A Penny Saved…

Written by: Kristy Kwan, Benefits and Retirement Plan Administrator

We’re all looking for ways to save these days, and one way to do so is to utilize all the tax benefits that the government allows. There are three savings vehicles that you can offer your employees to allow them (and you) to make the most of your hard earned money.

• 529 CollegeBound Fund: this program allows parents to set up a savings account for their child’s future education. Pre-tax payroll deduction can be set up for direct deposit. The money grows tax deferred and is withdrawn federal income tax free! The money can be used for any secondary education tuition and expenses, including community and vocational colleges. If your child decides not to go to school, you can change the beneficiary of the account to any other family member – siblings, parents, cousins – without penalty.
• US Bonds: this is one of the most conservative and easiest ways to save. Fully backed by the US Government, bonds can be bought for as little as $12.50 per paycheck and grow tax deferred until cashed. They can be cashed after just one year and mature after just 5 years. Bonds are exempt from local and state tax – you only pay federal tax when you cash the bond. If the bonds are used for your child’s education, you may even be exempt from federal taxes. Additionally, the interest rates on bonds are guaranteed for 30 years!
• 401k Retirement and Savings Plan: most people know that they can put money away pre-tax for retirement through a 401k. There are a few additional bonuses to keep in mind – MMC also provides a Roth 401k option, which allows you to pay the taxes on your money now, and distribute both your contributions AND the growth on those contributions tax free at retirement! If you need to access your money, it can be taken out through loans, or withdrawn completely for education, medical expenses, or the purchase of a primary residence.

All of the above and more are available to you free of charge* if you are an MMC client. Please call us at (800) 899-6624 if you’d like to learn more, or if you would like to have a representative do a presentation for your employees on any of the above programs.

* for the 401k plan, only the standard adoption (includes Roth 401k option) is free of charge.

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