Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors.
A b plan is a tax-sheltered retirement plan for people who work for nonprofit companies, including charities, schools, and qualified religious organizations. The b plan is comparable to its private-sector counterpart, the k plan , with important differences. If you're considering enrolling in a b plan , check out the benefits below.
Contributions to a traditional b plan are deductible on your federal income taxes. The money comes out of your gross salary and goes directly into the b plan, untaxed. This cuts down on the income tax you owe for that year based on your top marginal tax rate. If you opt for a traditional b plan, you don't pay taxes on the money you pay until you begin making withdrawals after you retire.
And remember, most people fall into a lower tax bracket after retirement. It's important to note that you won't owe taxes on the investment growth in your account until after you retire. The money will grow tax-free until you begin making withdrawals.
You will be able to change your investment choices without losing much, except for some trading fees. And because the tax efficiency of your mutual funds isn't a concern, you can concentrate your portfolio on investments that offer high returns and low expenses. Since , participants have also had the ability to choose a Roth rather than a traditional b plan. If you opt for a Roth, you'll pay the income taxes up front, in the year in which you contribute the money. But you'll owe no taxes on your contribution or the profits it earns when you take the money out after retiring.
If you can take the hit to your current income, this may be your best bet for building a rich retirement. Your employer might make matching contributions to your b. Others contribute nothing. In any case, a b plan can also get you a good deal on investments—often better than you could get on your own.
Financial institutions have even been known to waive their minimum investment requirements, helping employees invest in low-expense institutional funds. The Roth b is part of the Duke Faculty and Staff Retirement Plan, and allows you to contribute on an after-tax basis. Your combined pre-tax and Roth after-tax contributions are subject to the same annual IRS-established maximum limit.
For more information about the Roth b , review the brochure for details about how it works and whether it might be a good option for you. We also encourage you to meet with your tax advisor or a Fidelity financial representative to discuss whether the Roth b is right for you. Because Roth b contributions are under the same IRS limits as pre-tax contributions to the Faculty and Staff Retirement Plan, each dollar of a Roth contribution reduces the amount that can be contributed pre-tax and vice versa.
Your take-home pay will be less than it would be if you made an equivalent pre-tax contribution because income taxes must be withheld and paid on after-tax Roth b contributions. Signing up for Roth contributions is easy. Click here for more information. You get no current-year tax deduction for your Roth contributions. Generally, b contributions are tax-deductible up to an annual limit set by the IRS each year. There are some exceptions to deductibility though, such as in the case of contributions to a Roth b , which are not deductible.
In addition to the regular catch up catch up contribution for being 50 or older, there is an additional catch up contribution opportunity unique to b plans. Roth b contributions are not tax-deductible. The tradeoff is that you can withdraw from a Roth b without paying taxes on the distribution. You may also be able, if your plan permits, to make non-deductible, or after-tax contributions.
0コメント