NASD - FINRA Investor Education Foundation



Tables: Retirement Savings Plans

Table #1: Individual Plans

Individual retirement savings plans have tax benefits that make them attractive ways to save for retirement on your own, either in addition to an employer plan or when you’re not covered by such a plan. To be eligible to contribute, you must have earned income (note: alimony counts as earned income). While you can have more than one individual IRA account, and even more than one type of account, your total contributions to all of your individual accounts cannot exceed the annual contribution limit or the amount that you earn in one year.

In exchange for receiving tax benefits by contributing to an individual plan, you must follow specific rules on how much you put aside each year and, in some cases, how you take money out. In most cases, you must also take the initiative to set up and contribute to these plans on your own. But you have the right to choose where to open your account and which investments to make.

|Product |Who Can Use It |Maximum |Withdrawal Rules |Tax Rules |Portability |Comments |

| | |Contribution | | | | |

|Deductible |Anyone who earns |$5,500 for 2017, |Before 59 ½, taxes and|Earnings and |Can roll over to|Deductible |

|Traditional |income, but not after|plus $1,000 |10% tax penalty due on|contributions taxed at |another IRA or |contributions mean |

|IRA |age 70 ½ |catch-up if 50 or |most withdrawals |regular income tax rate|employer plan |immediate tax |

| |Spousal IRAs for |older |Must start required |at withdrawal |that accepts |savings |

| |non-working spouses | |minimum distributions |Can deduct full |rollovers |Income limits |

| | | |(RMDs) April 1 of the|contribution for 2017 |Can convert to |affect amount that |

| | | |year following the |if modified adjusted |Roth IRA, but |is deductible |

| | | |calendar year in which|gross income (MAGI) is |must pay taxes |No loans |

| | | |you reach 70½ |$62,000 or less as a |due | |

| | | | |single tax-filer or | | |

| | | | |$99,000 or less as | | |

| | | | |joint filer | | |

| | | | |Deduction phases out | | |

| | | | |for 2017 as MAGI | | |

| | | | |approaches $72,000 as a| | |

| | | | |single tax-filer or | | |

| | | | |$119,000 as a joint tax| | |

| | | | |filer | | |

|Non-deductible|Anyone who earns |$5,500 for 2017 | Before 59 ½, taxes |Earnings but not |Can roll over to|Contributions never|

|Traditional |income, but not after|plus $1,000 |and 10% tax penalty |contributions taxed at |another IRA |tax deductible |

|IRA |age 70 ½ |catch-up if 50 or |due on most |regular income tax rate|May qualify to |No loans |

| |Spousal IRAs for |older |withdrawals |at withdrawal |convert to Roth | |

| |non-working spouses | |Must start RMDs by 70 | |IRA, but must | |

| | | |½ | |pay taxes due | |

|Roth IRA |Anyone who earns |$5,500 for 2017 |Contributions can be |Contributions can be |Can roll over to|No required |

| |income and, for 2017,|plus $1,000 |withdrawn tax-free at |withdrawn tax-free at |another Roth IRA|withdrawals |

| |has a MAGI up to |catch-up if 50 or |any time |any time | |No age limit on |

| |$133,000 as a single |older |Up to $10,000 in |If you are 59 ½ or | |contributions if |

| |tax-filer or $196,000|For 2017, the |earnings may be |older and your account | |still earning |

| |as a joint filer |ability to |withdrawn tax free to |has been open at least | |Income limits |

| |Spousal IRAs for |contribute |buy first home |five years, you can | |affect eligibility |

| |non-working spouses |decreases as MAGI | |withdraw interest (or | |to contribute |

| | |rises from | |earnings on your | |Contributions never|

| | |$118,000 to | |contributions) tax-free| |tax-deductible |

| | |$133,000 for | | | |No loans |

| | |single filers and | |Interest generally | |Contributions may |

| | |from $186,000 to | |taxed and 10% penalty | |be withdrawn at any|

| | |$196,000 for joint| |may apply on | |time without |

| | |filers | |withdrawals made before| |penalty |

| | | | |age 59 ½ and when the | | |

| | | | |account has not been | | |

| | | | |open at least 5 years | | |

|MyRA |Anyone who earns |$5,500 for 2017 |Contributions can be |Contributions can be |Can roll over to|Because your |

| |income and, for 2017,|plus $1,000 |withdrawn tax-free at |withdrawn tax-free at |another Roth IRA|account is held at |

| |has a MAGI up to |catch-up if 50 or |any time |any time | |Treasury, |

| |$133,000 as a single |older |Up to $10,000 in |If you are 59 ½ or | |portability is not |

| |tax-filer or $196,000|For 2017, the |earnings may be |older and your account | |an issue if you |

| |as a joint filer |ability to |withdrawn tax free to |has been open at least | |change jobs |

| | |contribute |buy first home |five years, you can | |After 30 years or |

| | |decreases as MAGI | |withdraw interest (or | |until account |

| | |rises from | |earnings on your | |reaches $15,000 |

| | |$118,000 to | |contributions) tax-free| |balances will roll |

| | |$133,000 for | | | |over to |

| | |single filers and | |Interest generally | |private-sector Roth|

| | |from $186,000 to | |taxed and 10% penalty | |IRA |

| | |$196,000 for joint| |may apply on | | |

| | |filers | |withdrawals made before| | |

| | | | |age 59 ½ and when the | | |

| | | | |account has not been | | |

| | | | |open at least 5 years | | |

Table #2: Employer Plans

Your employer may offer a retirement plan as part of your employee benefits package. Sometimes you must be on the job a specific period of time before qualifying to participate. You fund traditional employer plans by deferring a portion of your pretax salary, reducing your current taxable income. However, with a Roth 401(k) or Roth 403(b), you contribute after-tax income and may qualify for tax-free withdrawals. Some employers may also match part of your contribution. A typical formula might be 50 percentof your contribution, up to 5 percent or 6 percent of your salary.

All contributions to all employer-sponsored retirement plans have the opportunity to grow tax-deferred. As with individual retirement plans, in exchange for tax advantages, there are certain contribution limits and withdrawal restrictions.

|Product |Who May |Maximum |Withdrawal Restrictions|Tax Rules |Portability |Comments |

| |Offer It |Contribution | | | | |

|Traditional |Corporations and |$18,000 in 2017 |Must start required |Withdrawals taxed at |Can roll over |Contributions |

|401(k) |non-profit |plus $6,000 |minimum distributions |regular income tax rate|contributions and |lower taxable |

| |organizations |catch-up if 50 |(RMDs) April 1 of the |10% tax penalty for |earnings to an IRA|income |

| | |or older |year following the |withdrawals before 59 ½|and to other |Loans permitted in|

| | | |calendar year in which | |employer plans |some plans |

| | | |you reach 70½ in most | |that accept | |

| | | |cases | |rollovers | |

| | | |Withdrawals permitted | |Can roll over | |

| | | |only when you change | |matching money if | |

| | | |jobs or retire, unless | |vested | |

| | | |you qualify for | | | |

| | | |hardship withdrawal | | | |

|Traditional |Non-profit |$18,000 in 2017 |Must start RMDs April 1|Withdrawals taxed at |Can roll over |Contributions |

|403(b) |organizations |plus $6,000 |of the year following |regular income tax rate|contributions and |lower taxable |

| | |catch-up if 50 |the calendar year in |10% tax penalty for |earnings to an IRA|income |

| | |or older |which you reach 70½ |withdrawals before 59 ½|and to other |Loans permitted in|

| | | |unless still working | |employer plans |some plans |

| | | |Withdrawals permitted | |that accept |Investments |

| | | |only when you change | |rollovers |limited to mutual |

| | | |jobs or retire, unless | |Can roll over |funds and |

| | | |you qualify for | |matching money if |annuities |

| | | |hardship withdrawal | |vested | |

|Roth 401(k), |Any organization |$18,000 in 2017 |Must start RMDs by 70 ½|No tax on withdrawals |May roll over into|Contributions made|

|Roth 403(b) |that also offers |plus $6,000 |Withdrawals permitted |if you’re at least 59 ½|Roth IRA if |with after-tax |

| |401(k) or 403(b) |catch-up if 50 |only when you change |and account has been |retiring or |income |

| | |or older |jobs or retire, unless |open at least 5 years |leaving job |Unlike Roth IRA, |

| | | |you qualify for |Tax at regular rate |Cannot move assets|no income |

| | | |hardship withdrawal |plus 10% tax penalty |to traditional and|restrictions on |

| | | | |for withdrawals before |401(k) or 403(b), |eligibility to |

| | | | |59 ½ |except matching |contribute |

| | | | | |funds, if vested |Matching funds |

| | | | | | |made to a |

| | | | | | |parallel |

| | | | | | |traditional |

| | | | | | |account |

|457 |State and local |$18,000 in 2017 |Penalty-free |Withdrawals taxed at |Contributions 100%| Contributions |

| |government agencies |plus $6,000 |withdrawals any time |regular income tax rate|vested |lower taxable |

| |and non-government |catch-up if 50 |after retiring from | |Government |income |

| |tax-exempt |or older, plus |government service | |employees only may|Can also |

| |organizations |additional |Must start RMDs April 1| |roll over to other|participate in |

| | |catch-up when |of the year following | |employer plan |401(k) or 403(b) |

| | |approaching |the calendar year in | | |if offered |

| | |retirement |which you reach 70½ | | |No matching |

| | | | | | |No loans |

|Thrift Savings |Federal agencies and|$18,000 in 2017 |Must start RMDs April 1|Withdrawals taxed at |Can roll over to | Contributions |

|Plan (TSP) |organizations |or up to 100% of|of the year following |regular income tax rate|IRA if retiring or|lower taxable |

| | |salary plus |the calendar year in |10% tax penalty for |leaving job |income |

| | |$6,000 catch-up |which you reach 70½ |withdrawals before 59 ½|Contributions 100%|Automatic match on|

| | |if 50 or older |Withdrawals per-mitted | |vested |1% of base pay for|

| | |Up to $54,000 in|only when you change | | |FERS employees. |

| | |2017 for |jobs or retire, unless | | |The first 3% of |

| | |tax-exempt |you qualify for | | |pay that you |

| | |income for |hardship withdrawal | | |contribute is |

| | |qualified | | | |matched |

| | |military | | | |dollar-for-dollar;|

| | | | | | |the next 2% is |

| | | | | | |matched at 50 |

| | | | | | |cents on the |

| | | | | | |dollar. |

| | | | | | |Investment |

| | | | | | |choices: l index |

| | | | | | |and lifecycle |

| | | | | | |funds |

Table #3: Small Business Plans

Certain types of retirement savings plans are designed specifically for small businesses and self-employed people. These plans give you access to some of the same types of tax advantages found in other employer plans, but with the additional flexibility you might need if you work for yourself or for a small business.

Among their advantages are higher annual contribution limits (compared with any other plans, individual or employer sponsored) and potentially broader choice of investments than with other employer plans.

|Product |Key Characteristics |Maximum |Withdrawal Restrictions|Tax Rules |Portability |Comments |

| | |Contribution | | | | |

|Simplified |Account in your |Up to 25% of |Must start required |Withdrawals taxed at |100% vested at |No loans |

|Employee |name, funded with |salary or |minimum distributions |regular income tax rate|time of deposit |Doesn’t commit |

|Pension (SEP) |employer |$54,000 in 2017,|(RMDs) April 1 of the |10% tax penalty for |Can be rolled over|employer to |

| |contributions |whichever is |year following the |withdrawals before 59 ½|into IRA |regular |

| | |less |calendar year in which | | |contributions |

| | | |you reach 70½ | | | |

| | | | | | | |

|Savings |Companies with 100 |$12,500 in 2017 |Must start RMDs April |Withdrawals taxed at |Contributions 100%|Contributions |

|Incentive Match|or fewer employees |plus $3,000 |1 of the year following|regular income tax rate|vested |lower taxable |

|Plans for |who earn at least |catch-up if 50 |the calendar year in | |Two-year waiting |income |

|Employees |$5,000 a year |or older |which you reach 70½ | |period or a 25% |Employer must |

|(SIMPLE) |Can be set up as | |Withdrawals permitted | |tax penalty on |match up to 3% of |

| |SIMPLE- IRA or | |only when you change | |most rollovers |your contribution |

| |SIMPLE -401(k) | |jobs or retire, unless | | |or at least 2% of |

| | | |you qualify for | | |your income |

| | | |hardship withdrawal | | | |

|Profit-sharing |Account in your |Up to 25% of |Must start RMDs April 1|Withdrawals taxed at |100% vested at |Loans may be |

|Keogh Plan |name, funded with |your salary, or |of the year following |regular income tax rate|time of deposit |available |

| |employer |$54,000 in 2017,|the calendar year in |10% tax penalty for |Can be rolled over|Contributions may |

| |contributions |whichever is |which you reach 70½ |withdrawals before 59 ½|into SEP or other |vary along with |

| | |less | | |IRA |company profits |

|Money Purchase |Account in your |Up to 25% of |Must start RMDs April 1|Withdrawals taxed at |100% vested at |Loans may be |

|Keogh Plan |name, funded with |salary or |of the year following |regular income tax rate|time of deposit |available |

| |employer |$54,000 in 2017,|the calendar year in |10% tax penalty for |Can be rolled over|Employer must |

| |contributions |whichever is |which you reach 70½ |withdrawals before 59 ½|into SEP or IRA |contribute |

| | |less | | | |specific |

| | | | | | |percentage of each|

| | | | | | |eligible |

| | | | | | |employee’s |

| | | | | | |earnings each year|

|Solo 401(k) |Account in your name|$18,000 in 2017 |Must start RMDs April 1|Withdrawals taxed at |100% vested at |Highest potential |

| |to which both you |from employee |of the year following |regular income tax rate|time of deposit |annual |

| |and employer |plus $6,000 |the calendar year in |10% tax penalty for |Can be rolled over|contribution |

| |contribute |catch-up if 50 |which you reach 70½ |withdrawals before 59 ½|into SEP or IRA |Loans may be |

| | |or older | | | |available |

| | |Employer | | | | |

| | |contribution to | | | | |

| | |a maximum of | | | | |

| | |25% of salary or| | | | |

| | |$54,000 in 2017,| | | | |

| | |whichever is | | | | |

| | |less | | | | |

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