Other tax-deferred savings plans let you invest a portion of your earned income on a systematic basis and further build your nest egg. Don't overlook the fact that you can fund an IRA and still participate in a retirement plan where you work, so take every option available to you.

Most employer-sponsored plans let you make contributions through payroll deduction. You usually have a choice of investment options to choose from and you benefit from tax-deferred growth until you begin withdrawals.

• 401(k) Plan - A 401(k) plan can be offered to employees by all types of businesses and corporations. While the specific requirements vary by employer, a 401(k) allows you to utilize pre-tax dollars to fund your retirement. It can be structured as a "cash" or "deferred" profit sharing plan, or as a salary reduction plan. Either way, you benefit from contributions that reduce your taxable income and accumulate tax-free until withdrawal. Some employers even match your contributions.
• 403(b) - If you are employed by a non-profit organization (hospital, church, school or charitable foundation), you are eligible to participate in a 403(b) if it is offered by your employer. Much like a 401(k), it offers a salary reduction plan, tax-deferred growth and possibly matching employer contributions.
• What is a Keogh Plan? - Keoghs are a tax-advantaged retirement plan that allows participants to contribute up to $40,000 or 25% of their eligible income (whichever is less) each year. Contributions are made pretax, and investment earnings aren't taxed until withdrawals are taken. There are actually three different types of Keogh Plans.
  
  
  • Profit Sharing Plans
    A Profit Sharing Plan is one of the most flexible of all qualified retirement plans. Contributions are discretionary, meaning you can raise, lower, or eliminate contributions as your profits dictate from year to year. Profit sharing plans can be integrated with Social Security, an advantage which can provide business owners and key employees with additional benefits.

  Profit Sharing allows a business owner to make annual contributions up to 15% of earned income to each plan participant. The employer may change the percentage of contribution in certain years.

  • Money Purchase Pension Plans
    A Money Purchase Pension Plan allows your company to make annual contributions that are not tied to profits. In many ways it operates like a profit sharing plan except you are required to contribute the same percentage of employee's salaries each year. For added flexibility, offering both a profit sharing and money purchase pension plan gives you the ability to boost contributions when you want.

  Money Purchase Pension Plans allows business owners to contribute up to 25% of earned income each year. The benefit of the higher Contribution limit must be weighed against the fact that once a contribution level is selected, annual contributions must be make at that level.

  • Paired Plans
    Allow the maximum flexibility of by combining Profit Sharing and Money Purchase Plans. For example, you may elect to contribute up to 10% of earned income to a Money Purchase Pension Plan (a fixed contribution level), and provide the option of contributing up to an additional 15% of earned income to a Profit Sharing Plan. In this situation, the Keogh Plan allows - but does not require annual contributions of up to 25% of earned income (or $40,000, whichever is less).
• Municipal Deferred Compensation Plan - Employees of certain state and local governments are eligible to participate in a Deferred Compensation Plan, to which they must contribute a percentage of their income.
• SEP-IRA - A Simplified Employee Pension Plan is especially suited for the self-employed, unincorporated businesses or small corporations. It allows the employer to make contributions on your behalf to a tax-sheltered retirement savings plan up to $41,000 for the 2004 tax year. You can elect to receive the contributions in cash, but if you elect to have contributions made to the SEP, those contributions are excluded from gross income. SEP-IRAs are much simpler to administer and maintain than Keoghs.
• Simple IRA - A simple plan offers the simplicity of an SEP-IRA but is primarily funded with employee deferrals of up to 100 percent of compensation with an annual maximum of $9,000 for the 2004 tax year. Additionally, participants age 50 and older in 2004 may be able to make an additional annual $1,500 catch-up elective deferral contribution to their SIMPLE-IRA. This plan may be more attractive than an SEP-IRA because employer contributions are less, as the employee contributions primarily fund the plan.