Stratton Mutual Funds - Retirement Plans

1) Traditional IRA
An IRA is a personal investment account that allows an individual to save a portion of his or her earned income for retirement. Amounts contributed to an IRA can be invested on a tax-deferred basis. When the tax-deferred amounts are ultimately taken from the plan, they are subject to income tax.

The immediate benefit of an IRA is the income tax deductibility of contributions to it. Over the long term, however, the tax-free deferred income and appreciation on IRA assets is extremely important. Tax-deferred means that the income and capital gains on the IRA account are not taxed immediately, allowing them to grow at a faster rate. Even though the total proceeds of an IRA are subject to income taxes when they are later taken out, almost invariably an IRA shows a more superior rate of return than assets that are not contributed to an IRA on a tax-deferred basis.

Any individual younger than 70½ years of age who receives earned income may establish an IRA. Earned income includes income received as wages, salaries, professional fees, bonuses, tips, alimony, and personal services. It does not include pension or annuity income, deferred compensation, profits from real estate (including rental income, dividends, interest income), and other income from passive sources.

2) The Roth IRA
Stratton also offers a Roth IRA. Roth IRA contributions are post-tax and are not tax-deductible, but earnings on the account are and accumulate tax-free. A Roth IRA may be opened by a single person with an adjusted gross income up to $110,000 or up to $160,000 for a married couple filing jointly.

Qualified distributions or withdrawals may be made tax-free with no annual limits and there are no minimum distributions required at 70½ years of age. However, in order for a distribution to be "qualified" the Roth IRA has to have been held for at least five years beginning with the first tax year for which a contribution was made and the account owner must be at least age 59½. A non-qualifed distribution will subject the earnings to taxation and an additional 10% tax will be imposed on the amount in the individual's gross income.

1) Defined Contribution Plans
Stratton offers two defined contribution plans - a profit sharing plan and a money purchase plan - for self-employed individuals or for corporations who wish to use shares of the Funds as a way to fund their qualified retirement plan.

a) Profit Sharing Plan
A profit sharing plan allows the employer to put a share of its company's profits into a retirement plan for employees. It can be used with 401(k), money purchase, defined benefit, and nonqualified plans.

Employee Advantages
Plan members benefit because a profit sharing plan allows them to:

Allows you to defer taxes on your contributions and their earnings until the plan pays benefits
Helps build retirement security

b) Money Purchase Plan
A Money Purchase Plan requires the employer to contribute a stated amount into each employee's retirement account each year. It can be used with 401(k), profit sharing, defined benefit, and nonqualified plans.

The employer can choose how much they want to contribute to the plan from a variety of different formulas. Benefit formulas may be based upon:

2) 403(b)(7)
A 403(b)(7) plan is specifically for employees of schools, hospitals and certain other tax-exempt organizations. Contributions to the plan are based on a reduction of the employee's regular compensation.

Benefits to the Employer
Lets you deduct your contributions from taxes as a business expense

3) SIMPLE IRA (Savings Incentive Match Plan for Employees of Small Employers)

A SIMPLE IRA is a written agreement (salary reduction arrangement) between an employer and an employee that allows an eligible employee (including a self-employed individual) to reduce his or her compensation by a certain percentage each pay period and have the employer contribute the salary reductions to a SIMPLE IRA on behalf of the employee. These contributions are called salary reduction contributions.

Benefits to the Employer





		Shares of Stratton Mutual Funds are available for purchase through two types of individual retirement accounts: Traditional IRA and Roth IRA. Shares of the Funds are also available for purchase through Defined Contribution Plans, 403(b) Plan and Simple IRA. Individual Retirement Accounts *1) Traditional IRA* An IRA is a personal investment account that allows an individual to save a portion of his or her earned income for retirement. Amounts contributed to an IRA can be invested on a tax-deferred basis. When the tax-deferred amounts are ultimately taken from the plan, they are subject to income tax. The immediate benefit of an IRA is the income tax deductibility of contributions to it. Over the long term, however, the tax-free deferred income and appreciation on IRA assets is extremely important. Tax-deferred means that the income and capital gains on the IRA account are not taxed immediately, allowing them to grow at a faster rate. Even though the total proceeds of an IRA are subject to income taxes when they are later taken out, almost invariably an IRA shows a more superior rate of return than assets that are not contributed to an IRA on a tax-deferred basis. Any individual younger than 70½ years of age who receives earned income may establish an IRA. Earned income includes income received as wages, salaries, professional fees, bonuses, tips, alimony, and personal services. It does not include pension or annuity income, deferred compensation, profits from real estate (including rental income, dividends, interest income), and other income from passive sources. *2) The Roth IRA* Stratton also offers a Roth IRA. Roth IRA contributions are post-tax and are not tax-deductible, but earnings on the account are and accumulate tax-free. A Roth IRA may be opened by a single person with an adjusted gross income up to $110,000 or up to $160,000 for a married couple filing jointly. Qualified distributions or withdrawals may be made tax-free with no annual limits and there are no minimum distributions required at 70½ years of age. However, in order for a distribution to be "qualified" the Roth IRA has to have been held for at least five years beginning with the first tax year for which a contribution was made and the account owner must be at least age 59½. A non-qualifed distribution will subject the earnings to taxation and an additional 10% tax will be imposed on the amount in the individual's gross income. Traditional IRA or Roth? Employer-Sponsored Retirement Accounts *1) Defined Contribution Plans* Stratton offers two defined contribution plans - a profit sharing plan and a money purchase plan - for self-employed individuals or for corporations who wish to use shares of the Funds as a way to fund their qualified retirement plan. *a) Profit Sharing Plan* A profit sharing plan allows the employer to put a share of its company's profits into a retirement plan for employees. It can be used with 401(k), money purchase, defined benefit, and nonqualified plans. Benefits to the Employer Lets you deduct your contributions from taxes as a business expense Allows you to provide a meaningful plan at an affordable cost Lets you focus contributions on merit pay Helps recruit and keep quality employees Employee Advantages Plan members benefit because a profit sharing plan allows them to: Allows you to defer taxes on your contributions and their earnings until the plan pays benefits Helps build retirement security b) Money Purchase Plan A Money Purchase Plan requires the employer to contribute a stated amount into each employee's retirement account each year. It can be used with 401(k), profit sharing, defined benefit, and nonqualified plans. The employer can choose how much they want to contribute to the plan from a variety of different formulas. Benefit formulas may be based upon: A flat percentage of each member's salary. For example, if you select 10% of payroll for your deposit, each member would receive 10% of their salary. A flat dollar amount. For example, you could contribute $5 per week for each member. Benefits to the Employer Lets you deduct your contributions from taxes as a business expense Helps recruit and keep quality employees Employee Advantages Plan members benefit because a money purchase plan allows them to: Allows you to know how much is being contributed to their accounts Allows you to defer taxes on the amount saved and its earnings until the plan pays benefits *2) 403(b)(7)* A 403(b)(7) plan is specifically for employees of schools, hospitals and certain other tax-exempt organizations. Contributions to the plan are based on a reduction of the employee's regular compensation. Benefits to the Employer Lets you deduct your contributions from taxes as a business expense Allows you to provide a meaningful plan at an affordable cost Helps recruit and keep quality employees Employee Advantages Plan members benefit because a 403(b)(7) plan allows them to: Allows you to make pre-tax contributions of up to $11,000 per tax year. Allows you to defer taxes until the money is withdrawn *3) SIMPLE IRA* (Savings Incentive Match Plan for Employees of Small Employers) A SIMPLE IRA is a written agreement (salary reduction arrangement) between an employer and an employee that allows an eligible employee (including a self-employed individual) to reduce his or her compensation by a certain percentage each pay period and have the employer contribute the salary reductions to a SIMPLE IRA on behalf of the employee. These contributions are called salary reduction contributions. Benefits to the Employer Lets you deduct your contributions from taxes as a business expense Allows you to provide a meaningful plan at an affordable cost Helps recruit and keep quality employees Employee Advantages Plan members benefit because a SIMPLE IRA allows them to: Lets you make tax-deductible contributions of up to $7,000 per tax year. You receive the benefit from an employer-match Allows you to defer taxes until the money is withdrawn Helps reduce your taxable income
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