Myers Financial Services

An annuity is an investment contract or policy between you and a life insurance company. Annuities can be a useful tool for retirement planning. Annuities enable you to save money on a tax-deferred basis. You will not pay taxes until you begin to withdraw your money. Unlike a 401(k) or IRA, there are no limits on the amount you can put into an annuity. Some annuities include an insurance component. If you die before you start to collect on the annuity, it pays your heirs the amount you invested plus interest or the market value of the funds in your account, whichever is more. You can purchase a contract that provides lifelong income or one that pays you for a specific time. Payments can be monthly, quarterly, semiannually or annually at a designated time. You determine how much you want to invest in an annuity and the amount of investment risk you are willing to take. If you put your money into a variable annuity, your premiums can be invested in stock or bond funds. There are no tax consequences if market conditions prompt you to change how your balances are invested. You can also change from one fund to another without tax consequences. If you don't want to deal with the ups and downs of the stock market, you can invest your money in a fixed annuity, which would offer you a specific rate of return.

Fixed

This provides a stable, guaranteed rate of return.

Variable Annuity

The annuity is invested in the stock or bond market. As a result, you assume some financial risk in return for a potentially higher economic reward.

A mutual fund is an investment that allows a group of investors to pool their money and hire a portfolio manager. The manager invests this money (the fund’s assets) in stocks, bonds or other investment securities (or a combination of stocks, bonds and securities). The fund manager then continues to buy and sell stocks and securities according to the style dictated by the fund’s prospectus. There are many reasons to buy a mutual fund. While there are a plethora of investment options (individual stocks, ETFs and close-end funds, to name a few) a mutual fund can offer a simple, efficient way to invest for retirement, education or other financial goals.

Term

Term life insurance is the most affordable type of life insurance available. It is designed to meet temporary life insurance needs; providing protection for a specified period of time, the term. This type of life insurance makes sense if you have financial needs that will diminish over time, such as a home mortgage or a child's tuition. Each year, a premium is paid to cover the risk of death during that year. Term life insurance has no cash value. The only way to collect anything is to die before the term life insurance expires. If death occurs, the life insurance beneficiary generally collects the death benefit of the life insurance policy, free of income tax.

Permanent

Permanent life insurance provides lifelong protection. Permanent life insurance is also known as whole life insurance. This type of life insurance policy never ends as long as the premiums are paid. In addition, permanent life insurance provides a savings element that accumulates a cash value over a long period of time. The growth in cash values is tax-deferred under current federal income tax law. Premiums stay level throughout the life of the policy. Life insurance proceeds are generally income tax free to the beneficiary. Ask us to learn more about the benefits of permanent life Insurance.

401(k)

A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.

401(a)

A money-purchase retirement savings plan that is set up by an employer. The 401(a) plan allows for contributions by the employee, the employer, or both. Contribution amounts, whether dollar-based or percentage-based, eligibility, and vesting schedule are all determined by the sponsoring employer. Funds are withdrawn from a 401(a) plan through lump-sum payment, rollovers to another qualified plan, or through an annuity.

403(b)

The 403(b) plan is a type of qualified retirement plan offered to employees of non-profits, educational institutions, and some self-employed ministers. The 403(b) plan is often compared to a 401(k) plan because it shares many of the same characteristics, withdrawals, contribution limits, tax rules, and investment choices.

457(b)

A 457(b) plan is a non-qualified, tax-deferred compensation plan that works very much like other retirement plans such as the 403(b) and 401(k). There are public plans set up by state and local government for their employees. There are private plans set up by tax-exempt organizations that are non-governmental.

Traditional IRA's

Traditional IRAs are tax deductible contributions (depending on income level).Withdraws begin at age 59 1/2 and are mandatory by 70 1/2.Taxes are paid on earnings when withdrawn from the IRA. Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.) Traditional IRAs are available to everyone; no income restrictions. All funds withdrawn (including principal contributions) before 59 1/2 are subject to a 10% penalty (subject to exception).

ROTH IRA's

Roth IRA Contributions are not tax deductible. There is no Mandatory Distribution Age. All earnings and principal are 100% tax free if rules and regulations are followed. Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.). Roth IRAs are available only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).

Solo or Single 401(k)

A Solo 401k may be well suited for the self employed business owner who would like to maximize their retirement contributions or who would like to borrow from their retirement plan using their 401k balance as collateral via a tax free Solo 401k loan.

SEP IRA

The SEP IRA is a retirement plan designed to benefit self employed individuals and small business owners. Sole proprietorships, S and C corporations, partnerships and LLCs qualify. A SEP IRA has broad appeal due to its high annual contribution limits, completely discretionary and flexible annual contributions and minimal administration. SEP IRA plans can be established by a one person business or by a business owner with employees.