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Savings Fitness A Guide To Your Money and Your Financial Future

FCIC: Savings Fitness: A Guide To Your Money and Your Financial Future

Content Highlights

A Financial Warm-up

Your Savings Fitness Dream

How's Your Financial Fitness?

Avoiding Financial Setbacks

Boost Your Financial Performance

Strengthening Your Fitness Plan

Personal Financial Fitness

Maximizing Your Workout Potential

Employer Fitness Program

Financial Fitness for the Self-Employed


Staying On Track

A Lifetime of Financial Growth

A Workout Worth Doing

Resources

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Savings Fitness:
A Guide To Your Money and Your Financial Future

Financial Fitness for the Self-Employed

Types Of Defined Contribution Plans

The following are some of the most common types of defined contribution plans. For a more detailed description and comparison of some of these plans, go to the Web site http://www.dol.gov/ebsa and click on the Retirement Savings Education Campaign, then follow the prompt to the Small Business Advisor.

401(k) Plan. This is the most popular of the defined contribution plans and is most commonly offered by larger employers. Employers often match employee contributions.

403(b) Tax-Sheltered Annuity Plan. Think of this as a 401 (k) plan for employees of school systems and certain nonprofit organizations. Investments are made in tax-sheltered annuities or mutual funds.

SIMPLE IRA. The Savings Incentive Match Plan for Employees of Small Employers is one of the newest types of employer-based retirement plans. There is also a 401 (k) version of the SIMPLE.

Profit-Sharing Plan. The employer shares company profits with employees, usually based on the level of each employee's wages.

ESOP. Employee stock ownership plans are similar to profit-sharing plans, except that an ESOP must invest primarily in company stock. Under an ESOP, the employees share in the ownership of the company.

SEP. Simplified employee pension plans are used by both small employers and the self-employed.

Other retirement plans you may want to learn more about include money purchase plans; 457 plans, which cover state and local government workers; and the Federal Thrift Savings Plan, which covers federal employees. If you are eligible, you may also want to open a Roth IRA.

What To Do If You Can't Join an Employer-Based Plan

You may not be able to join an employer-based retirement plan because you are not eligible or because the employer doesn't offer one. Fortunately, there are steps you can still take to build your retirement strength.

Take a job with a plan. If two jobs offer similar pay and working conditions, the job that offers retirement benefits maybe the better choice.

Start your own plan. If you can't join a company plan, you can save on your own.

You can't put away as much on a tax-deferred basis, and you won't have an employer match. Still, you can build a healthy nest egg if you work at it.

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