HIGHMARK FUNDS RETIREMENT PLANS –
A CLOSER LOOK
Retirement planning is essential to secure your future needs.
Establishing the right plan is not a one-time event, but an
ongoing process. It is important for you to stay flexible while
remaining focused on your long-term financial goals.
TABLE OF CONTENTS
New Tax Laws
Retirement Plans Offered by
NEW TAX LAWS
COMPENSATION LIMIT – The maximum compensation used
for figuring contribution and benefits for 2008 increased to
$230,000, and increases to $245,000 for 2009.
ELECTIVE DEFERRALS FOR SMALL BUSINESS
RETIREMENT PLANS – The limit for 2008 is $15,500, and
increases to $16,500 for 2009.
SIMPLE IRA PLANS – The limit on salary reduction
contributions remains $10,500 for 2008. The limit increases to
$11,500 in 2009.
NEW TAX LAWS
CATCH-UP CONTRIBUTIONS – Permitted to participants who
are age 50 or over. The limit for SIMPLE plans remains at
$2,500 for 2008 and 2009. For defined contribution plans, the
limit is $5,000 for 2008 and $5,500 for 2009.
REQUIRED MINIMUM DISTRIBUTIONS – Under the Worker,
Retiree, and Employer Recovery Act of 2008, required
minimum distributions for 2009 are waived for defined
contribution plans, IRAs, SEP IRAs and SIMPLE IRAs.
ROLLOVER TO ROTH IRA – Beginning January 1, 2008, a
distribution from a qualified retirement plan can be rolled over
to a Roth IRA. Subject to the restrictions that currently apply to
a rollover from a traditional Ira to a Roth IRA.
NEW TAX LAWS
MODIFIED ADJUSTED GROSS INCOME (AGI) LIMIT FOR
TRADITIONAL IRA – For 2009, if you are covered by a
retirement plan at work, your deduction for contributions to a
traditional IRA is phased out if your modified AGI is:
More than $89,000 but less than $109,000 for a married couple
filing a joint return or for a qualifying widow(er),
More than $55,000 but less than $65,000 for a single individual or
head of household, or
Less than $10,000 for a married individual filing a separate return.
If you either live with your spouse or file a joint return, and your
spouse is covered by a retirement plan at work, but you are
not, your deduction is phased out if your modified AGI is more
than $166,000 but less than $176,000. If your modified AGI is
$176,000 or more, you cannot take a deduction for
contributions to a traditional IRA.
With a Traditional IRA plan, an individual may be able to deduct the
contribution from taxable income (limits apply) reducing current income
taxes. Taxes on investment growth and dividends are deferred until the
money is withdrawn. Withdrawals are taxed as additional ordinary
income when received.
ELIGIBILITY – Individuals and their spouses who receive
compensation. Contributions for the year in which an individual
attains age 70 ½ and thereafter are not permitted.
TAX TREATMENT OF CONTRIBUTIONS – Contributions are
deductible subject to limitations.
CONTRIBUTION LIMITS – Contributions depend on
income level for individuals who are active participants in
an employer-sponsored retirement plan. You can make
your 2009 contribution any time until April 15, 2010.
Investors who are 50 years of age or older get a bonus –-
an annual catch-up.
EARNINGS / INTEREST – Dividends and other earnings
are not taxed when received by your IRA.
Maximum Annual Catch-up
Tax Year IRA Contribution Contribution
2008 $5,000 $1,000
2009 $5,000 $1,000
ROLLOVERS – Individuals may roll over tax-free amounts
distributed from employer-sponsored retirement plans
[401(k), SEP IRA, etc.] to a Traditional IRA. Conversely,
amount held in a Traditional IRA may roll over to
employer-sponsored qualified plans.
WITHDRAWALS – Total (principal + earnings) taxable as
income in the year withdrawn (except for any prior non-
deductible contributions). Minimum withdrawals must
begin after age 70 ½ or a 50% excise tax will apply to the
amount that should have been withdrawn. A 10%
additional tax for withdrawals before age 59 ½ may be
With a Roth IRA plan, the contribution limits are the same as Traditional
IRAs, but there is no tax deduction for contributions. All dividends and
investment growth in the account are tax-free. Most important with a Roth
IRA, there is no income tax on qualified withdrawals from your Roth IRA.
Additionally, unlike a Traditional IRA, there is no rule against making
contributions to Roth IRAs after turning age 70 ½ and there’s no
requirement that you begin making minimum withdrawals at that age.
ELIGIBILITY – Individuals and their spouses who receive Maximum Annual Catch-up
compensation. Individuals age 70 ½ and over may contribute. Tax Year IRA Contribution Contribution
2008 $5,000 $1,000
CONTRIBUTION LIMITS – Subject to limitations, contributions
are deductible. You can make your 2009 contribution any time 2009 $5,000 $1,000
until April 15, 2010. Investors who are 50 years of age or older
get a bonus –- an annual catch-up.
EARNINGS / INTEREST – Dividends and other earnings are
not taxed when received by your IRA.
ROLLOVER / CONVERSIONS – Individuals may roll over from
other IRAs only. Amounts rolled over (or converted) from
another Traditional IRA are subject to income tax in the year
rolled over or converted. Amount held in Roth IRAs may not
be rolled over into employer-sponsored qualified plans.
WITHDRAWALS – Not taxable as long as the withdrawal is a
qualified distribution -– generally, account has been opened for
five years, and the individual is age 59 ½ or above. Minimum
withdrawals not required after age 70 ½.
Specifically designed for self-employed people and small business owners,
although any size business is eligible.
EMPLOYER CONTRIBUTIONS – Generally must be a uniform
percentage of each employee’s pay. SEP IRA cannot exceed
the lesser of 25% of the employee’s compensation or $46,000
for 2008 and $49,000 for 2009.
MINIMUM COVERAGE REQUIREMENTS – The plan must
cover all eligible employees who earn at least $500 in
compensation for 2008, and $550 in 2009. The employee must
be at least 21 years of age and have worked for the employer
in at least three of the five years.
EMPLOYEE CONTRIBUTIONS – Not permitted.
MAXIMUM TOTAL ANNUAL CONTRIBUTION – Up to 25% of
the employee’s compensation, or $46,000 for the 2008 plan
year and $49,000 for 2009, whichever is less. The maximum
compensation on which contributions can be based is
$230,000 for the 2008 plan year and $245,000 for 2009.
MAXIMUM DEDUCTIONS – 25% of participants’ total
compensation, excluding SEP contributions.
VESTING SCHEDULE FOR EMPLOYER CONTRIBUTIONS
– All contributions 100% vested.
WITHDRAWALS / DISTRIBUTIONS – Allowed at any time, but
subject to tax. A 10% additional tax may apply if participant is
under 59 ½. Generally, the employer and employee must begin
to receive distributions by April 1 of the first year after the
calendar year when the person reaches age 70 ½. However,
the new Worker, Retiree, and Employer Recovery Act of 2008,
required minimum distributions for 2009 are waived.
DEADLINE FOR ESTABLISHMENT OF PLAN – Any time up
to the due date of employer’s tax return (including extensions)
for the year of establishment.
DEADLINE FOR CONTRIBUTION – Due date of employer’s
tax return (including extensions).
Limited to small businesses with 100 or fewer employees. The plan is
funded by employer contributions and can also be funded by elective
employee salary deferral. Employers are required to make contributions to
the employees’ accounts.
EMPLOYER MATCHING CONTRIBTUIONS – Annual
matching contribution on a dollar-for-dollar basis up to 3% of
the employee’s compensation.
EMPLOYER NON-MATCHING CONTRIBUTIONS – Instead
of making a matching contribution, the employer may, for any
year, make a non-matching, mandatory contribution equal to
2% of compensation for each eligible employee.
MINIMUM COVERAGE REQUIREMENTS – The plan must cover
all employees who are reasonably expected to earn at least
$5,000 in the current year and have received at least $5,000 or
more in compensation for the preceding year.
EMPLOYEE CONTRIBUTION LIMIT – Up to $10,500 for 2008
and $11,500 for 2009. For age 50 or older, the catch-up
contribution limit for 2008 and 2009 is $2,500.
MAXIMUM DEDUCTIONS – Same as maximum contributions.
VESTING SCHEDULE FOR EMPLOYER CONTRIBUTIONS – All
contributions 100% vested.
WITHDRAWALS / DISTRIBUTIONS – The plan follows
Traditional IRA regulations.
DEADLINE FOR ESTABLISHMENT OF PLAN – Any time
between January 1 and October 1 of the calendar year. For a
new employer coming into existence after October 1, the Plan
must be established as soon as administratively feasible after
the employer comes into existence.
DEADLINE FOR CONTRIBUTION – Employee contributions
must be deposited no later than 30 days following the end of
the month with respect to which contributions are made.
Employer matching contributions or non-elective contributions
must be deposited no later than the due date of employer’s tax
return (including extensions).
HOW HIGHMARK CAN HELP
Retirement planning can be confusing, but ignoring your IRA
assets may cause you to lose future income.
Talk to your financial advisor to analyze your personal
HighMark Funds can help create a sensible retirement and
investment plan to meet your financial goals and needs.
HighMark Funds offers the following retirement plans:
Traditional IRA To learn more about HighMark
Retirement Plans, please call
or visit us at
Mutual fund investing involves risk, including possible loss of principal. HighMark Funds Distributors, Inc., an affiliate of
PFPC Distributors, Inc., is the principal underwriter of the HighMark Funds. HighMark Capital Management, Inc., a registered
adviser, is a wholly owned subsidiary of Union Bank, N.A., and serves as investment adviser for HighMark Funds. Union Bank,
N.A., a subsidiary of UnionBanCal Corporation, provides certain services to the Funds and is compensated for these services. NO
BANK GUARANTEE, NOT FDIC INSURED, MAY LOSE VALUE. There is no guarantee that the Funds will meet their stated
The material presented is provided for educational purposes only. HighMark Funds claims no responsibility for its accuracy or the
reliability of the data provided. This information is not intended to provide tax advice. Please consult your financial advisor for
Carefully consider the Funds’ investment objectives, risks, charges and expenses. This and other information can be found in the
Funds’ prospectus, which may be obtained by calling 800.433.6884 or by visiting here www.highmarkfunds.com. Read the
prospectus carefully before investing.
445 South Figueroa Street
Los Angeles, California 90071