Getting Started What is a 457 plan? Section 457 of the Internal Revenue Code It can help you save...
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Transcript of Getting Started What is a 457 plan? Section 457 of the Internal Revenue Code It can help you save...
Getting Started
What is a 457 plan? Section 457 of the Internal Revenue Code It can help you save and invest extra
retirement money. You can voluntarily set aside some of your
income before you pay current taxes! In 2014, you can contribute 100% of your
includible compensation or $17,500 (whichever is less).
Enroll today. It’s that simple!
Reasons to Enroll Now
Easy enrollment and savings
Tax-deferred savings Investment options Convenient account management Personal and professional
service Savings and
investment education
*This hypothetical illustration assumes a 3.5% rate of inflation for 20 years.5 Source: http://trends.collegeboard.org/college-pricing/figures-tables/average-published-undergraduate-charges-sector-2013-14, “Average Published Undergraduate Charges by Sector.”
Start Saving Now for Your Future What can time do?
Whatever your goals are, they’ll probably cost more in the future than they do today.*
American home $260,000
Item Typical Cost in 2013Typical Cost in 2030
Pound of coffee
Women’s blue jeansTuition per year for public four-year college or university
New automobile
$78
$8,6465
$5.65
$27,250
$541,223
$155
$11,612
$10.94
$54,222
35 years25 years15 years
$58,902
$229,388
$18,295
$95,095
$34,604
Sarah
David
The Cost of Waiting to Save and Invest7
Journey to Retirement
Start now, don’t wait. Investing wisely and setting realistic goals are key to
successful saving. Starting today can make a big difference.
7 For illustrative purposes only. This hypothetical illustration assumes an 8% annual rate of return, compounded monthly, with no withdrawals or fees taken into account. If such fees were deducted, tax-deferred accumulations would be reduced. This is not intended to represent any particular investment.
The Power of Before-Tax Saving
*This hypothetical illustration assumes $2,000 in monthly wages, 15% federal income tax withholding and 4% state and local income tax withholding. It does not account for Social Security or Medicare tax.
SavingsBefore Tax
Gross Pay $2,000 $2,000Less: Contributions to Plan (Before Tax) -$100 0Taxable Pay $1,900 $2,000Less: Estimated Tax Withheld -$361* -$380*
Spendable Pay $1,539 $1,520
By contributing before tax in this Plan, Sarah has $19 more to spend (or save!) each month compared to saving after taxes—which translates into $228 more per year!
SavingsAfter Tax
Before-Tax Advantage None$19
Less: Contributions to Other Savings Plan (After Tax) -$1000
The Power of Before-Tax Saving
8 For illustrative purposes only. This hypothetical illustration assumes a $100 monthly contribution with an 8% annual rate of return, compounded monthly, and 25% federal tax, with no withdrawals or fees taken into account. If such fees were deducted, tax-deferred accumulations would be reduced. This is not intended to represent any particular investment..
$36,000
$59,295
$24,000
$46,732
Savings after 30 years
Savings after 20 years
$12,000$16,517
$18,417
Savings after 10 years
Tax deferred 8% return
Taxable 8% return
Taxable 0% return
$102,000
$150,030