1. Retirement Plans
Presented By
Teja Pongaluru

2. A retirement plan is a financial arrangement designed to replace employment income upon retirement. These plans may be set up by employers, insurance companies, trade unions, the government, or other institutions.

3. Traditional IRAs
Roth IRAs
SEP IRAs
SIMPLE IRAs
Qualified Plans (including profit sharing, and 401(k) plans)
403(b) Accounts
529 Plans
Education Savings Account

4. IRA
IRA is a tax-favored retirement account that lets you contribute a certain amount each year and invest your contributions tax deferred. That means you pay no taxes on annual investment gains (which helps them to grow more quickly). With a regular IRA, you pay income taxes on the money when it's withdrawn at retirement.

5. An IRA is an investment account
An IRA is an investment account. Once the money is placed within, you can invest in stocks, bonds, mutual funds, ETFs, and other types of investments. You can buy and sell investments within the IRA, but if you try to cash you entirely before retirement age at 59 ½ (known as an early distribution), you will most likely pay a 10 percent penalty fee and may be subject to federal, state and local income taxes.

6. Who Can Establish a Traditional IRA?
Any individual who has taxable compensation during the year and will not reach age 70.5 by the end of the year may make an IRA contribution for the year.
the kinds of compensation that are eligible to fund a Traditional IRA include wages, salaries, commissions, bonuses and other amounts paid to the individual for services performed for his or her employer.

7. compensation that are not eligible to be used for contributing to a Traditional IRA:
Rental income or other profits from property
Income from interest and dividends
Pension or annuity income
Deferred compensation
Income from some partnerships
Income or amounts that can be excluded from income

8. Roth IRAs
The Roth IRA is a retirement saving account to which individuals can make contributions with after-tax dollars.
If certain requirements are met, distributions from the Roth IRA will be tax-free
Contributions to the Roth IRA are discretionary, so individuals can choose when they want to fund their Roth IRA.

9. Qualified Distribution Defined
For a distribution to be qualified, it must occur at least five years after the Roth IRA owner established and funded his/her first Roth IRA, and the distribution must occur under at least one of the following conditions.
The Roth IRA holder is at least age 59.5 when the distribution occurs.
distribution occurs after the Roth IRA holder becomes disabled.
the assets are distributed to the beneficiary of the Roth IRA holder after the Roth IRA holder's death.

10. Any individual who pays income tax may establish and fund a Roth IRA.
Rental income, interest and dividends and other amounts generally excluded from employer-paid income are not eligible as compensation for contributing to a Roth IRA.
A Roth IRA can be funded from your own contributions, spousal contributions, transfers and rollovers.
IRAs cannot invest in collectibles but can invest in U.S. gold coins, silver coins and certain other precious metals.

11. SEP IRAs
An SEP is a retirement plan established by employers, including self-employed individual. The SEP is an IRA-based plan to which employers may make tax-deductible contributions on behalf of eligible employees, including the business owner. The employer is allowed a tax deduction for plan contributions, which are made to each eligible employee's SEP IRA on a discretionary basis.

12. Who May Establish an SEP?
Any employer - including a sole proprietorship, partnership, corporation, and nonprofit organization - with one or more employees may establish an SEP plan. This includes a self- employed business owner, regardless of whether he or she is also the only employee of the business. Individual employees may not establish an SEP plan.

13. Contributions
SEP contributions are made on a discretionary basis, which means the employer decides each year whether to make an SEP contribution for eligible employees.
An employer may contribute up to 25% of the eligible employee's compensation

14. SIMPLE IRAs
A SIMPLE IRA is a retirement plan that may be established by employers, including self- employed individuals .The SIMPLE IRA allows eligible employees to contribute part of their pretax compensation to the plan. This means the tax on the money is deferred until it is distributed. This contribution is called an elective-deferral or salary-reduction contribution.

15. Who May Establish a SIMPLE IRA
The employer employed 100 or fewer employees who earned at least $5,000 during the preceding year. All employees employed at any time during the calendar year are counted regardless of whether they are eligible to participate in the SIMPLE IRA plan.

16. 401(k) And Qualified Plans
One type of employer sponsored plan is a qualified plan.
A qualified plan is established by an employer to provide retirement benefits for its employees and their beneficiaries.
A qualified plan may be a defined-benefit plan or a defined-contribution plan. Qualified plans allow the employer a tax deduction for contributions it makes to the plan, and employees typically do not pay taxes on plan assets until these assets are distributed; furthermore, earnings on qualified plan assets are tax deferred

17. A qualified plan may be funded by both employer and employee contributions. Contributions are mandatory for some plans and discretionary for others, but the limits on employer contributions are the same for all defined-contribution plans.

18. Generally, the law requires plans to pay retirement benefits no later than the time an employee reaches normal retirement age, and many plans provide earlier payments under certain circumstances. For example, a plan may allow employees to receive distributions after terminating employment regardless of the employee's age.

19. Defined-Benefit Plans
Under a defined-benefit plan, employees' retirement benefits are predetermined by their compensation, years of service and age. For example, the plan may determine that upon retirement an employee will receive 1% of his or her average salary for the last five years of employment for every year of service with the employer. The plan may state this promised benefit as an exact dollar amount, such as $100 per month at retirement.

20. Defined-Contribution Plans
A defined-contribution plan does not promise a specific amount of benefit at retirement. Employees or employers (or both) contribute to these plans. The contributions are invested on the employee's behalf, and the benefits paid to employees are based on contributions and any earnings or losses. For defined-contribution plans, employers are not required to make up for any losses on investments. A defined-contribution plan can be a profit-sharing plan, an employee stock ownership plan (ESOP), a 401(k) plan or a money-purchase pension plan.

21. 403(b) Plan
A 403(b) plan is a retirement plan for certain public school employees, employees of tax- exempt organizations and ministers.

22. 403(b) plan can be established by any of the following organizations:
Public school systems
Cooperative hospital service organizations
Uniformed Services University of the Health Sciences (USUHS)
Public school systems organized by Native American tribal governments
Certain ministers

23. Education Savings Account
The Coverdell Education Savings Account allows individuals to deposit up to $2,000 per year in an educational savings account for an eligible beneficiary (child) without being taxed on earnings from interest, dividends, appreciation, etc. As long as the child uses the funds before the age of 30 for qualified educational expenses. The account must be started and all contributions made before the child is 18.

24. The maximum contribution is calculated two ways: maximum contribution per individual and maximum per child.
You can't contribute to an ESA if your modified adjusted gross income is above $110,000 as a single person or $220,000 as a married couple. Contributions are calculated on a sliding scale for individuals with MAGIs above $95,000 and below $110,000. Married couples contribute on a sliding scale if their combined MAGI is above $190,000 and below $220,000.
Contributing to an ESA isn't the only way to save for your child's education. Also consider 529 plans. Contributions aren't based on income and can be larger amounts.

25. Thank you