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Individual Retirement Accounts

Individual Retirement Accounts

An IRA is an excellent vehicle to help save for retirement

An Individual Retirement Account (IRA) provides an excellent vehicle to help save for a secure retirement, while potentially gaining valuable tax advantages1.

  • Contributions may be fully deductible, up to current limitations.
  • If you’re 50 or older, you may contribute an extra $1,000 per year.
  • Earnings grow tax deferred and withdrawals are taxed as normal income.
  • You may withdraw funds beginning at age 59½ without IRS penalties.
  • Withdrawals before age 59½ may be subject to income or penalty tax1.
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  • Contributions are not tax deductible and are limited to $5,500 per year.
  • If you’re 50 or older, you may contribute an extra $1,000 per year.
  • Withdrawals are tax-free after age 59 ½ or for first-time homebuyers if the IRA has been opened for at least five years.
  • Income limitations may apply.
  • You may make contributions from earned income after age 70 ½.
  • Mandatory distributions are not required.
  • Traditional IRAs can be converted into Roth IRAs.
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  • Minimum balance of $500.
  • Variety of terms to meet your needs.
  • Competitive term-based rates.
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What is a Simplified Employee Pension (SEP)?

Simplified Employee Pension (SEP) plans can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and their employees. A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay.

Simplified Employee Pension (SEP)

  • Available to any size business.
  • No filing requirements for the employer.
  • Only the employer contributes.
    • Traditional IRAs (SEP-IRAs) set up for each eligible employee.
    • Employee is always 100% vested in all SEP-IRA money.
  • Easy to set up with low administrative costs.
  • Flexible annual contributions.

The Interra Business Services team is available to help you get started.

For a SEP, can an employer contribute different amounts for employees?

Employers must contribute equally for all eligible employees.

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What is an IRA?

An IRA, or individual retirement arrangement, is an investing tool used by individuals to earmark funds for retirement. There are several types of IRA’s. There are Traditional IRA’s, Roth IRA’s, Simple IRA’s, and SEP IRA’s. IRA’s can consist of a wide range of financial products such as mutual funds, stocks, bonds, insurance products, and cash.

Is an IRA and a 401k/403b the same thing?

No, a 401k is retirement plan you set up with your employer. You make contributions pre-tax via payroll deductions. An IRA is a retirement plan you set up on your own, outside of your employer.

Are IRA’s a good idea?

Because of the tax advantages of IRA’s, the government is giving you an incentive to save for retirement. There are ways to escape taxes on either the money you put into the plan initially or on the money you withdraw in retirement, depending on what type of IRA you choose.

What’s the difference between a Traditional IRA and a Roth IRA?

The set up difference between a Traditional IRA and a Roth IRA is how and when you get a tax break. The tax advantage of the Traditional IRA is that your contributions are tax-deductible in the current year. The tax advantage of a Roth IRA is that your withdrawals in retirement are not taxed.

Save for Retirement

1Consult with your tax adviser