Individual Retirement Plans

An individual retirement plan can come in a “qualified” or “non-qualified” manner. A qualified plan simply means it follows specific tax laws enacted by the government for the purpose of aiding our retirement. These types of plans have very specific regulations, and rules which must be followed to “qualify” for tax deductibility or tax-free income purposes. Non-qualified plans do not have to follow the same tax codes, and can be virtually limitless in the amount of money that can deposited into them, and withdrawn out of them. However, that does not mean there aren’t other tax laws that must be followed to prevent you from being hurt financially. Click here to find out more about non-qualified retirement plans.

Types of Individual Retirement Plans

• Roth IRA – contributions are made with after-tax assets, all transactions within the IRA have no tax impact, and withdrawals are usually tax-free. Named for Senator William V. Roth, Jr.. The Roth IRA was introduced as part of the Taxpayer Relief Act of 1997.
• Traditional IRA – contributions are often tax-deductible (often simplified as “money is deposited before tax” or “contributions are made with pre-tax assets”), all transactions and earnings within the IRA have no tax impact, and withdrawals at retirement are taxed as income.
• SEP IRA – a provision that allows an employer (typically a small business or self-employed individual) to make retirement plan contributions into a Traditional IRA established in the employee’s name, instead of to a pension fund account in the company’s name.
• SIMPLE IRA – a simplified employee pension plan that allows both employer and employee contributions, similar to a 401(k) plan, but with lower contribution limits and simpler (and thus less costly) administration.
• Self-Directed IRA – a self-directed IRA that permits the account holder to make investments on behalf of the retirement plan.

Call 1-855-266-1094 today to speak with a retirement specialist about your best option.

Source: IRS.gov, CBO.gov