Borel Private Bank & Trust Company

Contributory IRA (Individual Retirement Account)

We have competitive deposit plans that fit your IRA investment needs. You don't need to have $5,000 to open an Individual Retirement Account. A minimum of $500 is all that's needed.

Have you earned income of at least $5,000 ($6,000 if age 50 or older), and are you not covered by an employer's qualified retirement plan?

You are entitled to set $5,000 ($6,000 if age 50 or older) aside in a Contributory IRA and take a $5,000 tax deduction. Married couples filing jointly can each set $5,000 aside, a total of $10,000 (or $12,000 if both spouses are age 50 or older) per year, even if only one has earned income. If you are covered by an employer's retirement plan, talk to your tax accountant for details regarding your individual tax situation and how you may benefit from an IRA plan.

When is the deadline for establishing your IRA?

The deadline for establishing your IRA and making contributions is the due date for filing your income tax return (usually April 15), excluding extensions.

Rollover IRA

Did you receive a distribution from your employer's qualified plan or annuity?

The distribution will generally be eligible for rollover to an IRA. However, only that portion which represents 401(k) contributions, your employer's contributions, or your voluntary deductible, and all earnings, can be rolled into the IRA.

You cannot roll over your own nondeductible "voluntary" contributions, minimum mandatory distributions you are receiving because you have reached age 70½, or a series of substantially equal periodic payments you are receiving at least annually over single or joint life expectancy or for a period of more than 10 years.

Roth IRA

Do you not qualify for deductible IRAs?

For those who don't qualify for deductible IRAs, and even for those who do, Congress created an alternative that some will find even more attractive. Dubbed the Roth IRA (named for Senator William Roth, the Chairman of the Senate Finance Committee), there are no deductions for contributions to this new account. Like a traditional IRA, the account grows without annual income taxes. However, if certain conditions are met, all withdrawals are fully tax-free.

How much may you contribute?

You may contribute up to $5,000 ($6,000 if age 50 or older) to IRAs each year. The contribution may be to a traditional IRA, to a Roth IRA, or to a combination, but the total may not exceed $5,000 ($6,000 if age 50 or older) per taxpayer per tax year.

Who is eligible to make contributions?

You must have at least $5,000 ($6,000 if age 50 or older) of earned income and there is an income cap for contributing to a Roth IRA as well. Single persons with adjusted gross income (AGI) below $95,000 and married couples filing jointly with AGI less than $150,000 may make full contributions. A partial contribution is allowed for singles with incomes between $95,000 and $110,000 and marrieds with incomes from $150,000 to $160,000.

Simplified Employee Pension Plan

What is a Simplified Employee Pension?

A Simplified Employee Pension (SEP), is a plan that permits your employer to contribute each year to a Contributory IRA you set up to receive the SEP contributions.

How much may your employer contribute?

Your employer may contribute up to 25% of your annual compensation or $46,000, whichever is less, even if you have reached age 70 1/2. You may still contribute to your own Contributory IRA an additional $5,000 ($6,000 if age 50 or older) or 100% of your annual compensations, whichever is less, provided you have not reached your 70 1/2 th year.

When is the deadline for establishing your SEP?

The deadline for establishing your SEP and making contributions is the due date for filing your income tax return (usually April 15), including extensions.

Defined Contribution Plans

Profit Sharing Plan

This plan permits the employer to contribute the lesser of 25% of earned income or $46,000 (25% of the 2008 $250,000 compensation cap = $62,500; therefore, $46,000 is the lesser of the two amounts).

Money Purchase Plan (MP)

This plan permits the employer to contribute the lesser of 25% of earned income or $46,000 (25% of the 2008 $250,000 compensation cap = $62,500; therefore, $46,000 is the lesser of the two amounts).

Paired Plans (PS & MP)

The combination of the two plans permits the employer to contribute the lesser of 25% of earned income or $46,000 (10% for a MP plan and 15% for a PS plan equal the maximum contribution rate of 25%, 25% of the $250,000 compensation cap = $62,500; therefore, $46,000 is the lesser of the two amounts).