All types of retirement plans allow for investment in traditional financial vehicles such as Mutual Funds, Stocks, Bonds, and Money Market plans. We can help you choose suitable investments that balance your need for growth with your risk tolerance level. It is easy to transfer or begin a retirement plan with us. For more complete information call our retirement specialist Charles Harris.
Here are some of the main features of the various plans:
The Traditional IRA allows earnings to accumulate tax free, but they are taxed upon distribution - between ages 59 1/2 and 70 1/2. The maximum annual deductible contribution is $5,000 for 2011 and 2012 ($6,000 for those over 50). All contributions must be made by April 15 for the prior tax year.
It is usually better for an individual to begin retirement savings using a Roth IRA. This IRA does not allow annual tax deductions for your contributions but does allow tax free withdrawals beginning at age 59 1/2 - a big advantage if you are now in your 20’s or 30’s. The adjusted gross income limits for Roth IRA eligibility for 2012 are $110,000 for individuals and $173,000 married, filing jointly. For 2011 the limits are $107,000 for individuals and $169,000 for married, filing jointly.
Rollover IRAs are used when you are changing jobs or retiring. A direct rollover of your investment in your previous employer’s retirement plan avoids up to 40% in taxes and penalties. You can still contribute annually to a Rollover IRA, with some restrictions.
SEP IRAs are flexible plans ideal for the self-employed and the small business owner. Paperwork and tax reporting are minimal. Contributions are discretionary and employer tax deductible. The maximum contribution is 25% of an employee’s compensation up to a maximum of $49,000 per year for 2011 and $50,000 for 2012.