Retirement Accounts

An employer-sponsored retirement plan allowing employees to make pre-tax or Roth (after-tax) salary deferrals, often with employer matching contributions. 2025 contribution limits are $23,500 (under age 50), with catch-up contributions of $7,500 (ages 50-59 and 64+) or $11,250 (ages 60-63, "super catch-up"). Employer matching contributions may be subject to vesting schedules. Plans may permit loans (generally up to $50,000 or 50% of vested balance) and hardship withdrawals. Required minimum distributions (RMDs) begin at age 73 for Traditional 401(k)s.

Example: A 45-year-old employee earning $90,000 annually contributes $10,000 to her 401(k) (11% of salary). H...

Mandatory annual withdrawals from tax-deferred retirement accounts that must begin at age 73 (for those born 1951-1959) or age 75 (for those born 1960 or later), calculated by dividing the prior year-end account balance by an IRS life expectancy factor. Failure to take RMDs results in a 25% excise tax on the amount not withdrawn (reduced to 10% if corrected within 2 years). Roth IRAs are exempt from RMDs during the owner's lifetime.

Example: A 73-year-old client with a $500,000 traditional IRA must take an RMD of approximately $18,868 ($500...

The process of transferring funds from a Traditional IRA, SEP IRA, SIMPLE IRA, or employer-sponsored retirement plan (401(k), 403(b)) to a Roth IRA, paying ordinary income tax on the converted pre-tax amount in the year of conversion. Since 2010, there are no income limits for conversions, making this strategy available to all taxpayers regardless of income level. Each conversion is subject to a separate 5-year holding period before converted amounts can be withdrawn penalty-free (even if over age 59½). Conversions are irrevocable and cannot be recharacterized.

Example: A 55-year-old executive with $500,000 in a Traditional IRA expects to retire in a lower tax bracket....

An individual retirement account funded with after-tax contributions, offering tax-free qualified withdrawals in retirement. No required minimum distributions (RMDs) during the owner's lifetime. Subject to income eligibility limits ($153,000-$168,000 for single filers, $242,000-$252,000 for married filing jointly in 2026). Contributions limited to $7,500 annually (or $8,600 if age 50 or older) for 2026. Qualified distributions require account to be open for 5 years and owner to be age 59½, disabled, deceased, or using up to $10,000 for first-time home purchase.

Example: A 35-year-old teacher earning $80,000 annually contributes $7,500 to a Roth IRA. She receives no tax...

An individual retirement account funded with pre-tax or after-tax contributions, offering tax-deferred growth with contributions potentially tax-deductible. Contributions limited to $7,000 annually (or $8,000 if age 50 or older) for 2026. Deductibility phases out at higher incomes if covered by employer retirement plan ($81,000-$91,000 for single filers, $129,000-$149,000 for married filing jointly in 2026). Required minimum distributions (RMDs) must begin at age 73. Distributions taxed as ordinary income, with 10% early withdrawal penalty before age 59½ (unless exception applies).

Example: A 45-year-old accountant earning $95,000 annually contributes $7,500 to a Traditional IRA. Because h...