Planning for retirement

by Yadunandana Pada das (ACBSP)
Posted 10 June 2003

I am only your servant, and I offer this suggestion only in service to the Vaishnavas. This is most likely a reiteration of what has probably been already brought up many times in the past. This is also by no means an original idea for which I or any one else can, or should ever, take credit for. This is simply a fact of life that is being practiced in organizations the world over. Somehow, our Vaishnava world has not yet taken advantage of this resource. The problem at hand is that after years of service in our Vaishnava societies our members have not been able to pay into Social Security, pension plans, trust funds, life insurance, retirement plans, or even a savings account.

Often these days we all stop and wonder, “What are we going to do with our elderly Vaishnavas”, when they (we) can no longer distribute books, build temples, cook in kitchens, perform puja, or even remember what happened a few moments before? Not all of us, and actually very few of us, will have the resources available to take care of us until the moment of passing from this world. How many years will pass between the day we become too ill or feeble to serve, and the final moment of passing on? Conceivably this elderely period of our lives could span several years, maybe 10 or 20 very long years, as is the case with many or our fellow human beings in mainstream karmi societies.

This strategy which I am about to propose is public domain knowledge as well as common practice worldwide in most institutions and corporations. Yet, for one reason or another, neither this system nor any system remotely resembling it or even attempting to address these issues of old age seems to exist in any of our institutions, to my knowledge. Please correct me if I am wrong, then perhaps we can use your blueprint as well to help others.

Inevitably, when we get to that stage of life each one of us is going to need help, medical care, looking-after, tender loving care, the Vaishnava Sanga, room-and-board, and probably Vaishnava hospice-care, all so that we are comfortable enough during the last years, and especially at the moment of passing to be able to remember the Lord and go back Home back to Krsna.

When my daughter was born in 1999, a man by the name of Chet Stevens, my boss and my senior vice president at Nokia offered me the advice that I would be able send my daughter to college and give her a trust fund of spending cash if I simply began putting $20 dollars a week into a mutual fund or annuity. He told me that he did that for each of his three sons and that at their 18th birthdays they had enough money to go to college. I did the math as he suggested and sure enough it made sense on paper. I ran it past my accountant and he, of course, confirmed it.

I then did a little math, and some research, to find out that for the demographics of our society there is a plan called a 403b retirement plan (based on mutual funds and both fixed or variable annuities) which could turn contributions of $5 or $20 dollars per week into SIZEABLE financial relief for our temples and for the individual. It would entail a $5 - $20 (possibly depending on age) per week "payroll" disbursement for each active member of the society [for those periods when the member is active as a full participant], which would then be invested 100% into the individual retirement account of each member. The Securites company that you hire to manage the funds will oversee it in exchange for a small percentage of the returns. It is that simple; Krsna in the form of Time will do the rest.

Here is the table of figures that I came up with. These figures are approximate, since interest rates on mutual funds and annuities vary and fluctuate, but you will get the idea.

VSVP
(Vaishnava Savings Varnaprastha Plan)

Contribution
Per Week

Starting
Age

8.0%
at age 65

5.0%
at age 65

3.0%
at age 65

$25

45

$62,036

$-------

$-------

 

 

 

 

 

$20 *

20

$419,196

$170,559

$97,992

$20 *

25

$280,967

$129,014

$79,689

$20 *

30

$186,891

$96,462

$63,900

$20 *

35

$122,865

$70,957

$50,281

$20 *

40

$79,289

$50,972

$38,532

$20 *

45

$49,632

$35,314

$28,398

 

 

 

 

 

$15

20

$314,385

$127,915

$73,491

$15

25

$210,717

$96,757

$59.764

$15

30

$140,163

$72,334

$47,923

$15

35

$92,115

$53,215

$37,709

$15

40

$59,465

$38,228

$28,898

$15

45

$37,223

$26,485

$21,298

 

 

 

 

 

$10 †

20

$209,574

$85,270

$-------

$10 †

25

$140,467

$64,500

$-------

$10 †

30

$93,435

$48,225

$-------

$10 †

35

$61,425

$35,474

$-------

$10 †

40

$39,640

$25,483

$-------

$10 †

45

$24,813

$17,655

$-------

 

 

 

 

 

$5

20

$104,811

$-------

$-------

$5

25

$70,250

$-------

$-------

$5

30

$30,720

$-------

$-------

$5

35

$46,728

$-------

$-------

$5

40

$19,825

$-------

$-------

 

 

 

 

 

$3

20

$62,887

$-------

$-------

 

 

 

 

 

A contribution of $10 per week per devotee will be a total
   yearly payroll salary of $520.

* If you compare the numbers you will see that a $20 per week
    contributions for each member will yield a result that can create
    greater relief for both the society and the individual, and will only
    cost the residence temple a payroll salary of $1,040 per year,
    per devotee.


This plan also allows for those entering the plan at a late stage in life to catch up a little by contributing more if able. Either way, whether the society and/or you invest $3 dollars or $25 per week on your VSVP, you will at least have enough to live in India comfortably for a long time, as well as to cover hospice costs, medical costs, and living expenses without being a financial drain on the society which might otherwise have no choice but to place you in government subsidized facility or send you home to your family. Even if you decide to split the earnings by placing a fraction of the earnings into a communal pool to cover others that have not been inducted into the plan; there will be plenty there to help our society and you financially in the years to come.

This is all contingent on the non-profit being set up the right way within their corporate charter's ‘permissible activities’ (check with your legal team first). In addition, since our organizations are global, all of our international members can take advantage of this under one plan per each non-profit organization which is based out of the United States. I do not know about organizations based out of other countries.

In another ten to twenty years we are going to be passing that life stage in large numbers. Unattended, this dilemma could break the society and cut off our most valuable assets, our brothers and sisters.

Please e-mail me if you have additional information on this relief effort, or if you need to get in touch with a financial professional who can help explain this better.

Below are the highlights of the 403b Plan.

Your servant,

Yadunandana Pada dasa ACBSP
P.O. Box 1297 Culver City, CA 90232

~~~~~~~~~~~~~~~~~~~~~~
HIGHLIGHTS OF 403B/TSA PLANS

The IRS approved salary deferral retirement program started in 1961.

Contributions to these plans generally take one of three forms: a) only employees make contributions through a salary-reduction agreement b) only the employer makes contributions c) the employee makes contributions and the the employer makes a matching contribution.


Every dollar contributed to your 403B/TSA plan is tax deferred. Your gross income is reduced by the amount of contribution to the plan and this consequently lowers your current federal income tax liability. There is no current tax within the plan on gains, dividends and interest income.


If the employer makes contributions to the plan then the plan is subject to ERISA (Employee Retirement Income Security Act 1974) which regulates the operations of many pension and retirement plans.

If there are no employer contributions then the plan is not subject to ERISA, unless the plan is involuntary, or the employer exerts too much influence in plan administration, or the investment selection. Generally, most plans are funded by employee only contributions.

The plan is typically designed for retirement; but, prior to retirement access is available by simply withdrawing the funds; however, the IRS will impose normal income taxes on the disbursement plus a 10% penalty tax for early withdrawal. This 10% penalty tax might be waived for financial hardship reasons, or if disabled based on the IRS's disability definition. Access is also available through loans.

Tax-deductible contributions to the plan can only come from salary deductions and these deducted monies can only be placed into plans offered through and made available through your employer. An employee cannot directly fund their plan.

By law, employee investment in these plans is limited to investing in mutual funds, variable annuities and fixed annuities only.


As of 2002, employees can deduct from salary up to $11,000 and put into these plans, plus a catch up contribution provision available for individuals over 50 years of age. Also, an additional catch-up provision is available for participants that did not participate in the plan earlier, subject to length of employment rules.

Employees are always 100% vested and own their participation in the plan.

For whatever reason, once the salary deductions are in the plan, an employee can move the funds to any mutual fund or variable annuity they want which offers 403b accounts; in most cases, without the consent of the employer.

if the employer placed monies into the plan for your account, then ERISA rules apply and there might be some restrictions on movement.

Upon departure or retirement from an institution which offered a 403B/TSA/TDA retirement plan, an ex-employee participant can move his plan into his/her IRA, or can move his/her plan into a 403b designated account.

Other flexible rollover options to other type retirement plans available as of 2002.

Participants in plans prior to 1987 can defer withdrawals on those pre-1987 dollars until the age of 75 versus 70 1/2.

As of 1997, working participants in these plan can defer mandatory withdrawals as long as employed.
All mutual funds are offered by prospectus only. All variable annuities are offered by prospectus only. A prospectus can be obtained from the issuing company, by calling a representative of Northeast Securities and in some cases issuing companies make the prospectus available via the internet. All Mutual Funds, Variable Annuities and Variable Life Insurance policies are offered by prospectus ONLY. For complete information including charges and expenses obtain a prospectus, and read it carefully before you invest. Variable Annuities have internal expense charges, administrative fees, and mortality expense. Most Variable Annuities, (excluding Noload Variable Annuities) typically have declining surrender charges should the contract be totally surrendered over the first several years. Please see, prospectus for details. Mutual Fund, Variable Annuity and Variable Life prospectuses are available directly from the issuing companies, from Northeast Securities when product information is requested, and in some cases, they can be downloaded directly on the issuing company's internet website. The tax deferral characteristic associated with variable annuities is not needed when used in an account that is by definition tax deferred (retirement accounts) and according to some sources variable annuities generally have higher fees and internal expenses than mutual funds. Systematic and dollar cost averaging within Mutual Funds, Variable Annuities and Variable Life insurance policies does not assure a profit and does not protect against loss in declining markets. It involves continuous investment in securities regardless of fluctuating prices and the investor should consider his or her financial ability to continue purchases through periods of low price levels. Investing in stocks, bonds, mutual funds and variable annuities does not guarantee a profit. All of these investments can lose money. Stocks, bonds, mutual funds and variable annuities are not FDIC insured.