Cash Flow Tips: Employee 401K Alternatives

Companies watching employee 401K savings dwindle do have alternatives for retirement plans.

This post examines investing via insurance vehicles. I recently spoke with investment advisor Idelle Steinberg serving South Pasadena and the greater Los Angeles area and why she offers insurance-based products as alternatives to the 401K.

Cash Flow Tips: Describe the type of retirement investing you’re promoting and the vehicle that makes it possible.

Idelle: About five years ago the federal government changed regulations for financial institutions (banks, brokerage firms, insurance companies) creating a level playing field. The Insurance companies are now able to do what the brokerage firms were doing but with more financial safely, and they are vying for the business.

Properly set up, a retirement plan through an insurance policy contract will produce income that is totally tax free and IRS approved. The fees are level and will not go up regardless of how high the balance accumulates on the account.

And since the principal is never directly invested into the stock market, there are no losses to principal, guaranteed. But you have the opportunity to earn market like gains.

In sum, there are:

• Low Fees

• Zero Stock Loss

• No Taxes

Cash Flow Tips: I believe most people think of insurance companies as offering low yield annuities that aren’t suitable for investors seeking growth. How is your investment program different?

Idelle: Annuities are a different subject, but a good one. People are leaving the stock market in droves as they realize that money efficiency and safety is at least 3x more effective than chasing higher returns.

So many people are turning to annuities for building retirement that inventory has diminished and some insurance companies have temporarily closed their doors to new business.

As far as yields, annuities can presently offer guaranteed 8% fixed, something you would only dream about in today's stock market. There are many different types of annuities available, making it possible to find something for almost everyone.

Annuities offer safety and protection against stock market loss, no fees, and when done as ROTH, they can also be tax free.

Cash Flow Tips: What are minimum investment amounts?

Idelle: We have two different subjects going here. One is building retirement through an insurance account which can yield income tax free, level fees and no loss to principal through market volatility. The amount invested can depend on several factors, but usually on how much someone wants to invest.

Minimum investments in annuities can start as low as $1000.

Cash Flow Tips: Is this something companies can use to offer their employees as part of a benefits package?

Idelle: These are great as part of a benefits package because the employee is in control, there are no adminstrative costs as fiduciary fees, and it can be taken intact with the employee if they ever leave the company.

Readers may call Idelle Steinberg (Ca Lic. #0E18530) for additional information: 626-441-7332.

This is not a sponsored post nor an endorsement of services. However, cash flow -- whether for companies or individual employees -- deserves research into the best vehicles and strategies for preserving or building capital.