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Plans for every type of investor
Deciding which type of IRA to open as a retirement plan is an important financial decision. While all IRAs offer a way to save for retirement, each type — Traditional, Roth, SEP or SIMPLE — offer distinct advantages when it comes to taxation, required distributions and payouts, penalty structures and exceptions, age requirements and more. See which type of self-directed IRA is right for you.
A Traditional IRA gives individuals the opportunity to direct pretax income towards investments that can grow tax-deferred. Another plus is that no capital gains or dividend income is taxed until it is withdrawn. STRATA gives you access to a wide array of investment opportunities through a self-directed Traditional IRA, which makes it a great complement to a conventional Roth or Traditional IRA. Many investors choose to have multiple IRAs as a way to truly diversify their portfolios.
Traditional IRA features:
Annual tax deductible contributions are based on income level.
Anyone with earned income under age 70½ can contribute up to the annual maximum limit. See our IRA Annual Limits chart.
Withdrawals can begin at age 59½ and are mandatory by age 70½.
Funds withdrawn before age 59½ are subject to a 10% penalty unless an exception applies.
Taxes are paid on earnings when withdrawn from the IRA.
Traditional IRAs may be converted to Roth IRAs by paying income taxes (but no tax penalties) on the IRA distribution before rolling over to a Roth IRA, regardless of income limits.
Before making contributions to a Traditional IRA, be sure to know the contribution rules and limits that apply.
SEP is an acronym for Simplified Employee Plan and is a retirement plan that’s established by an employer. An SEP IRA permits employers to make deductible contributions which are made to a Traditional IRA.
SEP IRA features:
Employers can choose how much they want to contribute to an SEP in any given year, with a contribution limit of up to 25% of earned income.
SEPs can be opened by any type of business entity, including a sole proprietorship, a corporation or a partnership with up to 100 employees. In the case of sole proprietorships, the business owner is considered the employee for plan purposes.
With an SEP plan, each eligible employee has their own IRA account associated with the SEP.
Each year employers can choose whether or not to fund the account, depending on the business cycle that year.
If an employer makes a contribution for themselves, they must also make a contribution for all eligible employees.
Once funded, SEP contributions are 100% vested.
Before making contributions to a SEP IRA, be sure to know the contribution rules and limits that apply.
STRATA Trust Company (“STRATA”) performs the duties of a directed (passive) custodian, and as such does not provide due diligence to third parties regarding prospective investments, platforms, sponsors, dealers or service providers. As a custodian, STRATA does not sponsor, endorse or sell any investment and is not affiliated with any investment sponsor, issuer or dealer. STRATA does not provide investment, legal or tax advice. Individuals should consult with their investment, legal or tax professionals for such services.
Investment Products: Not FDIC-Insured | No Bank Guarantee | May Lose Value
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