Retirement and Tax Planning Guide

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Facts at a glance

Not a Deposit Not FDIC Insured Not Guaranteed by the Bank May Lose Value Not Insured by any Federal Government Agency

Contents Small business/employer retirement plans Page 4

Individual retirement accounts Page 6

Retirement plan distribution rules Page 7

Rollover and transfer rules Page 9

Federal tax rates and schedules Page 10

Social Security benefits Page 13

Medicare benefits Page 15 4 Small Business/Employer Retirement Plans

Type of Plan Key Features Who Can Establish 2021 and 2020 Contributions

Simplified • Minimal paperwork and reporting. • Self-employed persons, Who Contributes: Employer Employee • Employers can change their annual partnerships, corporations, •U p to the lesser of 25% of an employee’s Pension (SEP) contributions, and contributions may and nonprofit groups. eligible compensation or be discretionary. – $58,000 per employee for 2021 • Deductible employer contributions ($57,000 for 2020). are made directly to employees’ IRAs. • All contributions must be 100% vested immediately.

SIMPLE IRA • Inexpensive 401(k)-type plan • Self-employed persons, Who Contributes: Employee and Employer for smaller employers. partnerships, corporations, • Employees can defer up to • No 401(k)-type discrimination testing. nonprofit groups, tax-exempt – $13,500 ($16,500 if 50 or older) for • Employees can make pretax elective institutions, and government 2021 and 2020. deferrals. entities with 100 or fewer • Employer must choose one of two options: • Deductible employer contributions employees who earned $5,000 – Match employee’s contribution dollar are made directly to employees’ IRAs. or more in compensation in for dollar, up to 3% of compensation • Employer contributions are mandatory. the preceding year. (no salary maximum; match cannot • All contributions must be 100% vested • Generally, the employer may exceed deferral limit).1 immediately. not maintain another plan. – Contribute 2% of each eligible employee’s compensation. Maximum eligible compensation: • $290,000 for 2021 tax year ($285,000 for 2020).

Solo 401(k) • Employees may make pretax • Business owners (and their Who Contributes: Business Owner elective deferrals. spouses) with no employees.2 • Business owner can make up to a 25%3 • Employees may make Roth discretionary profit-sharing contribution contributions (after tax) if permitted and defer up to by the plan. – $19,500 ($26,000 if 50 or older) for • Business owner contribution 2021 and 2020. requirements are set in the plan • Deferrals and employer contributions document. Contributions may be cannot exceed the lesser of 100% of discretionary. compensation or •P articipant loans are available if – $58,000 per person for 2021 tax year permitted by the plan. ($57,000 for 2020). Catch-up deferrals are not included in this limit. •T otal employer contributions to the plan cannot exceed 25% of total eligible compensation. (Employer contributions exclude employee deferrals.) • Maximum eligible compensation: – $290,000 for 2021 tax year ($285,000 for 2020).

401(k) • Employees may make pretax elective •P artnerships, corporations, Who Contributes: Employee and Employer deferrals. and nonprofit groups • Employees can defer up to • Employees may make Roth contributions (no government entities). – $19,500 ($26,000 if 50 or older) for 2021 (after tax) if permitted by the plan. and 2020. • Employer matching and profit-sharing • Deferrals and employer contributions contributions may be discretionary cannot exceed the lesser of 100% of if permitted by the plan. compensation or •P articipant loans are available if – $58,000 per person for 2021 tax year permitted by the plan. ($57,000 for 2020). Catch-up deferrals •V esting schedule on employer are not included in this limit. contributions is determined by the •T otal employer contributions to the plan employer. cannot exceed 25% of total eligible • Due to complicated discrimination compensation. (Employer contributions testing and tax reporting, third-party exclude employee deferrals.) administrative services are • Maximum eligible compensation: recommended. – $290,000 for 2021 tax year ($285,000 for 2020).

1. I n two years of any five-year period, match can be reduced to 1% of compensation. 2. Solo business owners can be defined as one individual (or the individual and his/her spouse) who owns 100% of the business or one or more partners (or partners and their spouses). 3. Incorporated businesses can contribute a maximum of 25%, while unincorporated businesses can contribute a maximum of 20% in profit-sharing contributions. 5

Small Business/Employer Retirement Plans (continued)

Type of Plan Key Features Who Can Establish 2021 and 2020 Contributions

Safe Harbor • Safe harbor 401(k) permits employers •P artnerships, corporations, Who Contributes: Employee and Employer 401(k) to choose either a 3% non-elective and nonprofit groups (no • Employees can defer up to and Super contribution or a 4% match on a government entities). – $19,500 ($26,000 if 50 or older) for Comparability 5% deferral. • Employers must provide a 2021 and 2020. 401(k) • Employer contribution must be made each 30-day notice before • Deferrals and employer contributions year to maintain safe harbor provisions. establishing the plan. cannot exceed the lesser of 100% of •S uper comparability 401(k) combines compensation or the features of a new comparability plan – $58,000 per employee for 2021 tax year (see below) with 401(k) safe harbor ($57,000 for 2020). Catch-up deferrals provisions. are not included in this limit. • No 401(k)-type discrimination testing for •T otal employer contributions cannot either plan. exceed 25% of total eligible compensation. •P articipant loans are available for either (Employer contributions exclude employee if permitted by the plan. deferrals.) • Due to the complexity of the contribution • Maximum eligible compensation: calculation, retirement plan administrative – $290,000 for 2021 tax year services are necessary. ($285,000 for 2020).

Profit-Sharing, • Profit-sharing contribution requirements • Self-employed persons, Who Contributes: Employer Age Weighted are set in the plan document. partnerships, corporations, •U p to the lesser of 100% of eligible and New Contributions may be discretionary. and nonprofit groups. compensation or Comparability •A ge-weighted formula is determined by – $58,000 per employee for 2021 the salary range and age of employees. ($57,000 for 2020). • New comparability formula groups •T otal employer contribution cannot employees into categories and then exceed 25% of total eligible compensation. bases the formula on each group • Maximum eligible compensation: as governed by nondiscrimination – $290,000 for 2021 tax year regulations. ($285,000 for 2020). • Employers may add a 401(k) salary deferral feature for all plans. •P articipant loans are available for all if permitted by the plan. •V esting schedule is determined by the employer for all plans. • Due to the complexity of the contribution calculation and nondiscrimination testing, retirement plan administrative services are necessary.

403(b)(7) •P articipants can make pretax salary • Public schools for grades k-12, Who Contributes: Employee and Employer5 ERISA/ deferral contributions. colleges and universities; • Employees can defer up to Non-ERISA •P articipants can make Roth contributions churches/church-related – $19,500 ($26,000 if 50 or older) for (after tax) if permitted by the plan. organizations, hospitals, and 2021 and 2020. •P articipant loans are available if other 501(c)(3) tax-exempt • Deferrals and employer contributions permitted by the plan. organizations. cannot exceed the lesser of 100% of • Employer contributions are allowed if compensation or included in the plan.4 – $58,000 per person for 2021 tax year ($57,000 for 2020).5 Catch-up deferrals and special catch-up contributions are not included in this limit.

457(b) • Employees make salary reduction • State and local governments Who Contributes: Employee and Employer contributions or employer contributes. or tax-exempt organizations • Employees and/or employer can •P articipant loans are available if under IRC 501(c). contribute up to permitted by the plan. – $19,500 ($26,000 if 50 or older) for • No 10% penalty for early withdrawal upon 2021 and 2020. retirement or termination of employment before age 59½ (except for amounts attributable to rollovers from other plans). • May cover part-time employees and independent contractors who perform services for the employer in addition to full-time employees. •P articipants can make Roth contributions (after tax) if permitted by the plan.

4. Employer contributions made by nongovernmental 501(c)(3) employers will likely make the plan subject to the Employee Retirement Income Security Act of 1974. (ERISA). 5. Employees with 15 or more full years of service with an eligible employer may be permitted to make special catch-up contributions of up to $3,000 over the elective deferral limit. The maximum lifetime amount is $15,000 over five years. Age 50 catch-up contributions count against the $15,000 cumulative limit. All rules related to the establishment or maintenance of each plan type are not included in this summary. Additional rules may also apply if an employer maintains multiple plans. Please consult your tax or legal advisor for detailed information. Invesco representatives do not provide investment or tax advice. 6 Individual Retirement Accounts

Traditional and Roth IRAs

Traditional IRA Roth IRA Who Can Individuals Individuals Establish/ • The account owner (or the owner’s spouse, if married filing • The account owner (or the owner’s spouse, if married Contribute jointly) must have compensation1 to contribute. filing jointly) must have compensation1 to contribute. • No age restrictions apply.2 • Contributions are not allowed (or maximum allowable contribution is reduced) for individuals with modified adjusted gross income (AGI) in certain ranges. • No age restrictions apply.

Deductibility •P otentially deductible. • Nondeductible. • The deduction is reduced or eliminated at specified income levels if account owner or owner’s spouse participates in an employer-sponsored retirement plan. • Nondeductible contributions are allowed.

Earnings •T ax-deferred. •T ax-deferred.

Withdrawals • Taxable (unless attributable to nondeductible contributions). •T ax-free after the account has been maintained for five years and owner: – Is age 59½ or older. – Is paying first-time homebuying expenses ($10,000 lifetime cap). – Is permanently disabled. – Has died and amount is paid to the beneficiary. •R oth contributions generally may be withdrawn tax and penalty-free at any time.

Traditional IRA — Maximum Deductible Contribution For individuals covered by an employer-sponsored plan3

2021 2020 Modified AGI Younger than 50 50 or Older Modified AGI Younger than 50 50 or Older Single $0 – $66,000 $6,000 $7,000 $0 – $65,000 $6,000 $7,000 More than $66,000, Partial Partial More than $65,000, Partial Partial but less than $76,000 deduction deduction but less than $75,000 deduction deduction $76,001 or more None None $75,001 or more None None

Married $0 – $105,000 $6,000 $7,000 $0 – $104,000 $6,000 $7,000 (Filing More than $105,000, Partial Partial More than $104,000, Partial Partial 3 Jointly) but less than $125,000 deduction deduction but less than $124,000 deduction deduction $125,001 or more None None $124,001 or more None None

Roth IRA — Maximum Contribution

2021 2020 Modified AGI Younger than 50 50 or Older Modified AGI Younger than 50 50 or Older Single $0 – $125,000 $6,000 $7,000 $0 – $124,000 $6,000 $7,000 More than $125,000, Partial Partial More than $124,000, Partial Partial but less $140,000 contribution contribution but less than $139,000 contribution contribution $140,000 or more None None $139,000 or more None None

Married $0 – $198,000 $6,000 $7,000 $0 – $196,000 $6,000 $7,000 (Filing More than $198,000, Partial Partial More than $196,000, Partial Partial Jointly) but less than $208,000 contribution contribution but less than $206,000 contribution contribution $208,000 or more None None $206,000 or more None None

1. Compensation includes taxable wages, salaries, tips, bonuses, commissions, self-employment income, taxable non-tuition fellowship, stipend payments, and alimony and separate maintenance payments, as well as nontaxable combat pay received by members of the US Armed Forces. 2. The 70½ age restriction was lifted for tax years beginning after December 31, 2019. 3. I ndividuals filing a single return and not covered by a retirement plan at work may deduct the full contribution amount with no modified AGI restrictions. For a married couple filing jointly, if both taxpayers are not covered by a retirement plan at work, the full contribution amount is deductible with no modified AGI restrictions. For a married couple filing jointly where the IRA contributor is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $198,000 and $208,000 in 2021, up from $196,000 and $206,000 in 2020. 7 Retirement Plan Distribution Rules

Retirement Plan Distributions

Under 59½ Years of Age 59½ to 72 Years of Age Over 72 Years of Age Traditional IRA/SEP/SIMPLE IRA Tax •T axed as ordinary income.1 •T axed as ordinary income.1 •T axed as ordinary income.1 Implications: Withdrawal • 10% penalty on taxable portion of • None. •F ailure to take any year’s full required Penalties: distribution unless a penalty exception minimum distribution (RMD) will result in applies. With a SIMPLE IRA, the penalty a 50% penalty on the amount that should for early withdrawal is 25% during the have been withdrawn. first two years of plan participation. RMDs: • Not until age 72.2 • Not until age 72.2 •Y es, starting no later than April 1 of the calendar year after the account owner/participant turns 72,2 then by December 31 each year thereafter. Roth IRA Tax • Contributions can be withdrawn • Contributions can be withdrawn • Contributions can be withdrawn tax-free. Implications: tax-free. Ordinary income tax applies tax-free. Investment earnings can Investment earnings can be withdrawn to investment earnings unless the be withdrawn tax-free as long as tax-free as long as the account has been Roth IRA has been open for at least the account has been open for at open for at least five years from Jan. 1 five years and withdrawal is due to least five years from Jan. 1 of the tax of the tax year for which a contribution death, disability or qualified first year for which a contribution was was first made. home purchase. first made. Withdrawal • No penalties on withdrawal of • None. • None. Penalties: contributions. 10% penalty on investment earnings withdrawn unless a tax-free distribution or a penalty exception applies. RMDs: • None during lifetime of original owner. • None during lifetime of original owner. • None during lifetime of original owner. Qualified Plan3/403(b)/Governmental 457(b) Tax • Depends on the type of plan, but • Generally taxed as ordinary income. • Generally taxed as ordinary income. Implications: generally taxed as ordinary income. Withdrawal • Qualified plan/403(b): 10% penalty on • None, but participant may be •F ailure to take any year’s full RMD will Penalties: amounts not rolled over to another required to separate from service result in a 50% penalty on the amount plan within 60 days unless an early before withdrawals are allowed if the that should have been withdrawn. withdrawal exception applies. plan does not allow for in-service • 457(b): Generally no penalty4 withdrawals. RMDs: • Not until age 72.2 • Not until age 72.2 •Y es, generally starting April 1 of the calendar year following the later of the year after participant turns 722 or the calendar year in which the participant retires from employment with the employer maintaining the plan, then by December 31 each year thereafter.5 Roth 401(k)/Roth 403(b)/Roth 457(b) Tax • Ordinary income tax applies to • Distributions are tax-free with five • Distributions are tax-free with five tax Implications: investment earnings unless employee tax years or more of Roth plan years or more of Roth plan participation. has been a Roth participant for at least participation. If the five-year If the five-year requirement isn’t met, five tax years and the distribution is requirement isn’t met, the amount the amount attributable to investment due to death or disability. attributable to investment earnings earnings is subject to ordinary income tax. is subject to ordinary income tax. Withdrawal • 10% penalty on taxable amount unless • None. •F ailure to take any year’s full RMD will Penalties: an exception applies. result in a 50% penalty on any taxable amount that should have been withdrawn. RMDs: • Not until age 72.2 • Not until age 72.2 •Y es, generally starting April 1 of the calendar year following the later of the year after participant turns 722 or the calendar year in which the participant retires from employment with the employer maintaining the plan, then by December 31 each year thereafter.5

1. Any amounts withdrawn from a traditional IRA that represent nondeductible contributions are not subject to tax. 2. For years prior to 2020, RMDs began for the year the individual reached age 70½. 3. A retirement plan that meets the requirements of the Internal Revenue Code to qualify for tax-favored treatment (e.g., 401(k), profit-sharing, money purchase). 4. A 10% penalty could apply if the distribution from the 457(b) plan is attributable to funds rolled into the plan from a qualified plan and the distribution does not qualify for another penalty exception. 5. Q ualified plan individuals owning more than 5% of the company sponsoring the retirement plan must begin taking RMDs by April 1 of the calendar year following the year they reach age 72, regardless of retirement status. 8

Retirement Plan Distribution Rules (continued)

Distributions Not Subject to the 10% Early Withdrawal Penalty

IRA/SEP/SIMPLE IRA1/Qualified Plan/403(b) IRA/SEP/SIMPLE IRA1 Qualified Plan/403(b) • On or after age 59½. • Qualified first-time homebuyer • After an employee’s separation from • Death. expenses ($10,000 lifetime limitation). service where the separation occurs • Permanent disability (as defined in the Internal • Qualified higher education expenses. during or after the year the employee Revenue Code). •P ayment of health insurance reaches age 55. • Series of substantially equal periodic payments. premiums while unemployed •T o an alternate payee under a qualified • IRS levy on the IRA or plan. (requirements apply). domestic relations order (QDRO). • Qualified reservist distribution. • Unreimbursed medical expenses in excess of 7.5% of AGI. • Birth or adoption expenses up to $5,000.

Substantially Equal Periodic Payments2 Distributions from a qualified plan, a 403(b) or an IRA before age 59½ are not subject to the 10% early withdrawal penalty if they consist of a series of “substantially equal periodic payments” (SEPP) that satisfy Section 72(t) of the Internal Revenue Code. Payments must be taken annually for at least five years or until age 59½, whichever is longer.

Calculating the Distribution Amount

IRS Approved Method Description Key Features RMD • Divide the account balance for each year by the •R equires annual recalculation of the payment using the appropriate life-expectancy factor from one of three updated account balance and life-expectancy factor. IRS tables: •O f the three methods, the RMD method generally results –U niform Lifetime. in the lowest payment. – Single Life Expectancy. • Annual changes to the payment amount are not – Joint and Last Survivor. considered modifications of the SEPP arrangement. • The same table must be used for all payment calculations.

Fixed Amortization • Amortize the account balance in the first year of • The payment is not recalculated after it is initially payment using the life-expectancy factor from one determined — it remains the same each year. of the IRS tables listed above and an interest rate. •E xception: The IRS allows the account owner to switch • The interest rate can’t be more than 120% of the federal to the RMD method in any year after the first year mid-term rate for either of the two months immediately provided the RMD method continues to be followed preceding the month in which payments begin. in all later years.

Fixed Annuitization • Similar to the fixed amortization method, except that • The payment is not recalculated after it is initially the life-expectancy factor (“annuity factor”) is taken determined — it remains the same each year. from an IRS-approved mortality table. • Exception: The IRS allows the account owner to switch to the RMD method in any year after the first year, provided the RMD method continues to be followed in all later years.

RMD Calculation Upon Attaining Age 72 To find the current RMD, divide the adjusted balance of the account on December 31 of the previous year by the applicable divisor from the IRS Uniform Lifetime Table. Use the account owner’s age on this year’s birthday. If the account owner’s spouse is the sole beneficiary of the IRA and is more than 10 years younger than the owner, you may use a separate IRS table — Joint and Last Survivor — that addresses joint life expectancy, which will result in a lower RMD.

IRS Uniform Lifetime Table

Age Applicable Divisor Age Applicable Divisor Age Applicable Divisor 72 25.6 82 17.1 92 10.2 73 24.7 83 16.3 93 9.6 74 23.8 84 15.5 94 9.1 75 22.9 85 14.8 95 8.6 76 22.0 86 14.1 96 8.1 77 21.2 87 13.4 97 7.6 78 20.3 88 12.7 98 7.1 79 19.5 89 12.0 99 6.7 80 18.7 90 11.4 100 6.3 81 17.9 91 10.8 101 5.9

1. The early distribution penalty is 25% (instead of 10%) during the first two years of SIMPLE IRA plan participation. 2. SEPPs are available to qualified plan and 403(b) participants only after severance from employment. 9 Rollover and Transfer Rules

What Distributions What Distributions Rollover Options Can Be Rolled Over/ Cannot Be Rolled Over/ Plan Type Transferred Transferred Direct Rollover Indirect Rollover Partial Rollover Qualified/ • Any eligible distribution • RMDs. •T rustee-to-trustee • The plan must • A portion of the 403(b)/ that is not described • Corrective distributions transfer to an withhold 20% for distribution is Govern- at right.1 of excess contributions eligible plan or IRA. federal income transferred or mental or deferrals. • No tax or penalty in taxes, and the rolled over, and 457(b) • Hardship distributions. the year of the participant receives the participant •L oans treated as rollover (unless the the net amount. keeps the remainder. Contract Exchange distributions. rollover is to a Roth •T o avoid tax and a • The amount not • If permitted under the • Distributions that are part IRA or a designated potential 10% early transferred or rolled plan, 403(b) partici- of a series of substantially Roth account in the distribution penalty, over is subject to pants can move assets equal payments made at plan). the participant must tax and possibly from one approved least annually over a deposit the full a 10% early investment provider lifetime or a period of distribution withdrawal penalty. to another within the 10 years or more. (including the 20%) same plan. • Dividends on employer in an eligible plan securities. or IRA within • The cost of life insurance 60 days. coverage.

Traditional • Any distribution to the • Amounts representing • Trustee-to-trustee • The IRA owner • A portion of the IRA/SEP/ account owner or the nondeductible contri- transfer to an eligible receives the distribution is SIMPLE IRA owner’s surviving butions to a traditional retirement plan distribution and transferred or spouse (who inherited IRA cannot be rolled or IRA. deposits it in an rolled over, and the IRA) that would be into a qualified/403(b)/ • No tax or penalty eligible plan or IRA the IRA owner taxable if it is not rolled Governmental 457(b) plan. in the year of the within 60 days. keeps the remainder. over or transferred to • RMDs. rollover (unless • No tax or penalty • The amount not another plan or IRA • Corrective distributions the rollover is to in the year of the transferred/rolled (but only one 60 day of excess contributions. a Roth IRA). rollover (unless over is subject to rollover is allowed • Distributions that are part the rollover is to tax and possibly a from the owner’s of a series of substantially a Roth IRA). 10% early withdrawal aggregate IRAs in a equal periodic payments penalty. one-year period). under Section 72(t) of the Internal Revenue Code. • Any distribution made within one year of another distribution that was rolled over from the account owner’s aggregate IRAs. • Any distribution to a non-spouse beneficiary who inherited the IRA.

Roth IRA • Generally, any • Any distribution made •T rustee-to-trustee • The Roth IRA • A portion of the distribution to the within one year of another transfer to another owner receives the distribution is account owner or the distribution that was Roth IRA. distribution and transferred or rolled owner’s surviving rolled over from the • No tax or penalty deposits it in a Roth over to another Roth spouse (only one 60 account owner’s in the year of the IRA within 60 days. IRA, and the account day rollover is allowed aggregate IRAs. rollover. • No tax or penalty owner keeps the from the owner’s • Any distribution to a in the year of the remainder. aggregate IRAs within non-spouse beneficiary rollover. • Any earnings amount a one-year period).2 of the Roth IRA. • The five-year period that is not rolled used to determine over is potentially qualified distributions subject to tax and doesn’t change. a 10% early withdrawal penalty (unless distribution is qualified).

Source: IRS Publication 590-B. IRA distributions are explained in Publication 590-B.

1. A distribution to a non-spouse designated beneficiary of a deceased employee will be treated as an eligible rollover distribution only if it is directly transferred to a traditional or Roth IRA established to receive the distribution. 2. There is also a prohibition on making another tax-free rollover from the IRA that received the rollover contribution within the same one-year period. 10

Rollover and Transfer Rules (continued)

Moving Money Between Plans

Roll to Qualified Designated Roth Traditional SIMPLE 457(b) Plan1 403(b) Account (401(k), Roll From Roth IRA IRA IRA SEP (government) (pretax) (pretax) 403(b), or 457(b)) Roth IRA Yes2 No No No No No No No Traditional IRA Yes3 Yes2 Yes2,7 Yes2 Yes4 Yes Yes No (after 2 years) SIMPLE IRA Yes3 Yes2 Yes2 Yes2 Yes4 Yes Yes No (after 2 years) (after 2 years) (after 2 years) (after 2 years) (after 2 years) (after 2 years) SEP Yes3 Yes2 Yes2,7 Yes2 Yes4 Yes Yes No (after 2 years) 457(b) Yes3 Yes Yes7 Yes Yes Yes Yes Yes3,5 (Government) (after 2 years) Qualified Plan1 Yes3 Yes Yes7 Yes Yes4 Yes Yes Yes3,5 (pretax) (after 2 years) 403(b) (pretax) Yes3 Yes Yes7 Yes Yes4 Yes Yes Yes3,5 (after 2 years) Designated Roth Yes No No No No No No Yes6 Account (401(k), 403(b), or 457(b))

Source: IRS Publication 590-A

Federal Tax Rates and Schedules

2021: Single Filers

Tax Rate Taxable Income Bracket Tax Owed 10% $0 to $9,950 10% of taxable income 12% $9,951 to $40,525 $995 plus 12% of the amount over $9,950 22% $40,526 to $86,375 $4,664 plus 22% of the amount over $40,525 24% $86,376 to $164,925 $14,751 plus 24% of the amount over $86,375 32% $164,926 to $209,425 $33,603 plus 32% of the amount over $164,925 35% $209,426 to $523,600 $47,843 plus 35% of the amount over $209,425 37% $523,601 or more $157,804.25 plus 37% of the amount over $523,600

2020: Single Filers

Tax Rate Taxable Income Bracket Tax Owed 10% $0 to $9,875 10% of the amount over $0 12% $9,876 to $40,125 $987.50 plus 12% of the amount over $9,875 22% $40,126 to $85,525 $4,617.50 plus 22% of the amount over $40,125 24% $85,526 to $163,300 $14,605.50 plus 24% of the amount over $85,525 32% $163,301 to $207,350 $33,271.50 plus 32% of the amount over $163,300 35% $207,351 to $518,400 $47,367.50 plus 35% of the amount over $207,350 37% $518,401 or more $156,235 plus 37% of the amount over $518,400

1. Qualified plans include, for example, profit-sharing, 401(k), money purchase and defined benefits plans. 2. Only one rollover in any 12-month period. 3. Must include in income. 4. Must have separate accounts. 5. Must be an in-plan rollover. 6. Any nontaxable amounts distributed must be rolled over by direct trustee-to-trustee transfer. 7. Applies to rollover contributions after December 18, 2015. 11

Federal Tax Rates and Schedules (continued)

2021: Married Filing Jointly or Qualifying Widow(er) Tax Rate Taxable Income Bracket Tax Owed 10% $0 to $19,900 10% of taxable income 12% $19,901 to $81,050 $1,990 plus 12% of the amount over $19,900 22% $81,051 to $172,750 $9,328 plus 22% of the amount over $81,050 24% $172,751 to $329,850 $29,502 plus 24% of the amount over $172,750 32% $329,851 to $418,850 $67,206 plus 32% of the amount over $329,850 35% $418,851 to $628,300 $95,686 plus 35% of the amount over $418,850 37% $628,301 or more $168,993.50 plus 37% of the amount over $628,300

2020: Married Filing Jointly or Qualifying Widow(er) Tax Rate Taxable Income Bracket Tax Owed 10% $0 to $19,750 10% of taxable income 12% $19,751 to $80,250 $1,975 plus 12% of the amount over $19,750 22% $80,251 to $171,050 $9,235 plus 22% of the amount over $80,250 24% $171,051 to $326,600 $29,211 plus 24% of the amount over $171,050 32% $326,601 to $414,700 $66,543 plus 32% of the amount over $326,600 35% $414,701 to $622,050 $94,735 plus 35% of the amount over $414,700 37% $622,051 or more $167,307.50 plus 37% of the amount over $622,050

2021: Head of Household Tax Rate Taxable Income Bracket Tax Owed 10% $0 to $14,200 10% of taxable income 12% $14,201 to $54,200 $1,420 plus 12% of the amount over $14,200 22% $54,201 to $86,350 $6,220 plus 22% of the amount over $54,200 24% $86,351 to $164,900 $13,293 plus 24% of the amount over $86,350 32% $164,901 to $209,400 $32,145 plus 32% of the amount over $164,900 35% $209,401 to $523,600 $46,385 plus 35% of the amount over $209,400 37% $523,601 or more $156,355 plus 37% of the amount over $523,600

2020: Head of Household

Tax Rate Taxable Income Bracket Tax Owed 10% $0 to $14,100 10% of taxable income 12% $14,101 to $53,700 $1,410 plus 12% of the amount over $14,100 22% $53,701 to $85,500 $6,162 plus 22% of the amount over $53,700 24% $85,501 to $163,300 $13,158 plus 24% of the amount over $85,500 32% $163,301 to $207,350 $31,830 plus 32% of the amount over $163,300 35% $207,351 to $518,400 $45,926 plus 35% of the amount over $207,350 37% $518,401 or more $154,793.50 plus 37% of the amount over $518,400 12

Federal Tax Rates and Schedules (continued)

2021: Married Filing Separately Tax Rate Taxable Income Bracket Tax Owed 10% $0 to $9,950 10% of taxable income 12% $9,951 to $40,525 $995 plus 12% of the amount over $9,950 22% $40,526 to $86,375 $4,664 plus 22% of the amount over $40,525 24% $86,376 to $164,925 $14,751 plus 24% of the amount over $86,375 32% $164,926 to $209,425 $33,603 plus 32% of the amount over $164,925 35% $209,426 to $314,150 $47,843 plus 35% of the amount over $209,425 37% $314,151 or more $84,496.75 plus 37% of the amount over $314,150

2020: Married Filing Separately Tax Rate Taxable Income Bracket Tax Owed 10% $0 to $9,875 10% of taxable income 12% $9,876 to $40,125 $987.50 plus 12% of the amount over $9,875 22% $40,126 to $85,525 $4,617.50 plus 22% of the amount over $40,125 24% $85,526 to $163,300 $14,605.50 plus 24% of the amount over $85,525 32% $163,301 to $207,350 $33,271.50 plus 32% of the amount over $163,300 35% $207,351 to $311,025 $47,367.50 plus 35% of the amount over $207,350 37% $311,026 or more $83,653.75 plus 37% of the amount over $311,025

2021: Capital Gains

Long-Term Capital Gains Tax Rates (longer than 12 months)1 Taxable Income Single Married Joint Married Separately Head of Household 0% $0 – $40,400 $0 – $80,800 $0 – $40,400 $0 – $54,100 15% $40,401 – $445,850 $80,801 – $501,600 $40,401 – $250,800 $54,101 – $473,750 20% $445,851 or more $501,601 or more $250,801 or more $473,751 or more Short-term capital gains (12 months or less) are taxed at ordinary income tax rates.

2020: Capital Gains

Long-Term Capital Gains Tax Rates (longer than 12 months)1 Taxable Income Single Married Filing Jointly Married Separately Head of Household 0% $0 – $40,000 $0 – $80,000 $0 – $40,000 $0 – $53,600 15% $40,001 – $441,450 $80,001 – $496,600 $40,001 – $248,300 $53,601 – $469,050 20% $441,451 or more $496,001 or more $248,301 or more $469,051 or more Short-term capital gains (12 months or less) are taxed at ordinary income tax rates.

2021: Retirement Savers Credit

Credit All Other Filers2 Married Filing Jointly Head of Household 50% AGI $19,750 or less AGI $39,500 or less AGI $29,625 or less 20% $19,751 – $21,500 $39,501 – $43,000 $29,626 – $32,250 10% $21,501 – $33,000 $43,001 – $66,000 $32,251 – $49,500 0% $33,001 or more $66,001 or more $49,5001 or more

1. S ome investors may owe an additional 3.8% of their net investment income, or the amount by which their modified adjusted gross income exceeds the statutory threshold amount based on their filing status. (Single or head of household – $200,000, Married filing jointly — $250,000, Married filing separately — $125,000). 2. Single, married filing separately, or qualifying widow(er). 13

Federal Tax Rates and Schedules (continued)

2020: Retirement Savers Credit

Credit All Other Filers1 Married Filing Jointly Head of Household 50% AGI $19,500 or less AGI $39,000 or less AGI $29,250 or less 20% $19,501 – $21,250 $39,001 – $42,500 $29,251 – $31,875 10% $21,251 – $32,500 $42,501 – $65,000 $31,876 – $48,750 0% $32,501 or more $65,001 or more $48,751 or more

Standard Deduction

Filing Status 2021 2020 Single, Married filing separately $12,550 $12,400 Married filing jointly $25,100 $24,800 Head of household $18,800 $18,650

Health Savings Accounts (HSAs)

2021 2020 Self coverage, individuals under age 55 $3,600 $3,550 Family coverage $7,200 $7,100 Catch-up contributions at age 55 $1,000 $1,000

Out-of-Pocket Spending of HSA-Compatible HDHPs1 2021 2020 Self coverage $7,000 $6,900 Family coverage $14,000 $13,800

Minimum Deductible Amounts for HSA-Compatible HDHPs 2021 2020 Self coverage $1,400 $1,400 Family coverage $2,800 $2,800

Social Security Benefits

Determine Your Full Retirement Age

Year of Birth Full Retirement Age Year of Birth Full Retirement Age 1943 – 1954 66 1958 66 and 8 months 1955 66 and 2 months 1959 66 and 10 months 1956 66 and 4 months 1960+ 67 1957 66 and 6 months

Delayed Retirement Benefits Cost of Living Adjustments (COLA)

Year of Birth Yearly Increase to Age 70 Year Percentage 1941 – 1942 7.50% 2021 1.30% 1943 – later 8% 2020 1.60% 14

Social Security Benefits (continued)

State Taxation of Social Security Benefits

Tax some or all SS benefits (13 states) CO, CT, KS, MN, MO, MT, NE, NM, ND, RI, UT, VT, WV No state tax (9 states) AK, FL, NV, NH, SD, TN, TX, WA, WY All other states (29) exclude SSB from taxation AL, AR, AZ, CA, DC, DE, GA, HI, ID, IL, IN, IA, KY, LA, ME, MD, MA, MI, MS, NJ, NY, NC, OH, OK, OR, PA, SC, VA, WI

Who Is Entitled to Your Benefits Once You’re Eligible

Who Eligibility Benefit* Spouse • 62 or older. • Eligible for 50% of your full benefit at FRA, reduced • Any age if caring for your child who is under 16 or if taken prior. disabled and also receiving benefits on your record. •U pon your death, surviving spouse can receive 100% • 60 or older (50 or older if disabled) upon your death. of your at FRA, no less than 71.5% if taken earlier.

Child • Any age if caring for your child who is under 16 or •C an receive 50% of your full benefit. disabled and also receiving benefits on your record. •U pon your death, surviving children can receive 75% •U nder age 18 (or is 18 – 19 if in high school full time. of your benefit. • Any age if disabled before age 22.

Ex-Spouse •A ge 62 or older. • Can receive 50% of your full benefit at FRA, reduced • Married to you for at least 10 years. if taken FRA, even if you have not filed, if both of you • Not currently married. are at least 62 and divorced at least two years. • 60 or older (50 or older if disabled) upon your death. • Entitled to same survivor benefits as current spouse.

Types of Social Security Benefits

Retirement • Workers who have worked for a sufficient number of years are eligible for retirement at age 62. • Taxable

Survivor • If you are the surviving spouse or minor child of a worker who qualified for Social Security • Taxable retirement.

Disability • If you haven't reached retirement age but have met the work requirements and are • Taxable considered disabled under the Social Security Administration (SSA) program's medical guidelines.

Supplemental • Monthly benefits are paid to people with limited income and resources who are disabled, • Not Taxable Security Income (SSI) blind, or age 65 or older. • Blind or disabled children may also get SSI.

Lump-Sum Death •P aid ($255) to a living with surviving spouse or minor/disabled children only. • Not Taxable Benefit •F ile Form SSA-8.

*Earnings limits, family limits and Windfall Elimination Provisions apply. 15 Medicare Benefits

Medicare: Federal Health Insurance for Retirees

Covered Not Covered Notes Medicare Part A – • Inpatient Hospital Care. •L ong-term care, such • Most people are automatically enrolled in Part A Hospital Insurance • Skilled Nursing Facility. as nursing homes or at age 65 if they have: • Hospice. long-term facilities. –W orked at least 10 years. • Home Health Care. –P aid Medicare taxes while working. • Medicare Part A coverage is typically premium-free but may also come with other costs, including: – Deductibles. – Co-insurance. – Co-payments.

Medicare Part B – • Doctor Visits. • Prescription drug • Unlike Part A, most people will pay a monthly Outpatient Medical • Lab Testing. coverage. This is premium for Part B. That premium will vary from Insurance • Ambulance Services. covered under Part D. year to year and depend on individual situations. • Preventative Care. • Medical equipment • Other costs related to your Medicare Part B • Mental Health Care. obtained through a coverage may include: • Drug coverage that supplier not affiliated – Deductible. must be administered with Medicare. – Co-insurance. by a doctor. – Co-payments. • Costs vary depending on the type of service or item requested.

Medicare Advantage • Dental Care. (Part C) – Alternative to • Hearing Care. Original Medicare from • Prescription Drug Coverage. a private insurer •V ision Services and Care. •A dditional Benefits not covered by Medicare A or B.

Medicare Part D – • Original Medicare offers • Original Medicare beneficiaries can sign up for Prescription Drug limited prescription drug Medicare Part D prescription drug coverage Insurance benefits. Fills the gap in through a separate Medicare Prescription Drug Plan. prescription drug coverage • These plans provide for stand-alone prescription left by Medicare Parts A drug benefits. Individuals still need to stay and B. enrolled in Part A and/or Part B for their hospital and medical coverage. • Individuals who opt for Medicare Advantage can get Medicare Part D coverage through a Medicare Advantage Prescription Drug plan. The convenience of these plans is that they provide all of your Medicare Part A, Part B, and Part D benefits under a single plan.

Medicare Supplemental • Deductibles. • Prescription drug Insurance (aka Medigap) • Premiums. coverage. Private insurance companies • Co-payments. that cover costs not covered •T ravel Care Coverage. by Original Medicare

Source: Medicare & You 2021 - The official U.S. Government Medicare Handbook.

Comparing Medicare Advantage and Medicare Supplement Plans

Does it cover Medicare’s Does it let you see any doctor Does it include additional out-of-pocket costs, such as you choose who accepts Does it include prescription coverage, such as routine Feature deductibles and coinsurance? Medicare assignment? drug coverage? dental or vision services?

Medicare • Yes. Different plans may • Yes, lets you see any • No, unless you still have • Standard benefits don’t Supplement – cover different portions doctor you choose a previously purchased include this coverage, Medigap of certain out-of-pocket who accepts Medicare plan that included this although some insurance costs. Some plans may not assignment with most coverage). companies may offer cover Medicare deductibles. plans. additional benefits.

Medicare • Plans set their own • Many plans have provider • Yes, with most plans. • Yes, with some plans. Advantage – coinsurance and networks you must use Part C deductible amounts. or else pay higher out-of- pocket costs for your medical services. This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

This brochure is not intended to be legal or tax advice or to offer a comprehensive resource for tax-qualified retirement plans, Health Savings Accounts, or other government benefits. The tax information contained herein is general and is not exhaustive by nature. Federal and state tax laws are complex and constantly changing. State laws may differ. Always consult your own legal or tax professional for information concerning your individual situation. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment-making decision. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Invesco representatives are not tax advisors. All data provided by Invesco unless otherwise noted. All data as of 2/1/21 unless otherwise noted. invesco.com/us RRET-BRO-1 05/21 Invesco Distributors, Inc. NA4541