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September 5, 2010 |     |
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Newsletters
Consolidating With One Trusted AdvisorWhen speaking to participants in the Plan, one goal that is consistently mentioned is consolidating assets with one trusted advisor. Consolidating accounts allows you to have a coordinated investment strategy which reflects all of your assets. Scarborough offers several plans which allow you to enjoy similar benefits of competitive investment performance, low expenses, and tax advantages. The Scarborough Advantage Variable Annuity Scarborough offers another IBEW Plan that we would like to make you aware of, the IBEW Local Unions Savings & Retirement Plan. While the plan you are in, the Savings & Security Plan accepts money from 401(k) plans, pensions, and IRAs, the Savings & Retirement Plan accepts deposits from sources such as money you have in CDs, savings accounts, and annuities. Many of you may remember the Savings & Retirement Plan as the old "$7 Plan" that began in 1975. The Plan's funding vehicle is the Scarborough Advantage Variable Annuity. This plan is available to IBEW members and their family regardless of whether you have just begun working, are about to retire, or have already retired. Features & Benefits Tax Deferral - The Scarborough Advantage can provide investors with a tax-smart way to save and participate in the investment markets. All earnings grow and compound tax-deferred until withdrawn. Tax deferred investing can accelerate the growth of your investments because earnings that would be paid out in taxes on a taxable investment remain working for you. Fixed Account - the Plan offers a Fixed Account very similar to the Stable Value Fund in your Savings & Security Plan. Your principal is guaranteed* and will not fluctuate in market value. The interest rate is currently 3.65%. CD rates are currently paying in this range but when the tax advantages are considered, the Scarborough Advantage Fixed Account produces a higher after-tax return. Compare your CD/Savings interest rate to the taxable-equivalent yield of the Fixed Account:
Also, unlike a CD, you do not have to tie up your money for a period of time**. No Surrender Charges - What really sets the Scarborough Advantage apart from other annuities is that it has no surrender charges. Surrender charges are penalties imposed on the account holder when withdrawing money*** or transferring the account within a certain number of years. Many annuities impose charges of up to 9% for 9 years. They charge you for taking your own money! Not the Scarborough Advantage - 100% of your account balance is available to you at any time with no penalty*. Withdrawals are available upon request or can be automatically sent to your bank account each month. Additional Deposits - Unlimited deposits are allowed into the Plan. Deposits can be made at any time by sending in a lump-sum deposit or on an automatic basis for your convenience. Other Investment Options - The variable portion of the Plan gives you the option to diversify into investment categories such as large-cap, mid-cap, small-cap, and global stock. Guaranteed Death Benefit - The Plan allows you to name one or more beneficiaries,allowing for a simple transfer to your heirs and avoids probate. Your beneficiaries will never receive less than your deposits minus any withdrawals, even if the value of your stock funds (if any) is down. Your current account value or the value of the account at each five year anniversary, whichever is higher, will be paid to your beneficiary. Professional Advice - You can get advice and service from the same people you deal with for your Savings & Security Plan. Who Should Consider Investing? Additional Savings for Retirement - If you are still working and building toward your retirement goal, the Scarborough Advantage could serve as part of your strategy. When saving for retirement we always recommend funding your 401(k) first, making sure to take full advantage of pre-tax savings and company match. If you are looking to save more for retirement, the Scarborough Advantage can be a great tool. The taxdeferral keeps the interest off your tax return during your higher income producing years. Convenient systematic investments from your bank account are available and some employers offer payroll deduction to the Plan. Other Annuities - If you already have an annuity with another institution, we can assist you in completing a tax-free transfer from your current annuity to the Scarborough Advantage****. Bank CDs and Savings Accounts - If you have money in CDs and/or savings accounts, transferring to the Scarborough Advantage would remove the interest from your tax return each year and allow for more compounding of interest. Taxes are paid upon withdrawal**. Proceeds from Sale of Home - After retirement some people sell their home, whether to downsize or move out of state. We are often asked for advice on how to invest the proceeds. The Scarborough Advantage is often an ideal solution as it provides options for safety and growth, tax-deferral, and ease of penalty-free withdrawal for those over 59-½. Inheritance - Other people come into money by inheritance. The accounts are sometimes held with companies with which you do not have a relationship. The Scarborough Advantage can be a wise place to transfer such accounts. Local Union IRA Another product to consider for retirement investing is the Local Union IRA. You have the option of a Traditional or Roth IRA. Many investors who are contributing to a 401(k) at work use a Roth IRA to supplement their savings. Although contributions to a Roth IRA are not tax deductible, withdrawals are completely tax-free as long as the account is held five years and the account holder is age 59-½ or older. A Scarborough Retirement Planning Specialist can help you decide which is best in your situation. For more information call us at 800-223-7608. The Scarborough Advantage Variable Annuity, policy form GV6059, is issued by Security Benefit Life Insurance Company and distributed by Security Distributors, Inc. * The current rate of the Fixed Income Account is currently declared quarterly by Security Benefit Life Insurance Company and is subject to change each quarter. Any earnings are taxed upon withdrawal from the account. Withdrawals made from the Plan, if withdrawn before age 59-1/2 are subject to a 10% penalty. Withdrawals from a non-taxable account are not subject to a penalty tax. The guarantee of principle is based on the claims-paying ability of the insurance company. The Local Union IRA is issued and distributed by Security Distributors, Inc. ** Withdrawals made prior to age 59-½ will be subject to a 10% IRS penalty tax on the earnings portion. *** Annuities generally have an annual amount (often 10%) that can be taken without penalty. **** Before initiating a transfer we recommend determining if your existing contract includes any withdrawal charges. (Published: 6/15/2008) Back to Index |
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