1. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved1 Introduction The IRA and Roth IRA are retirement accounts you must fund The Roth IRA was created for workers who didn’t want to pay taxes on their withdrawals The IRA was created for those not having a pension/401(k) at work It is not uncommon for workers who have a pension plan or 401(k) at work to also have one or both of these plans Both the IRA and Roth IRA are popular with workers

2. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved2 Objectives Explain how an IRA and a Roth IRA works Discuss how an IRA and a Roth IRA compare to a 401(k) Review the advantages/disadvantages of having an IRA Review the advantages/disadvantages of having a Roth IRA Identify the contribution limits for an IRA and a Roth IRA Discuss when money can be withdrawn from an IRA and a Roth IRA You should be able to do the following after completing this lesson! Explain the tax benefits of having an IRA or a Roth IRA Define the key terms introduced in this lesson

3. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved3 13.5.1 – The IRA and Roth IRA What a Defined Contribution Plan is What an IRA and Roth IRA are and how they work Where you can set up an IRA or Roth IRA Who funds these retirement plans How you select what investments to want to invest in In this Section, you will learn

4. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved4 13.5.2 – Advantages of an IRA Who can establish an IRA What fully and partially tax-deferred means When money from an IRA is taxed When you can withdraw money from an IRA without penalty In this Section, you will learn Tax-Deferred Income Example You will run the following Interactive Example

5. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved5 13.5.3 – Disadvantages of an IRA Why your filing status and income are important What tax rate will apply to your withdrawals from an IRA Why contributions and withdrawals must be reported to the IRS When the 10% Tax Penalty for early withdrawals applies What additional restrictions apply to IRA contributions What a Required Minimum Distribution is In this Section, you will learn How much you can contribute to an IRA each year

6. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved6 13.5.4 – Advantages of a Roth IRA In this Section, you will learn Who can establish a Roth IRA When the growth of an Roth IRA is taxed When you can withdraw money from a Roth IRA What a qualified withdrawal is How Required Minimum Distributions apply to a Roth IRA Whether you have to report contributions and withdrawals to the IRS

7. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved7 13.5.5 – Disadvantages of a Roth IRA In this Section, you will learn Why your contributions are never tax-deferred What limits how much you can contribute Why early withdrawal penalties only apply to the growth of a Roth IRA How long a Roth IRA must be open before you can withdraw money without penalty What is the max amount you can contribute to a Roth IRA each year

8. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved8 13.5.6 – Contribution Limits Why the maximum allowed contribution per year includes contributions to both plans When contributions to a Roth IRA begin to phase out In this Section, you will learn What the max annual contribution to an IRA and Roth IRA are

9. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved9 13.5.7 – Tax-deferred Contributions Why contributions to an IRA can be fully, partially or not tax-deferred In this Section, you will learn When tax-deferred contributions to an IRA begin to phase out Why contributions to a Roth IRA are never tax-deferred

10. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved10 13.5.8 – Withdrawing the Money In this Section, you will learn At what age you can begin making qualified withdrawals How being retired affects when you can make withdrawals from an IRA or Roth IRA When withdrawals from an IRA or Roth IRA are subject to income taxes How Required Minimum Distributions affect an IRA and Roth IRA Retirement Plan Growth Exercise You will run the following Interactive Exercise

11. Lesson 13.5 IRA/Roth IRA July 2011Copyright © 2011 … REMTECH, inc … All Rights Reserved11 Discussion Questions What is the probability that an individual’s income tax rate will be lower in the future? Why would someone select a Roth IRA knowing contributions cannot be used as a tax deduction?