Friday, May 1, 2009

The Various CPA Retirement Plans

A retirement plan is one of the most beneficial allowances that is offered by employers, which helps in attracting as well as maintaining employees that are considered to be highly qualified.

CPA offers a number of retirement plans that vary in specifications, to positively satisfy the needs of both individuals as well as businesses. Retirements can be split into 3 categories: 1. Retirement plans for corporations; 2. IRAs; 3. Retirement plans for the self-employed.

Corporate Retirement plans

Corporate Retirement Plans can be further split into 4 types:

The Simple IRA – These retirement plans are set up by employers and they come in various types like Roth IRAs, traditional IRAs or SEP IRAs. On this retirement plan individuals make their own monthly contribution, the maximum amount of which is $10,000 yearly. Individuals who are 50 years old or more, may also make additional contributions, called catch-up contributions.
SEP- The Simplified Employee Pension is a retirement plan which is also set up by the employer, and can also include individuals who are self-employed. This plan is a good retirement vehicle since employers are able to save money for their retirement, apart from that saved for the employees.

Qualified Plan – This plan differs from the above mentioned types, and is not even subject to the same set of rules. This plan may be a defined contribution or a defined benefit plan and enables employers to make tax deductions for the plan contributions. The maximum amount of money that can be contributed into this plan is $42,000.

The Individual 401k plan – This plan accepts contributions both from the employee as well as the employer. This plan may only be set up for a business owner and his spouse.
Individual Retirement Accounts

A person who is in a high earning tax bracket should go for a traditional IRA, while the Roth IRA is better for younger individuals, or individuals who think that after retirement, they will be in a higher tax bracket.

Self Employed Retirement Plans

This plan is driven by the same rules as the corporate plan, with however, one difference. The owner’s contribution is not on partnership tax return or schedule C, but on 1040.


Reference: http://www.deskscript.com/104/cpa-retirement-plans-2/

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