Investment Vehicles

Long-term plans can easily go awry due to health problems, a job loss, or other major life events. Luckily, there are ways to prepare for the unexpected Retirement, especially when unplanned, is a major life adjustment. Whether you're already invested into your company's 401K or you only heard that you should have an IRA, we can help you understand what investment vehicles are best for you.

Whether the investments are qualified – which means they have tax advantages designed by federal law – or unqualified which means that they have no specific tax advantages – they must still be taken into consideration for the individual circumstances.

Qualified Plans

A plan that meets requirements of the Internal Revenue Code and as a result, is eligible to receive certain tax benefits. These plans must be for the exclusive benefit of employees or their beneficiaries.

401K

Nearly all working Americans are at least familiar with the term 401K – which refers to an investment savings program established by employers to which eligible employees may make contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan, may make matching or nonelective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings made in the 401K accrue on a tax-deferred basis.

IRA (Individual Retirement Account)

An IRA is an investment account used by individuals to reserve and invest money for retirement savings. There are many different kinds of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs. Combined with potential tax savings at the time of contribution, IRAs can prove to be very valuable tax management tools for individuals. Also, depending on income, an individual may be able to fit into a lower tax bracket with tax-deductible contributions during his or her working years while still enjoying a low tax bracket during retirement. Polaris Financial Planning has the ability to work with all types of IRAs, and can help you decide which plan or plans are best for your particular situation.

Education Plans

One type of investment growing in popularity are qualified education plans. Many states offer special programs that help people save for either their own education, or the education of future generations of their family. Some examples of these plans include the Coverdell plan.

Other Plans

Although the plans listed above are some of the most common vehicles used for investment, there are also 403(b) Plans for teachers, 408(k) Plans for smaller companies, 412(i) Plans, 419(e) Welfare Benefit Plans, 457 Plans and 529 Plans to name a few. Regardless of what plan is best for you, we will work to help you understand the benefits and risks inherit to the various qualified plans.

Non-Qualified Plans

Non-qualified is not a negative term, it refers to any type of tax-deferred, employer-sponsored retirement plan that falls outside of ERISA guidelines. Non-qualified plans are designed to meet specialized retirement needs for key executives and other select employees. These plans also are exempt from the discriminatory and top-heavy testing that qualified plans are subject to. There are four major types of non-qualified plans; Deferred compensation plans, executive bonus plans, group carve-out plans and split-dollar life insurance plans.

Family Trusts & Estates

Although there is nothing new or unique about family trusts and estates, it is not uncommon for Polaris to find that despite good intentions, assets have not been properly allocated to the trust themselves. Polaris Financial Planning can work to make sure that your assets are in fact in the name of the trust, and will seek the legal or accounting expertise needed to be sure the trust can accomplish what you originally wanted.

Charitable Trusts

Depending on the net worth of the individual, Polaris can help you with strategies that organize a charitable trust on your behalf, and the then use a mix of other investments to help maximize your charitable donations, reduce taxes and still leave some income for your beneficiaries.

Corporations

Polaris Financial Planning may determine depending on your situation that it may make sense for assets to be placed within a corporation to protect them from liability, but also to pave the way for the future transfer of wealth. We will work with attorneys and CPAs to make sure we pick the right kind of corporation and that it will accomplish what you would like to intend it to do.

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