Types of Retirement Accounts
Midland provides the freedom and flexibility to choose your investments. Choose from a broad range of alternative investments. Invest in real estate, private placements, notes, hedge funds, futures, and more! Select an account type below to learn about the benefits, eligibility, and contribution limits of that account type.
Traditional IRA
Traditional IRAs are the most common retirement plans, which can be used by anyone with earned income. Account owners with earned income can contribute pre-tax dollars towards retirement. Taxes are due when distributions are made upon retirement. Contributions of up to $6000 can be made annually. A catch-up allowance of an additional $1,000 can be made for those who are 50 or older. Contributions may be tax-deductible, and earnings grow tax-deferred.
Traditional IRA Benefits
- Tax-deductible contributions
- Tax-deferred earnings
- Only pay taxes on withdrawn funds
- RMDs begin at age 72
- Can invest in any permissible alternative asset to build retirement wealth
Who Is Eligible for a Traditional IRA?
- Anyone with taxable compensation received during the given year.
- Individuals under the age of 72 at year’s end.
- Married individuals (under 72) who earned income during the year can open their IRAs.
- Bonus: If you are married and filing jointly, only one of you has to meet the compensation requirement. The employed spouse can contribute to the account on behalf of the unemployed spouse.
- Traditional IRA account holders who want more control over their investment decisions. These individuals can transfer their existing funds to a self directed account at Midland. They can also move funds from an old employer 401(k) into a self directed plan.
2021 Traditional IRA Contribution Limits
Annual Contribution: $6,000
Catch-Up Contribution: $1,000
Roth IRA
Roth IRAs are a favored plan for eligible individuals who can make post-tax contributions of up to $5,500 annually. They present unique savings and distribution terms not available in other plans. Eligibility depends on two factors. One, you must have earned income. Two, your modified adjusted gross income (AGI) cannot exceed the limits set for Roth IRAs.
Unlike a Traditional IRA, you pay taxes on contributions upfront. So, when you are eligible to take a distribution, you don’t pay taxes. The catch-up contribution of $1,000 applies for those 50 or older. Contributions are not tax-deductible, but after five years from the account set up date, all earnings grow tax-free. Withdrawals can be taken without any penalty at the age of 59 1/2.
Roth IRA Benefits
- Post-tax contributions
- Tax-deferred earnings
- Roth conversions from Traditional IRAs
- No RMDs (Required Minimum Distributions)
- Can invest in any permissible alternative asset to build retirement wealth
Who Is Eligible for a Roth IRA?
- Anyone with taxable compensation received during the given year.
- Those whose modified adjusted gross income (AGI) is within Roth limits.
2021 Roth IRA Contribution Limits
Annual Contribution: $6,000
Catch-Up Contribution: $1,000
SEP IRA
Simplified Employee Pension (SEP) plans allow the self-employed, partners, or corporation owners a low-cost, easy way to provide retirement benefits for employees. Employers can make discretionary, tax-deductible contributions of up to 25% of each employee’s compensation or the maximum of $57,000 in 2020. Start providing tax-deferred retirement benefits to yourself and your employees today!
SEP IRA Benefits
- Flexible employer and employee tax-deductible contributions
- Minimal start-up and facilitation fees
- RMDs (required minimum distributions) begin at age 72
- Flexible employer contributions
- Existing IRA or employer-sponsored plan can rollover or transfer into self-direction
- Can invest in any permissible alternative asset to build retirement wealth
Who Is Eligible for a SEP IRA?
- Anyone 21 or older with at least $550 in taxable compensation.
- Employees who have worked three out of five years for an employer.
- Employers are also considered employees. Consult with a CPA or financial advisor for specific contribution guidelines.
2021 SEP Contribution Limits
Annual Contributions: 25% of net earnings up to $58,000
SIMPLE IRA
SIMPLE IRAs tailor to small businesses with fewer than 100 employees. Employees may choose to defer a pre-taxed portion of their compensation into the plan. Employees include self-employed individuals. Contribution limits for employees under 50 are $13,500 and $16,500 for those 50 and older. Employers can match this contribution to up to 3% of employee compensation.
SIMPLE IRA Benefits
- Low start-up and facilitation costs
- RMDs (required minimum distributions) begin at age 72
- Employee salary deferral of up to $12,500
- Employer match between 1% - 3% of employee deferral
- Can invest in any permissible alternative asset to build retirement wealth
Who Is Eligible for a SIMPLE IRA?
- Self-employed individuals and/or small businesses with fewer than 100 employees in the previous year who do not sponsor any other retirement plan.
2021 SIMPLE IRA Contribution Limits
Employee Salary Deferral: $13,500
Salary Deferral Catch-Up Contribution: $3,000
Employer Matching Contribution: Between 1% - 3% of employee’s deferral
Employer Non-Elective Contribution: 2% of employee’s compensation
Education Savings Account (ESA)
Coverdell Education Savings Accounts (ESAs) allow tax-advantaged savings benefits for a child's education. These funds pay for qualified educational expenses such as tuition, books, and uniforms. A self-directed ESA provides the ability to invest in alternative assets to build capital towards education. You can rollover or transfer funds from an existing ESA into a self-directed plan.
Education Savings Account (ESA) Benefits
- No need to make yearly contributions
- Contributions are not tax-deductible
- Earnings grow on a tax-free basis if they are less than the account holder’s annual adjusted gross income
- Qualified expenses for educational purposes
- Exceptions are available for individuals with special needs
- Can invest in any permissible alternative asset to build retirement wealth
Who Is Eligible for an Education Savings Account (ESA)?
To qualify, you do not need earned income. However, the account's beneficiary must either be under the age of 18 or an individual with special needs. You must also open an ESA with a cash deposit.
2021 Education Savings Account (ESA) Contributions
Annual Contribution (Per Beneficiary): $2,000
Health Savings Account (HSA)
These tax-advantaged accounts are established for individuals and families to save for qualified medical expenses. Self-directed HSAs enable plan owners to acquire alternative investments — gaining the potential to increase the capital in the account. Alternative assets include real estate, precious metals, oil and gas options, and more.
Health Savings Account (HSA) Benefits
- Tax-free earnings and withdrawals
- Funds pay for qualified medical expenses
- No loss of funds if you change health care plans
- Funds in the account continue to accrue until they are needed
- No yearly distributions required
- Can invest in any permissible alternative asset to build retirement wealth
Who Is Eligible for a Health Savings Account (HSA)?
- Have a current plan with a high deductible
- Not have other healthcare coverage, including Medicare
- Not be considered a dependent on another person’s tax return
2021 Health Savings Account (HSA) Contributions
Individual HSA Account: $3,600
Family HSA Account: $7,200
Additional Catch-Up Provision: $1,000
