• James D. Lynch

Terms to Help Taxpayers Better Understand Retirement Arrangements

Contribution: The money that someone puts into their retirement account.

Distribution: The amount that someone withdraws from their retirement account.

Required distribution: A person generally must start taking withdrawals from their retirement account when they reach age 70 and a half.

Traditional: An IRA or 401(k) where contributions may be tax-deductible, but the funds in a traditional retirement account are taxed when they are withdrawn.

Roth: An IRA or 401(k) where the funds are not taxed when they are withdrawn, but contributions are not tax-deductible.

Savings Incentive Match Plan for Employees. This is commonly known as a SIMPLE IRA. Employees and employers may contribute to traditional IRAs set up for employees. It may work well as a start-up retirement savings plan for small employers.

Simplified Employee Pension. This is known as a SEP-IRA. An employer can make contributions toward their own retirement and their employees' retirement. The employee owns and controls a SEP.

Rollover: This is when the retirement account owner receives a payment from their retirement plan and deposits it into a different retirement account within 60 days.

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Law Office of James D. Lynch, PLLC

3000 Joe Dimaggio Blvd #90, Round Rock, TX 78665


(512) 745-6347 (Austin / Round Rock)

‪(210) 201-6317‬ (San Antonio)

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©2020 by Law Office of James D. Lynch, PLLC. The information contained in this website is for informational purposes and is not to be considered legal advice.  Any correspondence between you and the Law Office of James D. Lynch is not intended to create an attorney-client relationship.  Please do not send confidential information to us until after an attorney-client relationship has been established by an engagement letter signed by the proposed client and our attorney.