Retirement

Topic 1: Traditional and Roth IRAs

A traditional IRA allows you to make annual deductible contributions to an individual retirement account tax-deferred. Earnings from the account grow tax-deferred. For 2010 and 2011, you can make annual contributions to a traditional IRA of up to $5,000 or 100% of your employment income, whichever is less. A joint contribution of $10,000 can be made per married couple. If you are age 50 or older, you may make additional “catch-up” contributions to your IRA of $1,000. Withdrawals must begin after age 70 1/2.

Topic 2: Roth IRA

Roth IRA contributions are not deductible from your gross income on your federal income tax return. As a result, contributions may be withdrawn tax and penalty free at any point in time. Earnings on the account accumulate tax-deferred.

For 2010 and 2011, you can make annual contributions to a Roth IRA of up to $5,000 or 100% of your employment income, whichever is less. A joint contribution of $10,000 can be made per married couple.

If you are age 50 or older, you may make additional “catch-up” contributions to your Roth IRA.
There is no mandatory withdrawal age.

Topic 3: 401(k) Plan

A 401(k) plan is a defined contribution plan established by employers that allows employees to make tax-deferred contributions for retirement. Employers may match employee contributions up to a certain percentage. This plan empowers employees to generally direct contributions made to the plan as well as the percentage amount. In the event the employee changes jobs, the 401(k) plan can be moved with the employee from one company plan to another, or it can be transferred to an IRA. Funds in the plan cannot be accessed before age 59½ without penalties.