Retirement Plans
IRA
The term "IRA" is an acronym for a government sponsored personal retirement plan called an Individual Retirement Account. IRAs are tax-advantaged retirement programs for individuals with earned income.
Traditional IRA
An IRA that is not a Roth IRA or a SIMPLE IRA. Individual taxpayers are allowed to contribute 100% of compensation (Self-employment income for Sole proprietors and partners) up to a specified maximum dollar amount to their Traditional IRA. Contributions to the Traditional IRA may be tax-deductible depending on the taxpayer's income, tax-filing status, and coverage by an employer-sponsored retirement plan.
Roth IRA
The Roth IRA is a unique, tax-advantaged way for investors to save for retirement. Although contributions are not tax deductible, withdrawals are tax-free - as long as they are made after age 59½ and the account has been in existence for at least five years. This allows your earnings to compound free of taxes with no future income tax consequences. Of course, Roth IRAs may not be suitable for all investors - you'll need to consider your own personal financial situation.
Simple IRA
A SIMPLE IRA plan is an IRA-based plan that gives small employers a simplified method to make contributions toward their employees' retirement and their own retirement. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or nonelective contributions. All contributions are made directly to an Individual Retirement Account or Individual Retirement Annuity (IRA) set up for each employee (a SIMPLE IRA). SIMPLE IRA plans are maintained on a calendar-year basis. See IRS Publication 560, IRS Publication 590 and IRS Notice 98-4 for detailed information on SIMPLE IRA plans.
SEP
A SEP is a simplified employee pension plan. A SEP plan provides employers with a simplified method to make contributions toward their employees’ retirement and, if self-employed, their own retirement. Contributions are made directly to an Individual Retirement Account or Annuity (IRA) set up for each employee (a SEP-IRA). See Publication 560 for detailed SEP information for employers and employees.
