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Retirement Plans
Traditional IRAs
An Individual Retirement Account is an account which
allows you to defer taxes on your earnings until they are
withdrawn. Also, certain contributions are tax deductible
in the tax year for which they are made.
ROTH IRAs
A ROTH IRA is a newer Individual Retirement Account
where contributions are non-deductible, but all withdrawals,
including earnings are tax-free if the account has been
open for five years and the account holder is 59 ½
or older.
| Maximum
Annual Contributions for Traditional & ROTH IRAs |
|
|
|
2020 |
2021 |
| Individual |
|
$6,000.00 |
$6,000.00 |
| Married/Spouse |
|
$12,000.00 |
$12,000.00 |
"Catch-Up" Contributions
for Traditional and ROTH
Workers 50 and older before the end of the taxable year
can make up for lost time with additional IRA contributions
over and above the maximums above:
| For
year 2020 and thereafter |
$1,000.00 |
Contribution Deadline
You can open or make contributions to your IRA anytime up to and including the due date of your tax return.
Rollovers and Transfers
Rollovers and Transfers offer opportunities to move your
retirement assets to where you want them, while retaining
their substantial tax advantages. Assets that can be moved
or consolidated are qualified plans, tax-sheltered annuities,
and IRAs.
SEP (Simplified Employer Pension)
SEP is a retirement plan established by an employer. Any
employer, whether a corporation, partnership, or a self-employed
individual, may establish a SEP, even if there are no other
employees. Each year, the employer may contribute a certain
percentage of each eligible employee's compensation directly
to the employee's IRA. It is simple to establish and maintain
with minimal administration costs.
SIMPLE IRA (Savings Incentive Match Plan for Employees)
The SIMPLE Plan provides a method for employees and employers together to set aside funds for retirement on a tax-preferred basis. These plans do not include the nondiscrimination testing and other administrative costs that may apply to 401(k) plans. They are available only to employers who have 100 or fewer employees.
Withdrawals from an IRA prior to age 59 1/2 may subject the participant to an income tax liability and federal tax penalty. Consult your tax advisor for advice.
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