Secure a Comfortable Retirement

Rely on the experienced professionals at American Trust Center to help you secure a comfortable retirement with an Individual Retirement Account (IRA):

• IRA - Traditional Individual Retirement Accounts are accounts established by an individual who wants to start a retirement savings plan and avoid income on the contributions and earnings until withdrawn. Generally, most individuals may contribute up to $5,000 (2010). If you are a participating member of a qualified plan, your contribution may not be deductible. Recent tax law changes allow individuals who attain age 50 by the end of the year to make an additional "catch-up" contribution of $1,000 (2010).
• Rollover IRA - If you are changing jobs or retiring, you may want to consider "rolling" your account balance from your employer sponsored retirement plan into an IRA.  You may also want to consider consolidating your retirement assets by combining your IRA’s.   This type of account provides the owner with flexibility and options that may not be available within a retirement plan.
• Roth IRA –  With a Roth IRA, the contributions are not tax deductible like a traditional IRA, however, the earnings on the contributions are tax deferred and in most cases can be withdrawn TAX-FREE. Provided you are at least 59 ½ years old at withdrawal and the contributions have remained in the account for at least five years the earnings will not be taxed. If you are single, head of household, or married filing separately, your contribution limit begins to phase out when your modified AGI reaches $105,000 and is zero at $120,000. If you are married, filing jointly, or a qualified widow or widower, your contribution limit begins to phase out when your modified AGI reaches $167,000 and is zero at $177,000.  The contribution limit is the same as a traditional IRA $5,000 (2010).  Catch-up contributions apply to Roth IRA’s as well.
• Roth Conversions – For higher wage earners, this is a prime opportunity to convert money into a Roth IRA.  Staring in 2010, the income limit on conversions was lifted.  While 2010 is the actual year that you will be able to convert, the income to be claimed can be deferred until 2011 and 2012.  The IRS has set up special provision on how the tax will be paid.  The IRS has granted you the option to claim 50% of the conversion amount as income in 2011 and the remaining 50% in 2012.  Keep in mind that this is only in 2010.  If you elect to pay the tax over the two year period, keep in mind that the tax rate is determined for that year only.  The 2010 conversion is not limited to just your traditional IRA.  If you have any old 401(k)s or any other retirement plans from a previous employer, those will also be allowed to convert as well. *

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Retirement for your employees

Have you considered a retirement plan for your employees? We offer a number of plans, depending on the size of your business and the type of benefit you want to provide:

• Simplified Employee Pension Plans - SEP Plans are plans designed for smaller businesses. There are generally lower costs involved with establishing and maintaining this type of plan, and less reporting than other plans. SEP contributions are tax-deductible for employers. SEPs require little paperwork and are easy to administer. Employers determine how much to contribute, as long as the percentage of contributions is equal for all employees based on their income. As an employer, you can change contribution levels annually, including not contributing at all. Contributions are limited to the lesser of 25 percent of an employee's compensation or $49,000 (for 2010). As with other IRA's the contribution and earnings are only taxed when withdrawn.
• Simple IRA - This type of plan is available to employers with less than 100 employees. The IRA is funded with both employee and employer contributions made directly to the employee's IRA. Employees can defer up to $11,500 (2010) and the employer must either: a) Match the employee's deferral up to 3% of pay, or b) Make a 2% non-elective contribution to all employees. As with other IRA's the contribution and earnings are only taxed when withdrawn, but an additional penalty of 25% applies if withdrawn in the first 2 years.
• Traditional 401(k)Plans - There are various types of 401(k) plans which an employer can adopt and range from standardized to comprehensive  non-standardized. With 401(k) deferrals, employees enjoy tax savings when these deferrals are deducted from their paychecks pre-tax. It is easy, convenient, and the employees can direct how they want their accounts invested. The deferrals and accumulated earnings continue to grow tax-deferred until withdrawn (normally at retirement). Employers have discretion and may elect to match the employees' deferrals. Also, employers may elect to subject the matching contributions to a vesting schedule - meaning that employees need to work a required number of years to earn the matching contribution. Recent tax law changes allow individuals who attain age 50 by the end of the year to make an additional "catch-up" contribution of $5,500 (2010).
• Roth 401(k) Plans - The Roth 401(k) came into effect January 1, 2006. Roth 401(k)s are after-tax contributions made to a 401(k) plan. However, Roth 401(k) plans are tax-sheltered accounts, which means the money grows tax free in the account, and you are allowed to take the money out tax-free at retirement provided you meet the conditions of a “qualified” withdrawal.  Generally, the money has to have been in the account for 5 years and the participant has attained age 50 ½.
• Safe-Harbor 401(k)Plans - This type of 401(k) plan operates similar to a traditional 401(k) with entry and service requirements, yet differ in the area of employer contributions. Employees can defer up to $16,500 (2010) and the employer must either: a) Match the employee's deferral up to 3% of pay PLUS match 50% of the employee's deferral on the next 2% of pay, or b) Make a 3% non-elective contribution to all employees. The employer contributions are immediately 100% vested for the participant. This type of plan is attractive to employers who are already making contributions at or near the required levels. Catch-up contributions may also be made to Safe Harbor Plans.
• Profit Sharing Plans - Like the name states, employers determine how much of the company's profits they elect to "share" with their employees. The contribution is allocated pro-rata to all eligible participants. Employer contributions are limited to the lesser of 25 percent of compensation or $49,000 (2010) per participant and are tax deductible to the employer. Like deferrals, contributions to a Profit Sharing Plan grow tax-deferred.

*Beginning in 2010, new Roth IRA conversion rules allow for full participation by those individuals who previously did not qualify due to income restrictions. Though the 2010 Roth IRA conversion limit is removed, phase out limits still apply for contributions.