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YOUR RETIREMENT PLANNING CONNECTION. ChappelWood. YOUR RETIREMENT PLANNING CONNECTION. 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?.

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Planning for your future l.jpg

YOUR RETIREMENT PLANNING CONNECTION

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?


How do you obtain retirement security l.jpg

YOUR RETIREMENT PLANNING CONNECTION

How Do You Obtain Retirement Security?

  • Start early

  • Maximize pre-tax savings

  • Invest tax deferred

  • Protect against inflation

  • Diversify


Maximize your pre tax savings l.jpg

Monthly Gross Earnings

Pre-Tax Savings

Net Taxable

Spendable Take Home

Tax*

Present Paycheck

$2,250

$0

$2,250

$630

$1,620

Savings with Pre-tax Dollars

$2,250

$225

$2,025

$567

$1,458

Maximize Your Pre-Tax Savings

A $225 retirement savings benefit with only a $162 reduction in spendable take-home pay

* Assumes a 27% tax rate


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YOUR RETIREMENT PLANNING CONNECTION

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

.


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YOUR RETIREMENT PLANNING CONNECTION

A Safe Investment

  • Fixed Annuity

    • Safety of principal

    • Tax-deferred growth

    • Guaranteed minimum interest rate

    • Income you cannot outlive


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YOUR RETIREMENT PLANNING CONNECTION

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


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YOUR RETIREMENT PLANNING CONNECTION

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)


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YOUR RETIREMENT PLANNING CONNECTION

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


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YEAR

DEFERRAL LIMIT

200220032004200520062007

$11,000$12,000$13,000$14,000$15,000indexed

$1,000$2,000$3,000$4,000$5,000indexed

403(b) Contribution Limits

AGE 50+ CATCH-UP


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YOUR RETIREMENT PLANNING CONNECTION

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)


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YOUR RETIREMENT PLANNING CONNECTION

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


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YOUR RETIREMENT PLANNING CONNECTION

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


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YOUR RETIREMENT PLANNING CONNECTION

YOUR RETIREMENT PLANNING CONNECTION

ChappelWood

Why Choose a 403(b)?

YOUR FUTURE IS HERE!

Retirement is sooner than you think ……

are you ready?

  • 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

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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