Retirement Planning

Retirement Accounts are savings plans that allow investors to increase the size of their savings for retirement while taking advantage of special tax benefits.

Benefits of Retirement Planning

  • Tax-deductible contributions
  • Tax-deferred investment income and capital gains
  • Control over assets that are currently held in a former employer’s retirement plan

IRA contributions can be made in two ways:

  1. By transferring assets from a former employer’s retirement plan, such as a 401(k), into a new or existing IRA. (IRA Rollover).
  2. By making annual contributions to a new or existing IRA out of employment income.

Elements of a good Retirement Plan:

  • Provide 70 to 90 percent of an individual’s current gross income.
  • Take into account the obstacles that you may face after retirement.
  • Allow you to take advantage of the potential for growth over time.
  • Be diversified in its investments, by balancing growth and income with your own tolerance for risk.
  • Take advantage of income tax-deferred savings.


IRA’s

Traditional IRA
A Traditional IRA allows eligible individuals to make annual contributions of up to $5,000 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 Any earnings may grow tax deferred until withdrawn.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 $5,000 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 adjusted gross income (joint or individual) is $100,000 or less.

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.

  • No contribution limit.
  • 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.
  • SEP-IRAs and SIMPLE-IRAs, allowing you to invest more now to potentially reach your retirement goal faster.
  • High tax-deductible limits – up to $49,000 annually.
  • Immediate vesting.
  • Catch-up” contribution of up to $5,500 for those ages 50 and older.
  • Retirement asset consolidation.
  • Access to loans