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If you’re an employee, you may have access to a convenient, tax- advantaged retirement savings program that was created to help you prepare for your financial future. Here’s how contributing to an employer- sponsored retirement plan may be a smart move: 

1. Pre-tax Savings: By deferring compensation into an employer- sponsored retirement plan, you realize immediate tax savings on your contributions. Before any taxes are taken out, your paycheck is reduced by the amount you decide to invest. Therefore, your total taxable income is less.

2. Tax-deferred treatment of earnings: Taxes on any investment earnings in a retirement plan account are deferred. This way you don't pay taxes on anything your deferred compensation earns until it’s distributed.

3. Built-in dollar-cost averaging:  Since the amount you contribute is deducted from your paycheck at regular intervals, dollar-cost averaging is built into your investment plan. Over time, the average amount paid (average cost) for each share may be less than the average price per share.

4. Matching employer contributions: Your employer may elect to match a certain percentage of your plan contributions. This can be a major incentive to participate, as the amount your employer contributes to your account is money you receive above and beyond your regular salary.

5. Variety of investment options: Plan participants can choose from a wide variety of investment options, and you can change your investment mix as your needs change.

6. Access to your savings: Some plans offer a loan provision that enables participants to borrow from their account for certain types of expenses, with principal and interest paid back into the account. In addition, a provision for early withdrawals allows for restricted access to assets prior to separation from service.

Please feel free to contact the office any time to discuss contributing to, or increasing your contributions to your employer-sponsored retirement plan.

For more information contact Gary Padussis AIF® RFC® RFP® NSSA® at info@capeim.com or (609) 884-8085.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.

Dollar cost averaging will not guarantee a profit or protect you from loss, but may reduce your average cost per share in a fluctuating market.

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