There are really two important components when it comes to income planning in retirement. These components are personal planning and financial planning. Personal planning is crucial for determining the type of lifestyle you want to live and are expecting in retirement. Financial planning will identify the source or sources of that income, and establishes retirement budgets based on your personal planning. If you're in the early stages of retirement planning it's important to ask yourself about your retirement goals and how you hope to spend your time during retirement. Planning will be different for someone looking to buy additional properties and travel the world vs someone who wants to pick up some extra hobbies and volunteer within the community. For financial success identify and compare your income to expenses - review your income strategies - compare available income options - develop an action plan early on.
Traditional IRAs1: Annual contributions to your Traditional IRA allow most individuals to take a current tax deduction and defer income taxes on their IRA contributions and earnings. Your 401k or 403b retirement accounts may also be rolled over into your Traditional IRA, such as when you leave an employer or are otherwise eligible to transfer those funds.
ROTH IRAs1: Withdrawals from your Roth IRA at retirement are non-taxable. While your contribution is not currently deductible for income tax purposes, income earned in the Roth IRA is not taxable to you when you make qualified withdrawals. Additionally, you may contribute to your Roth IRA after the age of 70½, which you cannot do in a Traditional IRA.
SEP IRAs1: As a self-employed individual or a small employer, you are able to set up a SEP (Simplified Employee Pension) IRA for you, and if you have employees, for your employees. Setting up a SEP IRA is simple, and an advantage of the SEP IRA is that you may be able to make significantly larger contributions to the account than with a Traditional or Roth IRA. SEP IRAs generally follows the same rules as Traditional IRAs, except that all contributions to SEP IRAs are made by the business. Let us assist you in setting up a SEP IRA for you and your business.
Each of ISB’s IRA choices give you numerous options for beneficiary designations. Since there are many factors that go into determining the best plan for your circumstances, you may wish to consult with a professional as to which choice works best for you. The above descriptions are only highlights of the various IRA plans available through ISB and are not legal advice.
1All IRAs are subject to federal regulations regarding eligibility, deductibility, and withdrawals, etc. Non-qualified withdrawals from your IRA are subject to penalties. Please see IRS Publication 560 for more information or see your tax advisor or attorney for additional details and advice.