英语论文网

ially tax deductable if your adjusted gross income is in the range of $56,000 and $66,000 and not tax deductible if above $66,000. Like the 401(k) plan if you decide to make a withdrawal before the age of 59.5 you will have to pay the tax and the 10% fine charged by the IRS.

Also in the IRA family is the Roth IRA. It contrasts with the Traditional IRA as contributions are not tax deductable. Withdrawals from the account are tax free if you meet the proper qualifications. The qualifications to meet the tax free deductions are the account must have been opened for at least five years for principal withdrawals and the owner's age must be at least 59.5. Also the earnings and appreciation are tax free. To participate in a Roth IRA your modified adjusted gross income must be less than $166,000 annually for individuals who are married and file a joint tax return. $100,000 annually for individuals who are married, lived with their spouse at anytime during the year, and file a separate tax return. $114,000 annually for individuals who file as single, head of household, or married filing separately and did not live with his or her spouse at any time during the year. There are fewer restrictions on the withdrawal of the money from a Roth IRA because you have already paid the taxes upfront. For example you do not need to start withdrawing money by a set age like you would in a Traditional IRA, which forces you to make withdrawals by the age of 70.5. A Roth IRA can be advantageous if you are predicting overall taxes to increase, or your personal tax bracket to increase over the course of your savings. This is because you are paying the current tax rate when you put the money in the account and not paying the tax rate as you take the money out. The same is true for the opposite situation; if you believe the overall tax rates will decrease, or you personal tax bracket will decrease then it would not be a good idea to choose a Roth IRA because you will not receive the tax advantage.

There is also a SEP IRA. This is a retirement plan designed to benefit self employed individuals and small business owners. Sole proprietorships, S and C corporations, partnerships and LLCs also qualify. The contribution limit is $49,000. The contributions are tax deductable and investments earnings are tax deferred. This is a simplified plan which makes the administrative costs lower than other complex plan options. Other advantageous to business owners are there are no complex forms to fill out and no annual reports that need to be filed with the IRS.

Keoughs are a tax deferred pension plan available to self-employed individuals or unincorporated businesses. A Keogh plan can be set up as either a defined-benefit or defined-contribution plan, although most plans are defined contribution. Contributions are generally tax deductible up to 25% of annual income with a limit of $47,000. Keogh plan types include money-purchase plans, defined-benefit plans and profit-sharing plans. Keogh plans can invest in the same set of securities as 401(k)s and IRAs, including stocks, bonds,? certificates of deposit? and annuities.

A different type of retirement plan is an Employee Stock Ownership Plan (ESOP). In this situation the company gives employees shares of their companies stock. In this case the company feels that the workers will try to improve the company because they are tied in with the company through this plan. Essentia