American Express Individual k Introduced for Small Business Owners

Business Wire, Nov 4, 2004

MINNEAPOLIS -- Individual(k) Plans Cited as One of The Most Powerful Retirement Savings Products for Growing Numbers of Owner-Only Businesses

American Express Financial Advisors, a subsidiary of American Express Company (NYSE:AXP) today announced the introduction of the American Express(R) Individual(k), a 401(k)-based plan designed to provide self-employed professionals with added flexibility, investment choices, and higher contribution limits to help them save more effectively for retirement.

The American Express Individual(k) is being offered by American Express Financial Advisors to address the increasingly complex and urgent retirement savings needs of a vast and growing population of independent workers, such as entrepreneurs, consultants and professionals - any small business owner with no employees.

Paula Meyer, a senior vice president at American Express Financial Advisors said, "Now, more than ever, it's vital for individuals to create their own safety net for retirement. Life expectancy for most Americans is dramatically increasing, and people need to plan carefully for 20 or possibly more years of income in retirement. The American Express I(k) is truly a powerhouse for fueling a tax-advantaged retirement savings strategy for small business owners."

The American Express Individual(k) Plan, when compared to other more traditional plans, such as a SEP Plan, offers greater opportunities to save more aggressively, under certain circumstances. The Individual(k) plan allows investors to not only save up to 25 percent of their annual income as a tax-deductible contribution, it also offers them the option of making pre-tax salary deferred contributions of up to $13,000 with a maximum combined contribution not to exceed $41,000 (in 2004). In addition, the Individual(k) plan allows investors to make catch-up contributions to the plan if they are age 50 or older.

The differences can add up and may explain why industry research projects that these owner-only 401(k) plans will gain in popularity. Consider the difference in the amount that can be saved using the example of a 50-year old business owner, earning an income of $100,000 in 2004. That individual can put aside a total of $34,642 in an Individual(k) Plan, compared to $18,642 in a SEP Plan, which is almost twice the amount of annual savings.

Craig Brimhall, vice president of Retirement Wealth Strategies at American Express Financial Advisors said, "In this country, an estimated 16 million people operate an owner-only business. It's one of the fastest growing segments of the American population and the Individual(k) has been designed to help meet their needs. For instance, it allows them the flexibility to change their annual contribution amounts, a feature that will appeal to small business owners who often experience fluctuations in income from year to year."

The American Express Individual(k) complements American Express' 401(k) retirement plan offerings for mid-size and large company plans, creating a full range of retirement plan solutions. It combines industry-leading recordkeeping and administrative services, along with a wide range of investment choices, including American Express(R) Funds, and individual stocks and bonds, as well as over 2,000 mutual funds.

"The American Express Individual(k) is an efficient retirement savings solution for the small business owner," according to Brimhall. "It's a complete package because it offers recordkeeping services and administration, including tracking of contribution sources, and 5500 EZ reporting. This is a distinct advantage over other plans that may not include all the necessary services, relying instead on the business owner to do some of the record keeping and may limit their investment choices to a single family of funds."

American Express Financial Advisors is one of the nation's leading financial planning companies. It is part of the American Express Financial Corporation, which currently owns or manages more than $328 billion in assets. The 10,500 personal financial advisors of American Express provide financial advice, long-term financial planning and high quality financial products to more than 2.7 million clients throughout the United States. For more information, visit americanexpress.com.

American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors.