Retirement Planning
Traditional IRAs
- Maximum $7,000 for 2025 and $7,500 for 2026 (under age 50)
- Maximum $8,000 for 2025 and $8,600 for 2026 (age 50 or older)
- Contributions made prior to April 15 of the current year qualify as a prior year contribution
- Contributions are tax-deductible
- Account growth is tax-deferred
- If you are covered by a retirement plan at work, then your tax-deductible contribution to a Traditional IRA is phased-out for 2025 if:
- Your filing status is married filing jointly, and your AGI is more than $126,000 but less than $146,000.
- Your filing status is single or head of household, and your AGI is more than $79,000 but less than $89,000.
- If your filing status is married filing separate returns, then your deductible phase-out starts at $10,000.
- Distributions prior to age 59 1/2 may be subject to a federal penalty of 10%
Roth IRAs
- Maximum $7,000 for 2025 and $7,500 for 2026 (under age 50)
- Maximum $8,000 for 2025 and $8,600 for 2026 (age 50 or older)
- Contributions made prior to April 15 of the current year qualify as a prior year contribution
- Contributions are not tax deductible
- Account growth is income tax-free
- Phase-out (Adjusted Gross Income - AGI) for 2025
- Single Taxpayer $150,000 - $165,000
- Married Taxpayer $236,000 - $246,000
Roth IRA Conversions
- Individual Retirement Accounts (IRAs) may be converted into a Roth IRA without regard to your Adjusted Gross Income (AGI) limits beginning January 1, 2010
- Conversions from a Traditional IRA into a Roth IRA will incur income taxes
Roth IRA Distribution Rules
Roth IRAs must held for at least five years and owner must be 59 1/2 or older. Distributions used for the following purposes are not subject to penalties:
- First Time Home Purchase (up to $10,000)
- Disability
- Death
- Medical Expenses
- Retirement
SEP IRAs (Simplified Employee Pension)
- Available to independent contractors (you receive 1099s instead of W-2s)
- Contractor may contribute the greater of 25% of net income from self-employment up to $70,000 for 2025 and $72,000 for 2026
- Contributions are tax-deductible
- Account growth is tax-deferred
- Distributions prior to age 59 1/2 may be subject to penalties
Individual 401(k) Plan
- Higher potential contribution limit than SEP IRA and profit-sharing plans
- Ability to make profit-sharing contributions and salary deferrals
- Tax-deductible contributions and tax-deferred earnings
- Flexible annual contributions
Group 401(k) Plans
- Maximum contribution of 100% of gross earnings up to $24,500 for 2026
- Catch-Up Contribution of $8,000 for 2026 for ages 50 - 59 or 64 or older
- Super Catch-Up Contribution of $11,250 for 2025 for ages 60 - 63
- Contributions are made on a pre-tax basis
- Account growth is tax-deferred
- Distributions prior to age 59 1/2 may be subject to penalties
Contact us today at (818) 783-6620 to schedule a complimentary, no obligation conversation to learn more about how Kaplan Financial can help you pursue your financial goals.