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Investing for Retirement |
| Take
Control of Your Retirement — Consider This
Tax-Sheltered Investments
Are a
Powerful Tool
New
Contribution Limits
401(k) Plans — Your
Employer Is There to Help
IRAs Offer Big Benefits
Moving Your IRA to a Westcore IRA |
 Sometimes
it is hard to think about saving for retirement. Maybe it seems
so far away, or maybe you are just trying to make it through today
and your current financial situation. But planning for your retirement
early gives you more time to save and invest, helping to secure
a comfortable retirement and reach your goals.
Take Control of Your Retirement — Consider This |
You may think that retirement is a long way off and that
you’ll be taken care of, but consider these points:
- People today are living healthier, more active lives, thus prolonging life expectancy.
You may spend up to a third of your life in retirement.
- Federal government support is diminishing and may disappear altogether. You must take
responsibility for securing your retirement savings.
- Health-care costs are increasing.
- Social Security funds may be tapped out by the year 2039.
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More and more people are beginning to realize that to have a comfortable
retirement, they need to take control by investing on their own. Relying on
Social Security alone is not enough. Company 401(k) plans are a great place to start taking
advantage of free money with company matches. You may also want to consider investing in
an Individual Retirement Account, or IRA. These retirement investment vehicles offer ways
for you to grow your assets quicker than in a conventional account, because your growth
and earnings are sheltered from federal income taxes.
The first step toward planning for your retirement is to assess what retirement income
you require to live comfortably. With that goal in mind, you can figure what you need to
save now to reach that goal. |
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Tax-Deferred Investments Are a Powerful Tool
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Both 401(k) plans and IRAs were established to help you
save for your retirement. They enable you to accumulate
savings faster than a conventional investment plan because
the earnings generated in the account are tax-deferred.
As the following chart illustrates, 401(k) and IRA contributions
sheltered from taxes allow all of your money to remain in
your account (nothing goes to Uncle Sam) and to compound
year after year, leaving you with a larger asset pool
at retirement than could have been saved through equal investments
in a regular taxable account.
Example:
Imagine you contribute
the maximum contribution for each year starting in
2007, $4,000 per year for one year and $5,000 per
year for the remaining years, to both a tax-sheltered
IRA and to a regular taxable account. Our example
will assume you are in a 25% tax bracket and you earn
an 8% annual return on each investment.
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Look
at the power of tax-sheltered compounding
after 10, 20 and 30 years! |
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1
Year |
10
Years |
20
Years |
30
Years |
| Tax-Sheltered |
$4,320
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$76,069
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$242,454
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$601,667 |
| Taxable |
$4,240
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$67,478
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$188,261
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$401,323 |
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| This
graph illustrates how the tax-sheltered status
of an IRA affects asset growth. Each investment
represents a $4,000 or $5,000 contribution each
year to either a tax-sheltered account or a
regular taxable account, a 25% tax bracket and
a hypothetical 8% annual return. The examples
are hypothetical. Performance shown in chart
does not represent the performance of any specific
investment. Westcore believes the assumed 8%
annual return to be a reasonable growth rate,
but no assurance can be given that this rate
will be achieved. You may make more or less
than the accumulation shown, depending upon
the investment you select and actual profits. |
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401(k) Plans — Your Employer Is There to Help
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| Company 401(k) plans offer employees a great opportunity
in investing for retirement. You receive the benefit of your 401(k) contributions being
taken directly from your paycheck pre-tax, lowering your taxable income. In addition, your
company may give you an extra incentive, sometimes matching a portion of your
contributions annually. That is free money for you and your retirement investment. Also,
your earnings on your 401(k) account are tax-deferred — you do not pay income taxes
on those earnings until you begin withdrawals on the account, usually at retirement. At
that time, your income tax bracket may be lower than while you were contributing. One
limitation of 401(k) plans is that usually a maximum amount can be
contributed each year. As defined by your company, it is either a percentage of your
income or a set dollar amount, whichever is higher. If you are interested in having
Westcore Funds available for your 401(k) plan, contact your Human Resources administrator
and request that Westcore Funds be added. Take control of your 401(k) investments. Learn
more about Steering Your 401(k) Road to
Retirement. |
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IRAs Offer Big Benefits |
| Social Security may not be around for much longer, and
while 401(k) plans are a step in the right direction, some
companies may not offer them or it still may not be enough.
Individual Retirement Accounts, or IRAs, were developed
to give you an additional means to supplement your retirement
income. IRAs offer several benefits to the individual investor,
depending on what type of account you open, including deductible
contributions, deferral of taxes on account earnings, and
tax-free withdrawals.
Two types of IRA accounts are available: Traditional
IRAs and Roth IRAs. Each has its own benefits and depending
on your situation, you can determine which IRA is right
for you. Learn more about the differences
between Traditional and Roth IRAs now.
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Moving Your IRA to a Westcore IRA |
| Interested in moving your current IRA or retirement
account to a Westcore IRA to maintain its tax-sheltered status? If you are currently
receiving a distribution from your 401(k) or other employee-sponsored plan or simply want
to move an existing IRA to Westcore, it can be done one of three ways: transfer, rollover,
or direct rollover. Transfer
A transfer can be used to move an IRA you have with another custodian to a Westcore IRA
and can be done at any time, tax-free. Simply complete a Westcore Transfer Form (along with a
completed IRA application if you are
establishing a new Westcore IRA) and send it to Westcore Funds. We will move your IRA
assets directly from your current custodian to Westcore.
Rollover
A rollover contribution can be made to a
Traditional IRA with an eligible rollover distribution from an employer retirement plan or
with a distribution you have requested from an existing Traditional IRA. A rollover
contribution can be made to a Roth IRA with a distribution you have requested from an
existing Roth IRA or from an Traditional IRA (a "conversion" of the Traditional
IRA into a Roth IRA), but not with a distribution you have requested from an employer
retirement plan. You take receipt of the money and must reinvest it in another retirement
plan within 60 days to avoid the imposition of federal income tax and penalties. Unlike a
transfer, which you can do as often as you like, a rollover can be performed only once per
year. Simply send the distribution to Westcore with your new account application if you are
establishing a new account, or with your purchase slip for an established account.
IMPORTANT NOTE:
Since the distribution is paid directly to you, your employer must withhold 20% of the
distributions for federal income tax. This withholding tax can be avoided by using the
direct rollover option described below.
Direct Rollover
If you will be receiving a distribution from your employer's retirement plan, you must
decide whether to receive the distribution yourself or whether to effect a
direct rollover
of the distribution to a Traditional IRA or to your new employer's retirement plan
(assuming your new employer's plan accepts rollover contributions). If the distribution is
paid directly to you, your employer must withhold 20% of the distribution for federal
income tax. This withholding tax can be avoided by using the direct
rollover option. A
direct rollover is a distribution that is paid from your employer's retirement plan
directly into your IRA or another employer's retirement plan. To perform a direct rollover
to a Westcore IRA, simply establish your Westcore IRA with an application and instruct your employer
to prepare a check payable to Westcore Funds. Your Westcore IRA account number and the
words "Direct Rollover" should be typed on the face of the check and sent to
Westcore Funds. Please consult your tax adviser if you have any questions about rolling
over your retirement account.
This information should not be construed as
investment or tax advice. Investors must consider their own situation before making an
investment decision.
An investor should consider
investment objectives, risks, charges and expenses of
the Fund(s) carefully before investing. Click here for
a prospectus,
which contains this and other important information. Please
read the prospectus carefully before investing.
Westcore Funds are
distributed by ALPS Distributors, Inc. |
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