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Retirement Planning

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Traditional IRA

A Traditional IRA allows eligible individuals to make annual contributions of up to $5,500 or 100% of compensation, whichever is less. Contributions may be tax deductible, depending on adjusted gross income (AGI), tax filing status, and participation in an employer-sponsored retirement plan. Any earnings may grow tax deferred until withdrawn. Individuals age 50 or over may make additional, or “catch-up,” contributions to their Traditional IRA of up to $1,000.

Who is eligible?

  • Individuals who are ineligible to contribute to a Roth IRA due to adjusted gross income limits
  • Individuals with compensation who are under the age of 70½
  • Nonworking spouses who file a joint tax return
  • Distributions from 403(b) plans, may be rolled over to a Traditional IRA for municipal workers.
  • Distributions from 457 plans may be rolled over to a Traditional IRA for hospital workers and teachers.
  • Distributions from 401(k) plans may be rolled over to a Traditional IRA

Roth IRA

A Roth IRA allows eligible individuals to make annual contributions of up to $5,500 or 100% of compensation, whichever is less, depending on filing status and adjusted gross income (AGI).  The greatest advantage of a Roth IRA is that it may enable individuals’ contributions to accumulate tax free. This means that eligible Roth IRA owners won’t pay taxes on any earnings in their accounts, provided certain conditions are met.

  • Contributions are made after taxes.
  • Allows annual contributions to be withdrawn at any time, tax free and penalty free, and earnings can be withdrawn tax free after just five years, provided certain conditions are met.
  • Individuals age 50 or over (by December 31 of the calendar year for which the contribution relates) may make additional, or “catch-up,” contributions to their Roth IRA of up to $1,000.
  • Investors can convert Traditional IRA, Rollover IRA, SEP-IRA, or SIMPLE IRA (after two-year period) assets to a Roth IRA if your modified AGI does not exceed certain maximums.

Rollover IRA

A Rollover IRA plan allows you to take control of the money you have in a former employer's retirement plan. This type of retirement account is usually made after one leaves his/her job.

  • Tax-free if done properly.
  • Eligible distributions can be rolled over to a Rollover IRA — which will enable them to:
  • Maintain their retirement savings in a tax-deferred account.
  • Avoid penalties and taxes for any early distributions they may receive from their employer-sponsored retirement plans
  • Allow their account earnings to continue to accumulate on a tax-deferred basis
  • Enjoy the convenience of having their retirement assets in one account

Education IRA

The Education IRA accumulates tax-deferred earnings to pay education expenses, which may be withdrawn tax-free. The account may be established for a child under 18.

  • Qualified education expenses have been broadened to include elementary and secondary school.
  • Covered expenses include tuition, fees, tutoring, books, supplies, board and uniforms.

Simplified Employee Pension Plans

A SEP-IRA (Simplified Employee Pension Plan) is a tax-deferred retirement plan designed for self-employed individuals, independent contractors, or small-business owners seeking to create a retirement plan for themselves and/or to provide a valuable benefit for employees.  Employer and employee contributions to the SEP plan are deductible as a business expense and receive tax-deferred growth. Contributions can be made up until the employer's tax filing deadline, including extensions.

  • An employer's deduction limit is 25% of Adjusted Gross Income (AGI).
  • The maximum contribution allowed by a participant is the lesser of $52,000 or 25% of his/her compensation.
  • Distributions from 403 (b) plans and 457 plans may be rolled over to a SEP plan.
  • Small business owners receive a tax credit of up to $500 for startup costs for each of the first 3 years of a SEP plan established.

SIMPLE Plans

A Savings Incentive Match Plan for Employees Plan is a tax-deferred retirement plan for small employers with 100 or fewer employees, which allows employee salary reduction contributions and employer matching contributions. An employer must either match 100% of each employee's elective compensation regardless of whether he or she makes an elective contribution. Contributions can be made up to the employer's tax-filling deadline, including extensions.

  • Salary deferral limit of $12,000
  • Taxpayers age 50 and older may make catch-up contributions of $2,500.
  • Small business owners receive a tax credit of up to $500 for start-up costs for each of the first 3 years of a SIMPLE plan established on or after Jan 1 2002.

Self-Employed 401(k)s

An Individual (k) or Single (k) plan capitalizes on recent tax law changes, allowing owner-only businesses to enjoy the same benefits of larger company 410(k) plans.  They have higher contribution limits than SEP-IRAs and SIMPLE-IRAs, allowing you to invest more now to potentially reach your retirement goal faster.

  • High tax-deductible limits – up to $52,000 annually.
  • Immediate vesting.
  • “Catch-up” contribution of up to $5,500 for those ages 50 and older.
  • Retirement asset consolidation.
  • Access to loans
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