tailieunhanh - Lecture Employee benefits and retirement planning - Chapter 5: Traditional IRA

This chapter begins with a general discussion of the traditional IRA, what it is, when to use it, and advantages and disadvantages. A longer section on tax implications follows discussing contributions, investments, loans, distribution and rollover rules, and employer sponsored IRAs. After a brief section on learning more, the chapter closes with a short question and answer section which covers a few related topics. | Types of IRAs Retirement accounts for individual savers: Traditional IRA Roth IRA Employer-sponsored IRA accounts: SEP IRA SAR-SEP IRA SIMPLE IRA Copyright 2009, The National Underwriter Company What is it? IRA means Individual Retirement Account Individual Retirement Annuity A type of retirement savings arrangement that allows contributions (up to certain limits) and investment earnings to grow tax-deferred. Copyright 2009, The National Underwriter Company What is it? (cont) Traditional IRAs are primarily individual retirement plans. However, employers can sponsor traditional IRAs as a limited alternative to an employer-sponsored qualified retirement plan sponsor a “deemed IRA” as part of a qualified plan Copyright 2009, The National Underwriter Company When is it indicated? 1. to shelter current compensation or earned income from taxation 2. to defer taxes on investment income 3. for long-term accumulation, especially for retirement 4. as a supplement or an alternative to a qualified plan Copyright 2009, The National Underwriter Company Advantages eligible individuals (and their spouses) may contribute up to the maximum annual contribution amount and, within limits, take a tax deduction for the contribution(s) tax deferred investment income but withdrawals taxed as ordinary income Copyright 2009, The National Underwriter Company Disadvantages deductions are limited and can be unavailable to active participants in a tax-favored employer retirement plan early withdrawals subject to 10% penalty generally, cannot establish IRA after age 70½; withdrawals must begin April 1 of year after year reach age 70½ Copyright 2009, The National Underwriter Company Tax Implications: Contribution Rules 1. No required minimum contribution can contribute in one year, skip another year but failure to contribute reduces tax-favored accumulation Copyright 2009, The National Underwriter Company Tax Implications: Contribution Rules (cont) 2. Deduction Limits . | Types of IRAs Retirement accounts for individual savers: Traditional IRA Roth IRA Employer-sponsored IRA accounts: SEP IRA SAR-SEP IRA SIMPLE IRA Copyright 2009, The National Underwriter Company What is it? IRA means Individual Retirement Account Individual Retirement Annuity A type of retirement savings arrangement that allows contributions (up to certain limits) and investment earnings to grow tax-deferred. Copyright 2009, The National Underwriter Company What is it? (cont) Traditional IRAs are primarily individual retirement plans. However, employers can sponsor traditional IRAs as a limited alternative to an employer-sponsored qualified retirement plan sponsor a “deemed IRA” as part of a qualified plan Copyright 2009, The National Underwriter Company When is it indicated? 1. to shelter current compensation or earned income from taxation 2. to defer taxes on investment income 3. for long-term accumulation, especially for retirement 4. as a supplement or an alternative .