Lesson 20 Alternatives to Qualified Plans

The 401(k), 403(b), and 457 plans are employee-funded savings plans. They are investment plans first and foremost. If they can’t pass muster as a comprehensive investment plan, no amount of tax deferral is going to turn that frog into a prince. Merely having a plan is not the same as having a good plan. As investment solutions, plans divide themselves into the good, the bad, and the ugly. Because you have to provide most of the money from your own pocket, you must decide if the plan is worth participating in. Remember, tax advantages are not the whole picture. The chief tax advantage of a qualified retirement plan is deferral of tax on investment earnings. And by far the biggest advantage of a “qualified” ...

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