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IRAs - Individual Retirement Accounts
Traditional IRA. Traditional IRA contributions are often tax-deductible (often simplified as "money is deposited before tax" or "contributions are made with pre-tax assets"), all transactions and earnings within the IRA have no tax impact, and withdrawals at retirement are taxed as income (except for those portions of the withdrawal corresponding to contributions that were not deducted). Depending upon the nature of the contribution, a traditional IRA may be referred to as a "deductible IRA" or a "non-deductible IRA." It was introduced with the Tax Reform Act (TRA) of 1986.

Rollover IRA. The transfer of money from another qualified retirement plan, such as a 401(k) or regular IRA, into another IRA. The IRA receiving the money can be a new IRA or an existing one. Done properly, no withholding is taken out of the former account and no taxes are due the following April. However, any rollover will trigger a reportable item, meaning you will have to indicate you did a rollover on your tax return.

ROTH IRA. ROTH IRA contributions are made with after-tax assets. All transactions within the IRA have no tax impact, and withdrawals are usually tax-free. Named for Senator William V. Roth, Jr., the ROTH IRA was introduced as part of the taxpayer relief act of 1997.

SEP IRA. A SEP IRA is a provision that allows an employer (typically a small business or self-employed individual) to make retirement plan contributions into a traditional IRA established in the employee's name, instead of to a pension fund in the company's name.

SIMPLE IRA. A SIMPLE IRA is a Savings Incentive Match Plan for Employees that requires employer matching contributions to the plan whenever an employee makes a contribution. The plan is similar to a 401(k) plan, but with lower contribution limits and simpler (and thus less costly) administration. Although it is termed an IRA, it is treated separately.

North American
Pension Services, LLC
2542 South Rochester Road
Rochester Hills, MI
48307-3817 USA
Phone: (248) 723-4220
Fax: (248) 723-4224
[email protected]

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