By Stephanie Breedlove
Founder of Breedlove & Associates
Some of the clients and nannies we work with have asked us about retirement plans — as a supplement to Social Security and Medicare benefits. There are a number of tax-advantaged retirement plan options available, but most are either very expensive or difficult to administer, or both.
After extensive research, we recently announced that we’ve found a tax-advantaged retirement savings plan solution that is both easy and inexpensive.
Through Vanguard, who is among the country’s highest rated and most respected financial institutions in the U.S., we’re able to guide clients and/or their nannies to a Roth IRA that has no setup costs, no annual administrative fees, and an “expense ratio” (investment management charge) that is only 0.2% — a rate that is less than 1/5 the national average. (Note: administrative fees and management costs are a major drain on the long-term investment performance; keeping costs low can mean tens of thousands of dollars to the employee upon retirement).
Under the Vanguard Roth IRA, the employer or the employee are able to contribute up to $5,000 per year ($6,000 if the employee is 50 or older) to the employee’s account. Roth IRAs use after-tax dollars — all growth is tax-free and there are no taxes upon withdrawal. The employee has full control over investment decisions. And since it’s not tied to an employer, the IRA is completely portable — allowing the employee to easily take it with her no matter who she works for.
A Vanguard Concierge is available to assist with setup online or over the phone (it takes about 15 minutes) and provide detailed expert guidance to employees on investment options, the tax advantages of Roth IRAs, withdrawal options, etc.
IMPORTANT NOTE: Breedlove & Associates does not charge anything for this solution nor do we receive any kind of compensation from Vanguard. We want all the money to go into the employee’s account as working capital — and we’re pleased to find a solution that does just that. (We feel very strongly that nannies and other household professionals should have access to a simple, cost-effective retirement savings plan if they desire to supplement their Social Security and Medicare benefits).
If you or your families have any questions about tax-advantaged retirement savings plans or our Vanguard solution, please don’t hesitate to call. We’re here to help.