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What type of retirement plan is best for you? A comprehensive comparison (401k, IRA, Pensions, and more)

Jan 10, 2020 1:20:00 PM / by Stephen Heitzmann

With the world of finance evolving so quickly, it can be difficult to keep up with all your options for retirement planning. Enjoy this guide to help find what type of plans are best for you. Whether you are decades away from retiring, or it is quickly approaching - you'll learn what plans will work best for your goals. 

Comparing Different Types of Retirement Plans (401k vs IRA vs Pensions etc.)

Defined Contribution Plans:

Pensions today are becoming less common and are being replaced by many employers with defined contribution plans such as 401(k) plans, 403(b) plans, and 457(b) plans. Pensions are underfunded, creating a possible crisis in everyone’s future. Defined contribution plans have essentially taken over the retirement marketplace, but have been used since the 1980’s. Over 80% of employers in America have shifted from offering pensions to defined contribution plans.

Most people are familiar with 401(k) plans, which are relatively universal defined contribution plans offered by all types of employers. 457(b) plans and 403(b) plans are structured similarly, however, 457(b) plans are typically offered to government and state employees and 403(b) plans are offered to tax-exempt organizations such as public schools.

One thing all plans typically have in common is the contribution limit. The current, standard contribution limit for all plans is $19,000 per year. All three plans also typically offer a Roth version of contribution which takes taxes out before the money is paid. This allows people to withdraw the money tax free in the future, while possibly avoiding a higher tax rate.

 

 401(k) Plans

Pre-tax wages are contributed into a tax-advantaged plan each paycheck in order to save for retirement. Contributions grow tax-free for years until they are withdrawn at the time of retirement. Although 401(k) contributions are considered non-taxable income, retirees may still have to pay taxes or penalty fees if they choose to withdrawal their money before age 59 ½

Pros:

o   Conveniently withdrawn from each paycheck

o   High contribution limits

o   The money can be invested into other types of investments, such as stocks

o   Deferred taxes – do not have to be paid until money is withdrawn

o   Employers are allowed to match contributions up to 6% of a person’s salary

o   Although not recommended, money can be borrowed from a 401(k) if there is a financial emergency

Cons:

o   There are penalty fees for borrowing money from a 401(k) plan

o   Many employers require an employee to work with them for 6 months-1 year in order to be eligible for a 401(k) plan

o   There are not many plan options to choose from

o   Money is taxed as “additional income” when a person starts to withdraw 401(k) funds

o   Plan holders must start receiving distributions 6 months prior to age 71.

 

 403(b) Plans

A plan similar to a 401(k) plan, however, offered only to employees of tax-exempt organizations such as schools, churches, and charities. Additional participants may include nurses, doctors, school administrators, and religious ministers. In 403(b) plans, there is no taxable income, and employees contribute pre-tax money into the plan.

Pros:

o   Conveniently withdrawn from each paycheck

o   The money can be invested into other types of investments, such as stocks

o   Plan holder is not required to start paying taxes until the money starts being used

o   Contributions are tax-deductible when pre-tax dollars are put into the account

o   Many employers offer a matching contribution

Cons:

o   Many plan options have restrictions that do not allow high-risk investments

o   Using funds before the required minimum retirement age can result in penalties and fees

o   Funds must start being used at age 70 ½ to avoid contribution penalties

o   Because accounts are tax-deferred, there are restrictions for designating beneficiaries

 

457(b) Plans

A 457(b) plan is similar to the 401(k) and 403(b) plans, but is offered to specific tax-exempt organizations such as government employees, police officers, and firefighters. Employees can contribute pre-tax wages into a 457(b) plan that will grow tax-free until retirement. What makes this plan unique from the others is that there are no penalty fees for withdrawing funds before age 59 ½. This plan appeals to people who may be in poor health, disabled, or not expected to live long lives because they can access the funds at their time of choice.

 Pros:

o   There is no penalty for withdrawing money before retirement

o   Conveniently withdrawn from each paycheck

o   The money can be invested into other types of investments, such as stocks

o   Contributions are tax-deductible when pre-tax dollars are put into the account

Cons:

o   Plans typically do not offer an employee match

o   Very few employees qualify

o   Although there is no penalty for early withdrawal, it is more complicated to withdraw from a 457(b) than a 401(k) plan

o   Plan members may miss out on certain protections under the Employee Retirement Income Security Act of 1974 that apply to 401(k) plan members

 

Solo 401(k) Plans

A Solo 401(k) is a 401(k) plan offered to business owners who do not have any employees. Sometimes referred to as a solo-k or one-participant-k, the business owner’s spouse may also receive benefits to this type of plan. Business owners cannot contribute to a solo-k plan if they have any employees.

Elective deferrals adding up to $19,000 can be made as well as a non-elective contribution of up to 25% of a $56,000 annual income. Unincorporated businesses have a limit of 20% of their annual income. Plan holders can also choose between a traditional or Roth plan.

Pros:

o   Employer is in control of their own contribution

o   Higher contribution limits

o   Earnings are all tax-deferred

o   Spouses can benefit

Cons:

o   More difficult to set up

o   Tax penalty for early withdrawal

o   Can be more expensive to manage

o   Only retirement plan available for business owners with no employees

o   Plan will not work if employer wants to expand the business

 

IRA Plans:

An IRA plan is an important investment account controlled by the U.S government in order to help employees save for retirement. The plan allows an employee to save $6,000-$7,000/year and defer taxes until retirement. Employee-sponsored savings plans alone, such as 401(k) plans, sometimes do not earn enough income for someone to live comfortably in retirement. It is best to shoot for having 85% of your pre-retirement income as your retirement income, so it is best to start contributing to an IRA plan as early as possible.

Not only are IRA plans a good supplement for an employee-sponsored retirement plan, but they can also lead to a potentially wider range of investment choices than a deferred contribution plan. Monitoring and adjusting investments is a must, but always take advantage of the tax-deferred benefits and tax-free growth. Similar to deferred contribution plans, however, there is generally a 10% penalty for withdrawing funds before age 59 ½.

There are many different types of IRA plans such as traditional IRA, Roth IRA, and Simple IRA- all with different sets of rules regarding withdrawals and taxation.

 

Traditional IRA

One of the most common types of IRA plan, a Traditional IRA, is a tax-advantaged plan with significant tax breaks that help you save for retirement. Anyone can be a plan holder, regardless of income; however, there is a yearly contribution limit based on income. A plan holder may also be eligible to deduct their yearly contributions on their tax return. Contributions will then grow tax-deferred and you will not have to pay income taxes until money is withdrawn from the account. Like most IRA plans, there are extra taxes and penalties for withdrawing money before age 59 ½.

Pros:

o   Offers some of the most valuable tax benefits

o   Plan holders are not limited to number of investments such as stocks, bonds, and real estate

o   Tax payments are not expected until withdrawal begins in retirement

o   Almost anyone can contribute

o   Tax diversification of retirement portfolio

Cons:

o   Steep penalties for early withdrawal

o   The current contribution limit is about $6,000/year

o   Plan holders will eventually need to make required minimum distributions (RDM’s) which are mandatory money withdrawals

o   Not usually offered by employers- plan holders set up themselves privately

o   Plan does not allow for certain types of investments such as life insurance contracts regarding antiques or precious stones

 

Roth IRA

Similar to a traditional IRA, a Roth IRA is another tax-advantaged retirement plan. Traditional and Roth IRA’s are the two most common IRA plans. The difference is that Roth contributions are made with after-tax money. This means that you have already paid taxes on the money being contributed, so you will not need to pay taxes on it during retirement.  The money simply grows tax-free in the account. Roth contributions, however, cannot be deducted annually as taxable income like other IRA plans may.

If a person is not eligible for a Roth IRA based on income, they can open a backdoor Roth which is a tax strategy that is similar to a Roth IRA. This strategy entails opening a traditional IRA and converting it into a Roth by paying taxes on it.

Pros:

o   No taxes are taken out at retirement

o   Money grows tax-free

o   Money can be withdrawn early without penalty

o   No requirement minimum distributions

o   Considered the most flexible plan

o   Tax diversification of retirement portfolio

Cons:

o   There are contribution limits based on income

o   Cannot deduct from taxable income

o   Taxes must be paid upfront

o   Not offered by employers- plan holders must set up themselves privately

 

Spousal IRA

A spousal IRA allows an employee’s non-working spouse to earn income from an IRA plan. They are not joint accounts, but rather two separate plans in each person’s name. In order to be eligible, the spouse that earns the income must have a taxable income that is greater than the contributions made to an IRA plan. Plan holders still have the option to choose between a traditional or Roth plan.

There is typically an annual contribution limit of $6,000 per person. In order to qualify for a spousal IRA, couples must file a joint tax return as a married couple. Although there are two separate accounts, the couple can share the money in retirement. This type of plan has similar provisions to other IRA plans.

 

Pros:

o   Allows a non-working spouse to receive various benefits while taking care of family needs

o   Can double a couple’s savings

Cons:

o   The working spouse must make a certain amount of money per year to be eligible

o   Required minimum distributions (RDM’s) are required starting at age 70 ½

 

Rollover IRA

This type of plan allows an individual to transfer a retirement account into a traditional or Roth IRA in order to maintain a tax-deferred asset status. 401(k) plans, for example, can be turned into a traditional or Roth IRA to take advantage of the tax benefits. This can be done simply by writing a check or by direct transfer from the bank. Rollover funds can also be moved to a new employer’s retirement plan and there is no limit as to how much can be transferred.

 

Indirect IRA Rollovers may also take place when a former employee transfers funds from a 401(k) or 403(b) to a traditional IRA with no tax penalties. All IRA rollovers, however, can come with strict rules such as allowing only one direct rollover per year. Because of possible tax liabilities, it is important to completely understand how rollover IRA’s work. 

Pros:

o   Allows individuals to always be taking advantage of tax benefits

o   Easier to deal with employer changes

o   Can simplify finances

o   A variety of high-cost investments can be made

o   No trail of 401(k) accounts from various jobs

Cons:

o   Steep tax penalties for plan violations

o   Rollovers may include commissions and fees

o   Cannot take a loan from an IRA

o   Although there are no penalties for early withdrawal, there are many difficult exceptions

 

  1.       SEP IRA

A simplified employee pension, or SEP IRA, is like a traditional IRA but for small business owners and their employees. The difference is that this plan offers extra tax breaks for business owners and employees that want to put money away from retirement. Investments grow tax-deferred and do so until retirement. Also, the employer is the only one who contributes to this type of plan and funds transfer into an account like a trust fund.

With most IRA plans, there is a yearly compensation limit of $6,000-$7,000. SEP IRA plans typically have a contribution limit of about $56,000 (or 25% of compensation) - nearly ten times the amount of other IRA plan options.  SEP IRA’s can be combined with traditional and Roth IRA accounts.

 Pros:

o   Essentially a free retirement account since only employers can contribute

o   Substantially higher compensation limit than other IRA plans

o   Contributions are tax-deductible

o   Money is always easily accessible (not always a good thing)

o   Simple setup and easy to manage

o   Can be combined with traditional and Roth IRA’s

Cons:

o   No certainty of how much money will be accumulated

o   Money is always accessible (not always a bad thing)

o   Penalty for early withdrawal, but funds must start being used by age 70 ½

o   No Roth IRA plan option. Plan holders cannot pay taxes now and take tax-free distributions in retirement

 

SIMPLE IRA

A type of retirement plan with many similarities to a 401(k) plan, geared towards small businesses with under 100 employees. “SIMPLE” is an acronym for “Savings Incentive Match Plan for Employees.” With this plan, the same benefits apply to all employees. Employers must pass tests each year to make sure high-paid workers are not contributing too much into a 401(k).

Employers have the option of contributing 2% of an employee’s income into a SIMPLE IRA or matching the employee’s contribution of up to 3%. The 2% contribution is non-elective, and the employee does not have to contribute anything. Employees can contribute up to $13,000 each year into a SIMPLE IRA.

 

Pros:

o   Provides an opportunity for employees to make pre-tax salary deferrals and receive a matching contribution

o   Easy and inexpensive to maintain for the employee and employer

o   Annual contribution limit of $13,000, but most people do not contribute that much

Cons:

o   Some see the $13,000 contribution limit as a disadvantage since other deferred contribution plans allow up to $19,000 in contributions

o   Only offered to small companies

o   Large penalties: most IRA plans have an early withdrawal fee of 10% of contributions. SIMPLE IRA plans sometimes charge a 25% penalty fee

 

Pensions

A pension is a type of retirement plan where employers make contributions each month to save for their employee’s retirement. Pensions require very little of the employee, so they are the easiest to manage and fully funded by the employer. Employees can typically add additional investments into the pension plan if they wish. Pensions are only offered to a limited number of people, such as government workers.

Unfortunately with all the other retirement plan options becoming increasingly popular, pensions are on the road to being obsolete because they are not offered as much. Pension plans require an employer to commit to contributing a large sum of money into their employee’s retirement. A person fortunate enough to have a pension plan needs to think hard before they change jobs.

Pros:

o   Most pension benefits are taxable

o   No investment risk

o   Requires little maintenance for the employee

o   Guaranteed monthly payments for the rest of a person’s life

Cons:

o   Early access is not available

o   Pensions do not grow with market gains: no investment control

o   Returns could be less than other defined contribution plans

 

Guaranteed Income Annuities

This type of retirement plan allows an individual create their own type of pension, therefore it is not offered by employers. GIA’s are purchased on an after-tax basis so that a person will only owe on their earnings in retirement. An established agreement between an individual and an insurance provider is needed in order for a person to pay monthly to receive a lump sum or payments at retirement. Most people choose to get monthly payments over the lump sum.

There are three main types of GIA’s: fixed, variable, and indexed:

  1.       Fixed Annuity- Guarantees a minimum interest rate on a person’s money and also a fixed number of payments from the insurance company
  2.       Variable Annuity- Money can be invested in different securities, such as mutual funds. Payments depend on how the investments perform
  3.       Indexed Annuity- A mix between fixed and variable annuities. Payment is based on the stock market index performance

Pros:

o   Guaranteed income and regular payments for life

o   Typically have more death benefits

o   Money is tax-deferred

o   Best known for being an excellent supplemental retirement plan

Cons:

o   High fees to maintain and to leave the plan

o   Not for people who do not know when they are going to retire

o   Annuity growth sometimes does not match stock market growth (indexed annuity)

o   Limited or no access to the funds

o   Taxed as ordinary income

 

Profit-Sharing Plans

A profit-sharing plan is a supplemental retirement that gives employees a share of the profits of the company. The amount is generally a percentage of a company’s annual or quarterly earnings. The employer is in complete control of how much of the profits they are willing to share. Not only do the employees get a sense of ownership in the company, but it also enhances their enthusiasm for growing company sales.

Only employers can contribute to a profit-sharing plan- there is typically no option for employees to contribute. Employers can also choose whether or not they want to participate in every consecutive year.

Pros:        

o   Improves employee loyalty and boosts participation

o   No cost to employees

o   Encourages a company overall to be more competitive within their market share

Cons:

o   Difficult to predict the income amount at retirement age

o   Employers do not have to contribute consecutive years

o   Not 100% equal among employees

o   Must be rolled into an IRA before distribution to defer income tax

 

Federal Government Retirement Plans

Employees who work for the federal government are typically offered one of two plans:

Federal Employees’ Retirement System (FERS)

A plan designed to benefit federal government employees who were hired after December 31, 1983. Federal agencies contribute funds directly into the plan on behalf of the employee. There are laws that decide how much the employer must contribute.

The FERS plan offers three plans to federal government employees: A basic, defined benefit plan, social security, and The Thrift Saving Plan (TSP). A TSP is like an amped up 401(k) plan where FERS plan holders get to choose a low-cost investment such as a bond fund while also investing in treasury securities.

When FERS plan holders retire, they will receive their benefits based on their highest three consecutive years of pay along with number of years of service. They are also vested after five years of employment where they have the right to receive benefits, social security and TSP even if they no longer work for the federal government when they retire.

Civil Service Retirement System (CSRS)

This benefit plan is designed to cover most employees born prior to December 31, 1983 by giving them an annuity that pays a monthly benefit. Just to name a few examples, the benefits are based on things such as:

  • Number of years working for the federal government
  • Retirement age
  • Type of retirement plans the person has
  • Average pay of the highest three consecutive years of pay

In addition to having two extremely fortunate plan options, federal government employees can also choose from different lifecycle funds that have various target retirement dates. These types of plans invest in core funds, overall simplifying investment decisions.

Pros:

o   Federal government employees are not only eligible for these unique retirement plans, but they also can get a 5% dollar-for-dollar employer contribution in the TSP. It is highly recommended that you contribute 5% to get the full match from your employer if you are able to

o   Investment fees are unbelievably low

Cons:

o   Just like any defined contribution plan, there will always be uncertainty surrounding your account balance at retirement, especially when you are early into your working career

o   Although federal government plans may be easier to manage, you still need to figure out how much to contribute, how to invest, and whether or not to contribute to a Roth plan. This is why it is always best to manage retirement planning with a financial advisor, regardless of the level of simplicity of the investments

 

Cash-Balance Plans

A cash-balance plan is a unique version of a pension plan. It is similar to a pension plan because a cash-balance plan provides employees with the option of lifetime annuity. Instead of replacing a certain percentage of your income for life, you are guaranteed a proposed account balance, or lump sum, based on contribution and investment credits- such as annual interest.

The investment credits are not based on contribution credits, but based on a promise from the employer. For example, an employer can guarantee an employee that they will be given a lump sum of $500,000 at retirement. After the employee has declared retirement, they can then take the $500,000 lump sum at once or they can request to receive an annuity that in regular checks of a certain amount. You can also opt for a joint-annuity so that your spouse is protected if you pass away unexpectedly. Each year an employee earns benefits from their workplace, they accumulate benefits according to the following formula:

Annual benefit= (salary x pay credit rate) + (account balance x interest credit rate)

Although you are guaranteed a certain amount of money with a cash-balance plan, you will still receive regular statements explaining the account balance and value of your retirement account. The statements also remind the plan holder the procedures for taking the money as annuity or a lump sum. With annuity, you have less control because you cannot overspend the money- which is good. The downside is that you may not live long enough to receive all of the money you are promised.

Pros:

o   You are provided with a promised benefit

o   You do not have to contribute anything to it

o   Option for lump-sum or annuities at retirement. This includes opting for a joint-annuity for your spouse to receive your benefits if you suddenly pass

o   If you change jobs, the account balance is portable and is worth however much is accumulated at the time you leave

Cons:

o   If the plan earns more than promised, employers can decrease their contribution

o   If an employer changes from a generous pension plan to a cash-balance plan, employees could potentially miss out on the better plan as there are typically many benefits to traditional pension plans. Luckily, some companies choose to grandfather long-term employees into keeping the original plan

o   Investment credits can be modest (about 4 or 5%) and become a conservative part of your retirement portfolio

o   The date you retire can have an impact on receiving full benefits. Retiring early gives the employer the right to trim your benefits

 

Cash-value life insurance plan

This type of life insurance plan is a lot like a standard life insurance plan, but it features the cash-value savings component. The cash-value can be used as a source on loan, as a source of cash, or the method of paying for policy premiums. Like regular life insurance plans, there are various types of cash-value life insurance plans such as whole life, variable life, universal life, and variable universal life. The plan itself builds cash value while also providing a death benefit.

If you withdraw cash from the plan, the premiums you paid come out first and are not subject to tax. This plan is typically offered to high net-worth individuals who have already maxed out on their other retirement savings accounts.

             Pros:

o   Covers death benefits so that does not have to be worried about

o   You receive tax deferrals on the growth of your investments

o   It is possible to borrow against a cash-value insurance plan

o   Guaranteed funds

Cons:

o   Typically more expensive than a standard term life insurance policy

o   Short-term life insurance is sometimes a cheaper and better option performance-wise

o   Funds are guaranteed, but there are many stipulations to be aware of

 

Nonqualified deferred compensation plans (NQDC)

The first thing to note is that this type of compensation plan is extremely rare. Even the most high-end company executives are not typically offered this plan. This type of compensation plan allows an employee to earn their full yearly compensation, including salary and bonuses, but defer the income tax to a later year. The benefit of this provides income in retirement and allows a retiree to possibly pay taxes when they enter a lower tax bracket.

This type of deferred contribution plan can be non-qualifying or qualifying. The non-qualifying plan is created by the employer which allows employees to defer compensation that they legally have the right to receive. In other words, part of an employee’s annual compensation is deferred.

Pros:

o   Ability to save money on a tax-deferred basis

o   Like 401(k)’s, there is typically an employer match

o   There is no cap on the amount of compensation that is deferred

o   No RMD’s at age 70 ½

o   No income tax payments on the deferred compensation until its received in retirement

Cons:

o   Like cash-value life insurance plans, NQDC plans are a “promised” amount of money that is subject to claims and stipulations that can decrease the guaranteed amount of funds. Also, you may not receive any funds if the company has financial problems in the future

o   Do not offer as much security as other retirement plan options

o   No option to roll deferred compensation into an IRA or 401(k)

o   If an employee changes jobs before their contract is up, they are unlikely to receive any benefits

 

Roth IRA vs Traditional IRA – Which is Better for You?

The differences between a Roth IRA and traditional IRA accounts all revolves around taxes, including when and how you get a tax break. Both plans have their own advantages. Traditional IRA contributions are tax deductible in the year that the money is made. With IRA accounts, withdrawals in retirement are not taxed. So, the question when deciding between the two plans is: do you estimate your tax rate to be higher now or in the future?

It is easier for some to answer this question than it is for others. If you are sure about your answer, you will want to go with the plan that saves you most in taxes. If you think your tax rate will be higher in retirement, go with the Roth IRA- there is a delayed tax benefit. If you think your tax rate will be lower in retirement, choose a traditional IRA because taxes are taken out upfront.

Unfortunately, it is not always easy to anticipate your future tax rate when you are 20 years or more away from retirement. Roth IRA’s, luckily, work for most people because of its versatility and the tax break tends to apply to a larger portion of the nest egg assuming it has substantial growth over a long period of time.

Here’s why many savers tend to choose Roth IRA’s if they qualify:

Early withdrawals are not as detrimental to your savings with a Roth. While early withdrawals are not recommended, Roth plans allow a person to withdraw personal contributions (not earnings) at any time without having to pay early withdrawal penalties or income taxes.

An early withdrawal from a traditional IRA will likely result in a 10% penalty and you will also owe taxes on the money you take out. Tax payment is based on your current income tax rate. Of course, there are exceptions and other stipulations- but you must be overall more careful with traditional IRA withdrawals than with Roth IRA’s.

Roth IRA’s do not have as many restrictions in retirement and can be easier for a retiree to manage. With IRA plans, there are no required minimum distribution rules. Once you put money into the account, it can stay there and grow tax-free for as long as you would like it to.

Also, Roth plan holders are not required to take required minimum distributions (RMD’s). With traditional IRA plans, retirees must start using their retirement funds by age 70 ½.

Roth IRA plans are easier to pass on to heirs than traditional IRA plans. Similarly, Roth IRA plans may be more beneficial for your family as you may be able to accumulate more money. Most traditional IRA’s require you do take RMD’s at age 70 ½, but they also do not allow you to make any more contributions at that time.

Roth IRA’s allow you to keep contributing at any age as long as you still meet the requirements. Having the ability to let your money keep growing as well as having the ability to keep contributing puts your finances in a better placed to be passed onto loved ones.

Roth IRA’s will leave you with more after-tax money than in a traditional IRA. Since the tax break in an IRA plan does not arrive until retirement, you will not be tempted to spend the money before then. It is true that both IRA plans have their own set of benefits to offer, but extreme tax benefits of Roth IRA’s are often overlooked. With traditional IRA’s, the tax benefit comes once a year when you file your taxes. This process makes it easier for people to blow the money.

In traditional IRA plans, a person must be extremely disciplined with what they do with their tax money. To come out even, a person would have to invest the traditional IRA tax savings you get back each year into your retirement savings. Many people are tempted to spend the money on other things each year, such as debts they find more urgent to pay at the time.

There are benefits to funding a Roth IRA in combination with a 401(k) plan. One of the main benefits of having both plans is tax diversification. The standard 401(k) that most employers offer has almost identical tax benefits to a traditional IRA. Therefore, contributing to a 401(k) in conjunction with a Roth IRA ultimately gives you the tax benefits as if you had both a traditional and Roth IRA plan.

Many employers today offer a Roth 401(k) plan, which is highly recommended if it is available to you. If your employer does not offer a Roth 401(k), you can divert some of your retirement savings into a Roth IRA as it will provide more options for managing taxes during retirement.

Topics: Financial Planning

Stephen Heitzmann

Written by Stephen Heitzmann

Stephen Heitzmann is the CEO of Bauer Wealth Management, a Wealth Management Firm, based in Colorado Springs, CO. www.bauerwealthmanagement.com Bauer Wealth Management is a Registered Investment Advisor (CRD#: 152977/SEC#: 801-71090) with the Securities and Exchange Commission. This article does not represent an investment recommendation or endorsement of any kind. Please consult with your advisor regarding your specific situation. Investing in securities does involve risk of loss that clients should be prepared to bear. The risks can range from failing to keep pace with inflation to losing some or all of the money you invest.