Your 401(k) may kill your retirement

A 401(k) is NOT an employee benefit like you've been told.

The 401(k) was created by Congress as a tax-saving scheme for employers and highly-paid executives.

That free money you get when your employer matches your 401(k) contribution isn't free.

How it works:

1. Your employer matches your 7% deduction that feeds your 401(k). Hey, who doesn't like free money?
2. BUT, at the end of the year, you pay taxes on a 14% contribution(not 7%), while your employer gets a 14% tax break.
3. 
   
4. Still think it's free money?
5. 
   
   
6. An Annuity is basically an investment in a large insurance company, one of the most stable business classes in the world.
7. The biggest appeal of an annuity is that it's tax-deferred.
   

When you roll a [for example] $400,000 401(k) into an annuity, several things happen.

1- The insurance company invests your $400,000 in stable low-yield products (insurance has a very long-term outlook).

2- At your instruction, the insurance company will send you structured payments each month in the amount you request. For instance, you can request $7,000/month if that fits your needs.

The tax-deferred part:

3- At tax time, you won't pay taxes on the $400,000 invested. Instead, you'll pay taxes on the money received that year: $7,000 X 12= $84,000.

And that is your taxable income for the year.

4- As you reach retirement age, you can pull as much from your annuity as you please; because you're now in a much lower tax bracket, you'll pay less it.

All of this adds up to a program that grows your money at 3.25% to 5.10%, makes your money more easily available to you, and keeps the government out of your pocket until you're in a much lower tax bracket.

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