your retirement planning connection

YOUR RETIREMENT PLANNING CONNECTION

ChappelWood

http://www.utaic.com/index.asp

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?

• Start early• Maximize pre-tax savings• Invest tax deferred• Protect against inflation• Diversify


Maximize Your Pre-Tax Savings

Monthly Gross Earnings

Present Paycheck

Pre-Tax Savings

Net Taxable

Spendable Take Home

Savings with Pre-tax Dollars

Tax*

$2,250

$2,250 $225 $2,025 $567 $1,458

$0 $2,250 $630 $1,620

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

* Assumes a 27% tax rate

.

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


A Safe Investment

• Fixed Annuity– Safety of principal– Tax-deferred growth – Guaranteed minimum interest rate – Income you cannot outlive


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


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)


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• MEA calculation is repealed• Increased contribution limits in 2002 and beyond• Catch-up provisions • Portability rules eased• Purchase of service credits• Tax credit for low and middle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


403(b) Contribution Limits

AGE 50+ CATCH-UPYEAR DEFERRAL LIMIT

200220032004200520062007

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

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

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)


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


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



ChappelWood

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


YOUR FUTURE IS HERE!Retirement is sooner than you think …… are you ready?

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.

http://www.utaic.com/index.asp

your retirement planning connection

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