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King Trust Company, N.A.
8050 Spring Arbor Road
PO Box 580
Spring Arbor, Michigan 49283
517.750.2727
800.325.8975
517.750.2752 (fax)
info@kingtrust.com
Retirement Accounts
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Traditional IRA - allows individuals to defer taxes on a portion of their earned income each year (currently $4,000-$5,000, depending on age, or 100% of compensation, whichever is less, with some restrictions based on the amount of an individual's or couple's annual adjusted gross income). The earnings in a traditional IRA remain tax deferred until withdrawn from the account, normally at age 59 ½ or later, at which time distributions may be taken penalty-free (income taxes will be due based on the prevailing tax rates). Annual contributions to this IRA may be deductible from income in the tax year during which they are made.
Roth IRA - while not providing the deductibility from income feature of a Traditional IRA, Roth IRAs allow penalty-free, tax-free withdrawals for certain purposes after a five-year holding period, and for unlimited purposes after a five-year holding period if the individual is age 59 ½ or older. All income which accrues avoids taxation. Individuals may contribute $4,000-$5,000 annually, depnding on age, or 100% of compensation, whichever is less, to a a Roth IRA, while following other published guidelines.
SEP Plans - King Trust Company is able to help employers set up a Simplified Employee Pension (SEP) plan. SEP plans allow employers to contribute the lesser of 25% of an employee's compensation (or $45,000, whichever is less) to an IRA. This amount is then tax deductible for the employer. In general, SEP plans may be set up by any employer, even those who are self-employed (special rules apply to self-employed individuals). SEP plan contributions must be uniform for all employees (except those to whom special exclusions apply). Contact King Trust Company for details and regulations.
SIMPLE Plans - Under a SIMPLE plan, employees may choose to defer an amount of their salary (up to $13,000, depending on age) to a SIMPLE IRA. This amount, as well as income, is tax deferred for the employee. The employer then a) matches the deferral amount (between 1-3% of compensation); or b) makes a nonelective contribution the employee's SIMPLE IRA (2% of compensation). Both the employee deferral and the employer contribution are tax deductible for the employer.
Employers who do not have another qualified plan, with 100 or less employees who earned more than $5000 in the previous year, are eligible to establish SIMPLE plans. Contact King Trust Company for further details and regulations.