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From pensions to IRAs, there are many types of retirement plans

Though 401(k) plans are a common employee benefit, some businesses and organizations may want to consider other retirement plan options. At First American Bank, we can guide you to the alternatives that fit your objectives, ranging from employer-funded pensions to plans that provide enhanced retirement benefits for managers and other top-level employees.
  • 403(b) Plan: Offered by certain 501(c)(3) tax-exempt organizations and public schools. Participants save for retirement by contributing a portion of their pay; employers also can contribute to participants’ accounts. This is also referred to as a tax-sheltered annuity (TSA).
  • Money purchase pension plan: A plan funded by employers, who must make a contribution each year for the plan participants. Plan documents must state the required contribution percentage and how the amount is to be allocated among participants.
  • Nonqualified deferred compensation plan: A plan maintained for a select group of management and highly compensated employees. It allows the employer to provide benefits to these employees over the limits imposed under qualified plans.
  • SEP-IRA: A Simplified Employee Pension Plan allows the employer to contribute to IRAs that are established for employees.
  • SIMPLE-IRA: A SIMPLE IRA (Savings Incentive Match Plan for Employees) can be established by an employer with 100 or fewer employees. The employer must contribute the amount required by the plan document and employees are also permitted to defer part of their pay under this type of plan.
  • Cafeteria plan: These plans provide participants with an opportunity to receive certain pre-tax benefits. These include health insurance, dental insurance, vision insurance, flexible spending accounts for dependent care and medical care, and health savings accounts.
Disclosures

Not FDIC Insured | Not Bank Guaranteed | May Lose Value | Not Guaranteed by Any Government Agency | Not a Bank Deposit

Frequently Asked Questions

The IRS requires 20% withholding on all qualified plan distributions eligible for rollover to an IRA or another qualified plan. You will report the distribution as ordinary income on your personal tax return. Depending on your personal tax bracket, you may be required to pay additional taxes on the distribution or you may be entitled to a refund. If the additional amount of tax due is substantial, you may be required to make estimated tax payments. You may also be required to pay state income taxes. You should consult your personal tax advisor before making decisions regarding your distribution.
In general, Required Minimum Distributions (RMDs) from your retirement accounts (including IRAs) need to begin by April 1 following the year in which you attain age 70½. Thereafter, the plan must issue RMDs annually on or before December 31. Note that two required distributions will be issued your first year (April 1 and December 31) if you wait until April 1 to begin your distributions. You may avoid two taxable distributions in the first year by taking your first withdrawal by December 31 of the year in which you attain age 70½.

However, if you are still working, you are not required to begin RMDs from your employer sponsored plan until April 1 of the year following the year in which you terminate employment. This exception does not apply if you own more than 5% of the employer, nor does it apply to IRAs.
The annual deferral may not exceed the lesser of:

a. $19,000 for 2019;

b. the maximum deferral amount allowed under the terms of the plan; or

c. the amount that allows the plan to meet the required nondiscrimination tests.

In addition, if you attain age 50 or older by December 31, you may defer an additional $6,000 catch up contribution.
If a plan accepts rollover distributions from other qualified plans, it may also allow for employees to make a rollover contribution before they meet the plan's minimum age and service eligibility requirements. These employees would be considered 'limited participants' in the plan.
Yes, the additional 10% tax applies, with limited exceptions. Exceptions include distributions that are made to a participant after termination of employment after attainment of age 55, distributions that are attributable to an employee being disabled, and distributions that are made to cover deductible medical expenses.

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