Dearborn & Creggs offers Educational Workshops for your team. Client presentations are designed to raise your awareness about the issues behind planning for a long and comfortable retirement. Review this list and request a speaker.
- Teacher Retirement System (TRS) and Social Security
- Basics of Investing
- College Funding Strategies
- Eldercare Planning
- Federal Student Aid Loan Forgiveness
- Identity Theft
- Managing Credit
- Pre–Retirement Planning
- Retirement Planning Made Easy
- 403(b) Plans: Traditional and Roth
- Wealth Management
- Women and Investing
Employee Retirement Plans
Look here often for items that can help you set up and maintain your employee retirement plans.
- For 403(b) Plan Sponsors: Be Aware of Common Mistakes
This IRS publication can help you, as a 403(b) Plan sponsor, be complaint with the law, maximize your employees' retirement benefits and avoid additional taxes and penalties.
- For 403(b) Plan Participants: Be Aware of Common Mistakes
Alert your 403(b) plan participants about this IRS publication that helps them be complaint with the law, maximize their retirement benefits and avoid additional taxes and penalties.
- IRS 403(b) Plan Checklist
It's always a good idea to review the requirements for operating your 403(b) retirement plan each year. Use this IRS checklist to help you keep your plan in compliance with many of the important rules.
- IRS Retirement Plan Products Navigator
This IRS publication outlines resources you can order from the IRS to help you choose and maintain the right retirement plan for your small business.
Why Tax Deferred Plans?
Tax-deferred plans are designed to minimize or – in some instances – eliminate the federal taxes due on income received or on wages paid.
How They Work
Participants set aside money for retirement on a pre-tax basis through a salary reduction agreement with the employer. Within the limits established by law, no federal income taxes are withheld from the amount of the contribution. Participants may select from among various vendors offered by the employer when deciding where the money is to be invested. The money grows tax-deferred until withdrawn.
Following are some of the benefits that may accrue to both the employer and employee through the implementation of tax-deferred plans:
- Lower Taxes
By contributing on a pre-tax basis, participants in a tax-deferred plan may greatly reduce their current tax bill.
Generally, a contribution of $100 monthly to a tax-deferred plan may reduce one's current federal tax bill by $25 – assuming the participant is in a 25% tax bracket.
In essence, the participant is buying $100 for $75. It must be noted that this illustration does not take into consideration the participant's filing status, dependents and deductions. It should also be noted that the tax-deferred savings significantly increase as the amount of the contribution increases.
- Earnings Are Tax Deferred
One of the greatest single advantages of participating in a tax-deferred plan is that all dividends, interest, capital gains and growth accumulate on a tax-deferred basis while the money remains in the account. This translates into more dollars working for the participant which, in turn, may lead to larger growth potential.
- Investment Discipline
Through systematic payroll contributions, the employee develops a strong investment discipline. Investing becomes automatic, makes saving for retirement easy and eliminates the temptation to skip a contribution. Participants are less likely to miss the money once the first contribution is deducted.
Another benefit derived from an automatic savings program is the application of the "dollar cost averaging" concept which provides the investor with a hedge against market and share-price fluctuations. We emphasize, however, that a plan of regular investing does not assure a profit or protect against a loss during a declining market.
- Loan Privileges
Many tax-deferred plans have a loan provision that enables participants to borrow money from their account. Loans are not treated as distributions (withdrawals) and, therefore, are not subject to federal taxes and penalties. Of course, failure to repay the loan within the terms of the loan may result in the payment of current taxes and penalties.
None of the information in this document should be considered tax or legal advice. You should consult your legal or tax advisor for information concerning your individual situation.