Assisting my
children to set up pension plans/Carlos Pueblo
Recently, I
have watched the debate of Taiwan’s governmental employee’s
pension plan
with certain interest. I feel that I must introduce what happens
of the
personal retirement plans in the United States for the future reference
in Taiwan. I
have been an insurance agent for most of my adult life engaging in
tax differed
products such as individual retirement plan and benefit from such
tax and
financial strategy very much. I gave such advice to assist both of my
children
when they first entered the job market about 10 years ago especially
to my son.
My daughter
is an accounting major and only need to answer her original
questions to
compare the tax differed character of the pension plans. Her annual
income is in
a higher tax bracket; therefore, she is allowed to deduct her contribution
to her
individual retirement toward her annual income, for instance, she can
contribute $20,000
a year for her 401k, $5,000 a year for her individual retirement
plan, and
she also has a defined benefit plan which is a kind of benefit with no cost
to her. In
addition to these plans, she is in a mandatory requirement of contribution
to the
social security benefit. The growth of those various retirement plans are
tax differed
until you withdraw on that year hence the federal government is a major
partner of
your retirement asset.
It takes
about 8 years for me to explain such investment strategy to my son who is
not at the
same income level as his sister; however, I still believe that he still can be
benefit from
such retirement plans. He has his Roth, an after tax income saving,
regular IRA
$5,000 a year, and a recent 401k plan with a heavy contribution of 50%
of his
annual income and he also has an union’s pension within a small deduction from
his union
fee every pay check, of course, he maintains a social security plan. I agree
strongly
that a retiree cannot rely solely on social security benefit when he retires.
It has been
almost every year that he has a refund of $200 from IRS for his annual
$5,000
contribution toward his regular IRA.
In
conclusion, other than the government’s social security benefit, both of my
children
will have their
401k, IRA, company’s defined benefit for her and union’s benefit for him
etc. This is
a multi-selection pension plans and nice arrangement for the workers. I
now have an
early withdraw of social security benefit and a small company’s defined
benefit and
next year I must take a mandatory requirement distribution of my pension
plans, IRA
and 401k while after tax Roth is exempt from the MRD. Government of Taiwan
can learn
from the U.S. to encourage her citizen to save through various individual
retirement
plans to be a partner of the individual citizen’s retirement asset.
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