Share:

Effective tax preparation and retirement planning depend on understanding the benefits and drawbacks of the various types of saving and investment plans available. Sharrard McGee & Co PA, accounting and financial services experts serving individuals and businesses throughout the Greensboro, NC area, explain some of the key differences among the most common contribution types.

  • Elective Deferrals: These involve contributing a portion of your pre-tax earnings to a retirement plan. Some plans deduct a percentage of your pay while others may specify an exact dollar amount. 401(k), 403(b) or SIMPLE IRA plans often involve elective deferrals.
  • Designed Roth Contributions: These are included in gross earnings, but are tax-free when distributed or withdrawn. Many 401(k), 403(b) and governmental 457(b) plans allow them, but those plans must also include a pre-tax contribution option.
  • After-tax Contributions: These are savings and retirement vehicles that are not tax-free and must be claimed as income on your tax return. Designated Roth contributions are not included in this category.
  • Catch-up Contributions: These are permitted by some 401(k), 403(b), governmental 457(b), SARSEP, or SIMPLE IRA plans and allow those over the age of 50 to make year-end contributions beyond the basic limits on elective deferral payments.

Sharrard McGee & Co PA is a locally-owned business with over 40 years’ experience providing expert personal and corporate accounting services for almost any situation. They take the time to understand your financial situation before recommending solutions tailored to your unique needs. Visit their website to learn more about how they can help you prepare for the future, or just call (336) 884-0410 to make an appointment today.

tracking