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YOUR RETIREMENT PLANNING CONNECTION

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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YOUR RETIREMENT PLANNING CONNECTION

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  1. YOUR RETIREMENT PLANNING CONNECTION ChappelWood

  2. 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?

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

  4. 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

  5. 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 .

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

  7. 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

  8. 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)

  9. 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

  10. 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

  11. 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)

  12. 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

  13. 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

  14. 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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