Select your location

  • Japan
  • Taiwan
  • International - other
  • U.S. Offshore

Who are you ?

Select another location

Wer bist du ?

Wählen Sie einen anderen Ort

Qui êtes vous ?

Sélectionnez un autre emplacement

Qui êtes vous ?

Sélectionnez un autre emplacement

Qui êtes vous ?

Sélectionnez un autre emplacement

Wer bist du ?

Wählen Sie einen anderen Ort

Wer bist du ?

Wählen Sie einen anderen Ort

Qui êtes vous ?

Sélectionnez un autre emplacement

Wer bist du ?

Wählen Sie einen anderen Ort

Qui êtes vous ?

Sélectionnez un autre emplacement

Who are you ?

Select another location

Who are you ?

RETIREMENT PLAN INVESTOR

Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

IF YOUR PLAN ID BEGINS WITH IRK, BRK, 1 OR 2

Visit americanfunds.com/retire

IF YOUR PLAN ID BEGINS WITH 34 OR 135

Visit myretirement.americanfunds.com

Saving outside your plan

Your employer’s plan is not the only way you can save and receive tax benefits. You have several investment options:

Individual retirement accounts (IRAs)

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 2021 — and even more if you’re 50 or older.

There are two kinds of IRAs to consider — Traditional and Roth.

Traditional IRA

Roth IRA

  • Gives you the advantage of tax-deferred growth.

  • You pay taxes now but never pay on withdrawals.

  • Taxes are paid when you withdraw the money. To avoid a 10% penalty, postpone taking distributions until you are at least 591/2.

  • Your household income must be less than $140,000 in 2021 (single tax filers) or $208,000 in 2021 (joint tax filers). Talk to your financial professional to find out more.

  • Contributions are made with after-tax money, and your account builds earnings tax-free.

  • If your household situation meets the requirements, you can take a tax deduction for your contribution.

  • You can withdraw your earnings tax-free and penalty-free after five years and after you reach age 591/2, or as a result of your death or disability, or if the earnings are used to purchase a first home. You can withdraw your contributions tax-free and penalty-free anytime.

  • Roth IRAs do not require withdrawals until after the death of the owner.

You may qualify for a tax deduction on your traditional IRA if you meet the following criteria: Your household income must be less than $76,000 in 2021 for single tax filers or $125,000 in 2021 for joint tax filers.

Contact your financial professional or visit capitalgroup.com for more information about IRAs.

Mutual funds

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.

Tax-exempt bond funds

These mutual funds typically invest in bonds issued by state and local governments to finance projects such as highways, schools, hospitals and airports.

  • Dividends paid by these funds are exempt from regular federal income taxes.
  • State-specific tax-exempt funds can offer both federal and state tax advantages.
  • The higher your tax bracket, the more benefit there is to investing in tax-exempt bond funds.

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.

Variable annuities

A variable annuity is an investment that includes an option that can help make sure you don’t outlive your assets.

  • Taxes aren’t due until earnings are withdrawn. (Note that you may have to pay a 10% federal penalty tax on earnings withdrawn before age 591/2. Surrender charges and other costs may apply.)
  • Your money is invested in professionally managed funds that are similar to mutual funds.
  • Returns fluctuate as the prices of the stocks and bonds in the funds rise and fall, so the returns are variable.
  • They typically include a death benefit that can provide some protection to your beneficiaries.

Education savings programs

If you’d like to put money away for college tuition or other education expenses and receive certain tax benefits, consider these three options:

529 plans

Coverdell education savings accounts

Custodial accounts

  • Generally, contributions can be made until a beneficiary’s account value reaches a certain amount. The limit varies by plan. Check the plan’s program description for details.

  • These accounts allow you to save $2,000 per child per year on an after-tax basis, and earnings can grow tax-free.

  • Uniform Gift to Minors Act accounts (UGMA) or Uniform Trust to Minors Act accounts (UTMA) allow you to invest on behalf of a child’s education with the earnings taxed at a special rate.

  • Individuals can contribute up to $15,000 ($30,000 for couples) each year without gift-tax consequences.

  • Qualified withdrawals are tax-free and can be used for such things as required books, tuition, fees and room and board at most elementary, secondary and post-secondary schools.

  • For children under age 19 or full-time students under the age of 24 whose earned income does not exceed one half of their support, the first $1,100 of earnings is tax-free.

  • Under a special election you can accelerate up to five years’ worth of investments and contribute up to $75,000 ($150,000 for married couples) at one time without gift-tax consequences. No additional gifts can be made to that beneficiary over the next four years after the year in which the one-time gift is made. If the donor of an accelerated gift dies within the five-year period, a portion of the transferred amount will be included in the donor’s estate for tax purposes. Consult with a tax advisor regarding your specific situation.

  • Withdrawals for K-12 and post-secondary education are tax-free.

  • Earnings between $1,100 and $2,200 are taxed at the child’s rate.

  • The money is contributed on an after-tax basis, and your investments grow federally tax-free. Tax-advantaged treatment applies to savings used for qualified education expenses. State tax treatment varies.

  • Income tax and a 10% federal tax penalty apply to nonqualified withdrawals

  • Earnings above $2,200 are taxed at the parents’ rate.

  • Withdrawals used for qualified higher education at accredited colleges or universities and K-12 tuition (up to $10,000 a year per beneficiary) as well as certain student loan expenses (up to a $10,000 lifetime maximum) and certain apprenticeship program expenses are free from federal taxes.

 

  • The funds must clearly be set aside for the child.

  • Income tax and a 10% federal tax penalty apply to nonqualified withdrawals.

 

  • At the age of majority (usually age 18 or 21), the child takes control of the account.

  • If withdrawals are used for purposes other than qualified education expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. States take different approaches to the income tax treatment of withdrawals. For example, withdrawals for K-12 expenses may not be exempt from state tax in certain states.

 

 

Investing in American Funds

Find out how you can invest nonretirement plan money in the American Funds.

CollegeAmerica is a nationwide plan sponsored by Virginia 5 2 9.

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, 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.

Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state's 529 plan, investors should consult a tax advisor. CollegeAmerica is sponsored by Virginia529℠. 

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 impartial investment or fiduciary advice.