|
|
TYPE
OF
RETIREMENT
PLAN
|
PLAN
CONTRIBUTION
FEATURES
AND LIMITS
|
|
Plans
For Individuals
|
Individual Retirement Account (IRA)
|
The lesser of
$4,000 or 100% of earned income.
$8,000 for an individual and spouse.
Also, a $1,000 catch-up contribution may be made for those aged 50+. The tax deduction is phased out if
a spouse is in an employer
plan and income exceeds certain limits: $83,000+ joint, $52,000+ single,
subject to future annual indexing. Non-deductible
IRA contributions are permitted, but not as attractive.
(2007 Limit)
|
|
|
Roth IRA
|
This is a non-deductible IRA, that is limited to
$4,000 per year, or the employee’s earnings, if less; $8,000 for married
filing jointly. Contributions
may continue after age 70. Withdrawals
are tax-free, after the later of 5 years or 59 1/2, and need not be made
at age 70 1/2. Eligibility phases out at
$99,000 single and $156,000 married.
(2007 Limit)
|
|
|
Tax Sheltered 403(b)(7) Annuity or Custodial Account
|
Salary reduction arrangement up to the lesser of
25% of compensation, an amount calculated under special rules or $15,500. Also,
a $5,000 catch-up contribution may be made for those aged 50+. Non-deductible contributions not permitted.
Funds may be invested in an annuity or in a mutual fund custodial
account.
(2007 Limit)
|
| Plans
for Smaller Businesses
|
SIMPLE
/IRA |
Salary
reduction arrangement of 100% of compensation up to $10,500. Also,
a $2,500 catch-up contribution may be made for those aged 50+. Employer makes
matching contributions only to those employees who choose to
participate. No top-heavy rules. Each employee has own
separate IRA account. (2007 Limit) |
|
|
Simplified Employee Pension (SEP)
|
The lesser of
25% of earned income up to $180,000,
producing a maximum contribution of $45,000.
(2007 Limit)
|
|
|
Salary Reduction
(SARSEP)
|
Salary reduction arrangement up to the lesser of
$15,500 (2007 limit). Regulations may require a business contribution in
“top-heavy” plans. New SARSEP plans cannot be created as of January 1,
1997.
|
|
|
Profit Sharing Plan
|
The lesser of
25% of earned income or $45,000 for
each individual.
(2007 Limit)
Contributions may vary based on profits.
The Thrift Plan version permits employee contributions.
|
|
|
Money Purchase Pension
|
The lesser of 25% of earned income or
$45,000.
Annual contribution is generally required once installed.
|
|
Plans
for Mid-Sized Businesses
|
Profit Sharing
|
The lesser of
25% of earned income or $45,000 for
each individual. (2007 Limit)
|
|
|
Money Purchase Pension
|
The lesser of 25% of earned income or
$45,000.
Annual contribution is generally required once installed.
|
|
|
401(k) Plan
|
The lesser of
25% of earned income or $45,000.
There is a $15,500 cap on elective deferrals.
Also,
a $5,000 catch-up contribution may be made for those aged 50+. (2007 Limit)
|
|
|
Defined Benefit Pension
|
Costs are normally borne by the Employer, but some
plans require the employee to make non-deductible contributions, generally
as a per cent of compensation.
|
|
Special
Plan for Governments
|
Sec. 457 Deferred Compensation
|
Employees may contribute up to
100% of earned
income, subject to a maximum of $15,500. Also,
a $5,000 catch-up contribution may be made for those aged 50+.
(2007 Limit)
|
and C