Individual Retirement Accounts (IRAs)

Open a tax-advantaged account that helps you save more for retirement.

Wonderful growth potential.

Even if you already participate in an employer-sponsored-retirement plan like a 401(k), an IRA can help supplement these savings. IRAs offer the potential for growth in a tax-advantaged account. Over time, that can make a significant difference in your retirement savings.

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Ways to Save

Choose from a variety of investment options, each with their own advantages and flexibilities.

Take advantage of tax-deferred growth potential. You pay no taxes on any investment earnings until you withdraw or “distribute” the money from your account, presumably in retirement. Additionally, depending on whether you're covered by a retirement plan with your employer and your income, your contribution may be tax deductible.1

Take advantage of tax-free growth potential. Earnings are distributed tax-free in retirement if a five-year waiting period has been met and you are at least age 59½, or as a result of your death, disability, or using the first time homebuyer exception. Since contributions to a Roth IRA are made with after-tax dollars, there is no tax deduction regardless of income.

Both employees and employers can contribute to an IRA set up for employees. These are often offered by small businesses as a retirement plan for their workers—ideal for small businesses with a few employees. A SEP IRA is a Traditional IRA that holds employer contributions under the SEP plan.2

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Resources

Who can contribute?

With Traditional IRAs, you and your spouse—if filing jointly—can contribute if you have earned income. You can make a non-deductible contribution to a Traditional IRA even if your income exceeds Modified Adjusted Gross Income (MAGI) deduction limits.

For Roth IRAs, you and your spouse—if filing jointly—can contribute at any age as long as you have earned income and are at or under MAGI phase-out limits.

Are there contribution limits or deadlines?

IRS rules state how and by what date you can make your IRA contributions. IRA contributions must generally be made by April 15 for the prior tax year. If you are 50 or older, within a particular tax year, you can contribute an additional $1,000 catch-up amount each year. Contact us to discuss the exact date for this year and the amount you can contribute, or check out IRS Publication 590 found here:

What are IRA distribution options?

When you change jobs or retire, you generally have four options for your retirement plan assets:

  1. Roll assets to an IRA
  2. Leave assets in your former employer's plan, if the plan allows
  3. Move assets to your new/existing employer's plan, if the plan allows
  4. Take a lump-sum distribution and pay the associated taxes

There are advantages and disadvantages to each option. The best one for you depends on your individual circumstances.3Since your retirement plan savings may represent a substantial source of income in retirement it's important to think about all of the following:

  • The difference in fees and expenses between the QRP and IRA
  • When penalty-free distributions are available
  • Your need for help making investment decisions and other services offered
  • Any special considerations regarding your employer stock
  • Timing of required minimum distributions (RMDs)
  • Protection of assets from creditors and bankruptcy

We can sit down and look at your choices together so you can decide which one makes the most sense for you. Before you make any decision or take any action, speak with your current retirement advisor and tax professional.

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Ready to get started?

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Schedule a call.

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We'll make a smart, confident retirement plan together.

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Start funding your IRA, enjoying deductions wherever possible.

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Retire with confidence.

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  1. Traditional IRA distributions are generally taxed as ordinary income. Qualified Roth IRA distributions are federally tax-free provided a Roth account has been open for more than five years and the owner has reached age 59-1/2 or meets other requirements. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Both may be subject to a 10% IRS tax penalty if distributions are taken prior to age 59-1/2.

  2. Withdrawals are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59-1/2. For SIMPLE IRAs, the federal penalty increases to 25% if a distribution is taken prior to two years from the first deposit made into a participant's account if under age 59-1/2.

  3. Please keep in mind that rolling over assets to an IRA is just one of multiple options for your retirement plan. Each of the following options is different and may have distinct advantages and disadvantages.

    1. Roll assets to an IRA
    2. Leave assets in your former employer's plan, if plan allows
    3. Move assets to your new/existing employer's plan, if plan allows
    4. Cash out or take a lump sum distribution

    When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees and expenses, services offered, investment options, when penalty free withdrawals are available, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.