interest (not principal) at the time of any withdrawal.

Plan for Retirement

An individual Retirement Account (IRA) is one of the best and easiest ways to save for the future. IRA’s have been greatly enhanced by new legislation that brought significant changes to Traditional and Roth IRA’s. For example, aggregate IRA contribution limits have been increased, from $4,000 for the year 2007 to $5,000 for the year 2008. As in the past, persons age 50 and over can make annual $1,000 extra contributions. These maximum contribution limits will automatically increase beginning on January 1, 2009.

Income earning spouses may contribute in identical amounts to spousal IRAs for their spouses working inside the home. Thus, it is imperative that the family contribute into spousal IRAs just as much and as often as they contribute into the wage-earner spouse’s IRAs.

Similarly, the Adjusted Gross Income levels for active participants of employer sponsored retirement plans and their spouses have increased. Beginning in 2008 unmarried individuals participating in employer plans may make full tax-deductible contributions, if they earn less than $53,000 (Note: deduction is prorated for income levels between $53,000 and $63,000). The AGI limit for married spouses is $85,000 with prorated limitation amounts to $105,000. 

Depending on the type of IRA one chooses, the interest earned may either be tax-deferred or tax free and the contributions made may even be tax-deductible (Consult your tax advisor to determine your opportunities). The effective growth rate (up to 7.79%) of a 4.75% tax-deferred or tax-free IRA  annuity, as offered by Providence, guarantees a rapid accumulation and compounding of savings. The absence of any loads (administrative fees or charges) makes sure that every dollar invested with Providence works for the client.

Traditional IRA’s

A traditional IRA allows an investor to deduct all or part of his IRA pension contribution directly from taxable income. No taxes need to be paid on the interest earned on an IRA, until the client withdraws funds. Penalties may be imposed for early withdrawals (before age 59.5); however, tuition costs, long-term disabilities, a first time home purchase, and/or catastrophic medical expenses qualify depositors for early uses of funds.

Roth IRA’s

Eligible taxpayers can make nondeductible contributions to a Roth IRA which features completely tax-free qualified withdrawals. Penalty-free early withdrawals are available for tuition and qualified first-time home purchasers. Unlike the case with Traditional IRAs, an investor can make contributions beyond the time of his age 70.5. Nor must he make forced withdrawals from Roth IRAs.

Wage-earners can make non-deductible Roth IRA contributions, so long as their earnings, combined with spousal earnings do not exceed $159,000 ($101,000 for single persons), even if there is participation in an employer sponsored pension plan.

Leaving Your Job? Providence arranges and accepts 401k, 403(b), 457 and other qualified pension plan Rollovers.

For those who are leaving or retiring from a job, choosing what to do with a retirement plan payout is critical. Current IRS laws make the choices more complicated and critical: Upon leaving a job with a 401k or similar retirement savings plan, a 20% federal tax withholding requirement (or even a penalty) is levied against any payout not transferred into an IRA or a new employer’s pension plan. Happily, Providence can arrange for a tax and penalty free rollover of its clients monies.

Annuities Offer Supplemental Tax-deferred Savings Opportunities

Those who do not qualify for an IRA, or who wish to enhance retirement savings with additional monies, should open a Providence Annuity. This will save on taxes and still earn our high current yield of 4.75%. Annuity plans supplements IRA and other pension savings. The federally approved tax deferred features of annuities afford major investment advantage for the young and for retired pensioners.

Need to diversify your pension savings away from stocks and stock mutual funds? Call Providence.

The extreme volatility and uncertainty of domestic and international stock markets have forced many to seek out interest-based guaranteed income opportunities. Providence Annuities and IRA annuities are exactly what investors must consider to diversify their portfolios. Whether your pension fund is invested in IRAs or personal annuities, Providence can readily arrange for tax and penalty-free rollovers and transfers from those funds into its funds.

How do I learn more about Providence Annuities and IRAs ?
Visit our website at: www.provassn.com, call 1.877.857.2284 (toll free), or email: eluciw@provassn.com