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CPA Retirement PlansPosted by SEP-SOLO-IRA-401k-ROTH on: 2007-01-18 13:50:50 in category:
Retirement Planning News [ Print | Permalink / 0 Comment(s) ] Max Bellamy There are a wide variety of retirement plans that CPAs offer. These retirement plans are designed to suit the needs of any individual or business and take a wide variety of factors into consideration. Irrespective of the age of an individual or business, retirement planning is a smart move that is proactive. Starting a retirement plan as soon as possible is vital. There are basically three types of retirement plans that CPAs offer ? Individual Retirement Accounts (IRAs), Corporate Retirement Plans, and Self-employed Retirement Plans. Each of these retirement plans has its own merits and demerits. There are two types of Individual Retirement Accounts (IRAs) - Roth IRA and traditional IRA. The Roth IRA is not tax deductible and the income is not taxable when the individual withdraws it at retirement age. Roth IRA is the better option to choose when the person is young or if he believes he will be in a higher tax bracket upon retirement. Traditional IRA is preferable if the individual is in a higher tax bracket in the year of contribution. Corporate Retirement Plans consist of four types - Simplified Employee Pension (SEPs), Simple IRA Plans, Individual 401(k) Plans and Qualified Plans. SEPs have a maximum contribution of $42,000 (as of 2005) or 25% of all participants? compensation. In Simple IRA Plans, the maximum salary reduction contribution allowed for any employee is $10,000 (as of 2005). Employees over the age of 50 years can make a ?catch up? contribution of $2,000. Individual 401(k) plans are salary deferral plans with both employer and employee contributions. This plan is only allowed for a sole owner company and their spouse. Qualified Plans are Money Purchase and Profit Sharing Plans. These plans are based on current compensation and the maximum contribution is $42,000 (as of 2005). Self-employed Retirement Plans have the same rules as Corporate Retirement Plans but for one major difference. For those self-employed individuals or partnerships that have an SEP or Qualified Plan, the deductible contribution of the owner is on 1040 and not on Schedule C or Partnership Tax Return. This is a disadvantage since this is after deductions for Social Security and Medicare as well as the deduction towards the plan. CPA provides detailed information on CPA, CPA Exam, CPA Review, CPA Firms and more. CPA is affiliated with Expense Report Software. |
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