Spousal IRA
This is a type of IRA retirement plan that a domestic partner can open and have their life partner fund the account on their behalf.
This is why it is commonly referred to as a spousal IRA. The spousal IRA is basically a term and simply a normal Roth IRA, or Traditional IRA. The idea behind having a spousal IRA is that a non-working spouse should have the freedom to build up retirement funds for themselves.
An IRA can’t be mutually owned by the two parties, however once money is saved into the IRA it gets to be the legitimate property of the account holder. This implies that in the event of separation, a stay-at-home spouse will have the money in the account to fall back to. Also, another advantage of Spousal IRA is that married couples are able to contribute $10,000 every year (i.e. $5,000 per individual).
SEP IRA
An SEP IRA retirement plan shares some features with the traditional IRA, however unlike the traditional IRA, it is designed to benefit self-employed individuals and small business owners.
Irrespective of whether you are a sole proprietor, corporation, or an LLC, you can open a SEP IRA retirement plan. Basically, any contribution made into this type of account are tax deductible and the earnings are tax deferred. In this account, your contribution can be as high as $50,000 per annum, however, you cannot withdraw from the account before the age of 59 ½ years, else you suffer a 10% IRS penalty.
The major advantage of this account is the tax deduction. During tax time, if you gain more profits on your business than you expected, you can make a significant contribution to your SEP IRA retirement plan and significantly reduced owed income taxes to a reasonable amount for that year.
SARSEP
SARSEP retirement plan in an acronym for Salary Reduction Simplified Employee Pension Plan. This plan was originally made for small businesses with 25 or fewer employees until it was discontinued in 1996.
Under this retirement plan, employees have individual an SEP IRA retirement plan established in their names with both the employer and the account owner having the right to make contributions to the account. These contributions are pre-taxed through salary reductions, also the employer’s contribution may not exceed either $52,000 or 25% of the salary of the employee, whichever is less of the two.
The contributions made by the employee are dependent on salary reduction agreements spelled out in the plan, however the total contributions cannot exceed $17,500 (as at 2014). More so, all contributions made into this account are limited by the net profits. As a result of this SARSEP can better be defined as a collection of SEP IRAs and individual employee accounts operated in accordance to SEP IRA retirement plan rules.