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How does Simple IRA benefit older people?
Yes, the limitation does not apply between a SIMPLE IRA and a Roth/Traditional. However, because a SIMPLE IRA is a "qualified retirement plan" offered by your employer, yo…u may not be able to get a traditional IRA deduction- all depends on your income situation.
Yes you may, and neither the Simple nor the Traditional IRA is affected by contributions to the other. The maximum amount for the Simple IRA for 2010 is $11,500 plus a $2,50…0 catch-up for folks 50 years old and older. The Traditional/Roth IRA maximum contribution amount for 2010 is $5,000 plus a $1,000 catch-up amount for folks 50 and older.
The taxable amount of any distributions will be added to all of your other gross worldwide on your 1040 federal income tax return and subject to your marginal tax rates. Early… distributions are also subject to an additional 10% tax. Go to the IRS gov website and use the search box for Publication 590 (2009), Individual Retirement Arrangements (IRAs) Early Distributions Use the search box for Publication 560 (2009), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) Additional Taxes
One of the biggest advantages of the Roth IRA is that direct contributions may be withdrawn at any time without a tax penalty and the Roth IRA does not require a certain age f…or distributions. Another advantage is Roth benefits do not affect a persons social security benefit.
The major benefit of a Roth Individual Retirement Account is that it is tax-free. Other types of IRAs are taxed by the government. Converting to a Roth IRA requires the owner …to pay the taxes for all the money currently in the account, but all subsequent funds will not be taxed.
SIMPLE IRAA SIMPLE IRA is a retirement plan for small businesses. "A salary deferral retirement plan established by an employer with 100 or fewer employees who received $5000… or more in compensation in the preceding year."--Schwab Employees defer part of their pay into the plan and the employer either matches a certain percentage or makes a non-elective contribution.
You can rollover a 401k to any type of IRA account that is geared towards retirement. (Education IRA's do not apply). A simple IRA is no different, and you can do a direct r…ollover to this account without incurring any type of taxes or penalties. However, use caution when doing the transfer, as you can be penalized up to 40% if it isn't done correctly. (You would have to pay ordinary income tax plus a 10% penalty) eRollover.com has some great articles on the topic, and can be found at the link below.
The money you invest is from before tax...so say you normally make $100 and pay tax of $25, you would have $75 to invest. By being allowed to use before tax money, the e…ntire $100 is invested. So you have more money working for you. Then the (presumably) gains on your investment, which would normally be taxed as realized, (so if you have interest income or sell a stock at a gain you normally really receive only that after tax amount again), aren't taxed currently. Leaving you all your investment income to re-invest. It does not go untaxed however. When you reeach retirement and start withdrawing it, the amount you withdraw is taxable then. (Of course, it has worked for you the whole time, is now paid in later probably deflated dollars, and probably when your income and rate is lower).
All Simple IRA contributions made by employees and employers are immediately vested. This means employees have immediate access to their funds, without any employer restrictio…ns. Although immediately accessible by the employer, taxes and penalties still may or may not apply.
Social security benefits is not qualifying earned income that you can use to contribute to a IRA account. There are three categories of qualifying income that can be used to m…ake contributions to a IRA account. Amounts earned as an employee, Self-employment income, and Alimony income.
If you inherit a 401(k) plan, many companies often cash you out shortly after you inherit the plan, which makes the entire amount taxable. However, the Pension Protection …Act, passed in 2006, allows all beneficiaries to move money to an IRA. Nevertheless, you're limited as to how the movement takes place if you're not the spouse of the decedent.
An IRA account is a great thing to consider as a long term savings plan, such as retirement. The benefits increase the earlier in your life you open it because it gives you mo…re time to accumulate wealth.
SIMPLE IRA stands for Savings Incentive Match PLan for Employees. It lets employers and their employees contribute to traditional IRAs that are set up for them.
A Savings Incentive Match Plan for Employees individual retirement account, or SIMPLE IRA, allows small business owners to set up a retirement plan for employees without t…he paperwork involved in establishing a 401k plan. It's possible to make contributions to a SIMPLE IRA, traditional IRA and a Roth IRA at the same time, although it's not always wise to do so.
This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). It explains what a SIMPLE plan is, contributions… to a SIMPLE plan, and distributions from a SIMPLE plan. Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs.