Determining Your Best Retirement Plans

BY ALAN FRIEDLANDER

Saving for retirement has become one of the hottest topics in America for some good reasons.

Most Americans recognized the risk of relying only on the Social Security and corporate sponsored programs.

Americans also recognize the risks of market fluctuation, The question is, what kind of retirement plan is best?

The answer for many is to start your own Executive Retirement Plan (also called Private Pension Plan). These types of plans have a lot of flexibility.

The interest grows tax deferred and at retirement it can provide an income on which you pay no tax.

Funded by a life insurance policy specifically designed for high cash accumulation, the Private Pension Plan does not need IRS approval or an employer's participation.

While the return and guarantees on your Private Pension Plan will vary with the funding vehicle you and your planner select, it can be safe and pay an excellent return.

In fact, with some plans there are two returns. These are the current return and the lifetime guaranteed minimum return.

The current return is based on how well the stock market does. It is based on the performance of the S&P 500.

Each year the company evaluates the S&P 500 and a portion of its performance is credited directly to your Private Retirement Plan.

We have no guarantees that the stock market will continue to be as kind as it has been lately, so the lifetime guarantee minimum return is a backup.

Regardless of what the stock market does, the private Retirement Plan can be set up to guarantee you'll never earn less than a stated minimum, usually three percent.

With the Private Retirement Plan, you can get the benefit of both worlds.

If the stock market does poorly, you have the peace of mind knowing that your principal is safe and earning at least the guaranteed minimum.

The interest on your money will grow tax deferred. You'll get a statement at the end of the year showing how much interest you earned, but you won't get a 1099. You don't have to pay taxes on the interest you earn until you take it out.

With the correct planning, there is a way to take your money out tax free so you never have to pay taxes! Further, there are no IRS imposed limits on what or at what age the money can be written.

Individuals or companies may use these plans to replace, supplement, or mirror a qualified 401k plan/Roth IRA.

If used in a corporate situation, Private Retirement Plans may supplement the company's top people and reward them for loyalty.

The investor of the company can elect to defer as much income as they want. The company can match a percentage of elective deferrals.

The Private Retirement Plan has no ERISA limits on deferral and contribution amounts.

The company can put any type of vesting schedule they want on the matching funds.

The Select Executive Retirement Benefit is a smart money tool for an individual acting on his/her own part of a company sponsored plans.