Traditional and SEP IRAs
Save for retirement
and gain tax advantages
About
Traditional IRAs
Anyone under
age 70½ with earned income can contribute to a
traditional
IRA. Contributions may be tax
deductible, and taxes
on earnings are deferred until you
withdraw funds from the account,
so your investments have the
opportunity to compound faster.
About
Simplified Employee Pension (SEP) IRAs
A
Simplified Employee Pension Plan, commonly known as a SEP
IRA,
is a retirement plan specifically designed for self-employed
people and
small-business owners. Its key features are highlighted
below. When
establishing a SEP IRA plan for your business,
you and any eligible
employees establish your own separate
SEP IRA; employer contributions
are then made into each eligible
employee’s SEP IRA.
Traditional IRAs
| Apply |
Traditional/
SEP IRA Application (pdf) |
| Minimum
to open |
$1,000 |
|
| Contribution
deadline |
April 15, 2010 for 2009 tax year |
|
|
| Tax advantages |
| Contribution |
Tax deductible (subject to certain limitations) |
|
|
| Earnings |
Tax deferred (taxed when you begin withdrawing) |
|
|
| Withdrawals |
Taxable
(except withdrawals of non-deductible contributions) |
|
|
| Contributions |
| Eligibility |
Anyone
with earned income may contribute up until age 70½. |
|
|
| Annual contribution amounts |
You
may contribute simultaneously to a traditional IRA
and a Roth IRA (subject to eligibility) as long as
the total contributed to all (traditional or Roth)
IRAs totals no more than $5,000 for tax year 2008 ($6,000 for age 50 and older). |
|
|
| Withdrawals |
| Penalty free |
Withdrawals
after age 59½ |
|
|
| Penalty |
- If you do not start required minimum distribution
withdrawals by age 70½, you will face
a penalty. Special distribution rules may apply.
- Withdrawals before age 59½ are subject
to a 10% penalty. (Exceptions are listed below.)
|
|
|
| Exceptions to penalty |
- Higher education expenses for you or family members;
expenses include tuition, fees, books, supplies, and
room and board (must be enrolled at least part time).
- First-time home purchase expenses ($10,000 lifetime
limit) to buy, build, or rebuild a first home for you,
your parents, children, or grandchildren; you must not
have owned a home within the past two years.
- Death or disability.
- Certain long-term unemployment expenses.
- Certain medical expenses including qualifying health
insurance costs for certain unemployed individuals and
unreimbursed expenses exceeding 7.5% of AGI.
- Withdrawals made in equal installments over the account
holder's life expectancy.
|
Traditional/
SEP IRA Application (pdf)
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Simplified Employee Pension (SEP) IRA
Plan
eligibility
Tax advantages
SEP IRA deadline
Contribution Flexibility
Open
a SEP IRA
Plan eligibility
You can establish a SEP IRA if
you:
 Are a sole
proprietor, in a partnership, or a business owner (of
either an unincorporated or incorporated business, including
Subchapter S corporations);
Earn any self-employed
income by providing a service, either full-time or part-time,
even if you are already covered by a retirement plan
at your full-time job.
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Tax advantages
Tax-deductible contributions
Up to
25% of compensation, as much as $46,000 for the 2008 plan year.*
Tax-deferred growth potential
Any
investment earnings grow tax-deferred until withdrawn.
* The maximum compensation on which contributions
can be based is $230,000
for the 2008 plan year. For self-employed individuals, compensation
means earned income.
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SEP
IRA deadline
The deadline to open and contribute to
a SEP IRA is:
Your tax filing
deadline (including any extensions).
For most self-employed
individuals and small-business owners, that deadline
is usually April 15.
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Contribution
flexibility
No annual contribution required. Contribution
percentage can vary each year, from 0% - 25% of compensation,
up to $46,000 for the 2008 plan year.*
All SEP IRA contributions
must be made by the employer, and the same percentage
of compensation must be contributed for each eligible
employee (based on W-2 wages) including the employer
* The maximum compensation on which contributions
can be based is $230,000
for the 2008 plan year. For self-employed individuals, compensation
means earned income.
Plan simplicity
No complicated
forms to fill out
No annual reports for
you to file with the IRS.
Attractive benefit for employees
Offering a
retirement plan can make it easier to attract and retain
valuable employees.
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Open
a SEP-IRA
Investing in a SEP IRA is easy. If you're ready to open a
SEP IRA or transfer your SEP IRA assets from another institution,
select one of the options below.
To get started, Open
a No-Fee SEP IRA
If you would like assistance
completing the application or would prefer to discuss
your options, call a Midas Fund Shareholder Service Representative
at 800-400-6432.
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Prospectus
