Yiman Zeng
9/30/2017
ACCT 3013-60034
Executive Summary
1. Introduction
This section summarizes and compares the advantages and disadvantages between the types of individual retirement account (IRA) available. The purpose of this analysis is to provide an overview of the Traditional and Roth IRA options.
2. Comparison
Both Traditional and Roth IRAs is very helpful in saving money for retirement. But, the type of IRA chosen has significant impact on long-term savings. Therefore, a good understanding in the differences between these two IRAs is recommended in order to select one that is more suitable.
When it comes to income limit, there is no income restriction for contributing to Traditional IRA. Any individual with earned income can contribute to Traditional IRA as long as he/she has taxable compensation and is currently younger than 70½ years old. On the other hand, Roth IRA has strict income requirements. If the filer or the filer’s spouse have taxable compensation and his/her modified adjusted gross income is below certain amounts, he/she is eligible to contribute to Roth IRA at any age. While the tax deductibility for Traditional IRA depends on
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If you were to withdraw after retired, the amount is taxed at regular income tax rates. Conversely, Roth IRA contributions have no tax break. Also, withdrawals under Roth IRA are mostly tax-free. On the matter of withdrawal rules, both Traditional and Roth IRAs allow you to withdraw money anytime you desire. Nevertheless, another main difference between these two IRAs is when you have to take required minimum distributions. Traditional IRAs requires you to start withdrawing certain percentage of your savings at age 70½, regardless if you are in need of money at that moment. In contrast, withdrawals are not required provided that you are the original
Also with the Traditional IRA there are certain taxes which become due after a certain age. After age 59 1/2 income tax is due on earnings and the original contributions are withdrawn tax-free (smartmoney, the ira super page, 2000).
the distributions would be untaxed income on the FAFSA for the next year. This will reduce eligibility for the financial aid needed.
Roth IRA contributions are based on several factors (i.e. annual income and your tax filing status).
The main difference between a traditional 401(k) plan and a Roth 401(k) plan is in the way the plan is taxed. Whether to offer a traditional 401(k) plan and/or a Roth 401(k) plan is a business decision. If an employer opts to offer both, clear communication to employees on the differences between plans is necessary.
Retired individuals in the U.S. are eligible to receive benefits through Medicaid at the age of 65. Some individuals choose to have supplemental insurance along with Medicaid, which helps increase their benefits. If one retires before this age the can apply for the Health Insurance Marketplace.
There are some cases, however, where there are exceptions . Some exceptions may include leaving your employer at age fifty-five or older, purchase of a primary residence, to avoid foreclosure of or eviction from a primary residence, and medical expenses not covered by insurance (The basics of a 401(k) plan). If a person chooses to wait to begin taking money from their account, they must begin making required minimum distributions by the year after they turn seventy and one half. The notable exception is for those still working at this age (401 (k) - Wikipedia).
I just got off the phone with Mary a representative assistant. She inquired about Simple IRA contributions and Mia was so helpful providing the information, what she is not expecting is that Mia made a step further by looking into the IRS website and showed her what the information she was looking for. For Mary it was a great experience “Not everybody does that extra step”.
You are eligible to apply for a retirement pension when you are age 60 or over if you have made at least one contribution to the plan, regardless of whether you have stopped working or not. The standard age to begin receiving the pension is 65. However, you can take a permanently reduced pension as early as age 60 or take a permanently increased pension after age 65.
Since its inception, Vanguard has offered multi-channel services to all investors. This includes deferred compensation/benefit plans (401K, 403B, 457, pension), plans for children (529, UGMA/UTMA, ESA), and individual savings accounts (retail, IRA). Strategically, it does not offer high cost products like annuities and transactional funds. This is because these investments tend to be expensive for the client recurring commissions are paid to the broker who sold the products. In addition, they are difficult for the client to understand the fees and payout. As part of its commitment to all investors, which includes low income and finance illiterate individuals, Vanguard only offer products that it feels adds value to all types of portfolios.
There are three forms of Judaism Othrodox, Reform and Conservative. I will cover the bases of each, In Orthodox Judaism they tend to be more traditional. The main forms of faith are in Written Law and Oral Law, which are their fixed beliefs and cannot be changed by anyone. They also follow dietary restriction and follow the Torah.
It is easy to see that there will be differences between Orthodox and Reform Jews, simply from the words 'reform' and 'orthodox' themselves, as reform means to change or improve something, and orthodox means established and approved (Dictionary, 2016). Through research it is evident that Reform Jews have taken steps to modernize Judaism, and Orthodox Jews have worked to maintain the traditions of Judaism.
The Social Security Act of 1935 provided retirement benefits only to retired workers themselves. In 1939, before any benefits had been paid, the first of numerous extensions to the system provided benefits for survivors and dependents. Later extensions included several classes of workers not covered under the original law. For example, during the 1950?s state and local government employee, members of the armed forces, and many farm workers, domestic workers, and self-employed professions were taken into the system In 1956 the age at which women become eligible for some benefits was reduce from 65 to 62, and in 1961 men were given the option of retiring at a reduced level of benefits at the age of 62.
The first retirement plan created in the United States, is one that the majority of us are familiar, the Social Security Act, signed under law in 1935. Up until 1939, Social Security only paid retirement benefits to primary workers, which for the most part were men. Age 65 was chosen as the retirement age because individuals who survived past childhood were likely to live past 65. However, not everyone benefited from such assistance, even after age 65—agricultural and domestic workers were excluded from coverage (DeWitt, 2010). The excluded group consisted of roughly half of workers contributing to the economy, which the majority were African Americans. According to Larry DeWitt, a public historian from the Social Security Administration, exclusion of such groups was due to tax-collection procedures and not due to racial bias. Although it may seem as though Social Security was meant to be the only form of retirement plan for qualified retirees, it was not. During such time, many individuals strongly depended on their savings as well as on their family.
After a formula is applied to these earnings, they arrive at the basic benefit, or “primary insurance amount,” that the applicant would receive each month once they reach the ages of 65-67. It is also possible to start receiving monthly benefits early, at the age of 62. However, the monthly payments will be reduced. Payment amounts can also change if the applicant decides to delay their retirement past the standard retirement age. By doing this, Social Security benefits will increase by a certain percentage until retirement or the applicant reaches the age of 70 (Your Retirement Benefit, 2014).
One of the very first topics that I will elaborate on is the economic aspects of my later life. As of November 13, 2016, I have had an account opened for my retirement fund. Its pertinent that I, personally have this account. I have this account to be my cushion to “fall back on” if any of my other plans for aging do not fall through. “Currently, the full benefit age is 66 years and 2 months for people born in 1955, and it will gradually rise to 67 for those born in 1960 or later.” (National Academy of Social Insurance, 2017)