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AAB offers a variety of retirement and financial plans for individuals and
businesses. Plans include Individual Retirement Accounts (IRA's), Simplified Employee Plan
(SEP), 401(K), Annuities, and traditional profit sharing.
Click on a title below to see more
information:
Contact Us
Call us at 214-821-6677 or toll free 1-800-462-2322,
or email an agent to discuss the
plan that best suites your individual needs or the long-range needs of your business.
Traditional
IRA
Traditional IRA is an Individual Retirement
Plan in which an individual wage earner can contribute and deduct $2000 or 100% income for
the year, whichever is less. If the wage is married, an additional $2000 may be
contributed and deducted on behalf of a lesser earner (or nonworking) spouse, using a
"spousal" IRA.
An IRA can be established and funded at any
time from January 1 of the current year and up to and including the date an individual's
income tax return is due (generally, April 15 of the following year), not including
extensions.
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Roth
IRA
Roth IRA is similar in concept to the
traditional IRA. The Roth IRA differs in that contributions are never tax deductible, and,
if certain requirements are met, distributions from the account may be received free of
federal income tax.
A traditional IRA can be converted to a Roth.
Taxes result from the conversion of the "old" traditional IRA to the Roth IRA ,
with previously deducted IRA contributions, and all earnings in the account, added to the
taxpayer's gross income for the year of the conversion.
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Educational
IRA (Ed-IRA)
Educational IRA is tax-favored educational
individual retirement accounts designed to help certain taxpayers save for a child's
education. Money contributed to an Ed-IRA is nondeductible and earnings accumulate
tax-deferred.
The contributor need not be related to the
beneficiary and there is no limit on the number of individual beneficiaries for whom one
contributor may set up an Ed-IRA.
For 2001, the law limits contributions to $500
per beneficiary per year. The contributions must be in cash, must be made before the
beneficiary reaches age 18, and must be contributed before the end of the tax year to
which they apply. Other restrictions also apply, including penalties for excess
contributions.
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IRA
Rollover
IRA rollover is a special IRA that can be
used to hold a qualified plan distribution when an employee leaves a job or a qualified
plan is terminated. The plan is held until it is either transferred into a new qualified
retirement plan or it is later distributed to the employee.
If the distribution is transferred to an IRA
rollover (or another qualified plan) in a direct rollover, no income tax is withheld and
the employee avoids current income tax on the distribution.
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SEP
A SEP provides a self-employed individual a
simplified way to create a flexible retirement plan. An employer can also use this plan to
make contributions to an employee's individual retirement account.
Advantages of this simplified plan include:
- Contributions are tax deductible for the contributor and not
taxed currently to the participant.
- Contributions and costs are flexible. For example, the
maximum tax deductible contribution is $35,000 or the lessor of 15% of compensation
(limited to $170,000 in 2001) before the contribution.
- Participants may also have a traditional, deductible IRA
(subject to certain income level limitations based on filing status), a traditional,
nondeductible IRA, or a Roth IRA.
- Reporting is minimal.
- The plan is easy to set up.
- There is little or no administrative cost.
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401(k)
The 401(k) Plan is a profit sharing or stock
bonus plan which meets certain participation requirements of IRC Sec. 401(k). It can be a
cash or deferred plan. An employee can agree to a salary reduction or to defer a bonus
which he or she has coming. Tax-exempt entities may also adopt a 401(k) plan.
The 401(k) is a popular retirement plan
because contributions are tax deductible and employers usually contribute matching funds
or a predetermined percentages.
There are two types of plans:
- Salary reduction
- Cash or deferred
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Traditional
Profit Sharing Plan
Through a traditional profit sharing plan,
employer contributions to the plan need not be a specific percentage and they need not be
made every year, as long as they are "recurring and substantial." Profits are
not required in order to make a contribution.
Here's how it works:
- Employer contributions are tax deductible.
- Contributions are not taxed currently to the employee.
- Earnings accumulate income tax-deferred.
- Distributions are generally taxed as ordinary income.
Distributions may be eligible for 10-year income averaging, or rolled over into an IRA, at
retirement.
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