A 457 Retirement Plan Has 6 Pertinent Things You Should Know About  

Article by Choose a Retirement Plan for a Safe Future.

The SIMPLE 401(k). Designed for small business owners who want to avoid the retirement plan administration or non-discrimination tests that are required with a Traditional 401(k), the SIMPLE 401(k) is available for businesses with less than 100 employees. Like a Safe Harbor 401(k) plan, the business owner must make fully vested contributions (a dollar-for-dollar match of up to 3% of an employee’s income, or a non elective contribution of 2% of pay for each eligible employee.). For 2011, the maximum pretax employee contribution to a SIMPLE 401(k) is ,500, and employees with a SIMPLE 401(k) can’t have another retirement plan with that company.The SIMPLE IRA. This popular option like a SIMPLE 401(k) – a small business retirement plan with mandatory employer and optional employee contributions and a ,500 annual contribution limit. In this plan the one big difference for the business owner is, if the business is not doing well, the owner can temporarily reduce plan contributions. The employer contributions are still 100% vested from the beginning, and ,500 catch-up contributions are currently allowed for employees 50 and older.Times have changed – you can no longer take the retirement planning advice of an investment “guru” as the final word when it comes to your financial retirement planning. You need to educate yourself and take charge of your own money and financial security.In helping their clients prepare for retirement, should advisors look at the so-called retirement products (Pension plans by life insurance companies, mutual funds)? They should look at normal investment products and depending on the age of the customer, park a chunk of the money into equity plans. If a person is retiring in 2-3 years, there is an inherent risk in the aggressive portfolio. They should not consider pension plans from life insurance companies. The plans from mutual fund are slightly better. But the charge structure of the insurance plans offered by mutual funds might hurt.Are IFAs using retirement planning as a theme to talk about retirement and investment products?IFAs don’t have a product to sell other than the Templeton India Pension Plan which has a withdrawal lock-in. Even IFAs who are doing big ticket SIPs are not much focused. I don’t think earmarking for a goal based investment is happening.The answer is to invest your retirement account in a Safe Savings Account that offers you a guaranteed interest rate. A Safe Savings Account is similar to a bank CD or a Annuity in that you safely invest money for a guaranteed interest rate. It is better than a CD or Annuity in that Safe Savings Accounts offer a higher interest rates than CD, TBills, or Mutual Funds without all the money gobbling fees of an Annuity.What makes you different? Why would someone want you to manage their money instead of a neighbor, friend or golfing buddy who does the same thing? Investment products have largely become “commoditized” and offered by everyone. Ed Slott has made a fortune by becoming the IRA-go-to-guy; he is frequently quoted in publications and is considered an expert. Ed has a lucrative practice of advising brokers, and fee-based seminars and referrals. Someone else could have filled such a position, but Ed was first and will probably not be replaced. You could become the retirement plan specialist in your county or the retirement specialist that is referred by accountants and lawyers.An important first step in early retirement planning is to have a goal in mind. If you goal is to retire living the same lifestyle that you are living at the time of your retirement, then you need to figure the annual expenses involved to live that lifestyle and how much income you need to cover those expenses, and multiply that number by the number of years of your life expectancy. Don’t forget to account for inflation