Additional IRA Products

SEP IRAs

A SEP IRA is a Traditional IRA account that is established by an employer for eligible employees. Generally, all employees are eligible; however, the employer can choose to exclude:

• Employees under 21 years old,
• Employees who have not worked in (up to) 3 of the past 5 years, and
• Employees not earning the minimum annual amount of $500.00

Once an employee meets the company's eligibility requirements, they cannot be excluded from the Plan.

Each year the employer determines the contribution level, which can range from $0 to up to 25% of each eligible employee's compensation (salary, bonuses, tips, etc.) not to exceed specified limits (e.g. 2007 limit - $45,000; 2008 limit - $46,000). Contributing employers should consult with an accountant and/or tax advisor for actual contribution limits allowed.

• The contribution percentage must be the same for the employer and all eligible employees.
• The employer is not required to make contributions each year.
• Any employer, including a sole proprietor with no employees, can establish a SEP for the benefit of all eligible employees and themselves.

The employer and each eligible employee must establish an IRA Plan at a financial institution. Once the SEP Master Plan is established using the 5305-SEP document, the employer provides a copy to each eligible employee. The employee must open an account in order to receive employer contributions.

To learn more about SEP IRA Plans through Charter One, call Retirement Services at 1-800-445-4893.

Qualified Retirement Plans

A Qualified Retirement Plan Account was once known as a Keogh. These types of Plans are for small businesses and may also be referred to as Profit Sharing, Money Purchase or HR-10 Plans. A Qualified Plan is opened by an employer, the “Plan Administrator”, for him/herself and all qualified employees (“Plan participants”).

Qualified Plans follow specific federal guidelines to qualify as tax-deferred employee retirement savings plans.

To learn more about Qualified Plans through Charter One, call Retirement Services at 1-800-445-4893.

Coverdell Education Savings Accounts (ESAs)

Coverdell ESAs are designed to help pay for a child's education expenses, and they can be used for primary and secondary education expenses, including tuition, fees, books and supplies.

Although contributions to an ESA aren't tax deductible, earnings and withdrawals for qualified expenses are free from federal taxation.*

The definition of "qualified education expense" has been expanded to include primary and secondary educational expenses in addition to higher education expenses.

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