This comes from our friends at Breedlove and Associates.
Some household employees ask us about retirement savings plans -- as a way to supplement their Social Security and Medicare benefits. There are a number of tax-advantaged retirement savings plan options available. Unfortunately, most are expensive or difficult to set up and administer, or both.
After extensive research, we're proud to announce that we've found a tax-advantaged retirement savings plan solution that is inexpensive and simple for all parties.
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 employees 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 is 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 -- and then 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 offer 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 have any questions about tax-advantaged retirement savings plans or the Vanguard solution, please don't hesitate to call. We're here to help.