Your employer’s plan is not the only way you can save and receive tax benefits. You have several investment options:
Like your employer’s retirement plan, IRAs allow you to invest money for retirement while providing tax benefits as well. You can invest up to $6,000 in 2020 — and even more if you’re 50 or older.
There are two kinds of IRAs to consider — Traditional and Roth.
You may qualify for a tax deduction on your traditional IRA if you meet the following criteria: Your household income must be less than $75,000 in 2020 for single tax filers or $124,000 in 2020 for joint tax filers.
Contact your financial professional or visit capitalgroup.com for more information about IRAs.
Investing in mutual funds outside of your retirement plan can provide another tax-friendly saving opportunity. While your savings do not grow tax-deferred as they would in a Traditional IRA or 401(k) plan, current tax rates on qualified dividends and long-term capital gains can be considered favorable when compared with regular income tax rates.
*This rate does not include the 3.8% Medicare surtax applicable to net investment income for higher income taxpayers.
These mutual funds typically invest in bonds issued by state and local governments to finance projects such as highways, schools, hospitals and airports.
Click here for information on American Funds tax-exempt bond funds. Your financial professional can help you select from these or other tax-exempt funds that may be right for you.
A variable annuity is an investment that includes an option that can help make sure you don’t outlive your assets.
If you’d like to put money away for college tuition or other education expenses and receive certain tax benefits, consider these three options:
Find out how you can invest nonretirement plan money in the American Funds.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors, Inc. and sold through unaffiliated intermediaries.
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.
Use of this website is intended for U.S. residents only.
American Funds Distributors, Inc., member FINRA.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as