Individual Retirement Plans

Retirement may seem far away, but it’s never too early to think about how much you might need to enjoy retirement. Financial decisions now can impact how you live later. Alliance Wealth Managem,ent of WNY's Individual Retirement Account (IRA) is designed to help you reach your retirement goals. An IRA is a tax-deferred personal savings account that allows you to save for retirement without a company-sponsored plan. You can make tax-deductible contributions (subject to limitations) to your IRA throughout your career, which can then be invested in basic securities such as stocks and bonds.

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Traditional IRA

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With a traditional IRA—the most common type of IRA—income taxes are deferred until you withdraw funds, so you don’t pay annual federal (and, in many cases, state) income taxes on your earnings. At age 59 ½, you can make taxable withdrawals from the account called distributions. If you choose to take distributions before 59 ½ years old, the government imposes a premature distribution penalty of 10% on your withdrawal. Additionally, when you turn 73 years old, you are required to take distributions by April 1 of the following calendar year.

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Roth IRA Account

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Unlike a traditional IRA, contributions to a Roth IRA are considered “after-tax” and therefore not deductible, but you can generally take distributions from the Roth IRA tax-free. This option allows for investors to make limited annual contributions toward retirement (dependent on gross income). There is no mandatory age at which you are required to take distributions from a Roth IRA. There is also no premature distribution penalty for amounts you withdraw from the principal, subject to certain requirements.

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Savings Incentive Match Plan for Employees (SIMPLE)

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A SIMPLE IRA is a written salary reduction arrangement that allows both employees and their employers to make annual contributions. This type of arrangement is available to self-employed individuals or owners of companies with 100 or fewer employees and no qualified retirement plan. The money contributed to a SIMPLE IRA will accumulate tax deferred until money is withdrawn. Withdrawals are subject to ordinary income tax and, if taken before age 59 ½, a 10% federal income tax penalty may apply. This penalty increases to 25% for distributions taken within the first two years of participation in the plan.