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Retirement Planning
- Are you concerned about retirement?
- Can you afford a market correction?
- Have you considered an IRA?
- How about a Roth IRA?
- Have you lost your job and need to roll your 401K plan monies to an individual IRA?
- Have you ever had a professional evaluate your tolerance for risk or has your advisor simply picked a few mutual funds that he or she likes?
Retirement is a time when you should not have to worry about money. There are many investments available; how can you possibly understand all of them. Here at Bonniwell Financial Services, we can help you analyze your portfolio and help you prepare for retirement or allow you the freedom to enjoy retirement without financial worries. Whether you are an employer looking to set up a 401K, simple retirement plan, or if you are an employee looking to establish an IRA, Bonniwell Financial Services can help. Please give us a call for a free no obligation consultation.
• IRA – Individual Retirement Account
RA accounts are available in two basic forms: traditional tax deductible IRA and a non-tax deductible Roth IRA. Both the traditional IRA and Roth IRA allow your contributions to accumulate without current income tax, however, once you begin drawing monies from a traditional IRA, you must pay income tax on the monies withdrawn. The Roth IRA, without the benefit of an income tax deduction for contributions, allows for income tax free withdrawals at retirement. Below is a comparison to help explain converting a regular IRA to a Roth IRA:
| Today | In 2010 |
| A client whose modified adjusted Gross income (MAGI) is greater than $100,000 can’t convert from a Traditional IRA to a Roth IRA | Any client, regardless of income level, can convert a traditional IRA to a Roth IRA. |
| When a single taxpayer’s income reaches $101,000, there are limits to the contribution amount allow-able under a Roth IRA. Income limits for married clients filing jointly begin at $159,000. | A higher-income taxpayer (with a MAGI greater than the income limit) still cannot contribute directly to a Roth IRA but can make contributions to a traditional IRA and later convert it to a Roth IRA. |
| A client owes federal and state taxes on some or all of the amount converted from a traditional IRA to a Roth IRA. | The same rule applies. |
| Your client must calculate the total value of the IRAs and determine what amount is subject to tax and what is not (such as earlier after-tax contributions to an IRA), and then report the proportionate amount of the conversion as the taxable amount on his/her next tax return. | The same rule applies. Plus, a new rule for 2010 allows the income that results from the conversion to be reported in equal installments over a two-year period (in 2011 and 2012), the entire earnings portion of the conversion is taxable in the year the conversion is made. |
• 401K Plans
401K plans are employer sponsored defined contribution retirement plans. These plans are rather simple in their operation in that employees can reduce current taxable income and have these monies deposited into a tax deferred savings plan set up specifically for retirement. An employer may choose to help employees by contributing monies on their behalf (some form of matching contribution). 401K plans can allow for an immediate tax deductible contribution or, very similar to the Roth IRA, allow for non-deductible contributions with tax free advantages at withdrawal. 401K plans require a third party administrator to run tests for discrimination. Government regulations determine the level of employer contributions.
• Simple Retirement Plans
Simple retirement plans are often referred to as a simple IRA. As the name implies these plans are very simple. Simple retirement plans are sponsored by an employer. Employees can contribute monies into their accounts on a tax deductible basis. An employer is responsible for matching contributions (maximum 3% of income) for those employees that choose to participate. For those employees opting out of this plan, the employer need not contribute on their behalf. If an employer decides to contribute a lesser amount than the 3% match for participating employees, he may be required to contribute monies on behalf of those that have decided not to participate. The simple retirement plan does not require the use of a third party administrator for discrimination testing.
Whether your retirement needs are funded individually or you as an employer wish to help employees with retirement, we can help. Simply contact us with your questions.
Kent A. Baumann, CLU
Chartered Financial Consultant
President, Bonniwell Financial Services
1025 W. Glen Oaks Lane Suite 205
P.O. Box 38
Mequon, WI 53092
Phone: 262.241.8488 | Fax: 262.241.8066
kentbaumann@yahoo.com