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Article #196: Types of Retirement Accounts

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You should know before making one of the utilized for it's tax benefits at the
most important decisions of your opposite end is the IRA.
financial life that there are a vast With the IRA, or individual retirement
variety of different retirement plans for account, the amount a person can
us to choose from, and seeking contribute pretax is connected to the
professional advice may be the best way amount earned in wages.
to figure out what fits you best. Going Using an IRA makes sense if your
into your future financial planning with contributions are fully deductible or
a general knowledge of what's available your contributions are partially
out there to make your money work for you deductible and you won't need the money
is a necessity. before age 59 1/2, or if you're already
We all need to save more for our maxing out your 401K.
retirement years. The biggest issue and Within the category of IRA's, there are
deciding factor of how much you have at many different types. The Keogh Plan is
retirement is twofold. designed for a self employed person or a
First, how early you begin to save has a partnership.
significant impact on the end result. For small businesses to set up retirement
Second, the type of retirement account plans, there is the simplified employee
can mean the difference between retiring pension or SEP plan. With the Roth IRA,
rich and retiring "comfortably". the contributions made are not tax
You should know before making one of the deductible, however, the returns will be
most important decisions of your distributed tax-free.
financial life that there are a vast When contributing to a Roth IRA, your
variety of different retirement plans for plan would be that you'll pay less in
us to choose from, and seeking taxes now than the rate you'd pay in
professional advice may be the best way retirement.
to figure out what fits you best. You would also want to confirm with your
The retirement plan we are probably all financial advisor any tax benefits you
the most familiar with is the 401K plan. may receive now for making contributions
This plan is sponsored by our place of to your IRA, if any, as this can
employment. The employee makes his or significantly reduce your taxable income
her specified contribution per paycheck. in some cases.
Not every employer offers a 401k, but A rollover IRA is meant for people who
most bigger corporations offer it as an are retiring and receiving money from a
incentive for their employees to take 401K or for people who are leaving a job.
advantage of. There are more variations to investing
The contributions to a 401 are made for retirement and far more detail to
pretax, and are withdrawn directly from each kind of retirement account.
the individual's paycheck. Whatever an Review your own personal financial
individual earns on these contributions situation, your age (big rule of thumb,
may compound and remains tax-free until the earlier the better), your income and
the employee has it distributed upon other variables to determine which
retirement. investment option is best for you so you
The next retirement plan, and perhaps the can retire with peace of mind.
second most well-known and commonly






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