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Midstates Bank

IRAs

Traditional IRA 

Traditional IRAs are tax-deferred retirement savings plans. If eligible, individuals may receive a tax deduction for regular, catch-up, and spousal Traditional IRA contributions. IRA holders do not include earnings from Traditional IRAs in their taxable income until the year they take a distribution. 
 
  • Earnings grow tax free
  • Contributions are deductible if eligible
  • No contributions after age 70½
  • Required minimum distributions (RMD) begin at age 70½

Roth IRA 

Similar to Traditional IRAs, Roth IRA earnings grow tax-deferred. But unlike Traditional IRAs, all Roth IRA contributions are considered after-tax assets and are ineligible for an income tax deduction. The main benefit of a Roth IRA is realized when the assets are distributed. If certain requirements are met, individuals may take tax and penalty free Roth IRA distributions. 

  • Earnings grow tax free
  • Qualified distributions are tax and penalty free
  • No age restrictions for contributions
  • All contributions are non-deductible, after-tax dollars
  • No RMDs at any age
 Year
 Maximum regular/
spousal contribution
Maximum catch-up 
contribution
2017 $5,500 $1,000

SEP IRA 

SEP plans allow employers to make discretionary contributions to an employee's Traditional IRA.  For 2017, an employer may contribute up to the lesser of 25% of compensation or $54,000.  In that way, SEP plans are similar to profit sharing plans. 
 
  • Employer established retirement plan
  • The employer is allowed to deduct a percentage of the participant's compensation
  • Contributions are deductible by the employer, and not included in the employee's yearly income
  • Contributions are not subject to Federal withholding, FICA or FUTA taxes, unless self-employed
  • Earnings sheltered from federal and most state income taxes until withdrawn
 

SIMPLE IRA 

SIMPLE IRA plans are designed for businesses with 100 or fewer employees. SIMPLE IRA plans consist of a deferral program for the employees and a mandatory contribution made by the employer. In that way, SIMPLE IRAs are similar to 401k plans. 
 
  • Employee sponsored retirement plan
  • Employer must employ 100 or less employees
  • Employee, by making elective deferrals, can defer current income taxation
  • Employer may make matching contributions
  • An employer is allowed to deduct the cost of elective deferrals
  • Earnings on deferrals are sheltered from federal and most state income taxes until withdrawn
  • Contribute up to $18,000 in 2015-2017 (age 50 or younger) or $21,000 (age 50 or older)
 
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