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YOUR RETIREMENT PLANNING CONNECTION

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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
YOUR RETIREMENT PLANNING CONNECTIONPlanning 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
YOUR RETIREMENT PLANNING CONNECTIONHow Do You Obtain Retirement Security?
  • Start early
  • Maximize pre-tax savings
  • Invest tax deferred
  • Protect against inflation
  • Diversify
maximize your pre tax savings
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

why diversify
YOUR RETIREMENT PLANNING CONNECTIONWhy 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

.

a safe investment
YOUR RETIREMENT PLANNING CONNECTIONA Safe Investment
  • Fixed Annuity
    • Safety of principal
    • Tax-deferred growth
    • Guaranteed minimum interest rate
    • Income you cannot outlive
what is a 403 b plan
YOUR RETIREMENT PLANNING CONNECTIONWhat 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
benefits of a 403 b plan
YOUR RETIREMENT PLANNING CONNECTIONBenefits 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)
tax law changes
YOUR RETIREMENT PLANNING CONNECTIONTax 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
403 b contribution limits
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

catch up provisions
YOUR RETIREMENT PLANNING CONNECTIONCatch-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)
15 years of service catch up example
YOUR RETIREMENT PLANNING CONNECTION15 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
why choose a 403 b
YOUR RETIREMENT PLANNING CONNECTIONWhy 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
why choose a 403 b14
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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