Roth IRA
Although contributions are not deductible, the tax-free income opportunity can offer appropriate investors an unprecedented long-term investment incentive. Provisions of the Roth IRA include:
- Working individuals and their spouses can each contribute up to $4000 annually to a Roth IRA if their joint income does not exceed certain limits. (If you are age 50 or older in the year of contribution, an additional $1000 may be contributed for a total of $10,000 with some limits.)
- Contributions are always non-deductible.
- Tax-free withdrawals of contributions and earnings may be taken after five years if you are at least age 59½ (certain exceptions may apply).
- As long as you or your spouse have earned income, contributions can be made after age 70½.
- Distributions from Roth IRAs are not mandatory during the holder’s lifetime.
Roth IRA Conversion
- Traditional IRA may be eligible to convert
into a Roth IRA.
- Converting a traditional IRA into a Roth
IRA is a taxable event.
- Your representative can evaluate the benefit
to you.
Self-Directed Traditional IRA
The Traditional IRA is a popular vehicle for tax-deferred retirement savings. The benefits of the Traditional IRA include:
- Working individuals and their spouses can each contribute up to $4000 annually to an IRA (if you are age 50 or older in the year of contribution, an additional $1000 may be contributed for a total of $10,000).
- If you do not have a retirement plan available at work, you can generally deduct your Traditional IRA contributions, regardless of your income.
- If you are covered by a plan at work, your contributions may be fully or partially deductible depending on your income.
- Regardless of your ability to deduct your contributions, your earnings will grow tax-deferred.
- Income taxes apply to taxable amounts when withdrawals are taken from your Traditional IRA.
- Taxable distributions may be subject to a 10% tax penalty if taken before age 59½ (certain exceptions may apply).
- Required Minimum Distributions must begin no later than April 1 of the year after an IRA accountholder turns 70½.
- No further contributions can be made after the year the accountholder attains age 701/2.
SEP IRA
What Is a SEP Plan?
Simplified Employee Pension (SEP) plans may provide
an easy and economical way for employers
to provide retirement benefits for themselves and
eligible employees.
A SEP is an arrangement under which an employer
may contribute to an individual retirement account
(SEP-IRA) set up by each eligible employee. An
employee who already has an IRA can either put
the existing IRA under the SEP or keep the existing
IRA separate and establish a second IRA for
SEP contributions.
Employer contribution requirements are entirely
flexible. The employer may carry the contribution
from year to year, or skip contributions in a given
year, with no penalty. If made, however, contributions
must be based on a written, non-discriminatory
allocation formula. Where appropriate for use,
our IRS-approved prototype SEP can provide the
utmost in flexibility for the employer. We can also
provide IRS Forms 5305-SEP and 5305A-SEP.
401k
- Employer sponsored program.
- Funded by employee salary deferrals.
- Pre-tax investing.
- Mutual funds or self-directed investing.
- $15,000 maximum annual investment for 2006
(maximum annual investment limits increase
periodically)
- People age 50 or older can
deposit an additional $5,000.
Simple IRA
- Employer sponsored program (less than 100
employees).
- Funded by employee salary deferrals.
- Pre-tax income investing.
- Mutual funds or self-directed investing.
- $10,000 is the maximum employee contribution
in 2006.
