Types of IRAs
Keough Pension Plans
Keough Pension Plans represent a certain type of Individual Retirement Account (IRA), which is divided amongst two groups: Defined Contribution and Defined Benefit. These types of plans are tax-deferred and will not have taxes asessed on them until funds are withdrawn.
Defined Contribution Plan
Each individual who participates in the plan has an individual account. Defined Contribution Plans can be a Money Purchase Plan, which lets you deposit up to 20% of your income, or $30,000 a year. However, your contribution is fixed once and cannot be altered. A Defined Contribution Plan can also be a Profit Sharing Plan, which allows year to year contributions from business profits you share with fellow employees.
Defined Benefit Plan
Defined Benefit Plans are the flipside of Defined Contribution Plans: rather than restrictions on payments and how much you can regularly contribute, Defined Benefit Plans allow you to set a Benefit goal for retirement. You will then, with the help of a professional determine from week to week or month to month what you are able to contribute and what will assure you of your predetermined goal.
Roth IRA contributions are different from 401k plans or traditional IRA's in that they are not tax-deferred. That is, they are made on an after-tax basis. This will not allow you to protect some income from taxation, as a 401k would. However, any money that is withdrawn was already taxed as part of the initial investment, so benefits, including interest are not taxed. The contribution of $2,000 still applies.
SIMPLE (Savings Incentive Match Plans for Employees) IRA's is a way for small businesses to bypass the lack of 401k plans for employees. Unlike large companies, which have the resources and funds available to manage large 401k plans, small businesses must rely on government programs such as IRA's to help their employees provide for their retirement. Simple IRA's apply to companies with 100 or less employees that do not offer 401k Retirement Plans or another type of pension. Like traditional IRA's, an employee will contribute a percentage of their income, tax-deferred, and their employer will match a proportion of the employee contribution.
Spousal IRA's allow a married couple to each have a fund for retirement, even if one does not work full time or at all. Each member of the marriage must be under the age of 70 ½. Each spouse can contribute up to $2,000 a year to their IRA, and if one spouse makes less than $2,000, the other can contribute to their fund.
Like section 401k of the Internal Revenue Code, section 412i also has a retirement plan named after it. 412i plans give very small businesses, with six employees or less the ability to offer retirement plans. Not only does this plan, which operates similiarly to 401k plans allow employees to contribute tax-deferred income to a retirement fund, but it allows retirees to liquidate their fund into a lump sum upon retirement, rather than receive regular payments.
How can I find out more?
- You can start by visiting our online Learning Center to review the basics of how a 401k rollover works and what it can do for you.
- Use our Contact an Agent form to request a rollover for your 401k plan.
Home - Learning Center - Request Your 401K Rollover - Glossary - Articles - Links
© 2003-2023, 401k-Rollover-Options.com, All rights reserved.
Webmasters! Help us promote our products, click here