Florida Retirement Plans
What’s Your Investment Plan Preference?
A 403(b) or a 457(b) Retirement Plan?
Through Lincoln Investment, the advisors at Gulf Coast Educators Wealth Management offer many financial products to help educators invest in their future retirement. We have experienced and knowledgeable financial professionals available to explain all of the ins and outs of each of the different types of financial services that we offer. A sample of the investment plans available for educators includes the 403b investment plan and the 457(b) investment plan.
The 403b investment plan is a retirement plan for public school employees, tax-exempt organizations, and ministers. There are different types of 403b plans available. They include:
•An annuity contract provided by the insurance company
•A custodial account
•A retirement account income
An employee’s payment to the plan is made before income tax is paid. The money is taxed as income when it is withdrawn from the plan. Another benefit of this plan is tax-deferred earnings on plan contributions and the ability to take loans from a 403b account. Withdrawals are taxed as ordinary income in the year received. Tax penalties and penalties for early withdrawal may apply if funds are withdrawn prior to age 59 ½.
With a 457(b) plan, you select a portion of your income to be put into a tax-deferred savings plan. This plan has a pre-set selection of investment choices but you decide where you want to invest your contribution based on the options provided. There are advantages to this investment plan such as:
•Your contributions and earnings are tax-deferred
•Your money has the opportunity to grow because of time and compounding
•You can make an emergency withdrawal as long as you meet the criteria
•Your account is protected by law from anyone taking control of your assets including your employer-provided you have certain exemptions
•You may be able to take a tax credit for elective deferrals
A 457(b) plan is not subject to the age 59 1/2 withdrawal rule. This means there is no 10% penalty for early withdrawal at retirement or upon termination of employment. Note: This benefit applies only to public (governmental) plans. Private plan participants generally will pay federal income taxes when funds are made available to them. They may, however, defer receiving funds and instead be taxed when they actually take a distribution.
Gulf Coast Educators Wealth Management has retirement planning specialists available to answer any questions you may have about the array of financial products that we offer.