When it comes your retirement, the earlier you start planning for it, the better off you’ll be. And that’s where it pays to be S.M.A.R.T! This acronym stands for a supplemental retirement savings program that offers a convenient way to Save Money And Retire Tomorrow
The SMART Plan is authorized under section 457 of the Internal Revenue Code (IRC). Section 457 programs, commonly called 457 deferred compensation programs, allow eligible employees to save and invest before-tax and after-tax dollars through salary deferrals.
1. You decide, within IRC limits, how much of your income you want to defer.
2. You decide whether to contribute on a before- or after-tax (Roth) basis.
3. Your contributions will be invested, per your instructions, in the investment options offered under the SMART Plan.
4. Saving through the SMART Plan on a pre-tax basis may reduce your federal income tax responsibility.
Remember: Distributions from a before-tax SMART Plan account will be taxed as ordinary income in the year the money is distributed. Distributions of any earnings from an after-tax SMART Plan account will be taxed as ordinary income if you have not contributed to a Roth account for more than five tax years. Account values fluctuate with market conditions, and when surrendered, the principal value may be worth more or less than the original amount invested.
If your retirement plan consists of spreadsheets you double-check every other week it might be time to get a professionally crafted retirement income plan. At Chris Egan Financial, we’ll take the guesswork out of the process and work to create a SMART retirement plan the works best for you. Find out more by giving us a call today.
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