Читать книгу Horse Economics - Catherine E O'Brien - Страница 40

♦ Vested benefits are guaranteed to an employee, even if the employee leaves the company. Usually, pension benefits are based on contributions from both the employee and the company. If the employee resigns, he only keeps the portion he contributed. However, after working at a company for a designated period of time, the employee also keeps the contribution the employer makes—the benefits are vested.

Employer Sponsored Retirement Plans

If you have a retirement plan, such as a 401(k) through your place of employment, and you are vested^♦ in that plan, it is wise to make the maximum contributions that your employer will match. Although it often requires additional budget planning to enable you to set aside large amounts of your income, it is worth the effort: usually, the money you contribute is tax-deductible and grows tax-free until it is withdrawn.

Individual Retirement Accounts

If you are eligible, you can open an individual retirement account (IRA) at a financial institution, brokerage firm, or directly with a mutual fund. The amount you can contribute, and subsequently deduct, for a traditional IRA depends on various factors, such as your age, filing status, and modified adjusted gross income. For 2005, if you are under the age of 50, the maximum contribution to an IRA is $4,000 for a single contribution or $8,000 for a combined contribution (i.e., you and your spouse). If you are 50 or older, the maximum single contribution is $4,500—or $9,000 combined.

There are two types of IRAs, the Traditional and the Roth. The Internal Revenue Service (IRS) gives you a tax break on both. With a Traditional, the tax break is up front: you can use your contributions as a tax deduction. However, when you retire and start drawing money out of the account, it will be taxed as income. There are also rules about receiving the distributions^♦: you are penalized for early withdrawals, and you must begin receiving required minimum amounts by April 1 of the year following the year you reach 70½. When you begin receiving the required withdrawals, you can no longer make contributions.

Roth IRAs allow you to contribute to the account using “take-home” pay, and the interest earned on your investment is not taxed as income when you retire and receive distributions—as long as you satisfy all the IRS requirements. Contributions can be made to a Roth IRA regardless of your age, you can leave amounts in the account as long as you want, and upon your death, your beneficiaries may receive distributions income-tax-free. The IRS does impose limits on the amount you can contribute, depending on various factors such as your filing status and modified adjusted gross income.