William Penn Life, 1982 (17. évfolyam, 1-4. szám)

1982-01-01 / 1. szám

I President's Corner An Offer You Can’t Afford to Refuse Beginning in January 1982, forty million workers will be allowed to set-up their own individual retire­ment accounts, the working persons tax shelter. Virtually, the entire American work force will be eligible for this extremely attractive, tax ad­vantage way to save for one's retire­ment. Formerly, people who were already covered by some kind of qualified pension plan where they worked could not open one. Now anyone who works will be able to. Congress in the economic Recovery Tax Act of 1981 brought the eligibility of the individual retire­ment accounts, but the maximum any employee can set aside in an IRA each year has been upped from $1500 to $2000. For a married cou­ple, the limit is $2,250, unless both Happy 50th Anniversary MR. AND MRS. JOHN P. BALLA Mr. and Mrs. John Balia of George Street in New Kensington, Pa., cele­brated their 50th wedding anniversary on January 20, 1981. Married in Leechburg, Pa., they have 4 children, Dorothy Miller and Elaine Mazur of New Kensington, John of Cleveland and Councilman Ronald Balia of New Kensington and 11 grandchildren. Mr. Balia is National Vice President of the William Penn Association and has been affiliated with the Association since 1955. John and Emma celebrated this great affair with a family dinner at Tambellini’s and afterwards enjoyed a trip to Florida. We wish them many more years of happiness. work, in which case it is $4000 per year. Keogh Plans, which are similar to IRA's, except that are available only to self-employed individuals, will now have an annual limit of $15,000 per year. You should be especially receptive to these retirement plans at a time when Social Security is being called "Social Insecurity". The govern­ment is making an offer that you can't affored to refuse. An IRA or Keogh Plan is an ac­count just like any other account you have except that you must have a custodian. William Penn Association is an authorized custodian of IRA and Keogh funds. The money you put into the IRA or Keogh Fund is tax sheltered: you can deduct your full contribution each year from your taxable income. If you were in a 30% tax bracket, for example, a $2000 contribution reduces your taxes by $600. In effect, your put­ting up only $1400 while the government contributes the other $600 for an immediate return of over 40%. If you are in the 50% tax bracket, Uncle Sam matches you dollar for dollar in the form of lower taxes. So right away you earn 100% on your money at absolutely no risk. On top of that, any interest you earn is untaxed until you withdraw. You have to be at least 5914 years old to tap funds and then you pay or­dinary income tax on them. Once you retire, however, you will presumably be in a lower tax bracket. And, your nest egg grows much more rapidly than if it were being taxed each year. For example, if you put $2000 away each year for 30 years and it were earning only 8% annually, your IRA would contain $265,000 at the end of that period. If that $2000 were taxed each year before entering the same account and you paid taxes annually on the income, you would end up with only $60,000after 30years. That's some difference, and the higher your annual return, the more dramatic it becomes. If you could obtain a consistent 15% return on those $2000 annual installments over a 30 year period, you would wind up with $870,000 —as op­posed to $103,000 in an untaxed shelter account. Even if you paid 50% in taxes on a single lump sum withdrawal from you IRA, the dif­ference would still come to over $330,000. If you prematurely withdraw the money, you must pay a 10% penalty plus taxes. But considering you can easily obtain an annual yield more than 10% in your IRA these days, that doesn't seem very serious. The William Penn IRA accounts pay more than 8% and currently less than 15. As of today, our current interest rate is 12%. Elsewhere, in this issue, you can see an illustration of a 30 year old depositing $2000 yearly into the William Penn IRA. It will amass over $1,000,000.00 in a 35 year period. At a time when a typical young worker cannot expect to get back in Social Security benefits what he and his employer had contributed over his years of labor, even if the system remains solvent, the virtues of hav­ing an IRA are obvious. For a so­­called retirement system, Social Security has in fact become a disgrace. You'd be better off putting your Social Security contributions under a mattress than into the system as it works today. And, even if you already have a Keogh or incor­porate it and have your own per­sonal pension plan, you're still eligi­ble for an IRA. Opening an IRA is simplicity in itself. You must only find a qualified custodian, fill out a simple form and make your deposit. The William Penn Association is that qualified custo­dian or trustee. We have the simple forms for your completion and are ready to accept your deposits. The faster you deposit money into an ac­count, the sooner it begins to earn tax-deferred income. Another advantage of IRA is the roll over provision. He may have earlier IRA's started and placed elsewhere. They can be "rolled over” and now deposited with the William Penn. We have the necessary forms to help you com­plete this transaction. Or, when you collect your accumulated pension from a company you are leaving, you can roll over the money tax-free into an IRA. Unlike many financial institutions currently advertising to attract your IRA contributions, the William Penn charges no fees for custodial or financial services. The IRA is truly an offer that you can't refuse. With any wage earner now eligible to put an additional $2000 into a tax-shelter and tax deferred retirement accounts, the government is helping you avoid paying taxes. 2

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