Retirement Plans

401(k) Plan

A 401(k) plan is named after a section of the tax code and is a qualified
plan established by employers to which eligible employees may make
salary deferral (salary reduction) contributions on a post and/or pre-tax
basis. Employers may make matching or non-elective contributions to the
plan on behalf of eligible employees and may also add a profit sharing
feature to the plan. Earnings accrue on a tax-deferred basis. A 401(k) plan
allows you to contribute up to a certain percentage of your before-tax pay,
which varies based on your employer's plan. The IRS establishes the
maximum dollar amount that an employee can contribute from before-tax

Savings Incentive Match Plan - SIMPLE IRA

Simplified Employee Pension - SEP IRA

A type of retirement plan that an employer can establish, including
self-employed individuals. The employer is allowed a tax deduction for
contributions made to the SEP Plan. The employer makes contributions to
each eligible employee's SEP IRA on a discretionary basis.  

Traditional IRA

An IRA that is not a Roth IRA or a SIMPLE IRA. Individual taxpayers are
allowed to contribute 100% of compensation (Self-employment income for
Sole proprietors and partners) up to a specified maximum dollar amount
to their Traditional IRA. Contributions to the Traditional IRA may be
tax-deductible depending on the taxpayer's income, tax-filing status, and
coverage by an employer-sponsored retirement plan.

Roth IRA

An individual retirement plan that bears many similarities to the Traditional
IRA. Contributions are never deductible, and qualified distributions are
tax-free. A qualified distribution is one that is taken at least five years after
the taxpayer established his/her first Roth IRA and when he/she is age
59½, disabled, or using the withdrawal to purchase a first home (limit
$10,000), or deceased (in which case the beneficiary collects

Retirement Plans
 Life & Health Insurance Agency, Inc.                                        1-908-231-0303