RMR Wealth Management, LLC
February 2012 Retirement Plan
Article 1

212.785.4377
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Dear Valued Client,

Do you know how much you need to retire comfortably and remain comfortably retired?  With so many options, how do you know which one is right for you?  What does your retirement plan look like?  It is tax season, the time of year individuals are looking to minimize taxes.  Every year you have the opportunity to contribute to a retirement plan.  Considering the prevailing economy conditions, we can’t rely on social security, pensions, etc… In order to keep the same lifestyle in retirement you need to save 20-25% of your income.

 

Traditional IRA

-         $5,000 maximum contribution

-         Pre-tax dollars

-         Eligible contributions are deductible and grow tax deferred; taxes paid upon distribution

-         Catch-up contribution of $1,000 ($6,000 Total) for individuals, age 50 and older.

-         No loans available

-         RMD (Required Minimum Distribution) at age 70 ½ ; cannot make any contributions at age 70 ½ or older

 

Roth IRA

-         $5,000 maximum contribution

-         After-tax dollars

-         Eligible contributions grow tax deferred; tax free distributions

-         Catch-up contributions of $1,000 for individuals, age 50 and older

-         No loans available

-         NO RMD’s required; you can make contributions after you reach age 70 ½

 

Plans for Self Employed Individuals and Owners:

 

SEP IRA (Simplified Employee Pension)

-         $49,000(2011) $50,000(2012) maximum contribution or 25% of your net income

-         Pre-tax dollars

-         Eligible contributions are deductible and grow tax deferred; taxes paid upon distribution

-         No catch-up contributions available

-         No loans available

-         Complete form 5305-SEP

 

Individual (k)

-         $50,000 (2012) maximum contribution

-         Pre-tax dollars

-         Eligible contributions are deductible and grow tax deferred; taxes paid upon distribution

-         Catch-up contributions of $5,500 for individuals, age 50 and older

-         Access to loans 

 

Difference Between SEP IRA & Individual (k) Contributions

 

Maximum Total Contributions? (*1)

 

 

 

 

 

 

 

 

 

Business Net Profits

$50,000

$100,000

$150,000

 

SEP IRA

 

$9,294

$18,587

$28,389

 

Individual (k) (*2)

 

$25,793

$35,587

$44,773

 

 

 

 

 

 

 

*1 Maximum contribution amounts assume an individual is not participating in other retirement plans

*2 Individual (k) contribution limits are %5,500 higher if you are over 50 years of age

 

Single Defined Benefit

-         Ideal for individuals who wish to contribute more than the maximum allowed in an Individual (k) for at least a few years

-         Maximum contributions up to $195,000 for 2011 ($200,000 2012)

-         Pre-tax dollars

-         Contributions are calculated by an actuary based on the benefit you set and other factors (your age, net income, expected returns on plan investments, etc.)

 

Experts say only 22% of retirees have an income plan.

-         78% have no plan

-         11% established a plan before retirement

-         11% created a plan when retired

 

Are you ready for retirement?  Having the right retirement plan is critical for any long term plan.  What are the advantages/disadvantages of each retirement structure?  Which one is right for you?  Please contact me to go over all of your options.  Don’t be in the category of the 78% of Americans.  Be Proactive, Get Educated!

 

Call me today at 212-785-4377 x224 to schedule a retirement reality check. 

 

 Sincerely,

 

John J. Fiorito
Financial Advisor
“Retire Comfortably and Remain Comfortably Retired”

Securities offered through Dinosaur Securities, LLC Member FINRA, SIPC, NFA.

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.  RMR Wealth Management, LLC does not provide legal, tax, or estate-planning advice. For questions about a specific situation, please consult a qualified adviser.