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 401k Plans

401k to IRA

Retirement Seminar

The most popular retirement accounts that we manage include:

IRA: Most popular retirement plan. Normally set up by individuals and contributions are generally tax deductible. Principal and any earnings grow tax deferred till withdrawal (more)

Roth IRA: Normally set up by individuals and contributions are made with after-tax dollars. Principal and earnings grow tax free (more)

Rollover IRA: Opened when you change jobs and "rollover" your retirement account from your previous employer's qualified retirement plan, usually a 401K plan (more)

SEP IRA: (Simplified Employee Pension Plan): Most popular choice for self-employed professionals, lawyers, doctors, and small business owners (more)

SIMPLE IRA Plan: Utilized by companies with fewer than 100 employees. A little more complicated than an SEP (more)

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Below is a brief description of the most popular IRA choices. This list is not intended to cover all aspects and details of these plans.

IRA: Most popular retirement plan. Normally set up by individuals and contributions are generally tax deductible. Principal and any earnings grow tax deferred till withdrawal. A traditional IRA is a personal savings plan that has tax advantages when used for saving money for retirement. You contribute money to an IRA from your earned income up to the allowable limits each year (for 2007 the maximum is $4,000 or $5,000 if you are over 50, for 2008, $5,000 or $6,000, if age 50 or older). These funds then can be invested in stocks bonds, mutual funds or in a savings accounts. Depending on your adjusted gross income (AGI) and whether you participate in your employer's retirement plan (401K for example), contributions to an IRA are generally tax deductible. The contributions, as well as the earnings and gains from these contributions, accumulate tax-free until you withdraw the money from the account. You therefore enjoy the ability to generate additional earnings, unreduced by taxes on these earnings, each year the funds remain within the IRA. Withdrawals or distributions are taxed as income and can begin at the age of 59 1/2 but no later than April 1 following the year the tax payer reaches 70 1/2. Withdrawals before the age of 59 1/2 are subject to a 10% penalty in addition to the income tax due. Penalty-free withdrawals permitted before age 59 1/2 for first-time home purchase up to $10,000, higher education expenses or in event of disability or death. (Traditional IRA deductibility rules)

Roth IRA: Normally set up by individuals and contributions are made with after-tax dollars. Principal and earnings grow tax free. Unlike traditional IRA contributions, Roth IRA contributions are not tax deductible from your income, but qualified withdrawals are not taxable. Also, unlike traditional IRAs, there are no required distribution at age 701/2. Thus, an individual can keep a Roth IRA as long as they are alive. One advantage of the Roth IRA is that principle, but not earnings, can be withdrawn tax and penalty free at any time. Qualified distributions can start once the account has been established for five years and the tax payer has reached 591/2. Penalty-free withdrawals permitted before age 59 1/2 for first-time home purchase up to $10,000, higher education expenses or in event of disability or death. Individuals with modified adjusted gross income (AGI) of $110,000 or more are not eligible for a Roth IRA. Married couples filing jointly cannot contribute to a Roth IRA if their modified AGI is $160,000 or more. (Roth IRA eligibility and deductibility rules)

Rollover IRA: Opened when you change jobs or retire and "rollover" your retirement account from your previous employer's qualified retirement plan, usually a 401K plan, a 403b plan, or a TSP plan. Withdrawal rules are the same as those of a regular IRA account. No annual IRA contributions are allowed into a rollover account, but you can make annual contributions to a new or pre-existing regular IRA account. Additional information about some of the options available to you may be found at 401k withdrawal and 401k rollover options. Also see 401k catch up contributions

SEP IRA: (Simplified Employee Pension Plan): Most popular choice for self-employed professionals, lawyers, doctors, and small business owners. Unlike a traditional IRA, you can make yearly tax deductible contributions up to 25% (but a maximum of $40,000) of your income. SEP plans are very flexible particularly in that you decide which years and how much to contribute. Withdrawals or distributions are taxed as income and can begin at the age of 59 1/2 but no later than April 1 following the year the tax payer reaches 70 1/2. Withdrawals before the age of 59 1/2 are subject to a 10% penalty in addition to the income tax due. Penalty-free withdrawals permitted before age 59 1/2 for first-time home purchase up to $10,000, higher education expenses or in event of disability or death.

SIMPLE IRA Plan: Utilized by companies with fewer than 100 employees. A little more complicated than an SEP. Employees can contribute up to $10,500 (2007) if under 50 or $13,000 (employees over age 50). Employer must match up to 3% of compensation. (In certain situations, the match can be 1% to 2%) The alternative choice is an automatic 2% match for all employees. All employee and employer contributions are immediately vested. Taxes are due on earnings and contributions for withdrawals after age 59 1/2. Withdrawals before the age of 59 1/2 are subject to the following penalties: If funds are held for less than two years, there is a 25% early-withdrawal penalty plus taxes. After two years, there is a 10% withdrawal penalty plus taxes. Penalty-free withdrawals permitted before age 59 1/2 for first-time home purchase up to $10,000, higher education expenses or in event of disability or death.

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