- Annual contribution limits are based on earned income:
- Money Purchase Plan – Annual contributions are allowed
up to 25% of earned income or $45,000, whichever is less.*
- Profit Sharing Plan – Annual contributions are allowed
up to 25% of earned. income or $45,000, whichever is less.*
- The combined total of Qualified Retirement Plan contributions
cannot exceed $45,000.*
- Contributions are tax-deductible by the employer only.
- Plans must be opened on or before the last day of the tax
year in which the contribution deduction is claimed.
- Contributions for a tax year can be made up to the tax-filing
deadline for that year, including extensions.
- Funds are tax-deferred until withdrawn.**
- Mandatory distribution must begin at age 70 ½.
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| Since opening the correct retirement plan is so important, we
suggest you talk to your tax advisor about specific tax-deductibility,
contribution deadlines, and other requirements, and limitations
of the plan you choose. You should also discuss plan-to-plan transfers,
60-day rollover and direct rollover options with your tax advisor. |
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| * All contributions
to SEPs and Qualified Retirement Plans are subject to an annual
earned income cap. This cap is adjusted by the Internal Revenue
Service each year and is based on cost-of-living adjustments.
Annual SEP contributions are allowed up to 25% of an employee's
annual compensation, not to exceed $45,000 of compensation. Please
contact your tax advisor for current details.
** If funds are withdrawn prematurely,
they may be subject to income tax, if the owner is under age 59
½, plus a 10% premature distribution penalty. CD early
withdrawal penalties may also apply. |
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Downey Savings does not provide legal, accounting
or tax advice. Please consult with a qualified attorney, financial
advisor, or tax advisor to understand how this information may
apply to your own personal or business situation. |
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