Retirement Savings Plans

A secure retirement is something most investors aim to achieve. With careful planning,
professional guidance and ongoing assessment, you'll be able to plan for that retirement
with the IRA or retirement plan choice that's right for you.

Traditional IRA investors can benefit from tax-deferred earnings, regardless of their income level.

A traditional IRA works very simply. If you're under age 70½, for 2019 you can contribute up to $6,000 per year, but not more than your earned income for the year (less any contribution made to a Roth IRA), and invest it in one or more options that you select. Over time, your account grows as the value of your investments rises. The earnings on your contributions are not taxed until you withdraw them in retirement, so your account can grow faster than a taxable account.

If you are 50 years of age or older, you may have the additional benefit of catch-up contributions, which allows you to invest an extra $1,000 per year.

 

WHO SHOULD OPEN A TRADITIONAL IRA?

The ideal person to invest in a Traditional IRA is someone who thinks his/her federal income tax bracket will drop in retirement?

 

If you meet the following criteria, your contributions will be either fully or partially deductible from your current taxable income, so you can potentially save on your income taxes for the year:

  • Your contributions will be fully deductible if neither you nor your spouse is an active participant in an employer-sponsored retirement plan;
  • If you are covered by a retirement plan at work, a deduction for contributions to a Traditional IRA will be reduced (phased out) if your modified adjusted gross income (AGI) for 2019 does not exceed $103,000 for a married couple filing a joint return. If you are single your AIG cannot not exceed $64,000.
  • Your spouse, but not you, is an active participant in an employer-sponsored retirement plan, and (subject to certain phaseout provisions) your AGI is less than $193,000.

If you are married and file a joint tax return, you may also set up and contribute to a Spousal IRA for a non-working spouse. You can contribute up to $12,000 total to these two IRAs, but not more than your combined earned income, and not more than $6,000 to either one for the 2019 tax year.

IRA COMPARISON CHART

The major advantage of a Roth IRA is that you will be eligible for tax-free distributions if you make a qualified withdrawal.

A Roth IRA is similar to a Traditional IRA in that you can invest up to $6,000 annually for 2019 and enjoy tax-deferred growth on your earnings. But there are some important differences. First, contributions are not tax-deductible, but can be withdrawn anytime without paying taxes. Second, earnings withdrawn after five years are tax-free if you meet one of the following criteria:

  • You attain age 59½
  • Become disabled
  • The distribution is made for a first-time home purchase (up to $10,000)
  • The distribution is made to a beneficiary after your death

If you are 50 years of age or older, you may have the additional benefit of catch-up contributions, which allows you to invest an extra $1,000 per year.

You can contribute the full $6,000 if you're single and your AGI does not exceed $122,000 or if you're married filing jointly and your AGI does not exceed $193,000. Your eligibility to contribute phases out if you're single with an AGI between $122,000 and $137,000, or if you're married filing jointly with an AGI between $193,000 and $203,000.

IRA COMPARISON CHART

 

WHO SHOULD OPEN A ROTH IRA?

The ideal person for a Roth IRA is someone who thinks he/she might be in a higher tax bracket during retirement, may not need the money and wants to leave it to heirs, may want to withdraw original contributions before retirement, or is age 70 1/2 or older and wants to keep putting money into an IRA.

CONVERTING TO A ROTH IRA

If you currently have retirement dollars invested in a Traditional IRA but want the benefits of a Roth IRA — including potential tax-free access to your money in the future — you can convert some or all of your Traditional IRA savings to a Roth IRA.

To make a conversion, you have to convert some or all of your Traditional IRA to a Roth IRA. This is considered a taxable event, so you will have to pay income taxes on the amount you convert. If you use part of your IRA money to pay this income tax, you may have to pay an additional 10% penalty tax on that amount.

If you decide to withdraw money from your Roth IRA within five years after the conversion, the taxable portion of the distribution will be subject to a 10% penalty tax, unless an exception applies.

A Rollover IRA is a Traditional IRA that you can move money into from other retirement plans (an old 401(k), 403(b) or another IRA) and maintain tax-deferred growth.

A Rollover IRA is basically a Traditional IRA into which you can move money from other retirement plans and accounts and still maintain tax-deferred growth. You can roll over amounts distributed from your employer's retirement plan, from another IRA, a 403(b) account and from certain 457(b) accounts. For instance, if you're retiring or changing jobs, you can transfer your existing retirement savings accounts into a Rollover IRA, which can simplify managing your funds, possibly save you money on fees, and keep your funds growing on a tax-deferred basis.

A great feature of a Rollover IRA is that there are no taxes or penalties on amounts rolled into it. So, if you're in the process of receiving a distribution from a retirement plan and want to avoid the mandatory 20% federal income tax withholding, simply have the retirement plan directly transfer your proceeds into a Rollover IRA (retirement plans must withhold 20% unless the distribution is a Direct Rollover).

Consider rolling over your existing retirement accounts and distributions from retirement plans into a Rollover IRA. You'll maintain tax-deferred growth, enjoy a variety of investment options, benefit from investment management expertise, and be able to better oversee your retirement planning progress because all of your funds will be consolidated into a single account.

 

WHO SHOULD OPEN A ROLLOVER IRA?

The ideal person for a Rollover IRA is someone seeking to maintain the tax deferral on a distribution from his or her retirement plan, or seeking to consolidate tax-deferred assets.

IMPORTANT CHANGE TO INDIRECT IRA-TO-IRA ROLLOVERS (60 DAY ROLLOVERS)

Effective January 1, 2015, the IRS implemented a new rule governing indirect IRA-to-IRA rollovers. An IRA participant will be restricted to one indirect rollover across all IRAs they hold per 12-month period. Previously the restriction applied between two specific IRAs. As an alternative, the IRS is advocating trustee-to-trustee transfers as a means for moving money between IRA accounts, tax-free without restriction. For more information, please speak with your tax advisor.

A SEP-IRA Retirement Plan offers a valuable investment opportunity for self-employed individuals and small business owners.

A Simplified Employee Pension IRA (SEP IRA) is similar to a Traditional IRA, but is specifically designed for small business owners or self-employed individuals. Aside from the higher contribution limit, SEP-IRAs are generally subject to the same rules governing Traditional IRAs and are inexpensive for employers to offer — there is virtually no administration and the cost is minimal.

CONTRIBUTION LIMITS

The employer is the sole contributor and may contribute, on the employee's behalf, up to 25% of the employee's compensation or $56,000 (for 2019), whichever is less.

TAX ADVANTAGES

Contributions to a SEP IRA are generally 100% tax deductible and investment earnings in a SEP IRA grow taxed deferred. Withdrawals after age 59 1/2 are taxed as ordinary income. Withdrawals prior to age 59 1/2 may incur a 10% IRS penalty as well as income taxes.

A SIMPLE IRA Retirement Plan for small businesses can serve as a valuable retirement savings alternative to a traditional 401(k) plan.

A SIMPLE IRA for small businesses provides employers and employees with a simplified and inexpensive way to contribute toward retirement.

Similar to a traditional 401(k) Plan but without the administrative complexities, a SIMPLE IRA allows employees to contribute on a tax-deferred basis through convenient payroll deductions. The employer will also contribute to each individual's account by matching a portion of the employee contributions or contributing a fixed percentage of all eligible employees' pay.

Tax law provides an opportunity for owner-only businesses and self-employed individuals to save more for retirement when compared to other retirement plan alternatives. Contributions, in the form of salary deferrals and profit sharing contributions, can total as much as $56,000 in 2019 ($62,000 if age 50 or older).

In addition to these higher contribution limits, other advantages include the ability to take a loan from the plan and the limited administration required with an individual 401(k) plan.

The 403(b)(7) advantage: specifically designed for your retirement

As an employee of an educational or non-profit organization, you have an opportunity to save for your future by investing in a 403(b)(7) plan. This plan enables you to conveniently build assets for retirement through automatic salary deduction — while enjoying significant tax benefits today.

Contact Us

IRA's (Traditional, Roth, SEP, Rollover)

Call to learn more about how a Traditional IRA, Roth IRA, SEP IRA and/or a Rollover IRA can help you meet your retirement plans.

1-800-373-9387

Individual 401(K), SIMPLE IRA

Call to learn more about an Individual 401(k) or SIMPLE IRA.
 

1-800-843-5466

403(b)(7) Plans
 

Call us to speak with a Retirement Specialist to learn more about the 403(b)(7) plan.
 

1-800-358-0910

This information is general in nature and is not intended to constitute tax or estate-planning advice. Please consult your tax and/or estate-planning advisor for more detailed information and advice on your specific situation.

There are fees, expenses and penalties associated with different types of retirement plans.

Since 2006, certain retirement plans have been permitted to allow participants to designate some or all of their deferral contributions as "Roth deferral contributions." Roth contributions may only be rolled over to a Roth IRA.

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