IRA's Flashcards
- Available through an individual employer
- Sometimes allow the employer to contribute to its employees accounts
Company-Sponsored Retirement Plans
isa free service that allows you to transfer funds between your Schwab brokerage account and other financial institutions, at regularly scheduled intervals and/or upon request
Schwab MoneyLink®
Certain Schwab One account features are _____ available for an IRA, including:
- VISA debit privileges
- Schwab BillPay Services
- Margin
- Offer tax-sheltered growth for qualified distributions
- this means that investments can grow free of federal income taxes
- No RMD at 72
Roth IRA
Must have had the account opened for 5 years before taking a distribution, otherwise a 10% penalty is incurred.
James is 22 and just started his first job after college but wants to gert started now in investing for his retirement. What kind of IRA should James consider?
a Roth IRA
Why?
James is new to his career and hopefully will make more money the longer he works. So contributions made now will be taxed at a lower rate then say 20 years into his career.
Best Suited For:
An individual who expects to be in a lower tax bracket when they start taking withdraws
Traditional IRA
These plans may be established for small businesses with any number of employees
- However, Sole Props with 0 employees often open these accounts
SEP-IRA
This pre-tax deferral plan (Plus minimal employer contributions) is available for small businesses having up to 100 employees making $5,000 or more annually.
- Employers are required to contribute either a match up to 3%or a 2% nonelective contribution for each eligible employee
Simple IRA
Is designed for self-employed individuals/owner-only businesses and their spouses
In many cases, this plan allows small business owners to contribute more than other plan types such as SEPs
Individual 401(k)
Define-contribution plan, where employees contribute a defined amount each pay period
401(k) plans
Retirement accounts typically only offered through government employers and non-profit organizations
- Very similar to 401(k)s
457 Plans
a retirement plan offered by public schools and certain 501(c)(3) tax-exempt organizations
- Employees save for retirement by contributing to individual accounts.
- Employers can also contribute to employees’ accounts.
- also called a tax-sheltered annuity or TSA plan
403(b)
Converts retirement savings into a regular monthly stream of income
Guaranteed Income Annuities
30 Large, Established & Actively Traded U.S. Stocks
The Dow
Top 500 U.S. Headquartered Companies based off Market Cap
- over $6.1 Billion in Market Cap
S&P 500
Made up of 3,000 stocks.
Mostly Tech-based Companies
Nasdaq
an order to buy or sell a stock at the market’s current best available price
- Ensures an execution but +does not* guarantee a *specific price
- Generally, should only be placed during market hours (To avoid the price going down or up significantly after placing the order)
Market Order
When placing a bid, limits the buy price. When placing an ask, sets the minimum price to be received
Limit Order
- If the order is filled, it will only be at the specific limit price or better.
- No assurance of execution
- appropriate when you think you can buy at a lower than - or sell at a price higher than - the current quote
Limit Order
once a client turns ____, they may begin taking distributions from their IRA account without penalty
59 1/2
If a Roth IRA the account must also have been established for at least 5 years
-
Early Distributions - Subject to a 10% early withdrawal penalty
- Unless it is, Rolled Over to an eligible retirement plan within 60 days of receiving a check
- Directly transferred to another IRA
Traditional Contributory IRA
Minimum amount that an IRA owner must withdrawal yearly, starting the year they turn 72 (73 starting 2023).
The distribution must be made by Dec 31 each year
- For the year in which they turn 73 they have until April 1st to take their first distribution.
RMD
Amounts may be aggregated and distributed from a single retirement account or multiple accounts
Can request a check for cash or can journal stock to another brokerage account (will be taxed, which is the point of an RMD)
once a client reaches ____, and has had the account for _ years, they may begin taking distributions from their Roth IRA without paying a federal income tax or a 10% penalty
59 1/2, 5
An eligible employee (including the business owner) who participates in their employers _____ plan must establish their own individual _____ IRA to which the employer will deposit contributions.
Meaning once this account is set up, each individual who has a vested interest in this account must create their own IRA account for contributions
SEP IRA
