THE UGLY- THE TAX MAN COMETH

Madelyn H. Hornstein, CPADermody, Burke & Brown, CPAs LLC

443 N. Franklin St.Syracuse, NY 13204

315-471-9171

Retirement Planning: The Good, The Bad & The Ugly

June 24, 2009

BENEFITS OF USING A RETIREMENT PLAN TO SAVE:

Pre-tax Savings•Employees save income taxes on their contributions.•Employers save income taxes on the contributions they make on behalf of employees.

Tax deferred Growth• As the $2,000 contribution is growing to become $20,000, you don’t pay taxes on this growth until you take it out and spend it.

YOUR COMPANY RETIREMENT PLAN

Are you contributing as much as you can?

Are you and your spouse at least contributing enough to get the maximum matching contribution?

When can you change the amount that you are contributing?

Have you received a copy of the Summary Plan Description?

TAKING MONEY FROM YOUR COMPANY RETIREMENT PLAN

General Rule:

Cannot take money from the plan unless:4. Retire5. Die6. Become disabled7. No longer work for the company (some

exceptions)

Options:

1. Take the money and pay taxes on it.2. Rollover the money to another plan or IRA.

TAKING MONEY FROM YOUR COMPANY RETIREMENT PLAN

Taxes Owed:

• Federal Taxes at your tax bracket• Plus a 10% excise tax if not 59 ½ unless

an exception applies (death, disability, retirement after 55, medical expenses, etc.).

• 20% Federal Tax withholding requirement for eligible rollovers.

• State Income tax, if applicable• New York doesn’t tax 1st $20,000

taken from a plan each year if 59 ½ or older.

• States such as Florida do have not income tax

TAKING MONEY FROM YOUR COMPANY RETIREMENT PLAN

Other Options:

3. Plan Loans-if plan allows for them4. Hardship Distributions (medical, eviction,

foreclosure, funeral, education, etc.)5. In-service Distributions6. Required Minimum Distributions (70 ½)

• None required for 2009

INDIVIDUAL RETIREMENT ACCOUNTS (IRA)

Are you contributing as much as you can? ($5,000 max or $6,000 if 50 or older)

Everyone earning a wage can contribute into an IRA… which type of IRA you can contribute into is simply dependent upon income levels.

Roth IRA Conversions in 2010:Many higher wage earners have been unable to make Roth IRA contributions or rollover their retirement accounts into a Roth IRA. 2010 presents an opportunity for those people with IRA account balances to convert into a Roth IRA.

This creates taxation but the other benefits may outweigh the taxation.

Traditional,Roth or

Nondeductible

CONCLUSION:

Learn as much as you can about the benefit plans being offered to you.

Stop trying to keep up with the “Jones”

Teach your children to be “savers”, not “spenders”!

Keep an eye on the savings you already have.

Begin saving more than you are currently.

Have plans to stay active and keep that brain working.

WILL YOU BE READY?

Madelyn H. Hornstein, CPA mhh@dbbllc.com

443 N. Franklin StreetSyracuse, NY 13204

(315) 471-9171(315) 471-8555www.dbbllc.com

Contact Information

Auburn ~ New Hartford ~ Syracuse