WHICH RETIREMENT STRATEGY IS RIGHT FOR YOU?
An individual tax deferred retirement savings account.
Deferring taxes means all of your dividends, interest, and capital gains can compound each year without being taxed. This allows an IRA to grow much faster than a taxable account. The maximum current contribution for people under age 50 is $5,500 and over 50 years old is $6,500. When you make withdrawals after age 59 ½ they are treated as current income. Two types of Traditional IRAs are deductible and nondeductible. Please contact us at firstname.lastname@example.org to better understand which type of Traditional IRA you will qualify for as these depend on your income, filing status, availability of an employee-sponsored retirement plan, and whether you receive Social Security benefits.
-The IRA account must be set up and funded by April 15th of the following year.
-If neither you nor your spouse are covered by a retirement plan, your deduction is allowed in full.
-If you are covered under an employee sponsored plan, the deductible is fully phased out after an individual reaches $73,000 of adjusted gross income or when a joint return reaches $121,000.
-If only one spouse is covered under an employer plan, the contribution is fully deductible up to $189,000 of total adjusted gross income and the deductibility is fully phased out at $199,000
A retirement savings account that allows your money to grow tax-free
Contributions are made with after-tax dollars. The maximum current contribution for people under age 50 is $5,500 and over 50 years old is $6,500. Appreciation grows tax deferred. Distributions rules vary with age and the length of time the account has been established . The account must be established and funded by April 15th of the following year. There are limits on who qualifies to fund a Roth IRA. Please contact us so that we can determine if you qualify. This type of account is generally recommended for younger individuals.
An employee sponsored defined contribution retirement plan
Employee decides how much money they want to contribute into their individual plan and the employer contributes on their behalf through a pre-tax payroll deduction. A participating employee has the option of receiving compensation in cash or having it contributed pre-tax to the plan. An employee’s contribution is subject to an annual limit. For 2019, that annual limit is $19,000. The employer is the plan sponsor and hires another company to administer the plan’s investments based upon the individual’s directions. You are responsible for deciding how to invest your money based on the options offered by your plan. An individual who will be 50 years of age by the end of a tax year may make additional “catch-up” contributions. The maximum catch-up contribution for 2019 is $6,000. Catch-up contributions may only be made if the plan permits this type of contribution.
SEP IRA (Simplified Employee Pension) and Profit Sharing Money Purchase Account
A type of traditional IRA for self-employed individuals or small business owners
Any business owner with one or more employees, or anyone with freelance income qualifies for this type of account. For 2019, business owners can contribute up to 25% of income or $56,000, whichever is less. Contributions are tax-deductible by the business. It is established by an employer and funded by the employer. The money in the account is not taxable until withdrawal. Contributions are not mandatory and do not need to be made every year. SEP IRAs must be established by the employer’s tax filing deadline including extensions for the tax year to which the qualifying contribution applies. Profit Sharing Money Purchase accounts must be established, but not fully funded, by December 31 of the appropriate year. These accounts are recommended for small businesses. To see if you qualify or work somewhere that does, please contact us directly at email@example.com.