Retirement Planning

The best time to start preparing for retirement is now! An individual retirement account, or IRA, can be a tax-efficient way to save and seek to grow your money for your future plans.

MB Investment Services offers both Roth IRAs and Traditional IRAs. Each has their own features and tax structures, so it is important to speak with your tax advisor in preparation for meeting with your representative.

• For many individuals, contributing to an MB Investment Services Roth IRA may result in more retirement income than a comparable investment in a Traditional IRA.
• However, if you aren't eligible for Roth IRA and have some form of income, you can take advantage of the benefits of a Traditional IRA.

With either type of IRA, you may still come out ahead of a comparable taxable investment because earnings aren't eroded by taxes year after year.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

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This hypothetical illustration does not represent the performance of any investment options. It assumes an 8% annual rate of return, a 15% federal income tax bracket and reinvestment of earnings, with no withdrawals. It does not take into account state, local, Social Security or Medicare taxes. Rates of return may vary. Assumes that the taxable account does not hold any investment for more than 12 months. Distributions from a tax-deferred retirement plan are taxable as ordinary income, whereas taxable investments may qualify for lower capital gains rates. The illustration does not reflect any charges, expenses or fees that may be associated with your plan. The tax-deferred accumulation shown above would be reduced if these fees had been deducted.

SEP Plans ( Contribution Limits for 2021 Plans)

• An IRA-based plan fully funded by the employer.
• Contribution per each employee is the lesser of 25% of their annual salary or $58,000.
• SEP plans are discretionary; you can choose not to make contributions if you do not have the funds.
• Contributions are 100% vested immediately.

Simple IRA Plans

• Funded by both employer and employee contributions.
• Employee contributions are made on a pre-tax basis, reducing their taxable incomes.
• Maximum contributions per employee are $13,500, with an additional $3,000 in catch-up contributions available for those age 50 and older.
• All contributions are immediately 100% vested.

Profit Sharing Plans

• Generally discretionary.
• Contribution per employee is the lesser of 100% of salary or $64,500.
• Funding is solely on the employer.
• Vesting schedules are an attractive option to help retain employees.

401(k) Plans

• Usually funded with salary-deferred contributions.
• An employer, you may make matching contributions for each employee who makes a salary-deferred contribution.
• You may also add a profit-sharing feature, which allows you to make discretionary contributions.
• Contribution per employee is the lesser of 100% of salary or $19,500, with $6,500 catch-up contributions for those age 50 and older.

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