Retirement Tax Planning

Tax deferral is the greatest tax benefit to Qualified Retirement Plans. With tax deferral, you get the benefits of "compounding", meaning your initial deposit can earn interest, and the money you would have paid in taxes can earn interest. The graph below shows tax-deferred growth compared to other options.

Structuring a Plan (or Plans) that accommodates your cash flow with Maximum tax benefit is crucial.

There are a plethora of Plans available:

Traditional IRA   Simple IRA   Roth IRA   SEP IRA   Traditional 401 K
Simple 401 K   Roth 401 K   Profit Sharing Plan

• Traditional IRA, Simple IRA, Roth IRA: Maximum contributions: 2007 = $4,000, and 2008 = $5,000; Total deferral with catch up for 50+ years of age 2007 = $5,000, 2008 = $6,000.
  
  
• Sep IRA: Maximum contribution (25% of compensation) 2007 = $45,000, 2008 = $46,000.
  
  
• Traditional 401K, Simple 401K, and Roth 401K (deferrals may be higher when paired with 457(b)) 2007-2008: = $15, 500; for 50+ years of age = $20,500.
  
  
• Profit Sharing Plan: 2007 = $45,000, 2008 = $46,000; Total contribution with 401(k) catch up for 50+ years of age 2007 = $50,000, 2008 = $51,000.