Choosing the right IRA is dependent on several factors:
Because every person's situation is different, there isn't one simple answer. You need to compare your choices and decide which is best for you. Your Brown Insurance Group advisor can assist you in reviewing your financial situation.
The main difference between a Roth IRA and a Traditional IRA is when you pay taxes. Contributions to a Roth IRA are made from after-tax income. Roth IRA contributions grow tax-free and are not taxed when withdrawn for qualified reasons. These include a first-time home purchase, disability and medical expenses, and any withdrawal taken after age 59-1/2, as long as the account has been open for at least five years. Withdrawals that do not qualify may incur taxes and/or penalties. You may also want to consult a tax professional.
Contributions to a Traditional IRA are tax-deductible (subject to certain income limits) and taxes are paid when you withdraw the money. Contributions grow tax-deferred.
The Savings Incentive Match Plan for Employees (SIMPLE) IRA is a tax qualified retirement plan for businesses with fewer than 100 employees. It enables eligible firms to offer 401k-type benefits without complicated rules or high administrative expenses. It enables eligible employees to make tax-deductible contributions beyond what a Traditional or Roth IRA allows.
For Businesses, SIMPLE means:
For Individuals, SIMPLE means:
Required employer contributions can be made on either a 3% of compensation ‘elective’ basis or a 2% of compensation ‘non-elective’ basis. SIMPLE contribution limits for individuals are as follows:
|Year||Under Age 50||Over age 50 (catch up contribution)|
A Simplified Employee Pension (SEP) IRA is an easy to set up and easy to administer retirement plan. There are generous funding limits and contributions are fully tax deductible.
Because of the plan’s simplicity affordability and flexibility (contributions can be stopped or started at any time) the SEP is great for small businesses, professionals and self-employed people. Certain rules include: