
                          PLANNING FOR YOUR RETIREMENT
                          ^^^^^^^^^^^^^^^^^^^^^^^^^^^^


      1- RETIREMENT PLANNING

      Social Security payments:
      ------------------------

      a- Your Social Security payments will be based on the age that you
      retire  at and the  total dollar amount  that has been credited to
      your account by the administration.

      You should be  checking your records  about every two years  to be
      sure that the right amounts have been credited to you.  The reason
      is because the SSA  won't make  any corrections  if the errors are
      older than a period of three years, three months and 15 days.

      Since it takes about a year for the SSA to update their records, a
      two year  check  period  will give  them enough time  to make  any
      corrections in time.

      b- Now,  you probably want to know how to do this. It's really not
      to difficult.

      To get a statement: call your local Social Security Administration
      office  and request a "statement of savings" (postcard Form 7OO4).
      You will receive  a statement of your account  in about two months
      after you fill out and mail the form back to the SSA.

      This service is free  to you.  Anyone offering to  do this for you
      for a fee, is only taking you for a ride.


      IRAs:
      ----

      There are four types of IRAs available:

      Regular IRA:
      =========== 

      a- This type  of IRA  is the most  common type  that people  have.
      If you  have  income  and won't  be of age  7O 1/2  on  or  before
      December 31, then you qualify for a Regular IRA.

      b- You can be covered  under another retirement program  and still
      open up a Regular IRA.

      c- With both spouses employed,  each of you can establish your own
      seperate Regular IRA  and invest in it based  on your own seperate
      incomes. You simply fill out your own seperate IRA applications.

      Spousal IRA:
      ===========

      a- A type of IRA  that is used to allow your spouse to prepare for
      his or her's retirement years, as well. Part of the requirement is
      that he or she has to be unemployed.

      b- Eligibility  will be met  if you file a joint income tax return
      with  your spouse  being eligible for a  Regular IRA- and that you
      are unemployed or have earned less than $25O during the year.

      c- Opening a Spousal IRA,  is just  a matter of  completing an IRA
      application for yourself.  An IRA is owned  seperately and treated
      independently by either spouse, whether it is a Regular or Spousal
      IRA.

      Rollover IRA: 
      ============

      a- Ever hear of  IRA roll-overs?  What this means is that  you can
      "roll-over" (move) funds from one retirement plan, to another one.
      This happens  for example,  when you leave a company  and you have
      received a payment from your former employer's retirement plan.

      b- Generally,  there is no limit placed on the amount  that can be
      transferred to an IRA  and there is no tax  on the amount that you
      have transferred, because the money is only going from one plan to
      another retirement plan.

      c- You can only affect one roll-over per year from one IRA plan to
      another.

      d- Check with your retirement plan administrator,  to find out the
      proper procedures used to complete a roll-over.

      Simplified Employee Pension IRA (SEP-IRA):
      =========================================

      a- Small  companies  often  set  this  type  of plan up  for their
      employees when the company  has no other retirement plan in place.

      b- A SEP-IRA plan  allows the  employer  to make  contributions to
      your IRA plan.  This type  of plan  is generally  compared  to the
      Regular IRA rules in place with the exception of higher limits for 
      contributions.

      c- Reviewing  IRA Forms 53O5-SEP  and 53O5A-SEP,  will explain how
      SEP-IRAs are regulated. Ask your small business employer  to check
      into this plan.

      Some after thoughts:
      ===================
      
      a- There seems to be a belief  that there is no sense  in actually
      contributing to an IRA,  since the deductions have been eliminated
      by the tax reforms.

      It is true  that the deductions have been eliminated  but you will
      still accrue a compounded income tax-free savings  until you begin
      withdrawing  on your account.  A big plus, if you want to multiply
      any unused funds into a larger savings account.

      b- You need to  show the IRS  that the contributions  made to your
      IRA after 1986, were actually made after 1986. Since that money is
      no longer  tax-deductible,  you may  end up paying  taxes  on it a
      second time if you don't keep accurate records.

      c- The IRS  allows you to  close out your IRA  and then open a new
      IRA (with the same exact amount) within 6O days, without placing a
      ten percent penalty  plus ordinary  income taxes,  on your  funds.
      The problem with  this is  a possible  unknown glitch,  that would
      prevent you from meeting the required 6O day limit set by the IRS.


      4O1(K) plans:
      ------------

      a- Under  the old tax laws,  you were allowed to contribute  up to
      $3O,OOO into this plan. Now, you are limited to $7,OOO.

      This plan  is still a good way to build up a tax-deferred savings,
      because it is really considered as a kind of deferred compensation
      plan. Therefore,  you get  the benefits  of a double bonus  as you
      contribute to it. The reason  for this  is that, the contributions
      that  you  make  are deducted  from your  adjusted  gross  income,
      thereby reducing  your taxable income.

      Advantages-

      a- You can contribute more money into a 4O1(K) plan,  then an IRA.

      b- Many employers will match dollar for dollar the amount that you
      elect  to contribute  into your  4O1(K) plan.  Usually however,  a
      company will match your contribution on a percentage basis such as
      75 percent  or 50 percent for every dollar  you put in.  To put it
      another way,  they will add 75 cents or  5O cents for every dollar
      you put in.

      c- You usually can elect to have an escalating percentage of money
      deducted  (up to a point)  from your salary  to contribute to your
      plan.

      d- You have the benefit  of these types of plans  being managed by
      professionals.

      e- Unlike IRAs, you may be able to borrow from your companys' plan
      with payments made back into your plan. This isn't always true for
      every plan.  Check with the administrator of your particular plan,
      to verify  if you  can  or  can  not.  Also,  check  to  see  what
      conditions need to be met for repayment,  should you find that you
      are no longer employed by your company.

      f- Withdrawing money from your 4O1(K) plan for large medical bills
      may allow some of the withdrawal,  to escape  the 1O percent early
      withdrawal penalty. This is not allowed for IRAs.

      g- If you decide  to retire at age 55 say,  you can  withdraw your
      4O1(K) funds  without paying a penalty.  You can't do that with an
      IRA,  because you have to obtain the age of 59 1/2  before you can
      begin any withdrawals.

      h- If you finally decide to make a withdrawal in one lump sum, you
      may  qualify  for a 5  or ten  year  averaging  break, that is not
      available to IRAs.

      CAVEAT(S)-

      If you  do decide  to borrow  from your plan,  you must understand
      that if you are laid off  or otherwise unemployed by your company,
      you will still have an outstanding "loan" balance due to your plan
      and you may  either have  to pay the  loan off  completely,  or by
      your existing payment schedule.

      You can elect  to take a loss by rolling your plan balance into an
      IRA if you wish and your plan permits that but the difference from
      what your  balance was  before the loan  and the remaining balance
      will be considered  as ordinary income  and subject  to income tax
      plus a 1O percent penalty for early withdrawal.

      KEOGH PLANS

      Self-employment retirement plans:
      --------------------------------

      a- Keogh plans,  have come through  the tax reforms  in relatively
      good shape.  A yearly tax-deductible self-employment contributions
      of up to $3O,OOO or 2O percent of your income (which ever is less)
      may still be made into certain defined contribution plans.

      b- A defined-benefit plan  (as you reach retirement age) may allow
      you to contribute  as much as is necessary of your self-employment
      income,  to insure  a set income from your plan in retirement. You
      should check with your tax adviser.

      c- If you have employees, you must set up a Keogh plan for them as
      well as your self.

      d- Vesting  schedules  for  company  retirement  plans,  have been
      accelerated  to 1OO  percent  fully  vested after  five  years for
      your employees or gradually vested  over a period of  seven years,
      beginning after the third year, at 2O percent annually.

      e- It is  not  necessary  to be  fully  self-employed  in your own
      business to qualify for a Keogh plan.  Any self-employment income,
      from a side-line business to free-lance and consulting fees,  will
      allow you  to contribute  up to the  deductible limit  in your own
      plan.

      Retiring abroad:
      ---------------

      a- Maintain your assets  in US insitutions and  forward your funds
      as needed, to protect your dollar assets.

      b- Maintain two wills.  One will for  your US assets  and one will
      for your foreign assets. This will prevent the possibilty of cross
      claims  internationally,  that  may  complicate  disposal  of your
      estate.

      c- You will need  health  insurance abroad, just  as you  would at
      home.  Many countries  have their own  local insurance policies as
      good as  ours.  There  are  also  international  health  insurance
      policies available.

      d- Be advised that  Medicaid and Medicare do not extend beyond our
      boarders.

      e- Check  for  countries  that will  let  foreign  residents  take
      advantage of their government run health plans.  You may find that
      the cost is little or non-existent.

      Retire and still work:
      ---------------------

      a- Working a part time job to supplement  your Social Security may
      not pay off in the long run. Here's why: When you add up your pay-
      roll deductions, commuting costs and any job-related expenses, you
      may find that for the time and effort, it just isn't worth it.

      b- You can collect  full Social Security  benefits  and still work
      but your income will be limited, as set by the government.  Beyond
      this limit,  you will lose one dollar  ($1) in benefits  for every
      two dollars ($2) earned.

      c- You may not be able to collect  from your pension plan,  if you
      continue to work part-time for the same company. A way around this
      if your company  will go along  with this,  is to  come back  as a
      freelancer or consultant. This makes you self-employed which won't
      affect your pension plan.

      d- Working as a consultant or a freelancer as in the above example
      makes you self-employed. You can of course,  simply start your own
      business with its many attractive advantages (tax wise too).

      Medicare:
      --------

      a- Guess what?  You can get  more out  of Medicare  than you might
      think,  but you must act quickly  (within 3 months after your 65th
      birthday) to apply for what is known as Plan B.

      This is how Medicare  generally works:  When you reach  the age of
      65, Plan A  is automatically instituted.  This plan is a no-charge
      in-hospital insurance plan.

      Approximately  four months prior  to your 65th birthday,  you will
      be notified by Medicare  to enroll in the Plan B option.  You will
      have within  three months  after your 65th birthday  to respond to
      this request. If you miss that time frame, you still have a annual
      window  (January 1 to March 31) enrollment period,  in which to do
      so.

      Plan B is not free!  There is a premium that will be deducted from
      your Social Security  check.  Coverage includes:  tests,  doctor's
      fees, nursing and home health care expenses. There is a deductible
      for Plan B and it covers 8O percent of expenses.

      CAVEAT(S)-

      If you file late,  there is a  1O percent  increase in the  Plan B
      premium.

      You are not covered  if you become sick  or injured while  waiting
      for the enrollment period.

      Prescription drug expenses are not covered.

