Individual Retirement Accounts
SEP IRA- A Simplified Employee Pension Individual Retirement Account is a variation of the IRA. There are no real
administration costs if you are self-employed and don't have any employees. If you do have employees, all employees
must receive the same benefits under an SEP plan. Since SEP accounts are treated as IRAs, funds can be invested the
same way as any other IRA.
SEP-IRA contributions are treated as part of a profit-sharing plan. For employees, the employer may contribute up to
25% of the employee's wages to the employee's SEP-IRA account. For example, if an employee earns $40,000 in
wages, the employer could contribute up to $10,000 to the SEP-IRA account because 25% of $40,000 equals $10,000.
The total contribution to an SEP-IRA account is the lesser of 25% of income (20% for self-employed before
self-employed tax credit is included; see below) or $45,000 for 2007; thereafter, the subject to annual cost-of-living
adjustments for later years. Note that contributions may be made to the plan up until the date that the employer's
return is due for that year.
Rollover IRA- This is an account designed to receive transfers from a previous employer-sponsored retirement plan,
such as a 401(k) or 403(b). By rolling over these assets directly, you maintain the tax deferred status of the account,
simplify the management of your retirement investments, and potentially increase your investment choices.
Roth IRA- A Roth IRA account provides the opportunity for your earnings to grow tax-free. Generally Roth IRAs offer
greater tax savings and withdrawal flexibility than traditional IRAs.
Same contribution limits apply as traditional IRAs. Roth IRAs are funded with after-tax income.
Traditional IRA- This is an account that provides the opportunity for your earnings to grow tax-deferred until they are
withdrawn in retirement and offers the potential for tax-deductible contributions.
Earnings grow tax-deferred until withdrawn after 59 ½ at which time they are taxed at your current rate.
April 15th is contribution Deadline. For 2008- $5,000 is the contribution limit.
Age 50+ can add $1,000 catch-up contribution.
Investment options include Mutual Funds, Stocks, Bonds & ETFs. Please contact your advisor to see if other
investments are IRA-eligible.
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