Introduction to IRA retirement plans

A retirement plan is an arrangement of financing an individual’s income post his retirement. These plans can be set by the employers, insurance companies, trade unions, government, or any other organization. Tax benefits are provided on investments made on some retirement plans based on provisions of the Internal Revenue Code (IRC) and regulated by the labor department under the ERISA Act. The retirement plans can be classified as defined benefit plans and defined contribution plans based on the types of payment, investment, and benefits payout method preferred.

What is a defined contribution plan?
An individual chooses the type of investment towards which a portion of the earnings are allocated toward retirement. One might choose either a mutual fund, stocks, or other securities. IRA, 401(k), profit sharing plans, etc. are some examples of a defined contribution plan. These are eligible for tax benefits provided they are not withdrawn before the age of 59.5 or a penalty will be levied on early withdrawal.

What is an IRA?
An Individual Retirement Account (IRA) is a retirement plan that allows the employees to have control over their savings for retirement within an account that will be eligible for tax benefits. IRAs are classified into various types.

Types of IRAs:
Traditional IRAs:
The contributions may be tax deductible and the earnings are allowed to grow on tax-deferral. This allows the individual to defer paying taxes until retirement. This gives flexibility to withdraw at a lower tax bracket, depending on the income and the tax rates that apply. These plans are subjected to rules on distribution, investment, and contribution.
Advantage: The tax on the earnings can be deferred until the individual chooses to withdraw.
Disadvantage: There are mandatory withdrawals set for 70.5 years of age.
Roth IRAs: It is a savings account to which individuals can make contributions after the tax on income is paid. Distributions from this IRA may be tax-free if some criteria are met. It supplements an individuals’ retirement plan well. It accumulates earnings on a tax-deferred basis and can be made tax free if certain requirements are met.
Advantage: Contributions are discretionary, and hence the individuals can choose to fund the Roth IRAs whenever they want.
Disadvantage: The contributions are not eligible for tax-deductions and only the qualified distributions are tax free.
SEP IRAs: SEP stands for Simplified Employee Pension which is a plan established by the employer where contributions are made on behalf of individual employees. Here, the tax benefits are on the contributions made by the employer and then may be given to individuals on a discretion.
Advantage: Employee doesn’t have to pay any tax on the contributions.
Disadvantage: Any earnings or distributions made on this plan are taxable to an employee and also requires for a traditional IRA to be set-up individually which is then linked to this plan making the entire process very cumbersome.
Simple IRAs: This is a salary reduction plan which is established by the employer or self-employed persons. Here, the employees contribute a part of their pretax income/salary to this plan which defers the tax on the money until it is distributed.
Advantage: Starting and maintaining of a simple IRA is less expensive as the funding is shared between the employer and the employee.
Disadvantage: Contributions are not taxed but the distributions are taxable.

YOU MAY ALSO LIKE

  • Here’s what you need to know about grants for online schools

    Whether it is for traditional school learning or distance or online learning, managing expenses for school can be a challenge for many. Getting financial aid for traditional school learning is a common topic to talk about, but one should remember that there are ways to get grants for online schools, too? The grants for these online schools are an effective way of drastically reducing your school expenditure. So, if you have decided to go ahead with online learning, here’s everything you need to know about grants for online schools.

    What are grants for online schools?
    Grants for online schools are financial aids that are given once to the students based on their capabilities and requirements. These grants are different from loans. Unlike student loans, students do not have to pay back the grant money. Grants can be taken from various sources. Some of them are:

    • Government of the state
    • The college in which the student is applying in
    • Federal government
    • Some private organizations

    Common types of grants for online schools
    There are several grant types that students can get for their education. They can choose from the following:

    Need-based
    Federal government typically offers these types of grants. Financial aid is usually provided for a partial or complete tuition fee. The eligibility for these grants is determined after calculating the difference between the expected contribution to be made by the family and the entire attendance cost. To get these grants, the first step is to carefully fill the application for FAFSA®.

    Merit-based
    These are not what the name suggests. Most people are not aware about these grants, and it is commonly assumed to be available only for students with straight As. Any student with exceptional interests, motivations, and passion can be eligible for this grant. The golden rule to get this grant is to achieve a balance. For example, you might be leading a sports team and work part-time to manage your finances along with maintaining an average of B in your academics. You will still be considered for a merit-based scholarship by the committee.

    What are the best scholarships and grants for online schools?
    Some of the best grants and scholarships in the country that give students the opportunity to study further without any financial hurdles include:

    • Bemidji State University Distance Learning scholarship
    • Berklee online
    • BOLC Distance Learning Scholarships
    • Bright Future Scholarship
    • College Raptor Scholarship
    • Digital Responsibility
    • FirstGEN Fellows
    • FIU online
    • Get Educated Online College Scholarship
  • The best Asics running shoes
    Our sedentary lifestyle takes a huge toll on our bodies, and pretty soon you can see a paunch slightly jutting out of your favorite shirt, or you might find your pretty skinny jeans cutting into your thighs. These are signs that indicate the fact that we are neglecting our body. So, what do you do next? It's never too late to make amends to your routine. You can either join a gym or take up some sport to keep your body from flailing. However, there are people who do not enjoy working out in confined places and aren't motivated to follow the routine every day. So, there's still hope for such people. Pick up your running shoes and start jogging in the morning. Nothing brightens your day than being in the midst of nature and exercising at the same time. Now that you have decided to go running, the next question is, which running shoes should you opt for? There are plenty of different running shoes in the market and this might add to your confusion. So, let's make it easier for you. If you are looking for durability and style plus a dose of comfort, Asics running shoes are what would fit the bill perfectly. Asics running shoes should be your first preference if you wish to blend comfort with style. Here's a list of the best Asics running shoes that would suffice all your needs to the T. Asics Dynaflyte- Asics Dynaflyte is the latest in the Asics running shoes collection. Stylish and practical, these shoes are the ones that has shocked the testers as well, with its perfect grip and ability to chain gait swiftly. It is equipped with the new Impact Guidance System and has excellent moisture management which means bye-bye sweaty feet. Asics GT 2000 4- Is over-pronation a problem? There's no need to fret. The Asics GT 2000 4 is designed for the daily runner and takes care of over-pronation with great ease. You needn't worry whether your gait would be affected or the shoes would be fit you snugly enough to provide balance, because this Asics running shoes has a heel clutching system for support. Asics Gel Kinsei 6- If you are a daily runner and prefer comfort over everything else, then the Asics Gel Kinsei 6 is what you should opt for. The first thing that you need to take care while buying shoes is that, your feet should be able to breathe. This Asics running shoes are very breathable and the uppers are chafe-free. Asics Gel Noosa Tri 9- Here's a unique flashy Asics running shoes for the ones who love quirky designs. The gel cushioning system in heel and forefoot absorbs shock, so you aren't going to experience any discomfort while running. So, get your Asics running shoes and jog your way to a healthy you.
  • An ideal buy in the Fourth generation used Honda CR-V
    The Honda CR-V is a popular SUV choice among different types of drivers due to the different packages its offers for each. This SUV is considered as an SUV with the high level of practical utility, reliability, and build quality. The Honda CR-V is greatly lauded for the smooth drive and the powerful engine that generates a controlling acceleration. When choosing a used Honda CR-V, a buyer has to first set his or her mind on picking the right trim, the amount willing to be spent, the acceptable miles were driven, and the kind of technology integration required. Fourth Generation Honda CR-V The Honda CR-V underwent a major redesign in 2012, and the resulting change was five hp hike to 185 hp, and fuel efficiency for front-wheel drive versions got around 23 mpg in the city and 31 mpg while cruising the highway. Despite looking large, the reviews from owners and experts noted that the car was easy to handle like a smaller car because of its light feeling maneuverability with a tight radius for turning. This CR-V series equipped with a V4 engine was appropriate for easy driving in the city. However, the towing limit on this edition was 1500 lb. The suspension and the brakes were tight and firm, thereby making the SUV a reliable performer. As for the interiors, the CR-V’s was not much of a stunner as it was made out of hard plastic. However, regarding cargo space, the rear seat could be folded down to give way for extra cargo space, and the low depth of the cargo floor makes it easy for loading and unloading cargo without any hassles. While the leather upholstery and power driver’s seat were available at an additional price, the standard features integrated into the SUV included include Bluetooth, a USB port, and a rearview camera. The fourth generation used Honda CR-V is a wise choice for buying as these models are better in terms of both power and mileage. Picking a 2014 or later model would be more updated on technology. Planning to purchase a used Honda CR-V? Keep these points handy and make a smart choice.
  • How to effectively treat hematomas at home
    A hematoma is a bruise that usually a result of blood collection underneath the skin. It is typically caused due to a blunt trauma that leads to blood vessel damage, but certain medications, infections, strokes, etc. can cause hematoma too. Some hematomas involving grievous injuries require immediate medical intervention. On the other hand, milder forms of this condition can be treated with OTC medications and simple home remedies. However, it is recommended to consult a doctor in any circumstance to evade possible risks. Symptoms of hematoma Here are some of the common symptoms of hematoma
    • Severe pain in the affected area
    • Inflammation
    • Weakness
    • Headache
    • Redness
    Two useful home remedies for hematomas A proper diet is one of the best home remedies for hematomas. An intake of increased proteins, vitamins and minerals can help heal the hematoma internally. The following is a list of foods which can be beneficial for treating hematomas.
    • Vitamin C Loaded with antioxidant properties, Vitamin C can help reduce the bruising and discoloration. Citrus fruits (oranges, lemons, grapefruits, sweet lemons, etc.), strawberries, papayas, bell peppers, pineapple, broccoli, etc. are some of the fantastic sources for Vitamin C.
    • Protein The intake of protein is crucial as it helps to rebuild the damaged tissues. Some of the foods packed with high amounts of proteins are chicken, eggs, salmon, lamb, sardines, tuna, etc. If you don't have meats, then you can have dairy products, soy, quinoa, hummus, tofu, nuts, seeds, spinach, peanut butter, artichokes, lentils, beans, etc.
    • Vitamin K This particular vitamin is important as it resolves the issue of blood clotting. Spinach, raw green turnips, kale, parsley, raw cabbage, broccoli, wheat bran, Brussels sprouts, dairy products, eggs, etc.
    Apart from necessary dietary changes, ensure that you stay hydrated. Avoid caffeinated drinks, packaged juices, and alcohol as they might slow down the healing process. Instead, try to have herbal teas and homemade fruit juices. You can also use home remedies for hematomas like the RICE therapy, i.e., rest, ice, compression, and elevation.
    • Rest Ensure that you rest for at least one to three days. The restricted movement will help cease any further leaking of blood.
    • Ice Apply ice to the damaged part to lessen the pain and inflammation. Just make sure that you cover the ice pack in a towel so that it doesn't sting your skin.
    • Compression Use a bandage to firmly cover your hematoma so that it can reduce the level of swelling. It is important to be noted that compression bandages shouldn't be super-tight, as this can affect the circulation in the affected area, making the situation worse.
    • Elevate If you have an injury on the leg, then raise and rest it on an elevated level using pillows. This will help reduce the discomfort and soreness.
    Remember the above-mentioned home remedies for hematoma should only be implemented after you receive an accurate diagnosis from your doctor.
  • Tips to follow while buying a used luxury sports car
    Car enthusiasts are a breed of people who never seem to rest at ease with just one opinion about a given car. Add to this curiosity the hype behind sports car, and you can have a debate raging in under a minute about which sports car trumps the other.  Also, no matter how good a car they have, even if it is the best in the segment or the best possible model they could get, car enthusiasts always have a soft spot for the shiny, powerful, quintessential sports car. Now just sometimes, the budget might become a top concern that throws such buyers into a tizzy. But then worry not since the world of used sports cars and used luxury sports cars is just a step away. Here are some tips to consider while buying a luxury sports car. Consumables and concerns Be critical. There is nothing wrong in assuming that most consumables category of car parts could be pooched. From rotors to the clutch, you have to be prepared that these all need a replacement for the car you are planning to buy. Check the fluids For optimal investment, you need to assume that car fluids have never been changed earlier. Therefore, consider including these costs in your budget bracket. While coolant and engine lubricant are significant, do not forget to pay attention to the fluids for power steering or transmission either! Examine thoroughly Yes, we are still in sports car shopping zone and we want you to not trust the quality of the used luxury sports car much. Inspect the body from all ends, the bumpers and check for suspension damage. Look for the warranty  When shopping for used sports cars that have some factory warranty left, it is better to assume that the truth is otherwise. You will have to check each service sheet to know for sure what the real status is since goofing up the warranty is as easy as missing a fluid change. Spend some bucks to get a present purchase inspection. It takes around one hour but lets you understand internal issues such as those with powertrain electronics.
  • Make your Christmas special with Christmas decor
    What is getting you excited about winters? The commencing of winters brings with it the charm of Christmas and Christmas is indeed exciting. If you are busy imagining dancing to an amazing number with some mirthful elves as your arm candies, then Christmas is your true pal. The best part about the year-end is Christmas shenanigans and excitement about Christmas decorations. If you are still wondering how to gear up for Christmas decorations, then it is time to keep your worries at bay by shopping for the exclusive Christmas craft supplies. Someone has rightly said that Christmas has so many hues that you will fall in love with this festival over and over again. This festival brings the entire family under one roof with some scrumptious dinners and some hot cocoa amidst a soothing snowfall. It is also about the joy of gifting and surprising your dear and near ones. And hence to surprise them with the best we put our heart, soul and the best of our creativity to test. Shops today are filled to the edge with Christmas stuff flowing to bits while shopkeepers are busy laying red carpets to lure customers into buying some amazing Christmas gifts. Importance of affordable Christmas decor Christmas is incomplete without affordable Christmas crafts and hence to help you create some amazing cards, shopkeepers today have some easy DIY Christmas card kits that will help you to make some stunning Christmas cards. The most soothing fact about gifting a loved one on Christmas is that you have made the gift all by yourself. It is rightly said that bonds grow stronger when your love is expressed through your creativity. Send umpteen love to your loved one by creating some fabulous cards. Why Christmas is a beautiful festival for kids They say a child's brain is just like wet clay, for it takes proper molding to imbibe good things into them. At a time when the web of technology is trying to entangle kids in its vicious web, the only escape is art and craft. It is also scientifically proven that kids who indulge themselves in art and craft activities have good concentration and are equally calm and patient minded. Bring on the best of Christmas creativity in your kids by gifting them some fabulous Xmas crafts for toddlers and let the creativity flow. Still worried wondering that Christmas stuff is expensive? Do not worry as you can now find easy-to-use, and affordable Christmas crafts right here. So, why run from pillar to post when you have everything right here available for you. You can now choose from a wide range of Christmas craft supplies and create memories of a lifetime this Christmas season.