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It's time to get your money's worth. Build a new retirement plan that is right for you. Click on any of the following Retirement Plans below for more information about their Features, Contributions and Distributions2:
Traditional Individual Retirement Account (IRA)
Features
- Any earnings accumulate tax deferred - taxes are paid only when earnings and deductible contributions are withdrawn
- Contributions must be made in cash
Contributions
- Maximum contribution is the lesser of $4,000 or 100% of compensation per tax year for 20071
- Contributions may be tax deductible; however, an individual may also make nondeductible contributions
- For those individuals who are 50 or older at the end of the taxable year, and additional annual "catch-up" contribution of $1000 may be made
- Contributions may be fully or partially tax deductible depending on an individual's active participation in an employer-sponsored Retirement Plan and AGI (Adjusted Gross Income)
- Eligible rollover contribution from and employer-sponsored plan
Distribution2
- Penalty-free distribution events:
- Attainment of age 59 1/2
- Death
- Disability
- Series of certain substantially equal payme
- Health insurance premiums for certain unemployed individual
- Qualified higher-eduction expens
- Qualified first-time home purchases ($10,000 lifetime limit
- Certain medical expenses in excess of 7.5% of AIRS levy under Section 6331 of the Internal Revenue Code
- Minimum distributions must begin by April 1 following the year an individual turns age 70 1/2 and must occur by December 31 each year thereafter
- Withdrawls are subject to income taxes, and prior to age 59 1/2, a 10% federal penalty tax may apply
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Roth IRA
Features
- Earnings accumulate tax free
- Annual contributions must be made in cash
- Roth conversion contributions may be made in-kind
Contributions
- Maximum contribution is the lesser of $4,000 or 100% of compensation per tax year for 20071, 5
- For those individuals who are 50 or older at the end of the taxable year, an additional annual "catch-up" contribution of $1000 may be made
- Contributions are made with after-tax (or nondeductible) money
Distributions2
- Contributions can be withdrawn anytime - tax free and penalty free6
- Penalty-free distribution events:
- Attainment of age 59 1/2
- Death
- Disability
- Series of certain substantially equal payments
- Health insurance premiums for certain unemployed individuals
- Qualified higher-education expense
- Qualified first-time home purchases ($10,000) lifetime limit
- Certain medical expenses in excess of 7.5% of AGI
- IRS levy under Section 6331 of the Internal Revenue Code
- No minimum distributions required in account owner's lifetime
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Rollover IRA
Features
- Eligible distributions from employer-sponsored Retirement Plan can be directly rolled over to Rollover IRA
- Direct rollover avoids 20% withholding requirement on distributions from employer-sponsored plans
- Any earnings grow tax deferred until withdrawal
Contributions
- Annual contributions are permissible, but the commingling of money may result in the loss of eligibility to roll over to another employer-sponsored plan
Distributions2
- Penalty-free distribution events:
- Account must be held for 5 years
- Attainment if age 59 1/2
- Death
- Disability
- Series of certain substantially equal payments
- Health insurance premiums for certain unemployed individuals
- Qualified higher-education expenses
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- Qualified first-time home purchase ($10,000 lifetime limit)
- Certain medical expenses in excess of 7.5% of AGI
- IRS levy under Section 6331 of the Internal Revenue Code
- Minimum distributions must begin by April 1 following the year an individual turns age 70 1/2 and must occur by December 31 each year thereafter
- Distributions on earnings tax free after 5 9 1/2 if held for at least 5 years. Prior to age 59 1/2, a 10% penalty tax may apply.
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Simplified Employee Pension Plan (SEP-IRA)
Features
- Employer makes annual contributions to employees' IRAs
- Contributions are discretionary and employer tax deductible
- 100% immediate vesting
- Any earnings grow tax deferred until withdrawn
- Fewer administrative requirements than qualified plans
Contributions
- Maximum employer contribution - lesser of 25% of total compensation9 or $45,000 (for 2007) as indexed thereafter per participant (20% if self-employed)
- Uniform contribution rate for employees and employer
Distributions2
- Penalty-free distribution events:
- Attainment if age 59 1/2
- Death
- Disability
- Series of certain substantially equal payments
- Health insurance premiums for certain unemployed individuals
- Qualified higher-education expense
- Qualified first-time home purchase ($10,000 lifetime limit)
- Certain medical expenses in excess of 7.5% of AGI
- IRS levy under Section 6331 of the Internal Revenue Code
- Minimum distributions must begin by April 1 following the year an individual turns age 70 1/2 and must occur by December 31 each year thereafter
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Simple IRA
Features
- Simplified Retirement Plan that is easier and typically less expensive to administer than a 401(k) plan
- Allows for both:
- Voluntary employee salary-deferral contributions
- Mandatory employer contributions that are generally tax deductible for the employer
- 100% immediate vesting
- Any earnings on employee account balances grow tax deferred until withdrawn
Contributions
- Maximum employer contribution - lesser of 100% of compensation or $10,500 (for 2007) as indexed
- For those individuals who are 50 or older at the end of the taxable year, an additional annual "catch-up" contribution of $2,500 (for 2007) may be made
- Employer elect to either match contribution of up to 3% of compensation for each employee electing to defer a portion of compensation or a mandatory nonelective contribution of 2% of compensation9 for all eligible employees (mandatory)
Distributions2
- Penalty-free distribution events10:
- Attainment of age 59 1/2
- Death
- Disability
- Series of certain substantially equal payments
- Health insurance premiums for certain unemployed individuals
- Qualified higher-education expenses
- Qualified first-time home purchase ($10,000 lifetime limit)
- Certain medical expenses in excess of 7.5% of AGI
- IRS levy under Section 6331 of the Internal Revenue Code
- Minimum distributions must begin by April 1 following the year an individual turns age 70 1/2 and must occur by December 31 each year thereafter
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Profit Sharing Plan
Features
- Employer-funded plan
- Contributions are generally tax deductible to the employer
- Vesting schedules available for employer contributions
- Account balances grow tax deferred until withdrawn
- Full brokerage account option
- May be used in conjunction with a 401(k)
Contributions
- Maximum employer contribution - lesser of 25% of total net compensations9 or $45,000 (for 2007) as indexed thereafter per participant (20% if self-employed)
- Contributions are discretionary
Distributions2
- Distribution events:
- Attainment of age 59 1/2
- Disability
- Plan Termination
- Separation from service
- Death
- Minimum distributions required at age 70 1/2 or retirement, whichever is later11
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401(k)/Profit Sharing Plan
Features
- Bundled product including: recordkeeping, trustee, and investment services
- Standardized and non-standardized plan documents available
- Allows for voluntary employee salary-deferral contributions
- Employer match and discretionary profit sharing contributions
- Vesting schedules available for employer contributions
- Account balances grow tax deferred until withdrawn
- Choice of mutual fund investment options from multiple mutual fund families, as well a a self-directed brokerage option
Contributions
- Maximum employer contribution - lesser of 25% of total net compensations or $45,000 (for 2007) as indexed thereafter per participant (20% if self-employed)
- Maximum employee salary deferral [401(k)] contribution - lesser of 100% of compensation or $15,500 (for 2007) - may be eligible for employer match
- For those individuals who are projected to be age 50 or older at the end of the taxable year, an additional "catch-up" contribution of $5,000 (for 2007) may be made
- Employer may make annual (discretionary) profit-sharing contribution
Distributions2
- Distribution events:
- Attainment of age 59 1/2
- Disability
- Plan Termination
- Separation from service
- Death
- Minimum distributions required at age 70 1/2 or retirement, whichever is later11
- Hardship withdrawals are permitted
- Loans are permitted
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Defined Benefit Pension Plan
Features
- Employer-funded plan
- Contributions are generally tax deductible to the employer
- Vesting schedules available for employer contributions
- Benefits grow tax deferred until withdrawn
- Full brokerage account option
Contributions
- Maximum employer contribution is dependent upon amount needed to fund benefits
- Contributions are required and are determined by an actuary
Distributions2
- Distribution events:
- Attainment of retirement age
- Disability
- Plan Termination
- Separation from service
- Death
- Minimum distributions required at age 70 1/2 or retirement, whichever is later11
- Loans are permitted
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Feel free to call the investment professionals at TriCor:
TriCor Financial, LLC.
7201 W. Lake Mead Blvd, Suite 580
Las Vegas, NV 89128
Tel. (702) 254-1263
Fax (702) 254-8952
TriCor is a proud member of the Las Vegas Chamber of Commerce.
1Total annual contributions to all of an individual's IRAs (Traditional and/or Roth) cannot exceed the lesser of $4,000 ($5,000 if over 50) or 100% of compensation. 2Distributions from IRAs prior to age 59 1/2 may be subject to a 10% early withdrawal penalty unless an exception applies. 5The maximum annual contribution to a Roth IRA is phased out based on your adjusted gross income. 6Distributions are taken from the non-taxable portion of the Roth IRA first; only when all aggregate contributions have been withdrawn will any earnings be distributed (subject to taxation and an early withdrawal penalty unless an exception applies). 9For plan years beginning on or after January 1, 2002, maximum compensation on which contributions can be based is $205,000 as indexed thereafter. 10Distributions from a SIMPLE IRA prior to age 59 1/2 and before the expiration of the two-year period (which begins on the first day contributions are made to an individuals SIMPLE IRA by the individual's employer) may be subject to a 25% early withdrawal penalty. Distributions from a SIMPLE-IRA prior to age 59 1/2 and after the expiration of the two-year period may be subject to a 10% early withdrawal penalty. 11For individuals who own 5% or more of the business, minimum required distributions must begin by April 1 following the year the individual reaches age 70 1/2 and must occur by December 31 each year thereafter. The above review of retirement arrangements is meant to serve as a general overview. You should consult a tax advisor for applicability to a specific customer's facts and circumstances. You may also refer to the Traditional IRA, Roth IRA, SIMPLE-IRA, Retirement Plan, and 401(k) plan documents for more information.
This primer is not intended to be tax advice. The information presented is based on current interpretation of federal tax law. State income-tax laws may differ. All rules related to the establishment or maintenance of each plan type are NOT included in this summary. Additional rules may also apply if an employer maintains multiple plans. Please consult your tax advisor for detailed information. Tricor representatives are not tax advisors. Subsequent withdrawls of assets previously converted from a traditional IRA to a Roth IRA may be subject to certain withdrawl penalties. Some employees may be eligible for additional catch-up contributions. In two years of any five-year period, match can be reduced to 1% of compensation.
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