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(Solved) TYPES OF RETIREMENT PLANS [Document subtitle] Abstract This paper describes the various types of retirement plans available to American citizens....



You are enrolled in a personal finance course at your local uni- versity. One of the assignments is to write a group paper with another student about the different types of retirement plans. You and your partner conducted research on the topic and wrote a final draft of the report. You have the research paper and want to format it to enhance readability and address your partner’s comments.

Track Revisions

The document you receive has a few comments and shows the last few changes by your partner. You will accept or reject the changes and then make a few of your own.

a.Open w04c1Retirement and save it as w04c1Retirement_LastFirst.

b.Ensure that the markup view is All Markup. Review the comments. On the first page, reject the replacement of the two words “NOW” in lowercase.

c.Accept all other tracked changes in the document and stop tracking. Keep all comments.

d.Change all headings to the correct heading styles as per the comments left by your partner.

e.Click the first comment balloon and reply to the comment by typing I have made the style replacement.

f.Select the table on page 2, click the References tab, and then click Insert Caption in the Captions group. Modify the caption text to read Table 1: The Future Value of Money. Make sure the caption displays above the selected item. Assign the caption Table 2: Comparisons between a Traditional and a Roth IRA for the next table, as instructed in the comments. Format both captions as normal and centered.

Credit Sources

You are now ready to add the citations for resources that your partner used when assembling this report.

Name of Webpage: Choosing a Retirement Plan: 403(b) Tax-Sheltered Annuity Plan Name of Website: IRS Year: 2014

Month: October Day: 08 URL: http://www.irs.gov/Retirement-Plans/ Choosing-a-Retirement-Plan:-403(b)-Tax- Sheltered-Annuity-Plan

b.Add the source for the first table to the citation by inserting the following website citation:

Name of Webpage: The Future Value of Money Name of Website: IRS Year: 2014 Month: October

Day: 14 URL: https://www.irs.gov/retirement-plans/plan- participant-employee/retirement-topics-benefits- of-saving-now

c.Add the source for the first table to the citation. You can follow the example as shown in the second table. The name of the webpage is the same as the table caption, and use 14 for Day.

d.Insert a footnote on page 2 at the end of the table heading in the Introduction section (the first line of the table), which ends with 6% annual return. Type the following for the footnote: The calculation did not take into consideration the cost of living adjustment (COLA). (Do not include the period.) Change the number format for footnotes to a, b, c in the Footnotes dialog box. (Click Apply, not Insert.)

e.Insert a blank page at the end of the report and insert a bibliography in APA style on the blank page with the title Works Cited. The bibliography should be double spaced, with no paragraph spacing and a font of Times New Roman 12 pt. The title Works Cited should be centered, 12 pt, and not bold. All text in the bibliography should be Black, Text 1 font color.

a.

Select APA Sixth Edition style. Click before the period ending in the first sentence of the 403(b) Plans section. The sentence ends in (TSA) plan. Insert the following website citation:

Change the Cover Page, and Insert a Table of Contents and Index
You did not like the cover page, so you change it to another design. Also, to put the finishing touches on your document, you add a table of contents and an index.
a.Change the Facet cover page to Integral. Delete the Document subtitle and Course title placeholders.
b.Automatically generate a table of contents and display it on a page between the cover page and page 2. The style is Automatic Table 1.
c.Mark the following words as index entries, selecting Mark All for each: Contribution, Roth IRA, Traditional IRA, 403(b), and 401(k). Cross- reference contribution with deduction.
d. Addanindexonablankpageattheendofthedocument. Use the Classic format. Use all other default settings.
e.Display a centered page number, using Plain Number 2 format, in the footer of the document. Do not display the page number footer on the first page. Numbering begins with page 1 on the Table of Contents page.
f.Ensure that the second table is on one page, and update the Table of Contents.
g.Save the file, then save it again as a PDF document with the file name w04c1Retirement_LastFirst. Close both files and based on your instructor’s directions, submit the following:
w04c1Retirement_LastFirst.docx w04c1Retirement_LastFirst.pdf

TYPES OF RETIREMENT
PLANS
[Document subtitle]
Abstract This paper describes the various types of retirement plans available to American citizens. Exploring Series [Email address] Introduction
It is never too early to save for your retirement. For a start, you can estimate the amount that you
need to have before you can retire comfortably using financial calculators found on sites such as
CNN Money, Kiplinger, Motley Fool, and TIAA-CREF financial services. The good part is,
there are many different types of retirement plans that you can participate, individually or with
your employers. To help you save for retirement, there are many government-regulated and
government-approved retirement accounts that you can contribute a certain amount to annually.
Why should you enroll in a retirement plan NOWnow? Did you know that your retirement can
last for 30 years or more? A common rule to follow is that a retiree will need up to 80% of
his/her annual income today to retire comfortably. Unfortunately, the average benefit amount
paid monthly by the Social Security Administration is only $1,177.
Below are many advantages why you should start saving NOWnow: Tax on employee and employer contributions is deferred until distributed. Investment gains in the plan are not taxed until distributed. Retirement assets can be carried from one employer to another. Contributions can be made easily through payroll deductions. Saver’s Credit is available. Flexible plan options are available. Better financial security at retirement.
Future Retirement Savings Value - Assuming 6% annual return
Monthly Savings
5 years
15 years
20 years
$50
$3,506
$14,614
$23,218
$200
$14,024
$58,456
$92,870
$500
$35,059
$146,136
$232,176
Source: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-TopicsBenefits-of-Saving-Now
A contribution is defined as the amount that an employee and an employer can put into a
retirement plan. There are, however, varying limits on how much we (including both employers
and employees) can contribute to any of the retirement plan. Each plan has its own rules and
criteria, and must specifically state that contributions or benefits cannot exceed certain limits.
Employees can participate in contributions via salary reduction. Employers can match
employees’ contributions or contribute outright a certain amount into the employees’ retirement
account. Traditional Individual Retirement Arrangements (IRAs)
There are two major kinds of IRAs – traditional and Roth. A traditional IRA is a way to save for
retirement that gives you tax advantages. It allows you to make tax-deferred investments to
provide financial security when you retire. Your traditional IRA contributions may be taxdeductible. The deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. You can contribute to a maximum of $5,500
($6,500 if you are age 50 or older) every year to a IRA. Roth Individual Retirement Arrangements (Roth IRAs)
A Roth IRA is similar to a Traditional IRA in many ways, and is also subjected to the same rules
that apply to a traditional IRA. But the major disadvantage of a Roth IRA is that you cannot
deduct your contributions to a Roth IRA on your tax return. On the other hand, your distribution,
which includes both your contribution and earnings, are not subject to taxes when you withdraw
your investments later.
Some of the rules and regulations governing a Roth IRA include the following: If you satisfy the requirements, qualified distributions are tax-free. You can make contributions to your Roth IRA after you reach age 70 ½. You can leave amounts in your Roth IRA as long as you live. The account or annuity must be designated as a Roth IRA when it is set up. The same combined contribution limit applies to all of your Roth and traditional IRAs. Limits on Roth IRA contributions is based on modified AGI. Your Roth IRA contribution might be limited based on your filing status and income. Comparisons between a Traditional and a Roth IRA
You can save your money for retirement in a traditional IRA and/or a Roth IRA. Which method
is a better form of investment depends on various criteria. The table below highlights some of the
similarities and differences between these two options.
Features Traditional IRA Roth IRA Who can contribute? You can contribute if you (or
your spouse if filing jointly)
have taxable compensation
but not after you are age 70½
or older. You can contribute at any age
if you (or your spouse if filing
jointly) have taxable
compensation and your
modified adjusted gross
income is below certain
amounts. Are my contributions
deductible? You can deduct your
contributions if you qualify. Your contributions aren’t
deductible. How much can I contribute? The most you can contribute to all of your traditional and
Roth IRAs is the smaller of:
o $5,500, or $6,500 if you’re age 50 or older by the end
of the year; or
o your taxable compensation for the year. What is the deadline to make Your tax return filing deadline (not including extensions). For
contributions?
example, you have until April 15, to make your last year’s contribution.
When can I withdraw
money? You can withdraw money anytime. Do I have to take required
minimum distributions? You must start taking
distributions by April 1
following the year in which
you turn age 70½ and by
December 31 of later years. Not required if you are the
original owner. Are my withdrawals and
distributions taxable? Any deductible contributions
and earnings you withdraw or
that are distributed from your
traditional IRA are taxable.
Also, if you are under age 59
½ you may have to pay an
additional 10% tax for early
withdrawals unless you
qualify for an exception. None if it’s a qualified
distribution (or a withdrawal
that is a qualified
distribution). Otherwise, part
of the distribution or
withdrawal may be taxable. If
you are under age 59 ½, you
may also have to pay an
additional 10% tax for early
withdrawals unless you
qualify for an exception. Source: [Tra15]http://www.irs.gov/Retirement-Plans/Traditional-and-Roth-IRAs 401(k) Plans
A 401(k) is a qualified profit-sharing plan that allows employees to contribute a portion of their
wages to their individual retirement accounts at their workplace. This qualified plan can be a
profit-sharing, stock bonus, pre-ERISA money purchase pension, or a rural cooperative plan.
With a 401(k) plan, employees can choose to defer some of their salary to a retirement
account. In other words, instead of receiving that amount in their paycheck, the employee
chooses to defer, or delay, getting that money by putting their deferred money into a 401(k) plan
sponsored by their employer. The deferred wages (elective deferrals) are not subject to federal
income tax withholding at the time of deferral, and they are not reflected as taxable income on
the employee’s individual income tax return. However, this deferred money and its earnings will
be taxed when it is distributed later on.
You can make a 401(k) plan as simple or as complex as you want to. A 401(k) plan that is preapproved by the IRS might be just the thing to cut down on administrative headaches and
expenses.
Advantages and disadvantages of a 401(k) plan: Greater flexibility in contributions. Employees may contribute more to this plan than under IRA plans. Good plan if cash flow is an issue. Optional participant loans and hardship withdrawals add flexibility for employees. Administrative costs may be higher than under more basic arrangements. Need to test that benefits do not discriminate in favor of the highly compensated
employees. This testing can be complicated.
Additional withdrawal and loan flexibility adds administrative burden for the employer. 403(b) Plans
A 403(b) is a tax-sheltered annuity (TSA) plan. It is a retirement plan offered by public schools
and certain 501(c)(3) tax-exempt organizations. This plan is quite similar to a 401(k) plan which
is maintained by a for-profit entity. Just as with a 401(k) plan, a 403(b) plan allows employees to
defer some of their salary into individual accounts. The deferred salary is generally not subject to
federal or state income tax until it is distributed. However, a 403(b) plan may also
offer designated Roth accounts. Salary contributed to a Roth account is taxed currently, but is
tax-free (including earnings) when distributed. Employees save for retirement by contributing to
individual accounts, and employers can also contribute to the employees' accounts.
Advantages and disadvantages of a 403(b) plan include the following: Flexibility in contributions. Investment options are limited to those chosen by the employer. may have high administrative costs. optional loans and hardship distributions add flexibility for employees.
Who Can Participate in a 403(b) Plan?
The following employees are eligible to participate in a 403(b) plan: Employees of tax-exempt organizations established under §501(c)(3) of the Code. Employees of public school systems who are involved in the day-to-day operations of a
school. Employees of cooperative hospital service organizations. Civilian faculty and staff of the Uniformed Services University of the Health Sciences
(USUHS). Employees of public school systems organized by Indian tribal governments. Certain ministers if they are: Ministers employed by §501(c)(3) organizations. Self-employed ministers. A self-employed minister is treated as employed by a
tax-exempt organization that is a qualified employer. Ministers (chaplains) who meet both of the following requirements. They are employed by organizations that are not §501(c)(3) organizations. They function as ministers in their day-to-day professional responsibilities
with their employers. Conclusion
This paper summarizes the various types of retirement plans that employees can participate to
save for their own retirement. There are many pros and cons for each of the plans, and you need
to find the one plan that works best for you.

 


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