Suppose you already know your retirement savings options; congratulations! You’re on your way to a more financially secure retirement. You must continue to save and determine other retirement savings vehicle strategies that may be appropriate for your situation.

This article provides relevant information on five different retirement savings plans to help you understand which may be suitable and additional options to help you save for retirement.

1. Defined Contribution Plans

These allow an executive to delay part of their income until the future, reducing their taxable income now. Deferred comp plans are limited to executives and not all employees. Deferred comp plans also defer taxes on compensation until the executive accesses it later. If the executive leaves the company, the deferred comp plan can transfer into another tax-advantaged retirement savings account. The deferred comp agreement between the executive and their employer generally outlines:

• The amount of income to be deferred may include a portion of salary, bonuses, or other eligible cash payments.
• The deferral period schedule when the executive will take the income and the timeline until it depletes.
• The initial investment including the deferred income and any growth earned. The deferred payment is not placed into an investment strategy but designated for accounting purposes into a portion of the company.

2. Roth IRAs

Roth IRAs fund with after-tax contributions, so you pay taxes upfront. When you take distributions, both the contribution and accumulation are tax-free. Contributions are withdrawn tax and penalty-free for emergencies, home purchases, and more. However, drawing the account’s accumulation before age 59 1/2 will result in a 10% IRS penalty.

Anyone can open a Roth IRA at any age, as long as they have income. But income limits apply for who is eligible to contribute generally vary yearly. Reach out to your financial and tax professionals to determine if you are eligible to contribute and the contribution limits for this year.

3. Traditional IRAs

These fund with pre-tax contributions, which grow tax-deferred. IRA contributions and accumulation are taxed at the owner’s tax rate and are penalty-free if taken after age 59 1/2 when taken as distributions. If distributions occur before age 59 1/2, they tax as ordinary income, and an early distribution penalty of 10% may apply Here are a few more things to know about Traditional IRAs:

• Traditional IRAs have no income limits to contribute
• If you’re eligible for the tax deduction on your contributions, you can claim it whether or not you itemize deductions on your tax return.
• If you participate in your employer’s retirement savings plan, you may not be eligible to contribute to a traditional IRA.

4. A 401(K)

This is a tax-deferred retirement savings plan offered by employers that fund with pre-tax contributions, which grow tax-free. Distributions are taxed at the owner’s tax rate and are penalty-free unless the owner is under age 59 1/2 and will also take an early distribution penalty of 10%.

There is no income limit to participate in a 401(k), but there is a yearly contribution limit. Your financial professional can help you understand your contribution limits and if your 401(k) strategies are appropriate for your risk tolerance, timeline, and goals.

5. Fixed-Indexed Annuities

FIAs are contracts purchased directly from an insurance company or a financial institution. Annuities are bought with a one-time or series of payments over time. A feature of annuities is that they provide income for life and protect against market risk.

All annuities offer tax efficiency while they grow; they lock in gains based on market performance. However, the annuity protects the accumulation and initial investment when the market declines. Another benefit of annuities is that they provide a guaranteed death benefit of the initial investment and can include survivor benefits as a rider for an additional cost.

In Addition

An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.

Now that you know five common types of retirement savings options, a financial professional can help you determine which are appropriate for your situation and align with your retirement savings goals.

In Closing

SWG 2306340-0822a The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

As you grow your wealth, you may find the desire to give back. That’s where charitable giving comes in. Charitable giving can allow you to support causes and organizations you believe in while reducing your income tax, capital gains, and estate taxes. Here are several ways to incorporate charitable giving into your overall financial plan:

Identify Your Giving Goals

There are so many well-deserving causes out there. Take the time to figure out which ones are most important to you and your family. You might choose to support the environment and refugees or medical research, social justice, and the arts. Think about what motivates you and how donating to specific causes reflects your values.

Consider Charitable Tax Deductions

You can deduct charitable gifts on your tax return whether you make a cash gift or donate goods or services. To do so, however, you’ll need to choose a 501c3 tax-exempt organization. Please consult a tax advisor to determine the limits to how much you can deduct and whether it makes sense for you to itemize and lock in the deduction.

Gift Using Life Insurance

Use life insurance to gift by naming a charity as the beneficiary. Often, the strategies you use to transfer wealth, which organizations you want to donate to, and the length of time you want your assets to last is simplified by using life insurance.

Explore Qualified Charitable Distributions (QDCs)

If you’re 70 1/2 years of age or older, you can use a qualified charitable distribution or QCD to donate directly from your IRA to the charity of your choice. Even though the gift amount won’t qualify for a charitable deduction, it won’t count as taxable income and will allow you to simultaneously reduce your taxable income and give back.

Use Donor-Advised Funds (DAFs)

With DAFs, you can immediately donate cash or other assets to a charitable investment account and claim a tax deduction. Since a DAF will grow tax-free, you may choose the fund distributions over time to organizations and causes that mean the most to you. If you time your contributions to coincide with high-income years, you’ll reap the benefits of a larger deduction.

Bunch Your Donations

You may want to bunch your donations in one year instead of skipping one or several years to maximize potential tax deductions. This option is worth considering if your total itemized deductions for a single year fall below the standard deduction. Your itemized deductions may exceed the standard deduction and lower your overall tax burden.

SWG2306340-0722b The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

While there’s no obligation to pay for your child’s or grandchild’s college education. Helping them fund some or all of it can allow them to avoid overwhelming amounts of student loan debt. It can also help them to begin adulthood on the right foot.

Here are some tips if you’re interested in incorporating college planning into your financial plan:

1. Start Early.

Ideally, you’d start saving for your child’s college when they’re born. Before you start a college fund for a baby, sit down and figure out how much money you’ll need to save. Historical data shows that the cost of a college education usually triples over the 17 to 18-year period from birth to college enrollment. Therefore, you’ll want to do some research and find out the average cost of an in-state college and out-of-state college the year your baby is born. Then, take these numbers and multiply them by 3. The figures you come up with will give you a rough estimate of how much college may cost when your child is ready to attend. Remember, you don’t have to cover the entire cost of their education. Even paying for a quarter of it can do wonders for their future.

2. Open A 529 College Savings Account.

529 plans are state-sponsored, tax-advantaged savings accounts designed to help families save for educational expenses. There are two types of 529 plans: prepaid tuition plans, which allow you to buy credit for future tuition at today’s prices, and education savings plans which involve investing money to grow over time. The 529 contributions are invested and grow tax-free until they are needed to cover the beneficiary’s educational expenses.

3. Utilize UGMAs And UTMAs.

The UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act) are custodial accounts created to hold and protect money for minors until they turn the legal age in their state. While they allow stock, bond, and mutual fund investments, they don’t permit higher-risk investments like stocks. Since there are no limits, you can invest as much money as you’d like with these accounts, and be allocated toward anything, not just college expenses. Remember that if you go this route, however, your earnings will be taxed once they exceed $2,100.

4. Open Brokerage Accounts Specifically For College Funding.

If you opt for a brokerage account, you’ll get to invest in anything, including stocks, mutual funds, bonds, currency, or futures, and be able to deposit and withdraw money at any time without penalty. However, the most notable disadvantage to brokerage accounts is that they don’t come with any tax advantages. You’ll be on the hook for paying taxes on any returns you earn. You may also have to make a minimum investment and pay management fees.

5. Use Life Insurance.

If you’re a parent or grandparent, life insurance can be used for funding part or all allowable education expenses without tax consequences, assuming interest applies to the cash value. If the child doesn’t use it for education funding, you give them the gift of life insurance for themselves or their beneficiaries.

6. Invest In Your Child’s Talents.

Whether your child plays sports, dances, or participates in the band or orchestra, investing in these extra-curricular activities can open the doors to financial aid while enriching their life. There are many scholarships, grants, and other opportunities for children with unique talents.

Consult Your Financial Professional

A financial professional can help you save for your child’s college through the strategies that make sense for your unique situation.  Contact us today to get started.

SWG2306340-0722c The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

If you love to travel and immerse yourself in new cultures and experiences, there’s a good chance you’re looking forward to traveling in retirement.

Once you’re out of the workforce, you’ll have more time to visit the places and people you’ve always wanted to see. You can reach your goals by budgeting for travel expenses in your financial plan. Planning for travel helps ensure you have enough financial resources for other costs, can enjoy a quality of life at home, and pay for travel expenses. Here are several tips to help you budget for travel during your retirement years.

Lower Your Retirement Expenses

Even if retirement is years away, it’s a good idea to consider what you might pay for housing, food, health insurance, and other expenses after you stop working. Once you know your monthly expenses, look for ways to lower or cut some of them to increase the amount of money you spend on travel.

Create A Travel Bucket List

Maybe you’d like to travel to a few different states yearly. Or perhaps you hope to explore a new country every few years. Design a travel itinerary for your retirement years with the understanding that it can change due to health concerns, financial emergencies, and other factors.

Research Travel Costs

After you decide where you want to travel to during retirement, create an estimated budget for each trip. You may have to research online or ask a travel professional to understand what specific trips will cost. Don’t forget to include daily expenses such as rides to and from the airport and tickets to museums. You may want to work with a travel professional to make this step easier.

Add Cost Buffers

Once you know how much your dream trips may cost, build a buffer into each trip to account for unexpected expenses. For example, you may budget for a cruise to Europe with everything in one price but decide to enjoy some excursions at the last minute. Wiggle room in your travel budget can be beneficial in situations like this.

Maximize Your Travel Dollars

Since retirement can allow for time and flexibility, you can lower the cost of your trips. To do so, consider traveling during off-seasons or watch for online deals to score the best deals. Another option is to combine trips to save on airfare or visit family and friends to reduce the amount you spend on accommodations. Get creative and make the most out of your travel budget.

SWG 2306340-0722a The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!